Pie-expansion efforts: Collaboration processes in buyer-supplier relationships

The business press has coined the term "pie expansion" to refer to the coll aborative process of creating mutually beneficial strategic outcomes betwee n buyers and suppliers. In this research, the author provides an explanatio n of this process, hypothesizing that such outcomes are achieved through th e use of coordination efforts across organizational boundaries and speciali zed investments, The author investigates the facilitating roles of various environmental, interorganizational, and interpersonal conditions in this pr ocess. The results of a longitudinal survey of more than 220 buyers and sup pliers indicate that the collaboration process is worthwhile, with coordina tion efforts and investments leading to enhanced profit performance and the realization of competitive advantages over time. Environmental dynamism an d demand motivate suppliers to form collaborative exchanges with buyers and facilitate the dyad's willingness to create idiosyncratic investments. Goa l congruence and interpersonal trust facilitate coordination effort, and co mplementary capabilities facilitate both effort and investments.