In Specialized Supplier Networks as a Source of Competitive Advantage: Evidence from the Auto Industry, Jeffrey Dyer presents a compelling and interesting case for the interrelation of inter-firm specificity and performance. Specifically, he studies the US and Japanese car industry and attempts to analyze the relationship between car suppliers and auto companies from the above perspective. Dryer is able to take one of the central insights of transaction cost economics and apply it to a reified and appropriate area, generating new and compelling insights. Further, his essay goes beyond merely describing a relationship between asset specificity and performance, it suggests deeper inter-cultural sociological issues regarding trust, in-imitable competitive advantage, and social structures that underlie business relationships.
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Samuel Phineas Upham has a PhD in Applied Economics from the Wharton School (University of Pennsylvania). Samuel is a Term Member of the Council on Foreign Relations. You can visit his personal website at PhineasUpham.com.