Lo, Frias, & Ghosh 2012

Abstract

Question: How the capability-based perspective of the resource-based view of the firm can be integrated with the comparative-governance approach of transaction cost economics to shed light on governance issues in interfirm relationships

Argument:

Transacting parties create value not only through the employment of partner-specific investment and coordination activities 

but also through the employment of heterogeneous, firm-specific resources that each firm brings to the relationship and that, in turn, 

governance structures reflect a discriminating alignment with these two distinct forms of value-creating activities and resources

Context:

Industrial original equipment manufactures employing branded components are agreed upon (more fixed) ex-ante versus negotiated (more flexible) ex-post

Insight

1) The chosen governance form reflects a trade-off between safeguarding and adaptation motives even among parties engaged in cooperative relationships # Trade-off

2) Valuable, firm-specific resources that preexist outside of the exchange relationship are at stake in these cooperative yet contractually incomplete relationships # Resource outside

Trade-off + Resource outside + Resource specific investment and activities -> Governance design

Introduction

* An overview on branded component contracts

- Relational features

- Value creation

* Flexibility in price determination mechanism

- Fixed, predetermined prices

- Price redetermination

- Price renegotiation

* Hypotheses

- Creating value by fostering adaptation

- Claiming value through securing safeguards

* Research context

- In-depth pilot interviews 

- Data collection 

- Measures 

- Measure validity 

* Results 

- Additional investigation

* Discussion