Can a supplier benefit from investing in transaction-specific investments? A multilevel model of the value co-creation ecosystem perspective

Abstract

Purpose

This paper aims to build and empirically test a multilevel framework integrating transaction cost economics and a resource-based view into a value co-creation ecosystem perspective to explain the chain- and firm-level effects of transaction-specific investments (TSIs) on supplier performance.

Design/methodology/approach

This paper investigates cross-level network effects using survey data from the List of Taiwanese Central Satellite Production Systems. A total of 34 buyers (hub firms) and 106 suppliers (satellite firms) from 34 supply chains responded to the survey.

Findings

Findings confirm that individual firms’ TSIs can foster co-specificity at the supply chain level, thereby improving supply chain integration (SCI). SCI can have a positive cross-level moderating effect on the TSI–performance relationship.

Research limitations/implications

These two key concepts, value co-creation and co-specificity, extend the theoretical application of transaction cost theory and the resource-based view to cross-level study by contributing to the research on the TSI–performance relationship.

Practical implications

This study’s framework is a counter to the buyer–supplier–supplier relationships in which each actor who may have different goals can create value jointly and share benefits from their TSIs.

Social implications

Owing to high co-specificity, being embedded in a well-integrated supply chain can be a threat when the environment is turbulent; for losing strategic flexibility, co-specificity and embeddedness may result in a collective adaptation concern. High degrees of SCI may slow the reaction to environmental turbulence for both buyers and suppliers.

Originality/value

Individual firms’ TSIs can foster co-specificity at the supply chain level, subsequently enhancing SCI. An integrated supply chain can be a collective asset that facilitates value co-creation. Individual firms can benefit from the sharing of collective value. SCI can also increase switching costs, thus reducing the likelihood of individual firm engaging in opportunistic behavior and cost safeguarding.

Citation

Huang, M.-C., Kang, M.-P. and Chiang, J.-K. (2020), "Can a supplier benefit from investing in transaction-specific investments? A multilevel model of the value co-creation ecosystem perspective", Supply Chain Management, Vol. 25 No. 6, pp. 773-787. https://doi.org/10.1108/SCM-09-2019-0347