Value creation in the relationship life cycle: A quasi-longitudinal analysis

Among the growing literature on value creation in collaborative buyer-seller relationships, most researchers examine relationship value at a single point in time. In the present research, we explore whether different stages of the relationship life cycle moderate the relative importance of value-creating dimensions. To shed light on the dynamic nature of value in B2B relationships, we present the results of a survey among purchasing managers using a quasi-longitudinal research design. Our findings confirm the moderating role of the relationship life cycle in value creation. More precisely, our results indicate that a key supplier's potential for value creation in customer's operations increases in relative importance as relationships move through the life cycle. In turn, supplier's capabilities to create superior value at the level of the customer's sourcing process display a decreasing role over the life cycle of a business relationship. No significant link was found in the present study between value creation through a supplier's core offering and different stages of a buyer-seller relationship.     

Commercializing a radical innovation: Probing the way to the market

Needs, market structures, business models, and relationships concerning radical innovations (RIs) are unpredictable and, consequently, firms face critical challenges in commercialization. Therefore, this study examines the commercialization of RIs as a process complicated by divergent challenges. By drawing on the literature on innovation management, RIs, and the commercialization and adoption of innovations, and by analyzing six longitudinal cases, the study generates its contribution: a dynamic process model for the commercialization of RIs. The model captures the iterative and partially unpredictable commercialization process comprising transits back and forth between three main zones: strategic marketing decision making, market creation and preparation, and sales creation and development. Over this probing process, a firm faces major commercialization challenges: 1) choosing a feasible strategy in conditions of uncertainty, 2) understanding the benefits of innovation from the customer's perspective, 3) creating credibility, 4) acquiring support from stakeholders and the ecosystem, 5) overcoming adoption barriers, and 6) creating sales. For managers, the results suggest diligence in the neglected market creation and preparation zone instead of attempting rushed sales creation.     

Toward a guanxi-bases view of structural holes in sales gatekeeping: A qualitative study of sales practices in China

Sales managers often engage relational gatekeepers who connect personally with key managers or decision-makers in the client organization to broker the structural holes (‘absence of direct connections’) in sales relations in closely-knit networked markets. Based on interviews with fourteen local sales managers working for foreign companies and seven local gatekeepers in China, we aim to understand how different types of guanxi (‘particularistic personal ties’) bases and related social ties interact with one another, and together bridge structural holes in the sales management. We develop propositions to capture the essence of approaches, bases, rules, and rewards in sales gatekeeping (which refer to a process that involves the facilitation provided by relational gatekeepers in social and business interactions between a sales manager and a client manager in sales). We further develop a framework for understanding the differences in terms of guanxi bases and gatekeeper ties between homogeneous and heterogeneous structural holes in sales gatekeeping. This new framework has important theoretical and practical implications, as it allows researchers and practitioners to evaluate the guanxi-base characteristics of structural holes in business networking in China, and to determine the appropriate gatekeeper tie for the different purposes of gatekeeping (symbolic vs. reciprocal) in sales management.     

Capturing value creation in business relationships: A customer perspective

Collaborative relationships in business markets are of growing importance to customers and suppliers alike. Customers need to decide whether to invest in a new supplier relationship, to maintain and develop a valued relationship, or to divest from a low-value relationship. Suppliers, in turn, face growing commoditization of products and seek to differentiate themselves through relationships. The measurement of value creation in buyer-seller relationships is still in its infancy, and a sound understanding of how firms create and deliver value in business relationships is needed. Emerging studies investigate relationship value based on dimensions derived from theory and lack a managerial perspective. Therefore, the present research explored relationship value from a grounded theory perspective. In-depth interviews with purchasing managers identified eight value drivers in manufacturer-supplier relationships. Implications for the measurement of the concept are discussed, and directions for further research are suggested.     

