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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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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

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.

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.

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.

Although previous studies have examined the influence of asset specificity on firm performance, the literature has not focused on the influence of supplier asset specificity on product development, or the transformation that induces this. This study aims to propose a model by using the relational exchange perspective to explain the mechanism in which supplier investment in specific assets on behalf of buyers influences buyer performance in product development.

Empirical data were collected from research and development staff in Taiwanese listed electronic firms and tested using structural equation modeling to verify the fit of the hypothetical model.

The result demonstrates that supplier investment in specific assets for buyers positively impacts buyer's perceived relationship quality, which in turn affects knowledge sharing between buyers and suppliers and buyer product development performance. However, asset specificity does not directly affect knowledge sharing.

This study illuminates the contribution of asset specificity to knowledge sharing and product development performance, by clarifying the mediation effects resulting from relationship quality and knowledge sharing.

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).

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.

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.

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

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.

Previous studies have argued that trust and commitment can create value in cooperative relationships. However, this study observed that, in practice, trust and commitment alone may not ensure value creation in asymmetric relationships. Accordingly, this study aims to investigate the mediating role of specific assets in the effects of trust and commitment on value creation in asymmetric buyer–seller relationships.

Contract manufacturers (CMs) in Asia were sampled to validate the argument proposed by this study. Most Taiwanese CMs are partnered with international brands (original equipment manufacturers [OEMs]) that have stronger bargaining power. This cooperative relationship is characteristically asymmetric. A questionnaire method was applied, and structural equation modeling was performed to verify the proposed hypotheses.

Specific asset investment (SAI) was a crucial mediator that explained the effects of trust and commitment on the relationship value of an asymmetric cooperative relationship. Past studies have claimed that power asymmetry results in an unequal distribution of benefits. Nevertheless, regarding the relationship between CMs and OEMs, the study revealed that relationship value could still be increased once the congruent goals have been achieved by both parties. This finding contradicts past theoretical predictions.

Characteristically asymmetric CMs–OEMs (seller–buyer) relationships cannot be maintained merely through trust and commitment, particularly in the context of power and resource imbalances in which the stronger party often possesses a wider selection of prospective partners. The results of this study suggested that the CM should unilaterally invest in specific assets conducive to a cooperative relationship as an expression of faith in the relationship with the stronger firm, thereby creating opportunities for value cocreation.

The analysis of the relevance of relationship quality in the context of asymmetric cooperative relationships confirmed the mediating influences of SAI on ensuring value creation and the maintenance of the relationships. Relationship value could still be created despite the highly asymmetry power relationship. The CMs’ SAI is the key mechanism for this achievement.

This paper aims to analyze the impact of three types of embedded ties, namely, specialized complementary resources, idiosyncratic investments and knowledge sharing, on the innovation capacity of firms. It also examines the particularities of the machine-tool industry.

The evaluation of the embedded buyer-supplier ties is based on the potential sources of relational rents proposed by Dyer and Singh (1998). It also draws on Uzzi and Lancaster (2003) and Noordhoff et al. (2011), among others, to discuss the positive and negative aspects of embedded ties. Using data from a survey of 202 European machine-tool firms acting as buyers and sellers, the study proposes and evaluates a structural equation model.

Only knowledge-sharing routines exert a significant positive effect on product innovation performance. Neither an increase in idiosyncratic investments nor in complementary resources and capabilities enhances innovation performance. Moreover, knowledge-sharing routines mediate in the effect of idiosyncratic investments on innovation performance.

The machine-tool industry has unique characteristics that make generalization difficult. There is also considerable difficulty associated with testing the interrelations among these embedded ties in greater depth in the long run. It is plausible to consider that these interrelations operate within a gradual process.

This research contributes to a better understanding of the role of embedded ties on innovativeness. To the best of the authors’ knowledge, no previous international empirical research has been published analyzing the mediation effects among specialized complementary resources, idiosyncratic investments and knowledge sharing, and their effects on the innovation capacity of firms.