Abstract: Based on survey data from 158 sample enterprises, the mechanisms and effects of transaction-specific investments made by OEM suppliers on their competence-building efforts via their clients are explored. The main conclusions are as follows. Inter-firm cooperation and clients’ opportunism behavior play full-mediation roles between transaction-specific investments made by OEM suppliers and competence-building efforts made by OEM suppliers via their clients. Furthermore, client’s opportunism behavior imposes a direct restriction on the inter-firm cooperation. Theoretical contributions lie in the fact that the related mechanisms are comprehensively explored and research findings in relation to the local OEM suppliers are enriched.