Perspectives on joint competitive advantages in buyer-supplier relationships

A critical outcome of competitive strategy is the attainment of competitive advantages. Recently, there has been a growing recognition that such advan tages may reside in the boundaries of a firm-via its relationships with out side organizations. However, there is little understanding regarding how su ch advantages are created, eroded, and preserved in such relationships. In this paper, I summarize the findings around competitive advantages from thr ee studies, all of which involve longitudinal empirical tests of over 200 i ndustrial buyers and their suppliers in a variety of industries. The collec tive results indicate that specialized investments facilitate the attainmen t of joint competitive advantages and these advantages are positively corre lated with economic outcomes, organizational behavior, and expectations of continuity. Competitive advantages can also be eroded over time for buyers by suspicions of ex post opportunism that arise within the course of the re lationship. However, the detrimental effects of opportunism suspicions for both firms can be mitigated via the strategic use of various governance mod es such as bilateral investments, goal congruence, and interpersonal trust. (C) 2001 Published by Elsevier Science B.V.