This year, Oliver Williamson, who teaches at UC Berkeley, was co-recipient of the Nobel Prize in Economics (he shared the prize with Elinor Ostrom).
Admittedly, the official explanation by the Nobel Committee is hard for a layman to understand. He is being honored “for his analysis of economic governance, especially the boundaries of the firm”.
You also may be wondering what all of this has to do with XING. Quite frankly, a lot. Oliver Williamson is particularly famous for his concept of “transaction costs”, meaning costs associated with doing business with suppliers. These include costs for searching for the right partner, costs for making the initial contact, negotiation expenses, and also costs connected with a contract signing.
These costs are higher than they might appear at first. A simplified summary of Williamson’s conclusions could be as follows: transaction costs play a key role in the entire structure of our economy. One reason is that transaction costs explain why there are companies, instead of just freelancers, selling their goods and services on the free market. Because of the high costs for certain transactions, it is simply less expensive to bundle them within larger companies. When transaction costs can be kept low, smaller companies and freelancers have a better chance of competing.
Here’s where the parallel to XING should become clear. Whether you’re searching for a new employee, looking for the right contact person at a company, researching potential business partners, or setting up any kind of trust network via contacts: XING can simplify and accelerate the process considerably. Or, as the new Nobel Prize winner might put it, XING reduces transaction costs.
This may still sound theoretical to some readers, but in fact, a great deal of the benefits we as a professional network provider can offer is in that one sentence. Every day, we help tens of thousands of people to set up the initial business contact. That’s why it’s no surprise that freelancers are among our most loyal and active users. By using XING, they set up networks, become “visible” to potential clients, and make useful contacts. Countless “transactions” have been made through us – for the greater good of everyone involved. We’re proud of this, and we’re determined to do even more in the future. And thanks to Oliver Williamson, all of this is a little bit easier to understand.
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