Transaction-specific Investments Research Articles

Relationship satisfaction: An overlooked marketing channel safeguard

Transaction specific investments (TSIs) are investments that a marketing channel firm makes to create value for a particular channel relationship. TSIs transform the relationship by creating barriers to exit or lock-in situations because the investing party cannot leave the relationship without incurring substantial costs. This situation may compel the investing party to engage in opportunism to recoup the value of the specific investments, particularly when they are not satisfied with the relationship. We argue, therefore, that relationship satisfaction may serve as an important safeguard when TSIs have been made. Further, we argue that monitoring ease will interact with the moderating effect of relationship satisfaction on the relationship between TSIs and opportunism. Data were collected from 296 hotel general managers and 37 hotel headquarters' field representatives in the U.S. and Canada to test these possibilities. We found that relationship satisfaction indeed serves as an important safeguard, particularly when the partner has difficulty in monitoring the firm.

The Relationship between Mutual TSI and Interfirm Contracts: The Moderating Effect of Strong Ties

ABSTRACT Purpose: This study examines the influence that tie strength has on contractual relationships between exchange parties with specific investments and also explores the role of network intensity in contractual relationships between buyers and suppliers. We hypothesize that the relationship between transaction-specific investments (TSIs) and contracts is moderated by network intensity. Methodology: An empirical test is carried out by analyzing buyer–supplier relationships of manufacturing companies. The construct measures were based on those obtained from prior research, and the reliability and validity were established using exploratory and confirmatory factor analysis. The overall measurement model was then assessed with structural equation modeling using AMOS. Findings: We focus primarily on contract variables as a governance mechanism that can be affected by the strength of ties among firms and the results of our empirical study indicate that supplier TSIs improve the use of informal contracts while the use of formal contracts undermines the effect on supplier TSIs. In addition, we found that firms with weak ties with their partners in the network are more likely to use both formal and informal contracts than those with strong ties. Contribution: Our study has several contributions. First, our research improves the understanding of the relationship between TSIs and the choice of contracts as a governance mechanism, especially for mutual TSIs. Second, our research improves our understanding of the network strength in the context of business-to-business relationships extending the understanding of the relationship intensity among firms in a network. Third, we focused on the effects of network intensity on contractual relationships.

대형마트-벤더업체 간 거래특유투자가 수직적 준통합과 공동 영업성과에 미치는 영향

대형마트-벤더업체 간 거래특유투자가 수직적 준통합과 공동 영업성과에 미치는 영향

Reexamining the impact of TSIs on supplier performance: A multilevel model of value co-creation view

Does a supplier be able to benefit from its transaction-specific investments (TSIs) and those made by other suppliers? Theoretical arguments and empirical findings remain mix regarding the TSI-perf...

Transaction-specific investments in a supplier-distributor-supplier triad in China: opportunism and cooperation

PurposeRather than focussing on dyadic distributor–supplier relationships, this study aims to examine whether the difference in transaction-specific investments (TSIs) between rival suppliers in a supplier–distributor–supplier triad influences whether distributors expropriate or maintain their supplier’s TSIs.Design/methodology/approachDrawing on triadic data from 276 questionnaires that address both the supplier–distributor relationship and the rival supplier–distributor relationship, a moderated regression analysis is used to test the hypotheses.FindingsFive out of six hypotheses are supported by the empirical test. The results show that the supplier’s TSIs increase the distributor’s opportunistic behaviour and reduce cooperation when the distributor perceives that the supplier’s TSIs are lower than those of a rival supplier. In contrast, when the distributor perceives that the supplier’s TSIs are higher than those of a competitor, the supplier’s TSIs do not improve cooperation and can shift the link between the supplier’s TSIs and the distributor’s opportunism from being positive to negative.Practical implicationsThe findings have implications for the top managers of supplier firms embedded in distribution networks. This study suggests that the competitor’s TSIs can be regarded as an indicator of the supplier’s relationship with the distributor. By keeping an eye on their competitors’ TSIs, the top managers of suppliers can predict the likelihood of distributors’ opportunistic and cooperative behaviour and make efforts to improve their position by adjusting their own firm’s TSIs. Furthermore, this information can help suppliers decide on their investment strategies and maintain stable and healthy relationships.Originality/valueThis study 1) examines the effect of TSIs using a triadic framework and triadic data and demonstrates that how a distributor responds to a supplier’s TSIs, with either opportunism or cooperation, depends on the relative level of those TSIs in focal and competitive relationships; and 2) reveals the expropriation effects and restraint effects of TSIs by drawing on prospect theory. This finding indicates the dynamics of TSIs in a triadic relationship.

