Abstract
A central issue in manufacturer-supplier relationships revolves around mechanisms that regulate or control exchange processes. An experimental test of a model of relational closeness is provided, representing an extension to the basic transaction cost economics framework. The model draws on relational exchange theory in the treatment of governance. Subjects for the experiment were midlevel purchasing personnel, drawn from aerospace, electronics, and defense contracting firms. Findings demonstrate that transaction costs are influenced by dimensions of the exchange, including asset specificity and external uncertainty.In turn, transaction costs are linked to important dimensions of relationalism. Implications for theory and practice are presented.
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