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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…

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

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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…

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2536

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

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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…

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1012

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

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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…

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

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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…

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

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Article
Publication date: 5 April 2013

Yu‐Xiang Yen and Shiu‐Wan Hung

Although previous studies have examined the influence of asset specificity on firm performance, the literature has not focused on the influence of supplier asset

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1153

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Originality/value

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.

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Article
Publication date: 3 April 2017

Po-Yuan Chen, Kuan-Yang Chen and Lei-Yu Wu

Previous studies have argued that trust and commitment can create value in cooperative relationships. However, this study observed that, in practice, trust and commitment…

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1403

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Practical implications

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.

Originality/value

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.

Details

Journal of Business & Industrial Marketing, vol. 32 no. 3
Type: Research Article
ISSN: 0885-8624

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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…

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1059

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

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Article
Publication date: 21 November 2008

Ulrich Derigs and Shehab Marzban

The purpose of this paper is to analyze the impact of applying alternative Shariah screens on the resulting universe of halal assets and to show that Shariah screening…

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4638

Abstract

Purpose

The purpose of this paper is to analyze the impact of applying alternative Shariah screens on the resulting universe of halal assets and to show that Shariah screening procedures currently used in practice are inconsistent with respect to discriminating between halal and haram.

Design/methodology/approach

An empirical data analysis of the different asset universes obtained when applying the criteria specified by the most prominent Shariah‐compliant funds and indexes to a common standard asset universe, the assets contained in the S&P 500 index.

Findings

Analysis reveals that the asset universes are significantly different in size as well as constituents, i.e. for every index there is a substantial number of assets which are specified as halal or haram but classified the opposite way for other indexes. This indicates that, so far, there is no universal or generally accepted understanding of how to transform the descriptive Shariah rules into a system of checkable investment guidelines.

Research limitations/implications

The results presented in this paper could motivate the development of a standardized screening framework which, taking into account the existing Shariah guidelines, produces a controlled, unified and understandable classification of assets, by which the credibility and consistency of Islamic equity products is enriched.

Practical implications

Islamic institutions and Shariah scholars are guided to set up a common and standardized Shariah screening norm based on which computer‐based management systems for Shariah compatible portfolios could be developed.

Originality/value

This paper is believed to be the first empirical comparative analysis identifying the impact of using different Shariah screens on the composition of the compliant asset universe. The sensitization of Shariah scholars, fund managers and Islamic investors for the consequences of this so far undiscovered relation will certainly contribute to an enrichment of the credibility and consistency of Islamic equity products.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 1 no. 4
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 27 April 2010

Jon Charterina and Jon Landeta

The main purpose of this paper is to analyze which relational resources and capabilities are determinant in fostering innovations and to what extent these innovations are…

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1239

Abstract

Purpose

The main purpose of this paper is to analyze which relational resources and capabilities are determinant in fostering innovations and to what extent these innovations are relevant in achieving superior business results.

Design/methodology/approach

The proposed hypotheses are tested in an empirical study carried out on a sample group of 106 Spanish companies from the sub‐industries of machine tool manufacture and manufacturers of machinery for specific industries, operating in a business‐to‐business context. Information was gathered by means of telephone interviews with sales, production or management representatives of machinery suppliers. Analysis of data was performed by means of partial least squares regression. The exchange of knowledge leading to shared learning, investments in idiosyncratic or relation‐specific assets, non‐specific complementary resources and capabilities, and dyad governance mechanisms are the analyzed factors.

Findings

The results confirm that the existence of customer‐supplier relationships, which generally begin from contracts, and are based on trust and resource interdependence, tends to encourage the exchange of knowledge, specialized resources and idiosyncratic investments. It is also observed that the more committed firms are to the relationship, the greater the resulting increase in their innovativeness. In this regard, investment in idiosyncratic assets for the customer‐supplier relationship is seen to be a more effective practice for improving the supplier's innovativeness.

Originality/value

Contrary to the majority of empirical studies focused on distinguishing resources and capabilities within the firm, this paper defines and recognises some of those which lie in the realm of the dyad. Also, it studies the role from governance mechanisms of the relationship acting both as a joint capability by itself, as well as an antecedent of the other previously mentioned capabilities.

Details

European Journal of Innovation Management, vol. 13 no. 2
Type: Research Article
ISSN: 1460-1060

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