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Article
Publication date: 5 October 2018

Jinjie Xue, Hongping Yuan and Zizhen Geng

This study aims to investigate impacts of classic transaction cost-related factors (i.e. partner selection cost, specific asset investment and extorting rent cost) on joint…

Abstract

Purpose

This study aims to investigate impacts of classic transaction cost-related factors (i.e. partner selection cost, specific asset investment and extorting rent cost) on joint venture (JV) partner’s cooperative and opportunistic behaviour, from the perspective of transaction cost economics.

Design/methodology/approach

Item measurements, based on which the questionnaire was developed, were derived according to a thorough search and review of related literature. In all, 226 valid responses from manufacturing enterprises in China were collected. A structural equation modelling approach was used to analyse the data and examine the fitness of the proposed model.

Findings

This study shows that partner selection cost, specific asset investment and extorting rent cost are positively related to a JV partner’s cooperative behaviour. Specific asset investment exerts the most significant influence on partner’s cooperative behaviour. The results also reveal that partner’s opportunistic behaviour is not significantly affected by specific asset investment but is negatively influenced by extorting rent cost. Both partner selection cost and extorting rent cost show positive impacts on specific asset investment.

Research limitations/implications

The investigation focused on only manufacturing enterprises in one country. Future research could be directed to investigating other countries to increase the generalizability of the findings.

Practical implications

The findings suggest that increasing the extorting rent cost to promote the probability of specific asset investment is a core element to enhance JV partner cooperation.

Originality/value

The study not only empirically investigates the relative importance of classic transaction cost-related factors on JV partner opportunism and cooperation, but also enables a deeper understanding of the interrelationship among the classic transaction cost-related factors and their influences on partner cooperation and opportunism.

Details

Journal of Business & Industrial Marketing, vol. 33 no. 7
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 16 October 2007

Rodolfo Vázquez, Víctor Iglesias and Ignacio Rodríguez‐del‐Bosque

Transaction‐specific investments are often required in marketing channels in order to improve channel efficiency. However, such investments often increase the risk of…

1064

Abstract

Purpose

Transaction‐specific investments are often required in marketing channels in order to improve channel efficiency. However, such investments often increase the risk of opportunistic behaviors being sparked off. This paper aims to analyze the role of partners' investments in specific assets and the development of relational norms as safeguarding mechanisms against opportunism.

Design/methodology/approach

Three hypotheses are developed in line with transaction cost economics and relational exchange theories. The hypotheses are tested on a sample of 479 manufacturer‐distributor relationships in the food sector in Spain.

Findings

The paper finds that partner‐specific investments and relational norms are effective mechanisms against opportunism. However their efficacy differs depending on which opportunism (supplier's or distributor's) is to be avoided.

Research limitations/implications

The paper focuses on two mechanisms, yet there are other safeguards that firms can employ.

Practical implications

The partner's investments in specific assets are an effective safeguard for suppliers as well as for distributors. Companies should aim for balanced investment in this field, as it is the optimum way in which to avoid opportunistic behavior. Relational norms have shown to be effective only for distributors.

Originality/value

The study adopts a bilateral approach analyzing the effects of the governance mechanisms on both supplier and distributor opportunism. The paper provides new evidence on the role of the partner's specific investments as a safeguard against opportunism. They do not directly act against opportunism, but they act as variables that moderate the causal relationship between the specific investments of the firm and the partner's opportunism.

Details

Journal of Business & Industrial Marketing, vol. 22 no. 7
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 1 May 2005

Jeffrey C. Strieter and Sandeep Singh

This study aims to identify specific characteristics important in establishing and maintaining mutually beneficial relationships between endowment and pension fund managers and…

1186

Abstract

Purpose

This study aims to identify specific characteristics important in establishing and maintaining mutually beneficial relationships between endowment and pension fund managers and the providers of investment management services.

Design/methodology/approach

Utilizing exploratory factor analysis, this study of investment management service providers examines performance‐related and business relationship factors important to pension plan and endowment managers purchasing outside investment management services. These characteristics are examined across four asset categories: equities, fixed income, real estate and derivative/commodities/currencies.

Findings

This study identifies specific factors important in the purchase of investment management services. The results also compare and contrast similarities and differences between asset management services for different asset categories.

Research limitations/implications

This research focuses specifically on the investment management services industry. There may also be applicable to other, similar industries such as the providers of actuarial services. Further research in other industries will broaden the scope and applications of the findings of this study.

Practical implications

This research suggests that the initial hiring and subsequent retention decisions are not distinctly separate decisions, but, as other relationship marketing research suggests, is part of a continuous process. Customers, in making their initial hiring decision, are already looking ahead to the criteria used to determine whether to retain a hired manager.

Originality/value

Firms wishing to enter the investment management services marketplace must emphasize both the performance and relationship factors when trying to market their services to new customers. Firms already supplying asset management services to customers must continue to emphasize relationship factors along with the traditional focus on performance.

