An investment that is specific to a relationship – an investment in an RSA. Investments that, once made, have a lesser value in alternative uses than the original value intended to support a specific trading relationship. Amount of investment you cannot recover if you don’t end up doing business with that partner.
The relationship-specific investment is supposed to create value within the specific agreement so that it should be targeted to “customize” the service by increasing its individual value for the customer. For instance, Rolls-Royce company executives might decide to invest a significant sum of money in developing a special type of aircraft turbine exclusively for Boeing, which cannot be standardized due to the aircraft model specifications. As a result, the relationship-specific investment creates a high value for Boeing and Rolls-Royce since the turbine is customized specially for their aircraft so that the other aircraft manufacturing companies, such as Airbus, will not benefit from this investment.