Kang, Min-Ping (Shih Hsin U) Mahoney, Joseph T. (U of Illinois at Urbana-Champaign) Tan, Danchi (National Chengchi U)
Abstract
This paper examines why and under what conditions firms will make unilateral relationship-specific investments to serve their transaction partners. We propose that firms are more likely to make unilateral relationship-specific investments when the investment yields economic spillover values for other transactions with the same exchange partners as well as for third-party transactions. We also model two types of positive inter-project spillover effects that a transaction may generate: knowledge spillovers and reputation spillovers. We find empirical support for our developed theory in the context of Taiwanese suppliers of Original Equipment Manufacturers.
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Publisher Info
Paper provided by University of Illinois at Urbana-Champaign, College of Business in its series Working Papers with number
07-0110.
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