Development and implementation of customer solutions: A study of process dynamics and market shaping

A broad, dynamic network perspective on solution processes remains scarce. This article presents the process of developing and implementing customer solutions and its effects on the wider business environment by investigating customers and suppliers in the global mining industry (Australia, Chile, and Sweden), analyzing the deployment of a new customer solution, and assessing the changes to the competitive environment and focal firms' relationships with other customers and suppliers. It shows that the forces that drive customer and supplier interests and motivation to co-develop customer solutions may change over time, thus redefining the aim and scope of solutions and creating failure risks. Customers present problems; suppliers respond, on the basis of not only the feasibility of the customer-specific solution but also of their evaluation of future solutions in a broader market; then suppliers aim to standardize successful solutions across markets. Customers want close supplier relationships and unique solutions but also like standardized and repeatable solutions, so they can share development costs with competitors and expose the supplier to competition to avoid lock-in effects. From a network perspective, a novel solution can have a market-shaping effect and evoke reactions from other actors who want to enhance their market position. However, these changes are not necessarily deliberate, and the dynamics that market introductions of solutions trigger may be difficult to predict.     

Migrating from products to solutions: An exploration of system support in the UK defense industry

This article explores the acquisition of business solutions in complex systems environments, through insights drawn from current literature and a study of the UK defense industry. We seek to counter-balance the dominance of literature focusing on the supplier perspective, as well as provide richer distinctions between different kinds of system suppliers involved in providing business solutions. We do this through the detailed examination of customer support offerings and business relationships that exist at the system customer-supplier interface. Our findings provide a map of solutions models that exist in the UK defense context. These include: (1) product system support, (2) life cycle product system support, (3) functional system support, and (4) enterprise system support. Using these models, we highlight the continued relevance of a product orientation and the challenges involved in adopting a true customer orientation when delivering business solutions. System suppliers seeking to reposition from the supply of product system support towards more integrated and customer-oriented forms of support require a significant organizational step change.     

System supplier's customer strategy

The article addresses the management of dynamic customer relationships in large-scale, complex system business. It combines the existing knowledge on system business, high-tech services and buyer-seller relationships with an international multiple case study. As a result, we produce a framework model, which provides the answers to the following critical questions: What are the key activities through which a system supplier provides value for the customer? What are the system supplier's roles for the customer? How does the customer's strategy and capabilities influence the customer's need for the supplier's activities and its evaluation of potential suppliers? And, how does the stage of the supplier-customer relationship and the system's technology cycle influence the customer's perceived need for the supplier's activities? In sum, the framework model provides a major theoretical contribution to more profoundly understand and manage complex system supplier-customer relationships.     

Asymmetric customer–supplier relationship development in Taiwanese electronics firms

The purpose of this paper is to analyse the relationship development stages of asymmetric customer–supplier relationships. The structure of relationships between larger customers and smaller suppliers has been the focus of a number of studies in IMP (Industrial Marketing and Purchasing Group) research. But, there is a paucity of research that examines development stages in relationships where a difference in size between the parties exists. The paper links the characteristics of asymmetric customer–supplier relationships and the relationship development stages through a literature review. The findings from a set of five in-depth case studies of asymmetric customer–supplier relationships in the Taiwanese electronics industry are presented. The case studies involved 50 semi-structured interviews with customer and supplier executives and, in addition, multiple observations of customer–supplier interactions within each case study. Individual and cross-case analysis was conducted to examine the links between the characteristics of asymmetric customer–supplier relationships and relationship development stages. The findings revealed that asymmetric customer–supplier relationships in the Taiwanese electronics industry were very unbalanced and vulnerable in the exploratory stage of development. In the developing stage relationships were more likely to develop if suppliers and customers mirrored each other's behaviour and echoed each other's priorities. In the stable stage suppliers and customers worked on shared and balanced contributions to the relationship. The paper contributes to the understanding of how smaller suppliers and larger customers can identify and develop key sets of relationship characteristics through the exploratory, developing and stable stages of asymmetric relationship development from both customer and supplier perspectives.     

Basking in reflected glory: Using customer reference relationships to build reputation in industrial markets

Corporate reputation is an important intangible asset that enables firms to establish customer relationships. Customer relationships, specifically customer reference relationships, can in turn be utilized to build supplier reputation in industrial markets. The aim of this conceptual article is to analyze the combination of these two concepts. It lays the foundation for further investigations into the effectiveness of reference customer relationships in enhancing supplier reputation. By developing propositions on the determinants impacting effectiveness of reputation transfer between customer and supplier firm, implications for practice and research in business marketing and corporate reputation management are derived.     

“I want you back”: On the strategic roles of boundary spanners in supplier switching-back processes

This paper builds upon literature addressing boundary spanners and switching suppliers in order to explore an under-examined aspect of buyer–supplier relationships: how different individuals at multiple organisational levels affect processes by which firms return, or “switch back”, to former suppliers after breaches in their relationships. Our study followed a qualitative approach by applying an abductive research methodology to make sense of 85 semi-structured interviews with executives involved in the erstwhile buyer–supplier relationships that we investigated. We found that supplier switching-back processes (SSBPs) can be understood as constituted by a set of alignments and misalignments between boundary spanners (i.e. top management, purchasing and sales agents, engineers and technicians) in the organisations involved. Thus, peoples' interactions, or lack thereof, directly affect the possibility for buyers and suppliers to restore their severed relationships. We conclude that boundary spanners pursue seven distinct roles during different periods in SSBPs, roles that relate to three identified functions of boundary spanners in such processes. The paper closes by highlighting what our findings imply for business managers, limitations and some possible directions for future research.     

