Specific Investments in Marketing Relationships: Expropriation and Bonding Effects

Rokkan, Aksel I.; Heide, J. A. N. B.; Wathne, Kenneth H.

doi:10.1509/jmkr.40.2.210.19223

Cited by 496 publications

(526 citation statements)

References 106 publications

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“…But there is also a Pareto-superior equilibrium where partners in crossfunction alliances will invest more than their counterparts in same-function alliances. Interestingly, Rokkan et al (2003) show that partners in a vulnerable position might develop stronger bonds and demonstrate a greater sense of solidarity. In addition, we show that the collective investment of a cross-function alliance is not affected by the number of partnering firms.…”

Section: Resultsmentioning

confidence: 99%

Cross-Function and Same-Function Alliances: How Does Alliance Structure Affect the Behavior of Partnering Firms?

Amaldoss

Staelin

2010

Management Science

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F irms collaborate to develop and deliver new products. These collaborations vary in terms of the similarity of the competencies that partnering firms bring to the alliance. In same-function alliances, partnering firms have similar competencies, whereas in cross-function alliances, partners have very different competencies. On examining managers' view of these alliances, we find that, on average, same-function alliances are expected to perform better than cross-function alliances, holding fixed the level of inputs. A game-theoretic analysis shows that this apprehension about cross-function alliances is consistent with a Pareto-inferior equilibrium. A Pareto-superior equilibrium, however, suggests that partners in cross-function alliances may invest more in their alliances than those in same-function alliances. It is also often believed that increasing the number of partnering firms is not conducive for collaborative effort. Our analysis shows that this belief is correct for same-function alliances, but not for cross-function alliances. We test these equilibrium predictions in an experiment where we exogenously vary the type of alliance and the number of partnering firms. The experimental results lend support for the Pareto-superior equilibrium. Partners in cross-function alliances invested more than their counterparts in same-function alliances, and this difference in investment levels increased with the number of partnering firms. We extend our model to consider alliances where firms have an opportunity to learn from their partners and later leverage this knowledge outside the scope of their alliance. Though such learning increases the resources committed by alliance partners in the learning phase, it decreases investment in the subsequent competition and also dampens the overall investment across the two stages. In addition, an increase in interalliance competition decreases investments in the focal alliance but increases investment in the competition outside the scope of the alliance.

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Section: Resultsmentioning

confidence: 99%

Cross-Function and Same-Function Alliances: How Does Alliance Structure Affect the Behavior of Partnering Firms?

Amaldoss

Staelin

2010

Management Science

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“…Transaction attributes and control variables: Buyer asset specificity is measured by means of six items previously used by Heide and John (1992), Buvik and John (2000), and Rokkan, Heide, and Wathne (2003). The items assess the extent to which the buyer has made relationship-specific investments.…”

Section: Methodsmentioning

confidence: 99%

“…Although the choice of a single key informant may lead to respondent bias, previous studies measuring both sides of the dyad indicate that buyer and supplier responses demonstrate significant correlation (e.g., Ghosh & John, 2005;Rokkan, Heide, & Wathne, 2003), particularly with respect to structural issues, such as formalization (John & Reve, 1982).…”

Section: Web-appendix C: Additional Detail Concerning Research Designmentioning

confidence: 99%

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Strategic performance effects of misaligned formal contracting: The mediating role of relational contracting

Sande

Haugland

2015

International Journal of Research in Marketing

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Authors are permitted to self-archive the peer-reviewed (but not final) version of a contribution on the contributor's personal website, in the contributor's institutional repository or archive, subject to an embargo period of 24 months for social science and humanities (SSH) journals and 12 months for scientific, technical, and medical (STM) journals following publication of the final contribution. Although all errors remain our own, we gratefully acknowledge Robert Dahlstrom, Matilda Dorotic, Mrinal Ghosh, Auke Hunneman, Silja Korhonen-Sande, Rutger van Oest, Peter C. Verhoef, Kenneth H. Wathne, and participants at the 2010 Johan Arndt Conference, the 2010 ISNIE Conference, and two faculty seminars at the Department of Marketing, BI Norwegian Business School, for their constructive and useful comments on earlier drafts of this paper. This research initially began while the first author was employed at the Department of Ecology and Natural Resource Management at the Norwegian University of Life Sciences. This research would not have been possible without a generous grant from the Forestry Development Fund of Norway. The authors are indebted to the previous editor, Marnik G. Dekimpe, the current editor, Eitan Muller, the area editor, Sandy D. Jap, and two anonymous reviewers. Highlights: Firms experience significant losses due to misaligned formal contracting. Misalignment matters more for end-product enhancements than for cost reductions. Relational contracting mediates the negative performance effects of misaligned formal contracting. ABSTRACTStudies show that failing to align formal contracts with transaction attributes reduces relationship performance. However, few studies consider either how the effects of misalignment differ across outcome types or the mechanisms through which misalignment affects performance. This study examines the effects of misaligned formal contracting on two types of outcomes, i.e., end-product enhancements and cost reductions, and on one mechanism through which misalignment affects performance, i.e., relational contracting.Using survey data from 305 buyer-supplier relationships in the Scandinavian wood industry, the findings suggest that (1) misalignment has a significantly stronger negative effect on endproduct enhancements than on cost reductions, and (2) relational contracts mediate the effect of misaligned formal contracting on performance. Firms in the sample experience significant misalignment-related losses of 10.3% and 5.3% in end-product enhancements and cost reductions, respectively. The findings suggest that misalignment is particularly harmful to performance outcomes that rely on relational contracting, such as end-product enhancements.

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“…In certain partnerships, one or both parties can increase the benefits offered by the partnership by investing specific resources. Specific investments can prevent speculative behaviors [12,20,21]. In the case of the tourist hotel industry, the investment of specific assets related to the transaction between a hotel department director and an outsourcing vendor can aggravate relationship learning because it may be perceived as a method for seeking a greater investment return.…”

Section: Ementioning

confidence: 99%

Using Transaction Cost Theory to Evaluate Outsourcing Decision-making in the Tourist Hotel Industry

Chen¹,

Hsieh²

2013

Proceedings of the 2013 International Academic Workshop on Social Science (IAW-SC-13)

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Abstract-This study with tourist hotels as focus, applied transaction cost theory to establish a pattern of integrated relationship learning and aims to (a) identify the theoretical relationships between relationship learning, relationship trust, and relationship performance, and (b) verify the degree to which the proposed model fits the data using Structural Equation Modeling techniques. Findings indicate that whereas asset specificity, internal complexity, and relationship learning are positively correlated, environment uncertainty and relationship learning are negatively associated. Moreover, asset specificity and relationship trust were positively related, while behavioral uncertainty and relationship trust were negatively associated. A positive effect of relationship learning on relationship performance, and relationship trust on relationship performance and relationship learning was observed. These findings provide decision-makers in the tourist hotel industry with a guide for maintaining effective relationships with outsourcing vendors and facilitate managerial decision-making, thus promoting organizational performance.

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Specific Investments in Marketing Relationships: Expropriation and Bonding Effects

Cited by 496 publications

References 106 publications

Cross-Function and Same-Function Alliances: How Does Alliance Structure Affect the Behavior of Partnering Firms?

Cross-Function and Same-Function Alliances: How Does Alliance Structure Affect the Behavior of Partnering Firms?

Strategic performance effects of misaligned formal contracting: The mediating role of relational contracting

Using Transaction Cost Theory to Evaluate Outsourcing Decision-making in the Tourist Hotel Industry

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