Can a supplier benefit from investing in transaction-specific investments? A multilevel model of the value co-creation ecosystem perspective

Ming Chang Huang, Min Ping Kang, Jui Kun Chiang

Research output: Contribution to journalArticlepeer-review

Abstract

Purpose: This paper aims to build and empirically test a multilevel framework integrating transaction cost economics and a resource-based view into a value co-creation ecosystem perspective to explain the chain- and firm-level effects of transaction-specific investments (TSIs) on supplier performance. Design/methodology/approach: This paper investigates cross-level network effects using survey data from the List of Taiwanese Central Satellite Production Systems. A total of 34 buyers (hub firms) and 106 suppliers (satellite firms) from 34 supply chains responded to the survey. Findings: Findings confirm that individual firms’ TSIs can foster co-specificity at the supply chain level, thereby improving supply chain integration (SCI). SCI can have a positive cross-level moderating effect on the TSI–performance relationship. Research limitations/implications: These two key concepts, value co-creation and co-specificity, extend the theoretical application of transaction cost theory and the resource-based view to cross-level study by contributing to the research on the TSI–performance relationship. Practical implications: This study’s framework is a counter to the buyer–supplier–supplier relationships in which each actor who may have different goals can create value jointly and share benefits from their TSIs. Social implications: Owing to high co-specificity, being embedded in a well-integrated supply chain can be a threat when the environment is turbulent; for losing strategic flexibility, co-specificity and embeddedness may result in a collective adaptation concern. High degrees of SCI may slow the reaction to environmental turbulence for both buyers and suppliers. Originality/value: Individual firms’ TSIs can foster co-specificity at the supply chain level, subsequently enhancing SCI. An integrated supply chain can be a collective asset that facilitates value co-creation. Individual firms can benefit from the sharing of collective value. SCI can also increase switching costs, thus reducing the likelihood of individual firm engaging in opportunistic behavior and cost safeguarding.

Original languageEnglish
Pages (from-to)773-787
Number of pages15
JournalSupply Chain Management
Volume25
Issue number6
DOIs
Publication statusPublished - 2020 Jun 13

Keywords

  • Co-creation
  • Suppliers
  • Transaction cost theory
  • Value chain

ASJC Scopus subject areas

  • Business, Management and Accounting(all)

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