How does supplier's asset specificity affect product development performance? A relational exchange perspective

Purpose – Although previous studies have examined the influence of asset specificity on firm performance, the literature has not focused on the influence of supplier asset specificity on product development, or the transformation that induces this. This study aims to propose a model by using the relational exchange perspective to explain the mechanism in which supplier investment in specific assets on behalf of buyers influences buyer performance in product development. Design/methodology/approach – Empirical data were collected from research and development staff in Taiwanese listed electronic firms and tested using structural equation modeling to verify the fit of the hypothetical model. Findings – The result demonstrates that supplier investment in specific assets for buyers positively impacts buyer's perceived relationship quality, which in turn affects knowledge sharing between buyers and suppliers and buyer product development performance. However, asset specificity does not directly affect knowledge sharing. Originality/value – This study illuminates the contribution of asset specificity to knowledge sharing and product development performance, by clarifying the mediation effects resulting from relationship quality and knowledge sharing.