Abstract
Research on repeated ties has concluded almost lopsidedly that repeated exchanges are beneficial. Yet, most empirical evidences backing up this conclusion either do not measure real economic outcomes of repeated exchanges, or have performance data from only one side of the transaction. Our paper develops a synthetic view of the exchange dynamics through which positive or negative effects might take place, and exposes direct evidence of the impact of repeated ties on price, cost, profit and governance structure. We find that product-specific repeated ties — repeated exchange experiences on the type of products that were the same as the current order — promoted production and transaction efficiency as compared to sporadic transactions, but the benefits that relationship accrued were seized completely by the buyer in the form of preferential prices. We also find that across-product repeated ties — repeated exchange experiences on types of products that were different from the current order — elicited negative transfer of production and governance routines that inflated the cost of production and coordination. However, the seller was able to pass on the adjustment cost completely onto the buyer, and opportunistically leveraged the situation and came out with a high premium. Our analysis makes use of an unusually comprehensive record of transactions between a Glasgow shipbuilder and its buyers throughout the years of 1844–1963.