A needs theory of governance: Taking transaction cost theory back to humanistic economics and self-actualisation

In this paper we seek to integrate human needs and self-actualisation into the design of organisational governance. We problematise the assumptions that guide established justifications for governance, thus providing an opportunity for this type of theoretical approach. Drawing on Maslow's human psychology, we consider the potentially regressive features of the prescriptions of transaction cost theory (TCT), particularly the new institutionalist approach, and suggest inclusiveness as a mode of coordination that firms may wish to pursue to enhance self-actualisation. The main value added of this contribution is to highlight the need to discern among modes of governance design, using criteria of welfare maximisation by enabling opportunities for self-actualisation within the firm, different from the TCT focus on internal efficiency.