Organization and Transaction Costs


As most U of I students are involved in RSO, I was also actively involved in RSO called KCC since I was Freshman. KCC stands for Korean Cultural Center and the goal of this RSO is to promote Korean culture to people in and out of the campus. KCC has several leadership positions available for the members; there are president, vice president, and 5 team leaders. The term for president and vice president for this organization is restricted to one year. So, I have seen some changes in organizational structure over the past three years in this organization. When the president and vice presidents change, there will be new team leaders that are selected by new president and new vice president. Then, team members will be selected by team leaders. Regular team members have to reapply for becoming a member in KCC every semester, and they will write application form online and have interview with all members in leadership position.

In my first year in KCC, I was in media team. Our team members are close to each other, but there are not many connections with other teams. I didn’t really have chance to get to know other team members. Each team has its own events, and there were not many collaborations among teams. Members were required to attend the events that they are in charge. So, I couldn’t quite see other team members in our event. It was discouraging for us to have events and other team members don’t really support us.

Next year, I was in Outreach team. The president and vice president had changed and the atmosphere of KCC was totally different from my first year in KCC. Leaders in that year was more outgoing and collaborative. I was able to get to know other team members since there were many collaborations with other teams. Also, members are required to attend other team’s events at least three times in semester in order to maintain their membership in KCC. In every event, president and vice president were present. In my perspective, the second year in KCC was more fun and memorable than the first year. In addition, it was more productive to work in collaborative environment. Each team performed much better in promoting Korean culture than last year because they can get help from other teams as well.

Again, we have new president, vice president, and new team members this year. I hope to have collaborative and supportive environment like last year. This mainly depends on organizations’ leaders. However, as a member of the organization, I can choose either to become an active member and try to make more collaborative atmosphere or become a bystander. Becoming an active member of KCC, I had to spend a lot of transaction costs. Transaction cost will be incurred when the transaction didn’t go well, and you would like to make that transaction to be successful. It matters because transaction costs are incurred in almost every economic activity. For example, there was a new rule in KCC; members have to attend other team’s event at least three times in one semester. With the new rule, the time commitment in this RSO has increased than before, but the atmosphere of KCC has become more collaborative and events are more successful than before with more involvements of members. Also, members pay $40 membership fee which is a transaction cost in the beginning of the year. Since the goal of KCC is to promote Korean culture, members tend to gather a lot to get to know each other and have some fun together. In the manner of socializing, we usually have lunch or dinner together which includes some transaction cost. Members could have studied for their courses or worked in some place to get some pay in that time, but they choose not to do so. By paying that transaction cost, I could have met many good people through KCC in the campus and those relationships make my campus life more valuable and happier. Even though there are transaction costs in every activity involved in KCC, I think it is worth it.

Comments

  1. Professor ArvanSeptember 16, 2019 at 6:42 AM

    Let me ask this question, since another student in our class talked about a different Korean RSO. Do you know how many RSOs have a Korean focus? If there are several of them, then in this post you might have explained how you chose KCC. You might also have indicated whether there are any students of other than Korean ancestry in KCC and/or if any of the KCC activities are intended to reach out to the large campus community.

    You described an interview process that is followed before one can become a member. Are some potential candidates screened out by the interviews? Or do all of them get through? Only near the end of the piece did you mention the membership fee of $40. You didn't try to connect that to the interview process of the matter of sizing the RSO. I can imagine wanting the organization to be bigger so it has more revenue to work with. So these things might very well be connected. It would be could to consider that.

    One issue that you and everyone else who wrote about RSOs should consider is how the people who assume the top executive positions learn to be leaders and/or whether they indeed do learn this or not. The way you said officers rotate in and out of the job may not be the best for educating the top executives to do the work well. If there is learning by doing, it might be better, for example, to have someone service as vice president one year and then president the next year, with part of the president's job to educate the vice president about the nature of the work. This would produce more continuity in the organization leadership. So you might ask where the current structure came from and if it might be modified some.

    As with many other students, you are using the term transaction cost where I would call it a production cost. In class tomorrow we will review these ideas and I hope members of the class will better understand them after that session.

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    Replies
    1. Lawrence Klein Econ 490 fall 2019September 22, 2019 at 12:22 PM

      I know that there a lot of RSOs with Korean focus. There are KSA, KoJobs, KCC, KESS, Tassel Campaign, Kite, KLASO, and some others. So, there are around 10 RSOs that are Korean focused. I chose KCC (Korean Cultural Center) because I would like to be part of promoting Korean culture in the campus. Also, I wanted to get to know other Koreans on the campus. In my perspective, KCC was both meaningful and socially active RSO. In KCC, there was one Chinese student who loves Korean culture and she wanted to promote Korean culture like other members in KCC. But, most of the members were Korean since members should know Korean culture well to promote it to others.

      Through the interview process, some potential candidates would be screened out. KCC would like to maintain its number of members to between 30-40 members. So, if there are many applicants than the number, some will be screened out and some who don't seem to "fit well" in KCC or "active member" would be screened out as well. The membership fee of $40 is production cost that is required by members to maintain the RSO. I claimed that the new rule in KCC, attending other team's events, is transaction cost since it was incurred to make the transaction better. Through the new rule, members from other team get to know better and the organization become more collaborative than before. But, members would need to spend their own time to attend other events, so I believe that it was transaction cost.

      I also agree with you when you mentioned that if there were continuity in the organization leadership, students who are in executive positions will be well trained and be more professional in their positions. For KCC, there is a trend of social team leader becoming a next president of the organization. I think it is because KCC have many social events to get to know other members and social team is in charge of them. Regardless of the trend, I also think that it is better for vice president to become next president since the vice president would learn president's tasks besides the president.

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