The Cross-Level Effects of SCI on the Relationships between TSIs and Firm Performance

Theoretical models and empirical research on the relationships between transaction-specific investments (TSIs) and firm performance have produced inconsistent results. Such results highlight a need for further investigation of long-debated questions concerning how TSIs enhance firm performance. This study presents a “collective switching costs” perspective and proposes a cross-level framework that includes supply-chain integration (SCI) for reexamining the relationships between TSIs and firm performance. A survey of 140 firms drawn from the List of Taiwanese Central Satellite Production Systems shows that TSIs positively affect firm performance. Co-specificity, when aggregated from individual firms’ TSIs within a supply chain, had a positive effect on SCI. SCI positively affected firm performance and had a positive cross-level moderating effect on the TSI-performance relationship.