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Article
Publication date: 16 July 2021

Feihu Zheng, Hao Jiao, Junyi Gu, Hwy-Chang Moon and Wenyan Yin

This study aims to examine how different modes of knowledge flows affect the changes of asset specificity and how ownership control moderates the relationship between…

Abstract

Purpose

This study aims to examine how different modes of knowledge flows affect the changes of asset specificity and how ownership control moderates the relationship between knowledge flows and asset specificity in the open innovation paradigm.

Design/methodology/approach

This paper selects information technology outsourcing as the research base. It uses the feasible weighted least squares modeling method for its analysis and has collected the data from 2,369 research and development contracts of multinational vendor firms in China.

Findings

The coupled and outbound knowledge flows have a direct and positive effect on asset specificity. Moreover, the results show that weak corporate control has significant moderating effects on the relationship between both coupled and outbound knowledge flows and asset specificity; the strong control positively moderates the relationship between outbound knowledge flows and asset specificity.

Practical implications

In open innovation, firms build a higher degree of asset specificity to maximize the efficiency of knowledge flows, which then helps them to enhance innovation capacity and market performance.

Originality/value

Preceding studies have tended to examine the influences of asset specificity as an independent variable in a closed innovation paradigm. Asset specificity is hence often left as the antecedent “black box.” This paper, however, opens the “black box” of asset specificity, which is set as a dependent variable, by investigating the influences of knowledge flows on the asset specificity in the context of open innovation. It also reinterprets the role of asset specificity by adopting the lens of open innovation theory.

Details

Journal of Knowledge Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1367-3270

Keywords

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Book part
Publication date: 10 June 2009

Kyle J. Mayer

Transaction cost economics (TCE) has received extensive attention from a variety of disciplines, but it holds a particularly central place in strategic management. The…

Abstract

Transaction cost economics (TCE) has received extensive attention from a variety of disciplines, but it holds a particularly central place in strategic management. The focal issues examined by TCE, vertical integration and interfirm governance (including contract design), are important determinants of firm performance – the central issue in the field of strategy. While several extensive reviews of empirical work in TCE have been undertaken, one key issue has received relatively little attention – construct validity in TCE empirical research. The purpose of this chapter is to highlight some of the challenges of operationalizing key transaction cost predictions and provide some ideas for better measuring core constructs such as asset specificity, uncertainty, and frequency.

Details

Research Methodology in Strategy and Management
Type: Book
ISBN: 978-1-84855-159-6

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Article
Publication date: 14 March 2008

Tomás F. Espino‐Rodríguez, Pei‐Chun Lai and Tom Baum

This work analyses make or buy decisions from the transaction cost economics perspective and the resource‐based view of the firm. The aim is to analyse the extent to which…

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3552

Abstract

Purpose

This work analyses make or buy decisions from the transaction cost economics perspective and the resource‐based view of the firm. The aim is to analyse the extent to which the presumptions of the two theories are valid in the service sector in terms of specific assets.

Design/methodology/approach

The study was conducted on a representative sample of hotels in Scotland, UK. Each of the surveyed hotels was asked for information about 13 operations or hotel processes. A comprehensive model is developed that establishes the relationship between asset specificity and operation performance and hotel or business performance, moderated by the form of governance (make or buy). Moreover, the relationship between asset specificity and outsourcing in the hotel sector is also examined. The different hotel processes are classified according to the asset specificity. The factors that could lead to an increase in the outsourcing strategy are also analysed.

Findings

The results indicate that, the relationship between asset specificity and operation performance is weaker when the operations are executed in‐house. In the case of the relationship between specific assets and performance, the findings regarding non‐financial performance are not contradictory since it is slightly higher when the operation is outsourced. The factors determining an increase in outsourcing would be those related to the quality of the operation and to non‐financial performance.

Research limitations/implications

Previous studies have not considered the relationship between specificity and business performance, which gives extra incentive to complement and expand the literature on service operations. Future research should analyze other theories on organisations and outsourcing. The findings should also be tested in other geographical regions and use sources of information other than the hotel managers.

Practical implications

The work generates knowledge and aids managers in their “make or buy” decisions for the principal processes in the hotel industry according to the asset specificity.

Originality/value

The paper develops a specificity‐outsourcing matrix and identifies each of the hotel operations. Apart from testing the model in the hotel sector, which is an important sector of the service industry, the work offers a better understanding of outsourcing decisions based on the two basic theories used in the literature on services management. The paper also makes an innovative contribution by analysing relationships between operation specificity and performance that are previously untested in the service sector.

Details

International Journal of Service Industry Management, vol. 19 no. 1
Type: Research Article
ISSN: 0956-4233

Keywords

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Article
Publication date: 1 October 2005

Dawne Lamminmaki

To apply Williamson's six dimensional typology of asset specificity as a theoretical framework for appraising the nature of outsourcing activities in hotels.

