Information asymmetry and inter-firm relationships : are there any linkages?

This study investigates whether factors within transaction cost economics such as information asymmetry influence inter-firm relationships. The research proposes that when factors such as high levels of information sharing is present; firms are more likely to engage in more complex relationships such as collaboration and alliances than more complex and short-term oriented relationships such as arm’s length. This study uses data from the Australian road freight transport industry mail survey and interviews. The preliminary results demonstrate that due to the price driven and commoditised nature of the freight transport industry, transactions costs via strategic information sharing, decrease as relationship becomes complex. This study’s findings demonstrate that in the sample taken from the Australian freight transport industry, information asymmetry is low if more information is shared by the firms who are only in relationships that are at arm’s length. From the managerial perspective, the study provides clear overview and awareness of inter-firm relationships TC elements specific to Australian road freight transport industry and how to further improve the business relationships and minimise the risks and costs and overall improve service delivery, the flow of supply chain, value creation, reduce opportunism, sharing of information and assets in road fright transport industry.