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

Fingerprint

Suppliers
Specific investments
Spillover
Spillover effects
Knowledge spillovers
Original equipment manufacturers
Economics
Relationship-specific investments

Keywords

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

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

Cite this

Why firms make unilateral investments specific to other firms : The case of OEM suppliers. / Kang, Min Ping; Mahoney, Joseph T; Tan, Danchi.

In: Strategic Management Journal, Vol. 30, No. 2, 01.02.2009, p. 117-135.

Research output: Contribution to journalArticle

@article{194c91df56604b8c8221340299f22ef0,
title = "Why firms make unilateral investments specific to other firms: The case of OEM suppliers",
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.",
keywords = "Knowledge spillover: Reputation spillover, OEM, Unilateral relationship-specific investment",
author = "Kang, {Min Ping} and Mahoney, {Joseph T} and Danchi Tan",
year = "2009",
month = "2",
day = "1",
doi = "10.1002/smj.730",
language = "English (US)",
volume = "30",
pages = "117--135",
journal = "Strategic Management Journal",
issn = "0143-2095",
publisher = "John Wiley and Sons Ltd",
number = "2",

}

TY - JOUR

T1 - Why firms make unilateral investments specific to other firms

T2 - The case of OEM suppliers

AU - Kang, Min Ping

AU - Mahoney, Joseph T

AU - Tan, Danchi

PY - 2009/2/1

Y1 - 2009/2/1

N2 - 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.

AB - 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.

KW - Knowledge spillover: Reputation spillover

KW - OEM

KW - Unilateral relationship-specific investment

UR - http://www.scopus.com/inward/record.url?scp=60349119216&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=60349119216&partnerID=8YFLogxK

U2 - 10.1002/smj.730

DO - 10.1002/smj.730

M3 - Article

AN - SCOPUS:60349119216

VL - 30

SP - 117

EP - 135

JO - Strategic Management Journal

JF - Strategic Management Journal

SN - 0143-2095

IS - 2

ER -