Making or Buying Evidence: Using Transaction Cost Economics to Understand Decision Making in Public School Districts

We propose transaction cost economics theory as a tool for exploring when school administrators rely on information from two types of sources: internal sources like their own colleagues, and external sources like researchers and government agencies. The theory's application is illustrated in a comparative case study of two public school districts in Michigan. Consistent with the theory's predictions, the smaller, homogeneous, high-performing district used more external sources of information, while the larger, diverse, low-performing district used internal sources of information. We conclude by identifying some strengths and limitations of the theory, which can serve as starting points for debate.