The impact of vertical coordination on ex post transaction costs in domestic and international buyer-seller relationships

Even though the transaction costs framework has evolved considerably in the past decade, there is still only modest empirical knowledge about the governance performance implications of the theory. This article focuses on the governance performance of vertical coordination in relationships between manufacturing firms. On the basis of transaction cost analysis and related works in international marketing, the authors examine the impact of asset specificity and vertical coordination on ex post transaction costs in domestic and international buyer-seller relationships. In accordance with current literature in international marketing, performance measurement problems are expected to be more evident in international business trade than in domestic business-to-business relationships. The empirical findings show that under conditions with substantial asset specificity, vertical coordination reduces ex post transaction significantly more in international buyer-seller relationships than in domestic channel dyads.