How transaction-specific investments influence firm performance in buyer-supplier relationships: The mediating role of supply chain integration

Abstract

Theoretical models and empirical works on the relationship between transaction-specific investments (TSIs) and firm performance have produced inconsistent results. Such results highlight a need for further investigation of long-debated questions concerning how TSIs enhance firm performance. In synthesizing transaction cost theory, a resource-based model, and relational exchange theory, this study presents a collective switching cost perspective and proposes the mediating role of supply chain integration (SCI) for reexamining TSI-performance relationships. A survey of 84 firms listed in the List of Taiwan Central Satellite Production Systems shows that TSIs positively affect firm performance and supply chain integration. Supply chain integration negatively affects firm performance relationships. This investigation confirms the mediating effect of SCI on the relationship between TSIs and firm performance.