A framework of brand value in B2B markets: The contributing role of functional and emotional components

The creation of value is admittedly a critical task for marketers regardless of industry. This paper focuses on a type of value that has traditionally been perceived as irrelevant to industrial markets and argues that brand value facilitates the progression from goods and services value to relationship value. To address the limited amount of research on B2B branding from the suppliers' point of view, we complement insights gained from a literature review with ten exploratory interviews with B2B supplier managers, and develop a framework of brand value applicable to industrial markets. This identifies both the functional (i.e., quality, technology, capacity, infrastructure, after sales service, capabilities, reliability, innovation) and emotional qualities (i.e., risk reduction, reassurance, trust) important for the development of industrial brand equity. Situational (e.g. nature of the purchase) and environmental factors (e.g. the economic situation) affecting suppliers' perceptions of the importance of brand in a B2B context and the role of functional versus emotional brand qualities are discussed. The value of the brand as a driver for the development of business to business relationships is also highlighted. The framework provides a basis for B2B practitioners to build their brands in such a way as to make a functional as well as an emotional connection with buyers that is more likely to lead to a supplier–buyer relationship.     

‘It's almost like taking the sales out of selling’—Towards a conceptualization of value-based selling in business markets

While the creation of superior customer value is regarded as fundamental to a firm's long-term survival and growth, little is known about the effective implementation of a firm's value orientation at sales force level. As the sales force plays a pivotal role in implementing marketing strategies, this study adopts a discovery oriented approach and conceptualizes value-based selling as an effective sales approach in business markets. Based on in-depth interviews with sales managers in a variety of industries, we identify and portray three salient dimensions of value-based selling, namely (1) understanding the customer's business model, (2) crafting the value proposition, and (3) communicating customer value. The selling behavior entails a mutual orientation and focuses on the value-in-use potential of the offering for the customer's business profits. We argue that value-based selling is a unique concept that differs from the established selling approaches and propose a conceptual model linking value-based selling to performance outcomes. To further advance our knowledge about the effective implementation of a firm's value orientation, we identify future research avenues embracing qualitative and quantitative research methodologies.     

Flexibility in marketing & sales interfacing processes

Preliminary insights in the marketing literature indicate that flexibility is important in marketing and sales processes and interaction. However, to date, marketing and sales management literature lacks an understanding of what flexibility in marketing-sales interfaces looks like, its potential organizational consequences, and potential boundary conditions. Using data from interviews with marketing and sales managers, this study explores the nature, outcomes and facilitators of flexibility at the marketing-sales interface. This study conceptualizes marketing-sales interface flexibility (MSIF) as a process of flexible cross-functional resource exchange and finds that MSIF has positive organizational outcomes (both in terms of performance and relationship quality), that MSIF is essential for firms when dealing with exigencies in turbulent environments, and that the utility of MSIF is conditioned by the speed with which MSIF is implemented. The research contribution is twofold. At a theoretical level, the study defines the construct for the first time, revealing MSIF's conceptual composition for examination, and develops theory regarding MSIF's direct relationships with key business outcomes, as well as likely contingencies that shape its importance. At a practical level, the study's framework offers a tool that managers can use to help build organizational success through enhanced flexibility in their marketing-sales interfaces.     

Value creation and firm sales performance: The mediating roles of strategic account management and relationship perception

Research on relationship management has extolled the virtue of sellers creating value for their customers. Indeed, loyal relationships, defined as repeated business exchanges, tend to flourish when firms create and deliver value to their customers. While few argue this premise, questions remain regarding the precise delineation of a firm's value creation competence and the mechanism by which it influences the firm's performance. In the current study, the authors define the value creation competence concept and find empirical evidence for its positive effects on firm sales performance (e.g., new customer leads, close rates, retention, revenue, etc.). Interestingly, the results suggest this effect is mediated by strategic account management and the perception of the relationship held between buyer and seller. Both of these findings have implications in establishing that a firm's value creation competence translates into improved sales performance, mediated by strategic account management and relationship perceptions.     

