Buyer–Supplier Performance: The Role of Asset Specificity, Reciprocal Investments and Relational Exchange

This paper argues that the extent and balance of transaction specific assets, and the presence of relational norms in a buyer–supplier relationship are important factors affecting partnership performance. Hypotheses were tested using data from 393 manufacturing firms. Results revealed that while specific investments by one participant in the relationship negatively impacted the indicators of performance, offsetting investments by the other party effectively increased performance. Relational‐exchange elements were positively related to performance.