Competition, Governance, and Relationship-Specific Investments: Theory and Implications for Strategy

Strategic Management Journal, Forthcoming

Marshall School of Business Working Paper

41 Pages Posted: 12 Oct 2012

See all articles by Nan Jia

Nan Jia

University of Southern California - Marshall School of Business

Date Written: July 17, 2012

Abstract

This paper uses biform games to examine the endogenous decision to invest in relationship-specific assets. It addresses the questions of how competition affects suppliers’ decisions to produce a general-purpose product or a relationship-specific product for a buyer and under what circumstances a governance arrangement designed to share investment costs between the transacting parties increases the investment in relationship-specific assets. We offer a balanced perspective that emphasizes both the superior transaction value of relationship-specific products and their high transaction costs while considering the competition effects generated by alternative investment plans. The model and its extensions generate new insights into investment decisions regarding relationship-specific assets.

Keywords: asset specificity, relationship-specific investment, competition, governance, biform game

Suggested Citation

Jia, Nan, Competition, Governance, and Relationship-Specific Investments: Theory and Implications for Strategy (July 17, 2012). Strategic Management Journal, Forthcoming, Marshall School of Business Working Paper, Available at SSRN: https://ssrn.com/abstract=2160955

Nan Jia (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
263
Abstract Views
1,968
Rank
210,593
PlumX Metrics