Vertical coordination can facilitate stronger customer-seller ties but at the same time may increase the risk to the customer's and supplier's specific investments.

Question

Quizplus · Accepted Answer

Vertical coordination such as long-term contracts or vertical integration can lead to better communication, shared knowledge and joint problem solving, which in turn can strengthen the relationship between the customer and supplier. However, it also means that both parties are more interdependent and their investments in the relationship are more specific, which increases the risk of losses if the relationship fails.

Vertical Coordination Can Facilitate Stronger Customer-Seller Ties but at the Same