When Do Investments in the Supplier–Buyer Relationship Generate Optimal Profits? From the Relationship Life Cycle Perspective

In order to achieve expected financial performance, buyers and suppliers need to invest in their relationship. Prior research has corroborated the importance of relationship investments in relationship marketing. However, previous studies investigate the impact of relationship investments on financial performance in a static fashion without taking the RLC into consideration. Recent literature suggests that researchers study relationship marketing from a dynamic perspective. To meet the suggestion, the present search attempts to examine how general and specific relationship investments affect supplier’s profits during the RLC and investigate conditions under which the two relationship investments are able to produce optimal profits. After applying conceptual models, the current research reveals an interesting finding that when general and specific relationship investments have equal effects on profits, supplier’s profits will reach two extreme points: minimum and maximum. Based on the practical perspective, this study argues that the maximum point follows the minimum one. The following effort for this research is to find out at which stages of the RLC the minimum and maximum levels occur.