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Blay-Armah A and Ross A (2013) The impact of varying asset specificities of subcontractors on relationships development in construction . In: Smith, S D and Ahiaga-Dagbui, D D (Eds.), Proceedings 29th Annual ARCOM Conference, 2-4 September 2013, Reading, UK, Association of Researchers in Construction Management, 533–543.
- Type: Conference Proceedings
- Keywords: asset specificity, main contractor, relationship development, subcontractor
- ISBN/ISSN: 978-0-9552390-7-6
- URL: http://www.arcom.ac.uk/-docs/proceedings/ar2013-0533-0543_Blay-Armah_Ross.pdf
The adoption of more collaborative relationships in the supply network is recommended to provide sustained performance improvement, greater effectiveness and efficiency in operations. Transaction cost economics (TCE), however, argues that competitive advantage results from efficient governance of transactions, which involves tailoring of procurement procedures to transaction characteristics and thus viewing an optimum relationship as a function of asset specificity. Nonetheless, relationships between the main contractors and their subcontractors are complex. This paper explores impact of varying asset specificities of subcontractors on their relationships development. The data is part of an ongoing exploratory study which to date comprises, 7 semi-structured interviews individuals who are involved in the procurement of subcontract packages. The analysis is structured around the key attributes influencing asset specificity of subcontractors. Results suggest that subcontractors can be grouped on the basis of their asset specificity. Low asset specificity is associated with arm’s length relationship, whilst high asset specificity is closely linked to collaborative relationship. The development of bilateral dependency between main contractor and subcontractor starts at tender stage and follows different trajectories, depending on subcontract trade.