Inter-organizational Performance in the Automotive Supply Networks: The Role of Environmental Uncertainty, Specific Investments and Formal Contracts

This paper explores the impact of environmental uncertainty, specific investments and formal contracts on the performance of automaker-supplier relationships from two major theoretical perspectives: transaction cost theory (TCT) and resource-based view (RBV). The empirical data were collected from the component suppliers in the Austrian automotive industry. The findings show that, based on TCT, environmental uncertainty and transaction-specific investment negatively and, based on RBV, relationship-specific investments positively influence inter-organizational performance. In addition, formal contract reduces the negative performance effect of transaction-specific investment and environmental uncertainty, and environmental uncertainty increases the positive impact of relationship-specific investments on inter-organizational performance. Overall, we contribute to the inter-organizational performance literature by combining TCT and RBV to explain relationship performance.