The performance effect of inter-firm adaptation in channel relationships: The roles of relationship-specific resources and tailored activities

This study aims to investigate the effects of relationship-specific resources and tailored activities on relationship performance. Based on the Industrial Marketing and Purchasing group's actors-resources-activities (ARA) model, this paper critically reviews the transaction-cost and organization-design literature emphasizing a negative aspect of firms' resources or activities customized to relationship counterparts that cause transaction or coordination difficulties. This paper presents the results of a quantitative study by using survey data collected from 375 business units of Japanese manufacturing firms. The results show resource specificity and activity tailoredness positively influence relationship performance. We investigated the role of vertical integration as a moderator, in order to examine the performance effects more precisely. In contrast to a proposition of the transaction-cost and organization-design literature that low (high) specificity and tailoredness fit a low (high) vertical-integration level, one of the results suggests that even under a low integration level, performance increases as relationship-specific resources increase. We explored another moderator, as per the ARA model's assumption that the nature of complementarity among heterogenic resources and between the resources and activities of different firms will significantly influence relationship performance. We found that the performance effect of wholesalers' activity tailoredness increases as manufacturers' exploitation capacities as a knowledge-based resource increase.