Asymmetrical deployment of specific assets and contractual safeguarding in industrial purchasing relationships

The marketing literature based on transaction cost analysis (TCA) has only scantily explored whether the identity of the party (i.e., the buyer or the supplier) that employs specific assets is of importance in instances when alignments of contractual safeguards of specific assets occur in buyer-supplier relationships. Imbalanced deployment of specific assets highlights the problem of asymmetrical dependence in purchasing relationships. This article draws heavily on TCA and related works in marketing in an attempt to analyze and compare interfirm dependence, exposure to opportunism, and formalization of purchase contracting (FORM) across channel dyads where the buyer and the supplier respectively carry out relation-specific investments. In particular, an investigation of 161 industrial purchasing relationships demonstrated that the level of formalized purchase contracting was significantly greater when the supplier unilaterally deployed specific assets in a relationship as opposed to situations where mainly the buyer employed assets at risk. This and other findings clarify the issue of asymmetrical dependence structures in industrial marketing relationships. (C) 2000 Elsevier Science Inc. All rights reserved.