Do the Transaction Cost Determinants Affect the Livelihoods of SANASA Beneficiaries? A Case of Colombo District, Sri Lanka

The livelihood development of low-income groups is a big challenge in many less developed countries. Meanwhile, scholars argue that Transaction Cost (TC) is the main factor that averts the livelihood improvement of low-income groups. This study attempted to examine how the Livelihood Success (LS) of the low-income groups is affected by the determinants of the TC. The study selected the members of SANASA society, one of the leading cooperative societies involving livelihood improvement activities in Sri Lanka. The study selected the Colombo district, the main commercial region in Sri Lanka to conduct the survey and gathered data from 130 SANASA beneficiaries, employing multistage sampling. A structural questionnaire was administered to collect primary data which were analyzed using the Partial Least Square Structural Equation Modeling. The results revealed that the TC determinants; uncertainty, and opportunism have a positive relationship with TC and negatively relate to LS. Meanwhile, rational ability and transaction frequency have negatively affected TC and positively impacted LS. The TC has a partial mediator role in the relationship between TC determinants and the LS of SANASA beneficiaries. Thus, the study provides a significant contribution to the literature by providing empirical evidence of the practical efficacy of TC and its impact on LS of the SANASA beneficiaries. Further, the study enables the policymakers and SANASA beneficiaries to develop strategies to mitigate TC by improving the rational ability and transaction frequency, both helping to avoid the opportunistic behavior of exchange partners and decreasing the transaction uncertainty, improving LS.