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10268

Abstract

Purpose

To apply Williamson's six dimensional typology of asset specificity as a theoretical framework for appraising the nature of outsourcing activities in hotels.

Design/methodology/approach

Interviews with senior managers in large hotels.

Findings

Site specificity and brand capital appear to be the most pertinent dimensions of asset specificity in the sample investigated. Most observations support the transaction cost economics (TCE) prescription that high asset specificity results in insourcing.

Research limitations/implications

This study suffers from the normal shortcomings associated with fieldwork based on a limited sample of observations. Rather than attempting to make generalisable assertions, the study provides an exploration of the ways that asset specificity might manifest itself in hotel outsourcing decision making.

Practical implications

Asset specificity represents an important construct that should be considered when considering whether to outsource. It also provides a valuable context when considering the motivations of parties entering into a subcontracting arrangement.

Originality/value

No study applying either the asset specificity notion or the broader TCE theory has been found in the hospitality management literature. Also, there is a lack of prior research concerned with outsourcing in the hotel sector.

Details

International Journal of Contemporary Hospitality Management, vol. 17 no. 6
Type: Research Article
ISSN: 0959-6119

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Article
Publication date: 7 March 2016

Hag-min Kim and Ho-hyung Lee

E-Trade (paperless trade or cross-border e-commerce in B2B format) does not necessarily show positive results. The purpose of this paper is to conceptualize why and how…

Abstract

Purpose

E-Trade (paperless trade or cross-border e-commerce in B2B format) does not necessarily show positive results. The purpose of this paper is to conceptualize why and how such happens and furthermore, has two research purposes. First is to explain why studies in e-Trade performance show controversial results, such as some showing positive while others are not. Second is to investigate the relationship among research constructs such as e-Trade benefits, e-Trade use, asset specificity, and exporting firm’s capability.

Design/methodology/approach

This study considers multiple dimensions and evolutionary perspective of e-Trade performance. Structural equation model adopts the measures of firm’s capability, e-Trade use, and benefits to analyze e-Trade performance. Performance was divided into organizational net benefits (ONB) and industrial net benefits. Several hypotheses were suggested to test the relationship among the variables in the model. Basic moderator effect represented as an interaction between asset specificity and other constructs. In total, 295 exporting firms have participated in the survey and their responses were utilized for analysis.

Findings

This study shows that e-Trade performance should consider maturity as well as multiple stages among constructs. Critical paths were found among capability factors, process use (PU), ONB, and asset specificity. Results also show that information capability and marketing capability (MC) are determinant factors on e-Trade performance. In addition, MC and level of PU are read to be determinant factors of ONB. Furthermore, small and medium-sized enterprises’ (SMEs’) asset specificity, with level of capability and e-Trade use moderates their e-Trade performance.

Research limitations/implications

Asset specificity of SMEs has to be managed in a positive direction. Government’s e-Trade supporting programs for SMEs should be transformed in a way that can foster the growth of capability and self-sustainment. It reads to be inevitable to amend the current characteristics of e-Trade services. Furthermore, developing a specialized e-Trade service for large firms will also be in need. And utilizing exporting firm’s financial data would be more advisable testing the hypotheses.

Originality/value

Most works in information system as well as in e-Trade area report controversial performance results and this paper suggests an alternative model by combining asset specificity into capability and e-Trade use. Study on e-Trade performance is complicated and needs to consider multiple dimensions as well as their stages. This study envisions firm’s capability, asset specificity and at the same time contributes in e-Trade benefits.

Details

Journal of Korea Trade, vol. 20 no. 1
Type: Research Article
ISSN: 1229-828X

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Book part
Publication date: 3 May 2012

Eric La Lau, Michel A. van der Laan, Anne-Marie Kruis and Roland F. Speklé

This chapter provides evidence on the factors that influence the design of the control arrangements that govern support services. Specifically, we study sourcing decisions…

Abstract

This chapter provides evidence on the factors that influence the design of the control arrangements that govern support services. Specifically, we study sourcing decisions of non-strategic information technology (IT) support services. While the popular management literature suggests to outsource non-strategic activities, in practice organizations perform these services (partly) in-house. Based on transaction cost economics (TCE), we hypothesize that control structure choices depend on asset specificity, uncertainty and frequency. Using survey data on IT sourcing decisions from 89 firms in the construction industry, we find support for most of our hypotheses. Our results indicate that asset specificity deriving from the degree of organizational embeddedness of the IT function negatively affects firms’ propensity to outsource their non-core IT support, and that (behavioural) uncertainty intensifies this negative effect. As expected, we also find that frequency has a negative direct effect on the willingness to outsource IT services provision. However, we find no support for the hypothesized interaction between asset specificity and frequency. Overall, our study indicates that the organization's choice to outsource non-strategic support services depends on the organizational role of these services, rather than on their technological characteristics.

