What does relationship-Specific mean?

What does relationship-Specific mean?

According to the transaction cost theory (Williamson, 1985) relationship-specific investments defined as the degree to which assets are dedicated to a particular relationship create a lock-in situation for the investing party in inter- organizational relationships.

What is specific asset?

Specific assets are assets that have a significantly higher value within a particular transacting. relationship than outside the relationship.

What is meant by specificity in economics?

In economics, asset specificity is the degree to which a thing of value, or even a person of value, can be readily adapted for other purposes. A thing with high specificity is useful only for certain tasks or in certain circumstances.

What does high asset specificity mean?

The degree to which an asset can be used for different purposes. High specificity means that there is little opportunity to use an asset for anything other than its initial intended purpose. Low specificity means that an asset has many possible different uses.

What is a specific investment?

Specific investments, which are tailored to a particular company or value-chain partner, are important components of firms’ marketing strategies. At the same time, extant theory suggests that such investments pose considerable risk, because they put the receiver in a position to opportunistically exploit the investor.

What is hold-up in strategy?

The hold-up problem is a situation where two parties may be able to work most efficiently by cooperating but refrain from doing so because of concerns that they may give the other party increased bargaining power and thus reduce their own profits.

What is site asset specificity?

Site Specificity Site specificity occurs when investments in productive assets are made in close physical proximity to each other. Geographical proximity of assets for different stages of production reduces inventory, transportation, and sometimes processing costs. Consider the production of semifinished steel.

What is dedicated asset specificity?

Human asset specificity, i.e., highly specialized human skills, arising in a learning by doing fashion; and. Dedicated assets, i.e. a discrete investment in a plant that cannot readily be put to work for other purposes.

What is an asset specific investment?

Asset specificity refers to tangible and intangible investments that exchange parties use to build transactional relationships. Once made, asset specificity create substantial switching costs when the transaction relationship fail to develop (Wu, Chen, & Chen, 2015).

What are firm specific assets?

As such, internalization theory primarily focuses on the firm-specific assets (i.e., proprietary assets), such as technological know-how, production and management skills, patents, brands, and goodwill, that are transferable within a firm across borders.

What are not specified investments?

Non-specified Investments are defined as follows: Non-specified investments are any other type of investment (i.e. not defined as Specified above). The identification and rationale supporting the selection of these other investments are set out below.

Is a personal pension a specified investment?

Yes. The specified investment of rights under a personal pension scheme is a security.

What is asset specificity and how is it defined?

From Wikipedia, the free encyclopedia Asset specificity is a term related to the inter-party relationships of a transaction. It is usually defined as the extent to which the investments made to support a particular transaction have a higher value to that transaction than they would have if they were redeployed for any other purpose.

What is the meaning of the word assets?

Definition of asset. 1 assets plural. a : the property of a deceased person subject by law to the payment of his or her debts and legacies. b : the entire property of a person, association, corporation, or estate applicable or subject to the payment of debts. 2 : advantage, resource His wit is his chief asset.

What is an example of a highly specific asset?

Customized computer software is an example of a highly specific asset. Typically, service sector industries have lower asset specificity while the oil and gas industry, the airline industry and the manufacturing sector have the highest asset specificity. Companies may be reluctant to invest in highly specific assets in a poor or uncertain economy.

What is the relationship between net assets and equity?

Net assets are virtually the same as shareholders’ equity–both reflect the difference between what the company owns and what it owes. Typically, the higher a company’s net asset value, the higher the value of the company. Companies with negative net assets (or individuals with negative net worth)…