공급업자의 거래특유투자, 관계몰입과 혁신성과의 관계

공급업자의 거래특유투자, 관계몰입과 혁신성과의 관계

Examining the interface between supply chain governance structure choice and supply chain performances of dairy chains in Ethiopia

Recently, the concept of supply chain management has been applied in the food chains with the idea of transforming agribusiness through networking and trustful partnership in the food chains. In this regard, it is important to consider the empirical knowledge of the interface among the variables of factors in the supply chain governance structure choices, the chain actors’ choice of governance models, and the effects of these on the supply chain performances. The aim of this study was to empirically verify the relationships between factors existing in the business scenarios, the chain actors’ governance structure choice, and supply chain performances of dairy chains in Ethiopia. The chains were assessed using the survey data that were collected from 215 chain actors and analyzed using structural equation modelling and IBM SPSS and IBM AMOS of version 24 software. The data collected were tested for the Cronbach’s alpha reliability test for the internal consistency and using the different model goodness of fit measure tests. The results showed that the transaction cost, trust, and uncertainty significantly (P<0.001) predicted the chain actors’ supply chain governance model choice. On the other hand, uncertainty, willingness to collaborate, and collaborations advantages explained trust significantly (P<0.001). The correlations analysis among the factors showed that there existed negative significant correlation between transaction cost and willingness to collaborate. The correlation between willingness to collaborate and collaborative advantages was found positive and significant. Similarly, the correlation between uncertainty and transaction specific investments was found positive and significant. Moreover, chain actors’ supply chain governance structure choice significantly explained the supply chain performances, such as efficiency, flexibility, level of dairy losses, and level of integrations in the dairy chains. Promoting established dairy chain governance system, either through dependable relational governances or through formal contractual structure has been found improving the performances of the studied dairy chains.

A taxonomy of transaction-specific investments and its effects on cooperation in logistics outsourcing relationships

ABSTRACTThis study attempts to identify the variations in the transaction-specific investments made in logistics outsourcing relationships and explore how such variations are related to outsourcing cooperation. Based on the assumption that the vendor and the client always make some level of investment in outsourcing relationships, we develop a cluster model that illustrates four situations that indicate varying levels of vendor-specific investment and client-specific investment. We use data from client firms in logistics outsourcing relationships from China to test the theorised configurations through cluster analysis. The results validate our proposed matrix of specific investments and confirm that systematic configurations of the investment taxonomy and corresponding cooperation behaviours of information sharing, joint action, opportunism and conflict exist in each situation.

Matching governance mechanisms with transaction-specific investment types and supplier roles: An empirical study of cross-border outsourcing relationships

Drawing from transaction cost economics (TCE) and relational view (RV), we develop a contingency framework that matches governance mechanisms with different types of supplier transaction specific investments (TSIs) in cross-border outsourcing relationships. We further examine the three-way interaction effects between governance mechanisms, TSI types, and supplier roles in cross-border outsourcing relationships. Using data collected from 324 managers of local suppliers in China and 162 managers working for international buyers located in 15 different OECD countries, we find that while relational governance is more effective at safeguarding supplier human TSIs, it is not an effective solution for safeguarding supplier physical TSIs. In contrast, formal contracts help safeguard supplier physical TSIs against international buyer opportunism, but they are ineffective at safeguarding local supplier human TSIs. Moreover, we find that the interaction effect between formal contracts and supplier physical TSIs is stronger for original equipment manufacturers (OEMs) than for original design manufacturers (ODMs), whereas the interaction effect between relational governance and supplier human TSIs is stronger for ODMs than for OEMs. Theoretical and managerial implications of the findings follow.

