Silvicultural contracting in British Columbia: A transaction cost economics analysis

In the light of institutional reforms to British Columbia's forestry sector , this study investigates forest companies' decisions to contract out silvi cultural activities or to perform them in-house, A model is developed to te st the relationship between a firm's choice of contractual forms and (a) th e attributes of the activity (e.g., specificity of technical skills and phy sical assets, frequency of operations, and uncertainty in controlling perfo rmance quality) and (b) characteristics of the firm (e.g,, company size). D ata from a survey of forest companies in the Province are used to test seve ral hypotheses, The empirical results confirm the transaction cost logic th at silvicultural activities performed in-house are likely those that are co mplex to manage, have a low degree of seasonality, require high levels of h uman skills, and involve highly specialized physical assets.