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JOURNAL OF MARKETING DEVELOPMENT AND COMPETITIVENESS
The Effects of Buyer Specific Investments and Buyer Specific Monitoring Investments on
Hierarchical Governance in Business-to-Business Relationships
Author(s): Arnt Buvik, Otto Andersen
Citation: Arnt Buvik, Otto Andersen, (2011) "The Effects of Buyer Specific Investments and Buyer Specific Monitoring Investments on
Hierarchical Governance in Business-to-Business Relationships" Vol. 5, Iss. 2, pp. 87 - 97
Article Type: Research paper
Publisher: North American Business Press
Abstract:
Based on transaction costs analysis (TCA), this study examines the association between supplier held
specific assets, buyer specific assets, buyer specific monitoring investments and hierarchical governance
in industrial buyer-seller relationships and develops three hypotheses specifying these associations. Data
from a survey of 159 industrial buyer-seller relationships provide support for the hypotheses, and
demonstrates that there is a strong and negative association between buyer specific investments and
hierarchical buyer control, while the effect of buyer specific monitoring investments is positively
associated to hierarchical governance. Finally, in accordance with TCA predictions, the empirical
findings demonstrate that there is a strong and positive association between supplier held specific
investments and buyer control in business-to-business relationships.