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

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.

Buyer-supplier exchange relationship: How do exchange partners behave across the relationship life-cycle?

This study examines the behavioral differences between farmers and farm produce buyers on seven relationship-shaping constructs – use of contracts, transaction-specific investments, trust, cooperative norms, social bonds, long-term orientation, and information quality – at the exploration, expansion, and maturity phases of their relationship life-cycle. Findings from two independent surveys conducted in Vietnam’s agricultural heartlands show farmers and buyers holding comparable collaborative stance during the exploration and maturity phases, but behaving differently at the expansion stage. Triangulating these behavioral traits, we conclude that asymmetric trust in a dyadic relationship can converge to mutual trust through a process of reciprocal trust building.

Unfolding the impacts of transaction-specific investments: Moderation by out-of-the-channel-loop perceptions and achievement orientations

When distribution channel partners make specific investments, tailored to a particular supplier, it could prompt either opportunism or beneficial (e.g., extra-role) behaviors. The impact of the investment in turn may depend on whether the channel partner perceives that it is being left out of the channel loop by the supplier, as well as that partner's achievement orientation. This study considers a sample of 155 IT professional service firms and finds that their knowledge-intensive, transaction-specific investments (TSIs) encourage distinct behavioral intentions. If they perceive that the supplier is leaving them out of the channel loop, the effects of the TSIs get amplified in relation to opportunistic and extra-role behavioral intentions. Furthermore, the firms' achievement orientation moderates these influences. Suppliers thus should attend closely to achievement-oriented partners to ensure they do not perceive that they have been left out of the channel loop.

The moderating effect of buyer purchasing strategy on the relationship between supplier transaction-specific investment and supplier firm performance

This study examines whether the type of buyer relational strategy (competitive or cooperative strategy) moderates the relationship between supplier transaction specific investments (TSIs) and buyer commitment, and whether the type of buyer cost reduction strategy (purchase price-based strategy or total cost-based strategy) moderates the relationship between buyer commitment and supplier performance outcomes.Data were collected through a survey of purchasing managers at 248 buying firms in Korea. Results indicate that supplier TSIs positively affect supplier firm performance through buyer trust and commitment. The influence of supplier TSIs on buyer commitment depends on which relational strategy buyers use and the influence of buyer commitment on supplier firm performance depends on which buyer cost reduction strategy is used.

Knowledge transfer in buyer-supplier relationships: The role of transactional and relational governance mechanisms

Transferring a quantity of credible knowledge is a key competitive advantage for vertical relationships in an emerging economy. Distinct from extant research focused on the relational performance of and opportunism in channel relationships or knowledge transfer in horizontal alliances, this study investigates knowledge transfer in vertical relationships and considers how transactional and relational mechanisms differentially affect knowledge transfer quantity and credibility. Hierarchical regression analyses of 225 paired buyers and suppliers in China revealed that both transactional and relational mechanisms effectively improve quantity and credibility; within a transactional mechanism framework, contracts more effectively increase quantity, whereas transaction-specific investments do not increase credibility more effectively than contracts; and trust more effectively improves both quantity and credibility in the relational mechanism framework than personal relationships. These findings provide new insights for the knowledge management literature and practices in vertical relationships.

Institutional Determinants of Bilateral Trade: An Analysis According to Product Type

Formal trade barriers and transport costs explain only part of the resistance to international trade. Search costs on the international market and insecurity of property rights and contract enforcement have recently been emphasized as important intangible barriers to trade. This paper proposes that the impact of institutional quality on bilateral trade varies depending on the type of product that is being traded. Distinguishing between homogeneous and differentiated product groups, we estimate gravity equations to investigate how trade patterns are affected by variation in the quality of institutions across countries. The results show that institutions matter most for trade in differentiated goods. This variation in the importance of property security for trade underlines the relevance of search costs and other transaction-specific investments for understanding variation in bilateral trade patterns.