The emergent role of value representation in managing business relationships

This paper explores value processes, their effects, and their management in business relationships. Over time, scholars progressively moved their interest from the value of the objects exchanged to the value of business relationships. However, how value is related to interactive processes that characterize business relationships still remained unclear. With this scope, the paper brings to the fore recent studies on the role of actors' perceptions of value and the interactive features of the business context. The empirical research involves 77 interviews carried out over two years with actors internal and external to the Mikron Tool's business network, a Swiss leader in manufacturing high-precision tools. The study shows that four key value processes – value creation, value communication, value measurement, and value appropriation – determine specific consequences that must be managed to achieve effective business relationships. Moreover, empirical evidences highlight the relevance of value representation in affecting the four value processes. The study contributes to an improved understanding of value management in interactive and interdependent business contexts. Also, it draws attention to the need for a better integration between the traditional economic view of value and recent insights from the fields of organizational psychology and sociology.     

A value-in-process analysis of relationship interactions in non-equity alliances

In the domain of relationship marketing, there is an increasing need for greater understanding of ‘value’ in the process of social exchange interactions. We present a framework for analysis of value creation through these interactions. Two types of value creating interaction are identified, asset specific investment and technical exchange. Taking a series of 197 project-based, non-equity alliances between architects and building contractors, we examine value creation through these interactions. The findings establish that value in the relationship process is co-created and that this occurs through an iterative investment in specific assets at the operational level throughout the alliance. Additionally, the exchange of technical information at the operational level is found to be a source of value for the relationship and has iterative and co-creational characteristics similar to investment in specific assets. We provide an explanation for the relationship between these interaction types and relational value. We also find that goodwill trust's positive relationship with the asset specific investment interaction type is stronger in low, rather than high, operational compatibility partnerships. The implications for researchers and managers are explored and study limitations acknowledged.     

Managing business and social network relationships in Russia: The role of relational capabilities,institutional support and dysfunctional competition

The current study provides empirical insight into the nature of creating relational rents when managing business relationships in the context of the emerging Russian economy. Addressing both formal and social business network relationships, the study aims to understand the role of a systematic and purposeful approach to building and managing business relationships in order to generate superior relational advantage. The study explores the effects on both subjectively and objectively measured relational rents. Additionally, the role of institutional context in both shaping relationships and obtaining relational rents is considered through the inclusion of dysfunctional competition and institutional support. The results of a survey on a sample of 148 business-to-business firms demonstrate the leading role of the business relationship portfolio in generating relational rents, as well as the supporting role of relational capabilities in building this relationship portfolio. These effects are significantly affected by institutional moderators, demonstrating multidirectional effects on the mechanisms behind building relationships and obtaining the associated relational advantage.     

Value-based sales process adaptation in business relationships

In business relationships, the seller is often expected to adapt to the buyer. The main purpose of this study is to understand how business firms adapt their sales processes to the buyer. The resulting framework, which reveals how different modes of adaptation are contingent upon the type of product being purchased, includes three layers: sales process adaptation, seller–buyer relationship orientation, and the purchasing portfolio. The study is a qualitative one and utilizes a retrospective case study, where the main sources of information are in-depth semi-structured interviews with key informants representing the seller and buyer counterparts in the ICT industry. Our study adds to the understanding of how different modes of adaptation are contingent upon the type of item being sold and purchased. Managerial implications include that to strategically adapt, the seller could focus on the purchasing portfolio. Although previous research has recognized adaptation as a central aspect in relationships, how the sales process could be adapted to the buyer has received little attention. This study focuses on the adaptation of sales to strategically match it to the buyer's situation.     

