The allocation of specific assets, relationship duration, and contractual coordination in buyer–seller relationships

Abstract

This study explores the interaction effect of bilateral dependence and relationship duration on contractual coordination. In particular, the study compares how the allocation of specific assets, unilateral or mutual, affects contractual coordination across buyer–seller relationships with a short prior history as opposed to a long one. Data from a survey of 157 industrial purchasing relationships demonstrates that unilateral investments in specific assets by either the buyer or the supplier are more strongly supported by contractual coordination as the length of the relationship increases. On the other hand, contractual coordination of mutually deployed specific assets is significantly relaxed as relationships evolve over time.