Impact of Asset Specificity on Inter-firm Transaction Structure: A Case Study

Azarian Reza
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Azarian Reza: Dep. of Sociology, Stockholm University

Journal of Industrial Organization Education, 2012, vol. 6, issue 1, 16

Abstract: This article reports on the results of a case study that examines the characteristics of the transaction between a plastic producer firm and its supplier of steel injection mold in order to explore the possible effects of asset specificity on the firm�s choice of the transaction structure. The main findings indicate that once the dependence of the firm on the supplier and the ensuing vulnerability induced by the high specificity of the inter-firm trade is remedied by trust, the comparative advantages of the existing and well-functioning inter-firm relationship provide a sufficiently strong rationale of preferring it as the most adequate and satisfactory structure for the transaction.

Keywords: bounded rationality; industrial organization; inter-firm relationship; transaction costs; trust; uncertainty; vertical integration (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:jioedu:v:6:y:2012:i:1:p:1-16:n:3

DOI: 10.1515/1935-5041.1038

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