Why firms make unilateral investments specific to other firms: The case of OEM suppliers

Min Ping Kang, Joseph T. Mahoney, Danchi Tan

Research output: Contribution to journalArticle

Abstract

This study examines why and under what conditions firms will make unilateral relationship-specific investments to their transaction partners. We propose that firms are more likely to make such investments when the investment yields positive 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.

Original languageEnglish (US)
Pages (from-to)117-135
Number of pages19
JournalStrategic Management Journal
Volume30
Issue number2
DOIs
StatePublished - Feb 1 2009

Keywords

  • Knowledge spillover: Reputation spillover
  • OEM
  • Unilateral relationship-specific investment

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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