Why Firms Make Unilateral Investments Specific to Other Firms: The Case of OEM Suppliers
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.
|Date of creation:||2007|
|Contact details of provider:|| Web page: http://www.business.uiuc.edu/Working_Papers/Main.asp|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kirti Sawhney Celly & Robert E Spekman & John W Kamauff, 1999. "Technological Uncertainty, Buyer Preferences and Supplier Assurances: An Examination of Pacific Rim Purchasing Arrangements," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(2), pages 297-316, June.
- Akbar Zaheer & N. Venkatraman, 1994. "Determinants of Electronic Integration in the Insurance Industry: An Empirical Test," Management Science, INFORMS, vol. 40(5), pages 549-566, May.
- Kyle J. Mayer & Jack A. Nickerson & Hideo Owan, 2004. "Are Supply and Plant Inspections Complements or Substitutes? A Strategic and Operational Assessment of Inspection Practices in Biotechnology," Management Science, INFORMS, vol. 50(8), pages 1064-1081, August.
- Bertrand Quélin & Jérôme Barthélemy, 2006.
"Complexity of Outsourcing Contracts and Ex Post Transaction Costs: An Empirical Investigation,"
- Jérôme Barthélemy & Bertrand V. Quélin, 2006. "Complexity of Outsourcing Contracts and "Ex Post" Transaction Costs: An Empirical Investigation," Journal of Management Studies, Wiley Blackwell, vol. 43(8), pages 1775-1797, December.
- Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-540, September.
- Kentaro Nobeoka & Jeffrey H Dyer & Anoop Madhok, 2002. "The Influence of Customer Scope on Supplier Learning and Performance in the Japanese Automobile Industry," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(4), pages 717-736, December.
- Hoetker, Glenn, 2002. "How Much You Know versus How Well I Know You: Selecting a Supplier for a Technically Innovative Component," Working Papers 02-0106, University of Illinois at Urbana-Champaign, College of Business.
- Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-641, August.
When requesting a correction, please mention this item's handle: RePEc:ecl:illbus:07-0110. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.