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Article
Publication date: 1 February 1996

Woodrow W. Cushing and Daniel E. McCarty

This study develops a model for estimating an index measure of asset specificity based on the liquidation value of corporate firms and the proportional distribution of…

Abstract

This study develops a model for estimating an index measure of asset specificity based on the liquidation value of corporate firms and the proportional distribution of their pre‐liquidation assets. A statistically significant positive relationship was found to exist between the estimated specificity index and financial leverage supporting the theoretical prediction. Additional evidence was found that firms with higher variability in sales, lower probabilities of failure, higher valued non‐debt tax shields and higher levels of financial slack use less financial leverage.

Details

Managerial Finance, vol. 22 no. 2
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 March 2005

Constantine Bourlakis and Michael Bourlakis

To investigate the evolutionary process of the retail logistics network formation, and to propose a relationship framework between the logistics asset buyer (the retailer…

Downloads
5686

Abstract

Purpose

To investigate the evolutionary process of the retail logistics network formation, and to propose a relationship framework between the logistics asset buyer (the retailer) and the logistics asset supplier (the third‐party logistics firm).

Design/methodology/approach

The evolutionary process is based on the way the asset specificity element of transaction costs theory can be perceived by the logistics asset buyer and the logistics asset supplier. The asset specificity element is linked to both network and buyer‐supplier relationship theories with the aim of conceptualising a buyer‐supplier relationship framework. Secondary data for the UK food retail chain are also employed.

Findings

A new relationship framework is developed based on the buyers’‐suppliers’ perceptions in relation to logistics asset specificity, and the conditions required for the formation of the retail logistics network are illustrated. If transaction costs are perceived as high by both the buyer and the supplier of a logistics asset, the retailer will engage into a fourth‐party logistics network formation where the use of information technology systems is of critical importance. At this stage, these systems will become the primary co‐ordination device for the reduction and absorption of complexity in the retail chain.

Originality/value

The paper offers a unique buyer‐supplier partnership framework by proposing that the formation of a fourth‐party logistics network will decrease the complexity of modern retail logistics operations. The paper will assist retail managers responsible for the development of logistics strategies and will be beneficial to researchers examining logistics and supply chain management operations.

Details

Journal of Business & Industrial Marketing, vol. 20 no. 2
Type: Research Article
ISSN: 0885-8624

Keywords

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Book part
Publication date: 15 July 2009

Elizabeth Maitland and André Sammartino

This chapter addresses an unresolved theoretical issue in international business: the impact of existing, committed assets in a host location on parent and subsidiary…

Abstract

This chapter addresses an unresolved theoretical issue in international business: the impact of existing, committed assets in a host location on parent and subsidiary decisions regarding the configuration of future value-adding activities for the location. We develop a measure of investment committedness, or the degree of flexibility versus specificity of existing assets in a host location, to explore this issue. The measure assesses whether assets, such as brands, human capital, process technologies, and supplier relations, retain only scrap value outside their current application or they can be redeployed to alternative value-adding activities in the host location or shifted offshore, either within the multinational enterprise (MNE) or to another user. The measure is a key step in developing a model of strategic choice for the future configuration of value-adding activities by MNEs in host locations. Drawing on firm-specific data from 237 MNE subsidiaries operating in Australia, we first present a traditional integration-responsiveness classification of subsidiary activities. This static snapshot of the subsidiaries’ current profiles is then compared with the measure's preliminary findings on the levels of investment committedness and strategic flexibility available to the sample MNEs and how this may shape strategic allocation decisions, including divestment and withdrawal.

Details

Managing, Subsidiary Dynamics: Headquarters Role, Capability Development, and China Strategy
Type: Book
ISBN: 978-1-84855-667-6

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Article
Publication date: 17 October 2016

Ching-Tang Hsieh, Hao-Chen Huang and Wei-Long Lee

The basic concept of transaction cost theory is that firms like to conduct transactions in a channel with lower transaction costs. Therefore, the purpose of this paper is…

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1741

Abstract

Purpose

The basic concept of transaction cost theory is that firms like to conduct transactions in a channel with lower transaction costs. Therefore, the purpose of this paper is to use the transaction cost perspective to identify which conditions cause companies to choose between outbound open innovation (hierarchy governance) and inbound open innovation (market governance).

Design/methodology/approach

Accordingly, transaction cost economics was used to relate the choice and implementation of open innovation using a sample of 250 electronics and information start-ups in China. Structural equation modeling was used to conduct confirmatory factor analysis to evaluate measurement model, while logistic regression analysis was used to test the hypotheses.

Findings

As expected, the dedicated asset specificity, human asset specificity, behavioral uncertainty, transaction frequency, and small number exchange were positively associated with outbound open innovation.

Originality/value

The contribution of this paper lies in explaining the role played by transaction cost economics in the process of open innovation for start-ups through empirical analysis.

Details

Management Decision, vol. 54 no. 9
Type: Research Article
ISSN: 0025-1747

Keywords

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