Guest editorial

Citation

Vagn Freytag, P. and Ritter, T. (2007), "Guest editorial", Journal of Business & Industrial Marketing, Vol. 22 No. 3. https://doi.org/10.1108/jbim.2007.08022caa.001

Guest editorial

Per Vagn Freytag is Professor in Industrial Marketing, Department of Entrepreneurship and Relationship Management, University of Southern Denmark. Professor Freytag has published articles and books within segmentation, portfolio planning, partnering, sourcing and qualitative research. His PhD was on supplier cooperation at the Copenhagen School of Business. Thomas Ritter is Professor of Business Market Management and Research Director at the Center for Applied Market Science at the Copenhagen Business School. He joined the Copenhagen Business School in January 2001 after holding academic positions in Germany and the UK. His main research interests are in business relationship and inter-firm network management, collaborative value creation and the impact of modern information technology on networking. His work has been widely published in journals including the International Journal of Research in Marketing, Journal of Business Research, Industrial Marketing Management and Journal of Business and Industrial Marketing. Thomas Ritter teaches various courses at bachelor, MSc, MBA and executive level, and consults for firms on business marketing and strategy issues.

Relationship benefits, burdens and conflicts

A typical case

The logistics manager at FICUS, a producer of lamps for offices and homes, was asked about the firm’s best supplier. The manager answered without any doubt that the best supplier was STAMP. STAMP is a large producer of stainless items that are used within many different industries. STAMP followed very standardized and precise rules and always delivered the items agreed upon on time. The logistics manager could not remember a single case where STAMP had failed to live up to its obligations.

At the same time the person responsible for items from suppliers in production was asked about good and bad cases of suppliers who were inventive and cooperative. It turned out that STAMP was mentioned as a supplier who was hard to deal with even when minor changes in the items delivered were discussed.

STAMP was asked about its perception of FICUS as customer. The sales department saw FICUS as a typical example of a smaller manufacturer. Several good ideas for product inventions and a good feeling of what was happening in their market, but too many and too frequent changes in their product program. The manufacturing department knew the items for FICUS but did not have a particular understanding of the needs that FICUS had. The items produced for FICUS “were all right”, but many times the trouble of changing the tools was not worth it.

The story told within FICUS differed a lot depending on who was asked about STAMP and was seen as effective and straight or was seen as stiff and troublesome. Within STAMP the perception of FICUS was more or less the same. FICUS may be worth dealing with but there was a need for greater order volume to make FICUS really interesting as a customer.

But most interesting in the case was that top managers in the two companies had made an agreement saying that the companies saw each other as important and that they would intensify their efforts to improve cooperation. After about two years the top managers of the two companies met again and signed a contract where STAMP was described as a preferred supplier. FICUS’s managers were very interested in getting access to certain technologies and STAMP’s managers saw FICUS carrying out some tests using different technologies in a cost effective manner. At the same time, conflicts at the operational level had been growing for some time.

Theoretical interpretations

This case is not extraordinary – we consider it as a rather normal business-to-business relationship. Over the past decades, many suggestions have been made as to how to analysis business relationships. In relation to this case, one could apply:

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  an analysis of the relationship atmosphere and characteristics of the interacting parties (Håkansson, 1982);

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  an analysis of the stage at which the relationship is (Ford, 1980; Dwyer et al., 1987);

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  an analysis of abilities and uncertainties on both sides (Håkansson et al., 1976);

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  an analysis of the value-creating functions for both FICUS and STAMP (Anderson and Narus, 2004; Walter et al., 2001, Walter et al., 2003);

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  an analysis of the actors, activities and resources involved (Håkansson and Johansson, 1992; Håkansson and Snehota, 1995; Håkansson and Waluszewski, 2002);

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  an analysis of network positions (Johanson and Mattsson, 1992);

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  an analysis of trust, commitment and adaptations in the relationship (Morgan and Hunt, 1994; Brennan and Turnbull 1997; Wilkinson and Young, 1994); and

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  an analysis of their relational orientation and strategic intentions for the relationship (Campbell, 1985; Coviello et al., 2002).

As such, literature about relationships is rich and offers a lot of insight and tools. However, there are still many “white spots” on the relationship map. In this Special Issue we wish to shed some additional light on business relationships.

Contributions in this issue

The first contribution by Cunningham focuses on two topics. First, a fruitful comparison between neurological networks and business networks can be made. This comparison supplements earlier metaphors for relationships as marriages, dancing and mating. Second, the paper also challenges the theoretical development in this field as the notion of writer’s block is introduced. Academic fields need renewal, and it may be fatal to reproduce too much work at the expense of newness. We are glad that Malcolm Cunningham has accepted an invitation to share his views in this issue as he was awarded the “Significant Contribution to Industrial Marketing” award by this journal at the last IMP conference in Copenhagen in 2004.

