The Impact of Relation-Specific Investments on Channel Performance: Focusing on Mediators

This study investigates the mediating mechanisms through which relation-specific investments (RSIs) can contribute to channel performance in China. We distinguish between property-based RSIs and knowledge-based RSIs and propose that these two types of RSIs rely on different governance mechanisms to impact channel performance. Specifically, although property-based RSIs prompt the drafting and utilization of formal contracts, they promote channel performance through relationship communication. In contrast, knowledge-based RSIs enhance relational trust and relationship communication, which can increase the profitability of the channel relationship. However, both types of RSIs can enhance channel performance directly. Our study shows that relationship communication plays an important role in strengthening the effects of governance mechanisms for both types of RSIs in China. In addition, relational governance mechanisms have greater effects than formal contracts on channel performance. These results enrich our understanding of RSIs in the emerging market.