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

Yi Liu (Department of Marketing, Shanghai Jiao Tong University, Shanghai, China)
Jiaqi Xue (Department of Marketing, University of International Business and Economics, Beijing, China)
Yuan Li (School of Economics and Management, Tongji University, Shanghai, China)

Journal of Business & Industrial Marketing

ISSN: 0885-8624

Article publication date: 1 July 2019

Abstract

Purpose

Rather 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/approach

Drawing 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.

Findings

Five 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 implications

The 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/value

This 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.

Keywords

Acknowledgements

This paper forms part of a special section “Institutional environment and collaborations/consolidations in B2B”, guest edited by En Xie, Zhi Yang and K.S. Reddy.

This study was supported by National Natural Science Foundation grants of P.R. China (71472043; 71572109; 71832008), the Program for Changjiang Scholars and Innovative Research Team in University (IRT13030), Beijing Social Science Foundation (17GLC040), and the Fundamental Research Funds for the Central Universities in UIBE (CXTD9-03).

Citation

Liu, Y., Xue, J. and Li, Y. (2019), "Transaction-specific investments in a supplier-distributor-supplier triad in China: opportunism and cooperation", Journal of Business & Industrial Marketing, Vol. 34 No. 6, pp. 1297-1312. https://doi.org/10.1108/JBIM-01-2018-0057

Publisher

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Emerald Publishing Limited

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