Asset Specificity Sample Clauses

Asset Specificity. Asset specificity of a transaction refers to the degree to which assets are tailored to a specific transaction. It can be physical or human assets (Xxxxx and Xxxxxxxxx, 2002), refer to the transferability of assets that support a given transaction. An asset is said to be transaction specific if it cannot be redeployed in an alternative use without significant loss in value. It might be physical or human assets. (Xxxxx and Xxxxxxxxx, 2002) Highly asset-specific investments (also called relationship-specific investments) represent costs that have little or no value outside the exchange relationship. These costs are mainly in the form of human specificity (e.g. training of salespeople specifically for a certain partner) or physical specificity (e.g. investment by a supplier in equipment, tools, jigs, and fixtures to cater to idiosyncratic needs of a manufacturer). Investments in information systems that primarily serve the needs of one unique customer and cannot be leveraged across other external parties would also be another form of asset-specific investment. Xxxxxx and Xxxxxxxxxxx (1994) suggest that, using proprietary systems increases business process asset specificity. Inducement of Information Technology into the relationship reconfigures the existing processes and creates procedural specificity (Mukhopadhyay and Xxxxx, 2002), whereby firms develop processes (with or without Information Technology, Just in Time etc.) that are unique to the relationship and which may require learning time if developed with other suppliers.