Do specific investment and qualification of capability foster or impede firm performance: the moderating role of shared values
Authors: Wang Yufan , Song Michael , Zhang Haili , Sib Sansan Monest 
Published: July 2023

Purpose

Firms aiming to enhance firm performance require specific investment and qualification of capability. However, the relationship between these factors and firm performance is influenced by boundary conditions. This study focuses on the role of shared values as a governance mechanism in moderating the relationship between specific investment, qualification of capability, and firm performance.

Design/methodology/approach

Drawing on transaction cost analysis, the authors develop a theoretical model to explore how shared values moderate the relationship between specific investment, qualification of capability, and firm performance. The authors collected data from 156 firms in Cote d’Ivoire, resulting in a sample of 216 observations. The authors employed hierarchical regression analysis and the “pick-a-point approach” to examine how specific investment and qualification of capability impact firm performance at different levels of shared values.

Findings

The results indicate that specific investment and qualification of capability have a partially positive impact on firm performance. Interestingly, shared values are an important moderating variable, acting as a boundary condition that affects the relationship between specific investment, qualification of capability, and firm performance. Specifically, specific investment leads to excellent firm performance only when shared values are not sufficiently high, whereas qualification of capability leads to superior firm performance only when shared values are sufficiently high.

Research limitations/implications

This study has three research implications. First, this study enriches TCA literature by identifying shared values as a boundary condition and examining the moderating role of shared values. Second, the study findings discover new insights into how specific investment and qualification of capability enhance or inhabit organizational performance at different levels of shared values. Third, this study extends the existing research and reveals the specific conditions for positive or negative relationships between specific investment and organizational performance and qualification of capability and organizational performance.

Practical implications

First, compared to specific investment, qualification of capability has greater effect on organizational performance. Second, when considering whether to increase specific investment or/and improve qualification of capability, executives are encouraged to first evaluate their firm's level of shared values and then make appropriate strategic decision accordingly. Third, six tactics are recommended for enhancing shared values.

Originality/value

This study enriches the literature on transaction cost analysis and contributes to understanding the moderating role of shared values. The findings shed light on the specific investment, qualification of capability, and firm performance relationships. Additionally, this research highlights the importance of considering shared values as a boundary condition in examining these relationships.