Journal Article

The impact of trust and commitment on value creation in asymmetric buyer–seller relationships: the mediation effect of specific asset investments

Chen, Kuan-Yang, Wu, Lei-Yu, Chen, Po-Yuan

2017

Overview

Purpose Previous studies have argued that trust and commitment can create value in cooperative relationships. However, this study observed that, in practice, trust and commitment alone may not ensure value creation in asymmetric relationships. Accordingly, this study aims to investigate the mediating role of specific assets in the effects of trust and commitment on value creation in asymmetric buyer–seller relationships. Design/methodology/approach Contract manufacturers (CMs) in Asia were sampled to validate the argument proposed by this study. Most Taiwanese CMs are partnered with international brands (original equipment manufacturers [OEMs]) that have stronger bargaining power. This cooperative relationship is characteristically asymmetric. A questionnaire method was applied, and structural equation modeling was performed to verify the proposed hypotheses. Findings Specific asset investment (SAI) was a crucial mediator that explained the effects of trust and commitment on the relationship value of an asymmetric cooperative relationship. Past studies have claimed that power asymmetry results in an unequal distribution of benefits. Nevertheless, regarding the relationship between CMs and OEMs, the study revealed that relationship value could still be increased once the congruent goals have been achieved by both parties. This finding contradicts past theoretical predictions. Practical implications Characteristically asymmetric CMs–OEMs (seller–buyer) relationships cannot be maintained merely through trust and commitment, particularly in the context of power and resource imbalances in which the stronger party often possesses a wider selection of prospective partners. The results of this study suggested that the CM should unilaterally invest in specific assets conducive to a cooperative relationship as an expression of faith in the relationship with the stronger firm, thereby creating opportunities for value cocreation. Originality/value The analysis of the relevance of relationship quality in the context of asymmetric cooperative relationships confirmed the mediating influences of SAI on ensuring value creation and the maintenance of the relationships. Relationship value could still be created despite the highly asymmetry power relationship. The CMs’ SAI is the key mechanism for this achievement.

• Publisher: Emerald Publishing Limited,Emerald Group Publishing Limited
• Subject: Competition / Competitive advantage / Cooperation / Costs / Economic models / Efficiency / Hypotheses / Information sharing / Manufacturers / Market positioning / OEM / Product development / Quality / Studies / Suppliers / Value creation