Specific investments, which are tailored to a particular company or value-chain partner, are important components of firms' marketing strategies. At the same time, extant theory suggests that such investments pose considerable risk, because they put the receiver in a position to opportunistically exploit the investor. In this article, the authors examine this "expropriation" scenario but also consider whether specific investments, because of their specialized nature, may actually "bond" the receiver and reduce opportunism under certain conditions. These conditions involve a focal relationship's time horizon (i.e., its extendedness) and particular norms. The key theoretical argument is that the effect of specific investments on opportunism will shift in a nonmonotonic fashion over the range of these relationship conditions. The authors test their research hypotheses empirically through parallel analyses on each side of 198 matched buyer-supplier dyads. The empirical tests provide general support for the predictions but also reveal differences between buyers and suppliers regarding the focal effects. The authors discuss the implications of the findings for marketing theory and practice.

This article examines the effects of monitoring on interfirm relationships. Whereas some research suggests that monitoring can serve as a control mechanism that reduces exchange partner opportunism, there is also evidence showing that monitoring can actually promote such behavior. The authors propose that the actual effect of monitoring depends on (1) the form of monitoring used (output versus behavior) and (2) the context in which monitoring takes place. With regard to the form of monitoring, the results from a longitudinal field study of buyer–supplier relationships show that output monitoring decreases partner opportunism, as transaction cost and agency theory predict, whereas behavior monitoring, which is a more obtrusive form of control, increases partner opportunism. With regard to the context, the authors find that informal relationship elements in the form of microlevel social contracts serve as buffers that both enhance the effects of output monitoring and permit behavior monitoring to suppress opportunism in the first place.

Argues that relational exchange is dependent upon both effectiveness and power considerations. The primary objective is to study the effect of power and effectiveness on the relational exchange process between voluntary retail chains and their vendors. In particular, proposes that relational exchange between the chain and the vendor is dependent on (1) the chain’s ability to obtain necessary coordination and limiting free‐riding within the chain system, as well as (2) creating a symmetrical dependence structure that fosters trust and long‐term commitment. The first issue is related to effectiveness, while the second issue concerns aspects of power. The hypotheses were tested on a sample of relations between voluntary retail chains and their suppliers in Norway. Results suggest that free‐riding within the chain, number of chain members and asymmetry of market position are negatively related to relational exchange.

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