Index of Paper Presentations for the Parallel Sessions - Academy of ...

incurs three types of costs (Williamson, 1973): agency costs, transaction costs and teamproduction costs. Agency costs are incurred by NACO when it is unable to detect opportunisticbehaviour by lower ranking organizations (e.g. SACS) and other stakeholder such as CBOs andSMOs. Transaction costs arise out of a need to negotiate, monitor and enforce contracts amongthe parties involved. Finally, team production costs arise either because NACO fails to detect theunderperformance of organizations who are assigned key responsibilities, or NACO allocatesresources in excess of these organizations‘ needs.Since each governance structure incurs different costs, the best organizational structure isone that ensures increased efficiency and higher effectiveness in achieving the proposedobjective. For example, transactions costs (e.g. monitoring) of using a hierarchical organizationare likely to rise with the increase in number of parties involved and how these parties aregeographically dispersed, as it seems to be the case in NACP-III. These costs may be lower in aprice system; however agency costs are likely to rise as NACO may not be able to identifyopportunistic behaviours within a geographically dispersed set of SMOs and CBOs.Intuitively, transaction costs can explain not only the firm‘s boundaries, but also thecontrol of the central government over each state and other lower level governments and NGOs inits actions against HIV/AIDS. That is, if the state/UT‘s performance is difficult to measure andNACO believes it knows best what actions need to be taken, then hierarchical control needs to beimplemented. This seems to have been the case in NACP-I. However, if the central governmentlacks the capabilities to effectively and efficiently reach all the HIV/AIDS target groups, then amarket system would be the most suitable as selected NGOs assume the responsibility on behalfof the central government. This takes us then to our final theme, the capabilities required by thegovernment to successfully move from a hierarchical governance structure to a hybrid structurewith the implementation of NACP-III.Gaps in capabilities