Details

International Journal of Bank Marketing, vol. 23 no. 3
Type: Research Article
ISSN: 0265-2323

Keywords

Book part
Publication date: 18 August 2006

Heli Wang and Jeffrey J. Reuer

This paper provides a stakeholder-based rationale for firm risk reduction through diversification. While firm-specific investments from stakeholders are often important sources of…

Abstract

This paper provides a stakeholder-based rationale for firm risk reduction through diversification. While firm-specific investments from stakeholders are often important sources of firm competitive advantage and economic rents, there is a reduced incentive for stakeholders to make these investments due to the risk associated with firm-specific investments. Since the risk associated with firm-specific investments is often related to the total firm risk level, we argue that stakeholders’ difficulties in diversifying the risks associated with their firm-specific investments create incentives for risk management by firms. We test this argument in a diversification setting. Based on a sample of firms’ first acquisition moves, we find that firms are more likely to engage in risk reduction through diversification when high levels of firm-specific assets are important to the firm's operations. Several proxies for stakeholders’ specific investments are found to be significant in explaining cross-sectional variation in the extent of ex ante risk reduction in acquisitions.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-0-76231-337-2

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 focal…

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

Article
Publication date: 6 February 2017

Yu-Xiang Yen and Shiu-Wan Hung

This paper aims to propose an integrated model based on buyer and supplier opportunism to show the mechanism through which current and competing suppliers influence buyer market…

1358

Abstract

Purpose

This paper aims to propose an integrated model based on buyer and supplier opportunism to show the mechanism through which current and competing suppliers influence buyer market competitiveness.

Design/methodology/approach

Questionnaires were distributed to purchasing staff in listed electronics firms in Taiwan to collect empirical data. Structural equation modeling was used to analyze these data and examine the fitness of the proposed model.

Findings

The findings show that current and competing suppliers influence buyer market competitiveness through supplier opportunistic behaviors and buyer commitment. The alternative attractiveness of competing suppliers affects buyer market competitiveness through the influence of asset specificity. Supplier opportunism negatively and indirectly influences buyer market competitiveness through buyer commitment. Nevertheless, buyer opportunism does not influence buyer commitment and market competitiveness.

Research limitations/implications

The investigation focused on only one industry in one country. Future research could investigate other industries and countries to increase the generalizability of the findings.

Practical implications

The results suggest that buyers can focus on utilizing the pressure of alternative suppliers to improve market competitiveness through increased specific investments by the current supplier.

Originality/value

On the basis of buyer–supplier opportunism, this study shows the mechanism through which the asset specificity of current suppliers and alternative attractiveness influence buyer market competitiveness.

Details

Journal of Business & Industrial Marketing, vol. 32 no. 1
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 1 December 1996

Charles C. Nielson

The concept of switching costs or transaction‐specific investments has been widely used in theoretical models of industrial buyer‐seller relationships. Yet there are few empirical…

2679

Abstract

The concept of switching costs or transaction‐specific investments has been widely used in theoretical models of industrial buyer‐seller relationships. Yet there are few empirical studies that have examined the dimensionality of switching costs. The purpose of this study is to investigate empirically the dimensions of switching costs. Different typologies, or dimensions, of switching costs are identified from a review of the literature. Measures of these dimensions are developed and empirically tested for construct and pragmatic validity using confirmatory factor analysis and structural equation modelling. Two switching cost dimensions are identified and validated: hard assets and soft assets.

Details

Journal of Business & Industrial Marketing, vol. 11 no. 6
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 2 October 2017

Rodolfo Vázquez-Casielles, Victor Iglesias and Concepción Varela-Neira

This paper aims to investigate the extent to which relation-specific investments undertaken by the distributor favor the presence of various governance structures (formal contract…

1307

Abstract

Purpose

This paper aims to investigate the extent to which relation-specific investments undertaken by the distributor favor the presence of various governance structures (formal contract and relational governance). Furthermore, it examines whether dependence moderates the effect of relationship-specific investments on these governance structures.

Design/methodology/approach

Survey data were gathered from 224 wholesalers from the food and beverage industry. Hypotheses were tested through regression analysis.

Findings

This study illustrates that property-based relationship-specific investments have a greater positive impact on the use of formal contracts than knowledge-based relationship-specific investments. Furthermore, knowledge-based relationship-specific investments have a greater positive impact on relational governance than property-based relationship-specific investments. The results also suggest that it is necessary to consider the moderating effect of cost-based dependence and benefit-based dependence. Finally, mixed governance structures (e.g. formal contracts combined with relational governance) have a positive impact on satisfaction and intention to maintain and extend the relationship.

Practical implications

The findings allow manufacturers to concentrate their efforts on mixed governance structures facilitating relationship-specific investments and benefit-based dependence from distributors to develop a competitive advantage.

Originality/value

Several investigations have obtained a relationship between investments in specific assets, governance structures and performance. Nevertheless, they have not identified different types of investments in specific assets. This study proposes that there are two types of relationship-specific investments: based on property and based on knowledge. Additionally, a two-dimensional model of dependence (cost-based and benefit-based) allows capturing the different theoretical spheres of this concept.

Details

Journal of Business & Industrial Marketing, vol. 32 no. 8
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 21 February 2020

Yaowu Sun and Qi Zhong

The purpose of this paper is to offer novel and complementary insights into the relationship between product modularity and product innovation by investigating the mediating role…

Abstract

Purpose

The purpose of this paper is to offer novel and complementary insights into the relationship between product modularity and product innovation by investigating the mediating role of module suppliers' relationship-specific investments which include both property-based relationship-specific investment (PRSI) and knowledge-based relationship-specific investment (KRSI).

Design/methodology/approach

This paper is an empirical study based on structural equation modelling, with a sample of 121 core firms of high-tech modular cooperation in China.

Findings

The findings indicated that product modularity had a significant positive effect on product innovation; product modularity was positively related to module suppliers' PRSI; module suppliers’ KRSI had a direct effect on product innovation while PRSI had an indirect effect on product innovation through KRSI; the relationship between product modularity and product innovation was serially multi-mediated by module suppliers’ PRSI and KRSI.

Practical implications

Modular product design and modular cooperation governance guidance for core firms and cooperative investment strategies guidance for module suppliers were provided.

Originality/value

This study is the first attempt to analyse how product modularity affects product innovation in the context of inter-firm modular cooperation by revealing the mediating role of module suppliers' relationship-specific investments.

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