How to protect specific investments from opportunism: A moderated mediation model of customer integration and transformational leadership

Kedi Wang, Baofeng Huo and Min Tian

International Journal of Production Economics, 2021, vol. 232, issue C

Abstract: Manufacturers usually deploy specific investments to their customers in order to foster cooperation between them. However, manufacturers that implement specific investments are likely to incur potential opportunism from their customers. In this way, manufacturers need to protect their specific investments and curb customer's opportunism. Based on transaction cost economics, this study develops a moderated mediation model that includes customer integration, as a mediator between manufacturer's specific investments and customer's opportunism, and transformational leadership, as a moderator on the relationship between the mediator and customer's opportunism. To test the model, we collected data from 206 Chinese manufacturers. The results show first, manufacturer's specific investments have a positive direct effect, but a negative indirect effect through customer integration, on customer's opportunism. Second, transformational leadership strengthens the negative effect of customer integration on customer's opportunism. Third, transformational leadership enhances the negative indirect effect of manufacturer's specific investments on customer's opportunism. This study contributes to governance mechanism literature by employing customer integration as an effective governance mechanism and contributes to leadership literature by building a transformational leadership-governance mechanism link, involving transformational leadership to the area of operations management. Our findings also provide insightful guidelines for manufacturers to protect specific investments, thus solving the conflict in investing for benefits and opportunism.

Keywords: Specific investments; Opportunism; Customer integration; Transformational leadership (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527320302917
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:232:y:2021:i:c:s0925527320302917

DOI: 10.1016/j.ijpe.2020.107938

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().