Value synergy and value asymmetry in relationship marketing programs

Prior research advocates a positive, linear association between relationship investments and relationship performance. Our study challenges this conventional wisdom and advances the extant literature by investigating the potential curvilinear effects of suppliers' different relationship marketing programs (i.e., social, financial, and structural) on dyadic perceptions of relationship value. From an analysis of 113 buyer-supplier dyads, we found that social programs enhance relationship value synergy, but their effect on relationship value asymmetry between suppliers and buyers follows a U-shaped curve. On the other hand, we observe a positive and increasing returns-to-scale effect of financial programs on relationship value synergy and its inverted U-shaped association with supplier's relationship value asymmetry. Interestingly, structural programs increase relationship value synergy and have a stronger effect on increasing relationship value for the supplier than for the buyer. In addition, we find that structural programs are more effective in creating value in long-term relationships than in short-term relationships; therefore, as the relationship with a buying firm ages, managers should consider investing more in structural programs to develop their relationship. However, in long-term relationships, managers should avoid investing too much in financial programs because financial programs are less effective in increasing creation of relationship value as a relationship ages.     

Attitudes and behaviours of key account managers: Are they really any different to senior sales professionals?

This study investigates the range of attitudes and behaviours exhibited by Key Account Managers (KAMs) in their roles as customer relationship managers. Specifically, we test whether KAMs exhibit different behaviours and attitudes towards relationship management compared to other sales professionals based on a range of assumptions currently theorized but untested in the Key Account Management (KAM) literature. Utilizing the existing theoretical models of a KAM role we identify six major areas of relational behaviour assumed in the literature to separate the KAM from the sales professional. Drawing on a cross sectional quantitative study of 10 organizations and 409 key account managers, sales managers, and senior sales executives we explore goal orientation, planning, customer embeddedness, strategic prioritization, adaptability and internal management behaviours of our groups and find that, in certain managerial tasks, KAMs do indeed exhibit many of the different behaviours and attitudes predicted in the literature. However, in many customer-facing, goal orientated and revenue generating activities, contrary to expectations, they display similar attitudes and behaviours to those in senior sales roles. This challenges the way that the KAM role has previously been conceptualized. Our findings raise a potential issue for senior managers, since KAMs' unexpectedly short term orientation may lead to insufficient consideration of the strategic consequences of their decisions for these key customer relationships.     

Evolution of B2B relationship stages in China: A study of confucianism philosophy

This study aims to explore the development of business relationships from an interactional perspective, which challenges the conventional time-based view in Western contexts. Twenty in-depth interviews with Chinese SME managers reveal the uniqueness and importance of the operationalization of Confucian virtues, the guiding principles, and mechanisms for social interactions and trading practice, in developing Chinese business to business (B2B) relationship stages (i.e., discernment, authentication, stabilization, and decoupling). Given the role of Confucian virtues and their dynamics for the development of business relationships, we further argue that the evolution of a relationship depends on the shifts in concerns of transactional and relational governances among business partners. Our propositions advance the literature by showing that distinct constructions of Confucian virtues mark a vantage point for business operators and practitioners in formulating effective B2B relationship strategies in China, and raising future research questions of the impacts from sub-evolutions in Confucian virtues on B2B relationships.     

Effective implementation of relationship orientation in new product launches

The critical role of relationships in business performance is widely recognized in the business marketing literature. However, to date, the prevailing new product launch research has concentrated on firms' general customer and competitor focus on predicting launch performance, and mainly applied a product centered or marketing mix perspective on considering effective strategic and tactical launch activities. Consequently, there is only scant knowledge on the relevance of a relational perspective when launching new products. The study contributes to this gap by examining the impact of firms' relationship orientation on launch performance and the key activities through which it is transformed into performance in the new product launch context. A set of hypotheses is developed and tested with data collected from 109 new product launches in pharmaceutical companies. The results show that sales force management and relationship leveraging mediate relationship orientation's impact on launch performance through complexly intertwined relationships. From a theoretical perspective, this study highlights the role of the relational perspective in new product launch and fosters our understanding on how relationship-focused culture is effectively implemented in practice. From a managerial perspective, the results offer insights on how firms can effectively enhance the successful commercialization of new products through relationship-oriented sales and marketing activities.     

