Although transaction cost economics (TCE) continues to be the dominant paradigm for explaining the structure, conduct, and performance of inter-firm relationships (IFR's), one important caveat is that it underemphasizes or even totally ignores performance issues in IFR's.

The basic purpose of this dissertation is to enhance our understanding of performance in IFR's within the broader context of the transaction cost framework. The main contributions of this study are three fold, i.e., (a) to conceptualize performance more broadly by using, applying, and extending the emerging governance value analysis (GVA) framework, (b) to specify structural processes that outline pathways for value creation in IFR's, and (c) to provide empirical tests of relevant hypotheses relating to value creation.

To better understand performance within the TCE framework, I formulate a conceptual model and conduct empirical tests of various hypotheses regarding the antecedents, processes, and consequences of specific investments. Perceptual data were collected from 216 client relationship managers representing marketing research suppliers. All empirical analyses were conducted by using Latent Variable Structural Equations (LVSE) modeling, which is most appropriate for analyzing perceptual data. The empirical results of my analysis strongly support the dual hypothesized effects of specific investments involving expropriation safeguards and value creation.