Relationship Governance Dynamics: The Role of Partner Selection Efforts and Mutual Investments

Abstract

To explicate interfirm governance in the context of supplier-reseller relationships, this article reports on a longitudinal study conducted to examine the roles of supplier selection efforts and mutual specific investments, with respect to motivating a supplier to make incremental investments, as well as safeguarding the investments from supplier ex post transaction costs. The authors also examine the joint effects of selection efforts and mutual investments on supplier ex post transaction costs. From a practical standpoint, the findings suggest new guidelines for channel strategy. Theoretically, they provide new insights into relationship dynamics and offer evidence about the effects of a firm's governance choices over time.

Creating a Sustainable Supply Chain Network by Adopting Relationship Management Strategies

“…For example, seller investments and customer investments can play a key role in improving the strength of buyer-seller relationships (Boyle et al 1992) between two firms (Zhang et al 2016). These joint efforts and mutual investments can have considerable impact on ex-post transaction costs (Wathne et al 2018). Zhang, Pawar and Bhardwaj (2017) argue that supplier development program such as collaboration and training can be positively effective in enhancing supply chain sustainability.…”