Marketing of competence: Exploring the resource-based content of value-for-customers through a case study analysis

In this article, we propose a competence-based view of value-for-customer in business markets. While literature in both strategy and marketing has provided many insights to understand the competence-based roots of value creation, the interface between the two areas is still largely unexplored. Moreover, while the notions of competence exchange and value creation feature strongly in the relational perspective, they occur only once relationships have been established. This begs the question whether competencies could be developed outside established relationships, and then marketed to guide customers' buying behavior. Basing on three case studies from the yarn manufacturing, IT systems, and automotive components industries, we identify key features of competence-based marketing: the alignment of supplier's competencies with the customer's business processes, the experiential communication of supplier's competencies, and the delivery of competencies to the buyer's business processes. Within the strategies for creating value-for-customers, these findings contribute to the understanding of the use of competencies to induce purchases.     

Interpersonal influence strategies in complex B2B sales and the socio-cognitive construction of relationship value

The investigation of how exactly salespeople create value at the individual level of interaction is still incomplete. While there have been lively debates on value creation and co-creation processes at the organizational level in the business marketing literature, researchers have paid much less attention to the fact that such processes almost always start at the interpersonal level of buyer-seller interactions. Through utilizing a symbolic interactionist perspective and the ethnographic research method of shadowing, the present study moves research insights into value creation in sales forward by depicting the detailed activities and tactics that influence customers’ value perceptions during the sales encounter. We complement the sales influence literature with three additional tactics: disrupt, reassure and dedicate. We also expand the framework of value creation in sales interactions by identifying three value strategies that change, strengthen or expand customer value perceptions through different socio-cognitive mechanisms.     

Structural vs. relational embeddedness: social capital and managerial performance

This paper examines the impact of managers' social capital on managerial performance. Two dimensions of social capital are compared—the structural embeddedness (i.e., configuration) of a manager's network of work relations and the relational embeddedness (i.e., quality) of those relations. Based on a sample of 120 product and sales managers in a Fortune 100 pharmaceutical firm, this paper presents evidence indicating that both elements of social capital influence managerial performance, although in distinct ways: structural embeddedness plays a stronger role in explaining more routine, execution‐oriented tasks (managerial sales performance), whereas relational embeddedness plays a stronger role in explaining new, innovation‐oriented tasks (managerial performance in product and process innovation). This research considers resource exchanges within firms as key to value creating behaviors and contributes a deeper understanding of how social capital influences productive resource exchanges. Copyright © 2005 John Wiley & Sons, Ltd.     

Demand‐side strategy,relational advantage,and partner‐driven corporate scope: The case for client‐led diversification

Research Summary: We advance research on corporate diversification by joining insights from the demand‐side and relational views in strategy to offer a novel theory of client‐led diversification. We propose that client‐led diversification results from a combination of the customer‐driven opportunities emphasized in the demand‐side view and the creation of added value through relational assets that is a central tenet of the relational view. Furthermore, we hypothesize that suppliers’ client‐specific knowledge, clients’ relational commitment to suppliers, and growth opportunities in clients’ markets (relative to the suppliers’ own markets) will magnify the client‐led diversification effect. We test our hypotheses using a longitudinal dataset on patent law firms and their diversification into new domains of patent prosecution work for their corporate clients. Managerial Summary: Explanations of why firms diversify into new lines of business have largely concerned the redeployment of underutilized resources, with little regard to opportunities or influences stemming from firms’ existing customers. In our article, we show how the changing scope of business needs from a knowledge‐based supplier firm's set of existing clients is a central driver of supplier‐firm diversification, and this is especially the case when the level of relational assets shared between a supplier and its clients is higher. In a competitive landscape where suppliers compete intensively for the business of clients, our results show how managers can increase the likelihood of capturing additional business from its existing exchange relationships rather than bearing the risks of seeking new exchange relationships.