Manufacturer–distributor relationships: role of relationship-specific investment and dependence types

Abstract

Purpose This paper aims to investigate the extent to which relation-specific investments undertaken by the distributor favor the presence of various governance structures (formal contract and relational governance). Furthermore, it examines whether dependence moderates the effect of relationship-specific investments on these governance structures. Design/methodology/approach Survey data were gathered from 224 wholesalers from the food and beverage industry. Hypotheses were tested through regression analysis. Findings This study illustrates that property-based relationship-specific investments have a greater positive impact on the use of formal contracts than knowledge-based relationship-specific investments. Furthermore, knowledge-based relationship-specific investments have a greater positive impact on relational governance than property-based relationship-specific investments. The results also suggest that it is necessary to consider the moderating effect of cost-based dependence and benefit-based dependence. Finally, mixed governance structures (e.g. formal contracts combined with relational governance) have a positive impact on satisfaction and intention to maintain and extend the relationship. Practical implications The findings allow manufacturers to concentrate their efforts on mixed governance structures facilitating relationship-specific investments and benefit-based dependence from distributors to develop a competitive advantage. Originality/value Several investigations have obtained a relationship between investments in specific assets, governance structures and performance. Nevertheless, they have not identified different types of investments in specific assets. This study proposes that there are two types of relationship-specific investments: based on property and based on knowledge. Additionally, a two-dimensional model of dependence (cost-based and benefit-based) allows capturing the different theoretical spheres of this concept.

Learn to be good or bad? Revisited observer effects of punishment: curvilinear relationship and network contingencies

“…An observer who is highly dependent on a supplier generally conducts transactions with that supplier repeatedly (Dong et al , 2015), which may establish exchange routines and increase the familiarity between the two parties; for this reason, the supplier is more capable of detecting the observer’s opportunism. In addition, as a dependent observer rarely has alternative suppliers to switch to (Provan, 1993; Vázquez-Casielles et al , 2017; van Riel et al , 2011), the observer may perceive a higher level of cost and threat than do the less dependent distributors, even in light of the same punishment event (Dong et al , 2015; Vázquez-Casielles et al , 2017).…”

The influence of logistics clustering on distribution capabilities: a qualitative study

“…The firm’s learning processes and behaviours in its relationships may shape hard-to-replicate capabilities. Knowledge-based investment in relationships can be produced through informal interactions, social skills and cooperation in the distribution channel (Vázquez-Casielles et al , 2017). Such capabilities have been viewed in logistics and supply chain literature as an indicator of the firm’s performance: “Cumulative learning from experience is a critical mechanism through which firms deepen their existing capabilities” (Pisano, 2017, p. 15).…”

Do control mechanisms always promote collaborative performance: the role of formal institutions and business ties

“…Relationship duration, defined as the age of a buyersupplier relationship, can improve collaborative performance, because long-established ties usually involve better working relationships and improved cooperation, because of reduced conflict and sources of friction (Lee et al, 2015;Wever et al, 2012). The level of supplier-specific investments, defined as highly specialized and persistent investments made by a company for a particular trading partner or trading relationship (Jap and Ganesan, 2000;Vazquez-Casielles et al, 2017), was measured by three items adapted from Sheng et al (2006). In the absence of proper control mechanisms, it is generally assumed that the dedicated investment of one partner increases the likelihood that the other partner will act opportunistically, which can break the buyer-supplier relationship (Sheng et al, 2006).…”