In relation to the above mentioned benefits, burdens and conflicts in the FICUS case, Cunningham is pointing to the “dream world” of managers, which has lost connection to the operational level. He also highlights the fact that the problems of the STAMP-FICUS relationship cannot be solved from the outside but need to be addressed from inside the relationship (with potential third-party mediation). Also, his analogy leads to an understanding of problems as challenges and new beginnings rather than problems being the beginning of the end of a relationship.

Schurr’s contribution deals with the basic building block of business relationships – the exchange episode. It is actually surprising how little research has been done on episodes in comparison to relationships and networks. However, in order to understand larger structures, we need good models for the building blocks. The paper offers a classification of episodes and a discussion of research methods related to episodes.

Seen from Schurr’s perspective on episodes, the FICUS case holds some interesting observations. On the one hand, STAMP was always performing as expected by living up to its obligations. The logistics manager saw the episodes he focused on as neutral for the relationship, and by keeping this performance level, it would make the relationship go on. On the other hand, for the person responsible for items from suppliers in production at FICUS, the perception of STAMP was quite different. By being reluctant to accept even small changes STAMP was weakening the relationship. At the level of top management in both organizations the situation was quite different again. By signing a new contract with the purpose of closer cooperation, they created an episode that they saw as strengthening the relationship between the two organizations. Schurr offers a classification of episodes that is a helpful analytical tool. He introduces a range of research paradigms and tools that can be used to analyze episodes and to create fruitful explanations. A further research question is how different perceptions of episodes occur. Initially, such differences could be based on different levels of knowledge, different contexts, or different personalities (i.e. the way reality is perceived per se).

Bowery and Easton contribute to our understanding of network effects. They apply the concept of social capital to relationships and triads and thus offer an understanding of the structure and working processes of networks. The mechanisms of net social capital are illustrated by a case study. The case describes a Canadian entrepreneur who is a member of a business constellation. It is concluded that net social capital is a complex concept to work with, where the social capital of a net is more than an aggregation of the social capital of the different sets of dyads that exist within the network. It is argued that the actors-resources-activities model is a helpful setting into which social capital can be readily placed.

The social capital perspective makes us aware of that the drivers of a relationship may not only be business related in a narrow sense. Both in between individuals, groups, and organizations there may be a social component that may explain why a relationship continues, collapses or expands. In the case of FICUS and STAMP it may be of importance that top managers belonged to, for example, the same sports clubs and trade associations.

Holmen, Pedersen and Jansen focus on the dynamic aspects of network initiatives. They look at the characteristics of supply base and supply networks and what the differences and similarities between the two concepts are. Even though the two concepts are closely related they are seldom combined within a single study or article. In their discussion of the literature they notice that the automotive industry especially has been studied and not much weight has been put on how supply networks change over time. They follow a case within the construction industry along three phases and highlight the dynamic nature of relationships and networks. A main conclusion is that there is a need for research that looks more into supply networks initiatives, their possible changing contents over time, the outcomes such initiatives produce over time, and the interplay between these two aspects.

FICUS and STAMP have had a long-lasting relationship. Much of the current status of the relationship can be attributed to the relationship itself. But the relationship between the two companies is also affected by the firms’ general supplier/customer initiatives and by other actors in the network. If the person at FICUS responsible for items starts a benchmarking exercise, they are comparing STAMP with other suppliers. At the same time going into closer cooperation by signing a contract at the top management level can be seen as an expression of new policies and looking forward rather than of acknowledging the current status. Holmen, Pedersen and Jansen are among others pointing at the importance of assessing the outcome of an initiative after a suitable time frame and implementing maintenance processes if necessary.

Freytag and Mikkelsen offer an overview of issues related to sourcing. Their paper summarizes the purchasing literature and indicates areas for further research in order to develop an understanding and managerial tools of the challenges identified. As illustrations of the challenges companies face when sourcing from outside, a number of short cases are introduced. The paper tries to pinpoint the central challenges that companies face when they source from outside and to indicate different aspects and considerations that may help the company to find useful answers to these challenges.

Before signing a contract, FICUS should consider the different challenges. Relying on some historically motivated relationships as the basis for strategic planning may prove dangerous. Instead FICUS (as well as STAMP) should individually clarify the relevance and aims of a given relationship and, based on the initial analysis, discuss together potential matches and mismatches. It may be troublesome to work together on a daily operational basis, as the statements of employees from both organizations indicate. But contracts are signals from top management giving directions for further improvements.

The final paper deals with analyzing relationship governance. Based on the hierarchy-markets-networks discussion, Ritter develops a framework for relationship analysis. He stresses that such analysis should be done involving various people inside the firm (multi-person), looking at both sides of the relationship (dyadic) and continuously over time (dynamic).

The different views about the FICUS-STAMP relationship support the importance of including the viewpoints of various people within one firm. Also, the different views of the two firms indicate a need to analyze the gap between the firms and the implications of these differences. Also, the case indicates the differences between process (as governance) and output (as value creation) that is described towards the end of the paper.

Per Vagn Freytag, Thomas RitterGuest Editors