Does Firm Innovation Affect Corporate Social Responsibility?

textabstractThis study examines the relationship between firm innovation and CSR. Stakeholders’ concern over transaction-specific investments exacerbates when firms engage heavily in innovation activities. To secure stakeholders’ support, firms adopt CSR effectively as an ex ante signal of sustainability and goodwill. As CSR is endogenous to a firm’s innovation activities, we rely on an instrumental variable (IV) approach to test our hypothesis. Using a sample of 3,315 U.S. publicly-listed firms from 2001 through 2011, we find that more innovative firms also engage more in CSR activities. This effect is stronger for firms of higher risk and/or operating in a less munificent environment. Additionally, firms with higher innovation reap greater financial benefits from their CSR activities.

Opportunities and opportunism with high-status B2B partners in emerging economies

PurposeThis study examines the potential of foreign business-to-business (B2B) firms to select high-status local partners in emerging markets to achieve positive relationship outcomes. Because a domestic firm’s high status may also promote opportunism, the study also examines if the foreign B2B firms may mitigate such behavior through either or both transaction-specific investments (TSIs) and socialization.Design/methodology/approachThe research is conducted via a model that suggests a positive correlation between high local partner status and the focal relationship outcomes and the moderating effects of structural TSIs and social governance systems. The model was developed and empirically tested using data collected from 96 foreign firms operating in China.FindingsUsing multiple regressions, the findings suggest that foreign B2B firms are likely to achieve more beneficial relationship outcomes with high-status local partners. Standing alone, foreign B2B firms’ TSIs mitigate the positive relationship outcomes, whereas their socialization with the high-status partners enhances the beneficial outcomes. Most importantly, combining socialization with TSIs increases beneficial outcomes.Research limitations/implicationsThis study adds to B2B marketing, status theory and the application of transaction cost economics (TCE) and social exchange theory to foreign-local B2B exchange relationships in emerging markets. The findings confirm the attractiveness of high status in emerging markets by exploring how the selection, formation and chosen B2B governance processes may lead to competing outcomes of opportunism or success. Future research will benefit from simultaneously securing data from both sides of the dyad.Practical implicationsThe paper suggests that foreign B2B firms consider high status as a key criterion in selecting local partners in emerging markets and the importance of managing high-status partners’ potential opportunism by effective governance mechanisms.Originality/valueThis study is one of the first to apply and explore the workings of status theory in the foreign-local B2B partner selection process and relationship outcomes in emerging markets and thereby contributes to B2B marketing, status theory and both TCE and social exchange theories in the focal foreign-local B2B context.

Moderating Effects of Buyers’Purchasing Strategies on the Relationship between Suppliers’ Transaction Specific Investment and their Firm Performance

공급기업과 구매기업은 각기 자사 마케팅전략에 따라 영업과 구매부문의 전략을 실행하고 각 사의 상황에 맞도록 독자적인 의사결정을 한다는 점에서 상호간 전략의 정합성 연구는 매우 중요한 의미를 가진다. 이 연구는 공급기업의 거래특유투자가 구매기업의 신뢰와 몰입을 유도하고 공급기업의 거래성과를 높인다는 기존 연구에 더하여 구매기업의 구매전략, 즉 공급자관계...

The Cross-Level Effects of SCI on the Relationships between TSIs and Firm Performance

Theoretical models and empirical research on the relationships between transaction-specific investments (TSIs) and firm performance have produced inconsistent results. Such results highlight a need...

The determinants of parts and components trade: the role of trust and commitment

We draw on the knowledge from the fields of international economics and international marketing to improve our insights on the determinants of bilateral trade, in particular trade in Parts and Components (P&C). While trade economists have confirmed the importance of trade agreements, infrastructure and institutional quality among others, as important determinants of trade, international marketers have pointed to the critical role of trust and commitment among partners as antecedents to cross border relationships. In this paper, we introduce macro level variables to represent the antecedents of trust and commitment between dyads in a trade gravity model. We base our findings on 17,030 bilateral relationships involving 291 SITC 5 digit products that we classify as P&C. Our findings confirm the importance of cultural distance, business ethics and transaction specific investments in a bilateral trade relationship. In particular, we find that trust and commitment among partners are more important in P&C trade.