Relationship-Specificity, Bargaining Power Growth, and Firm Performance

Iver Bragelien () and Joost Impink ()
Additional contact information
Joost Impink: Fisher School of Accounting, Warrington College of Business Administration, University of Florida, Postal: University of Florida, Warrington College of Business Administration, Fisher School of Accounting, PO Box 117166, 336 GER, Gainesville, Florida 32611-7166, USA, http://warrington.ufl.edu/contact/profile.asp?WEBID=2576

No 2014/4, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

Abstract: We investigate the relevance of relationship-specificity in explaining firm performance and firm value. First, we use an incomplete contracts model to derive hypotheses on how relationship-specificity interacts with bargaining power and growth. And, second, we test these hypotheses on US data for the period 1998 to 2012. We use contract intensity introduced by Nunn (2007) to measure relationship-specificity at the industry level. Relationship-specific investments are considered to be low when a company’s inputs are sold on an exchange and high otherwise. Using size as a measure for bargaining power, we find support for our hypothesis that the benefits of bargaining power increase with relationship-specificity. We also find that growth has a stronger impact on firm value when relationship-specificity is high, indicating that the continuation value of the relationship matters.

Keywords: Relationship-specificity; firm performance; bargaining power; growth (search for similar items in EconPapers)
JEL-codes: D23 L14 L25 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2014-02-20
New Economics Papers: this item is included in nep-bec, nep-cse and nep-cta
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/11250/194962 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://hdl.handle.net/11250/194962 [302 Found]--> https://www.unit.no/brage-denne-lenken-er-ikke-lenger-gyldig [301 Moved Permanently]--> https://sikt.no/brage-denne-lenken-er-ikke-lenger-gyldig)

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:hhs:nhhfms:2014_004

Access Statistics for this paper

More papers in Discussion Papers from Norwegian School of Economics, Department of Business and Management Science NHH, Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by Stein Fossen ().