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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.

Integrating transaction costs economics and task-technology fit theory, this study distinguishes two categories of social media–enabled interactions, namely task-related interactions and tie-related interactions, and explores the match between these two and firms' use of contracts in achieving safeguarding and coordinating purposes in interfirm governance.

Two studies were conducted to test the hypotheses. In Study 1, this study collaborated with a professional market research firm and collected responses from Chinese manufacturing firms in a survey. In Study 2, this study designed a scenario-based experiment and collected 239 participants from the Credamo platform.

This study categorized social media–enabled interactions into task-related interactions and tie-related interactions and conducted two studies to reveal that the safeguarding purpose of contract specificity is amplified by tie-related interactions, whereas the coordinating purpose of contract specificity is strengthened by task-related interactions.

This study assumes that firms permit and encourage the use of social media. However, some firms might prohibit the use of social media due to risk issues, or their partners may be prohibited from using social media.

Given that social media–enabled interactions have joint effects with contracts in achieving safeguarding and coordinating purposes, a firm's employees should match their goals with an appropriate type of social media–enabled interactions.

This study enriches the interfirm governance literature by uncovering the roles of these two types of interactions in matching contract specificity to achieve safeguarding and coordinating purposes, which provides actionable insights for managers in governing interfirm relationships.

Drawing on transaction cost economics (TCE) theory and organizational information processing theory (OIPT), this study investigates how the alignments between the characteristics of service (i.e. task complexity and measurement ambiguity) and governance mechanisms (i.e. contract specificity and monitoring) can affect service performance.

The paper uses a rigorously designed survey to collect data from professionals who manage service outsourcing contracts in various industries. The respondent pool consists of randomly selected members of the Institute of Supply Management (ISM). The authors’ research question is analyzed using 261 completed and useable responses. Structural equation modeling is adopted to examine the data and test the proposed hypotheses.

The authors find that both contract specificity and monitoring have a positive impact on supplier performance. Further, for high task complexity services, contract specificity is more effective than monitoring, and for high measurement ambiguity services, the opposite is true. Moreover, the effect of contract specificity is mediated by monitoring.

Service outsourcers should use both contract specificity and monitoring in governing outsourced services and know that the former depends on the latter during execution. Facing resource constraints, they can prioritize crafting detailed contract provisions over implementing monitoring for highly complex services but consider monitoring as the primary governance tool in services whose outcomes are difficult to measure.

This study is the first to couple TCE with OPIT and consider the nature of outsourced services in the choice of governance mechanisms and empirically test the simultaneous effects of contract specificity and monitoring in the context of service outsourcing.

This paper aims to investigate how congruent keywords are used in information security policies (ISPs) to pinpoint and guide clear actionable advice and suggest a metric for measuring the quality of keyword use in ISPs.

A qualitative content analysis of 15 ISPs from public agencies in Sweden was conducted with the aid of Orange Data Mining Software. The authors extracted 890 sentences from these ISPs that included one or more of the analyzed keywords. These sentences were analyzed using the new metric – keyword loss of specificity – to assess to what extent the selected keywords were used for pinpointing and guiding actionable advice. Thus, the authors classified the extracted sentences as either actionable advice or other information, depending on the type of information conveyed.

The results show a significant keyword loss of specificity in relation to pieces of actionable advice in ISPs provided by Swedish public agencies. About two-thirds of the sentences in which the analyzed keywords were used focused on information other than actionable advice. Such dual use of keywords reduces the possibility of pinpointing and communicating clear, actionable advice.

The suggested metric provides a means to assess the quality of how keywords are used in ISPs for different purposes. The results show that more research is needed on how keywords are used in ISPs.

The authors recommended that ISP designers exercise caution when using keywords in ISPs and maintain coherency in their use of keywords. ISP designers can use the suggested metrics to assess the quality of actionable advice in their ISPs.

The keyword loss of specificity metric adds to the few quantitative metrics available to assess ISP quality. To the best of the authors’ knowledge, applying this metric is a first attempt to measure the quality of actionable advice in ISPs.

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.

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.

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.

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.

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.

This study aims to test the effects of forecast specificity on the asymmetric short‐window share market response to management earnings forecasts (MEF).

The paper examines a large sample of hand‐checked Australian data over the period 1994 to 2001. Using an analyst news benchmark, it estimates a series of regressions to investigate whether the short‐term impact from bad news announcements is greater in magnitude than from good news announcements and whether this differs between routine and non‐routine MEFs. Additionally, it examines whether (after controlling for news content of MEF) there is a differential market impact conditional on specificity: minimum versus maximum versus range versus point.

The results indicate that an asymmetric response is evident for the overall sample and a sub‐set of non‐routine forecasts. Contrary to predictions, the results show that forecast specificity, minimum, maximum, range and point MEFs make no additional contribution to the differences in the market reaction to bad or good news.

The study extends the research investigating the short‐run market impact of MEFs. The main element of innovation derives from the interaction between specificity and news content, as well as distinguishing between routine versus non‐routine cases. Notably, it found little support for the view that more specific forecasts elicit greater market responses. What the results do suggest is that managers appear to choose the form of the forecast to suit the news being delivered. In particular, bad news delivered in a minimum forecast seems to be ignored by the market.

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

Interviews with senior managers in large hotels.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

This study was designed to offer empirical evidence about the significant impacts of supplier opportunism and relational stability upon restaurant performance. This study aims to investigate the extent to which competence and goodwill trust interact with contract specificity in mitigating supplier opportunism and improving relational stability.

This study obtained a data set using 324 account executives representing a US restaurant product supplier. These same account executives were also contacted to obtain data from general managers of their largest restaurant accounts. Structural equation modeling was used to assess the hypothesized relationships. Additionally, a two-step hierarchical regression analysis was used to test how contract specificity and trust interact upon supplier opportunism and relational stability.

Results revealed that contract specificity, competence and goodwill trust significantly reduced supplier opportunism and improved relational stability, which positively affected restaurant performance. Additionally, the interaction between contract specificity and goodwill trust significantly reduced the level of supplier opportunism, supporting the complementary role of goodwill trust for contract specificity. When goodwill trust interacted with contract specificity, it was found to significantly improve relational stability.

These results offer empirical evidence pertaining to the significant impacts of supplier opportunism and relational stability upon restaurant performance. Findings can be used to develop effective governance strategies to manage restaurant-supplier transactions.

Although the interaction between contract specificity and trust with respect to decreasing supplier opportunism and promoting relational stability has been a subject of debate in the supply chain management research literature, to date, no relevant research addressing this topic exists within the context of restaurant management. In this study, trust was particularly assessed based upon its two distinct roles (competence and goodwill) involving their interaction with contract specificity upon supplier opportunism and relational stability. The findings regarding those different roles of the two types of trust provide new insights into the existing knowledge about the use of both formal and informal governance specific to the restaurant industry.

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.

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.

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.

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.

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.