Knowing me,knowing you: Self- and collective interests in goal development in asymmetric relationships

This paper investigates how self-interests and collective interests in goal development are manifested in the context of asymmetric customer–supplier relationships. Taking an interaction approach (IMP Group, 1982), a conceptual structure highlighting possible patterns of characteristics of the asymmetric customer–supplier relationship and approaches to self- and/or collective interests in goal development has been created.Based on a multiple case study approach, the findings suggest that smaller suppliers who deliberately pursue self-interest in their business activities with larger customers experience better outcomes. Larger customers recognise that the creation of collective business goals enhances the outcome of joint efforts in terms of market impact and profitability. The findings also highlight that trust is perceived as a necessity for the development of collective interests in asymmetric relationships and that the power of the larger customer is not perceived as a constraint. A key conceptual contribution is the identification of two distinct types of asymmetric relationships: ‘product/technology-oriented’ in which self-interest dominates by focusing on one party's resources for developing new products or technology and ‘complementary competencies-oriented’ in which collective interests link the competencies of the larger and smaller party for new joint business ambitions.     

Key issues in global supply base management

Developing effective business relationships with suppliers is hard work, especially when suppliers are located in different parts of the globe. Doing business with a supplier in China entails a very different set of fundamental elements than with one in the United States or Europe. As such, managers cannot rely on information systems to conduct business with global suppliers, but in many cases must travel to the location and visit with the supplier face to face to build an effective business relationship. In this article, 11 key issues that buying organizations should consider in their efforts to manage a global supply base are presented. These issues focus on the need for the “human factor” in establishing positive supplier relationships and the development of a high-performing global supply base.     

Understanding attractiveness in business relationships — A complete literature review

The concept of attraction has received surprisingly little attention within business relationship research. Yet, recently, more and more authors have argued that attraction may contribute to the motivation and willingness of a buyer and supplier to engage in and develop a business relationship. However, the concept of attraction is relatively new and there have been diverse interpretations of it. This literature review collates those interpretations with the aim of enhancing current understanding and creating fundamental knowledge of the current streams of literature on the concept. In examining how the concept has been investigated, the paper aims to establish the direction that the understanding and use of the concept of attractiveness may take in the future in the context of business research. The literature review indicates that attraction has been used in three research areas to explain or resolve a particular construct: 1) attraction in the development of buyer–supplier relationships, 2) customer attractiveness to suppliers, and 3) attractiveness in portfolio and key account management. This literature review contributes to the understanding of how knowledge of the power of attraction could enrich the theory and practice of business relationships.     

The role of supplier relationships in the development of new business ventures

New business ventures have rather limited resources, generally suffer from liabilities of smallness and newness and rely on external business relationships, typically with suppliers, for developing and acquiring necessary resources. Yet, to date, research on how new ventures develop initial relationships with suppliers and how these affect the nascent business has been limited. Taking the business network perspective and relating it to studies of supply chain and supplier involvement in product development, our study contributes to the rather limited body of knowledge on new ventures' supplier relationships. Empirically, we draw on a longitudinal, in-depth single-case study of the first two years of operation of a start-up. Our study shows that the development of the key initial supplier relationships starts from open-ended expectations of mutual future relational benefits and involves a stepwise ‘inter-definition’ of solutions in interaction between the parties. We observe that interdependences arise between the new venture and its key suppliers and these enable but also limit, the development paths of both partners. We argue that the key initial supplier relationships extend a new venture's resource and capability base and are an integral part of a new venture's business model.     

The impact of customer attractiveness and supplier satisfaction on becoming a preferred customer

This paper discusses how a firm can become preferred customer, defined as a particular buying firm to whom the supplier allocates better resources than less preferred buyers. Two concepts play a central role for a firm aiming to become preferred customer: (i) customer attractiveness and (ii) supplier satisfaction. However, the current literature still lacks a clear discussion on the conceptual differences between these constructs and their attributes and is ambiguous with regard to the relationships between the concepts. This study addresses these shortcomings. We examine customer attractiveness and supplier satisfaction as distinct conceptual variables and test how these constructs relate to each other and to preferred customer status. We build upon practitioner input and survey data from 91 suppliers to do so. Our analyses show that the impact of customer attractiveness on preferential resource allocation from suppliers is significantly mediated by supplier satisfaction. These findings expand the current understanding of these concepts. In addition, our findings might help managers better evaluate their relationships with suppliers and align their strategies accordingly to obtain better resources from their suppliers.     

The effect of buyer behaviors on preferred customer status and access to supplier technological innovation: An empirical study of supplier perceptions

Buying firms are increasingly looking to suppliers for technological innovations that enhance the competitive position of their new products. However, extant research provides limited guidance on how buying firms may gain access to suppliers' innovative technologies. To address this gap in the literature, we draw from social exchange theory to posit sequential relationships among buyer behaviors, preferred customer status, and supplier's willingness to share technological innovations. We test our assertions by applying structural equation modeling statistical analyses to survey response data from 233 sales personnel of production good suppliers in the U.S. automotive industry. Whereas our results show that two buyer behaviors – early supplier involvement and relational reliability – positively affect preferred customer status, a third behavior – share of sales – has no effect. In turn, we find that preferred customer status is positively associated with supplier's willingness to share new technology with the buyer. Further, our findings indicate that preferred customer status fully mediates the benefits exchanged within a buyer–supplier relationship. Hence, our study highlights why buyers seeking innovations should take care that their behavior is appropriate for managing suppliers' perceptions. Accordingly, our results provide specific guidance to buyers as to how they may increase their access to suppliers' new technologies.     

Effects of Supplier and Customer Integration on Product Innovation and Performance: Empirical Evidence in Hong Kong Manufacturers

While the beneficial impacts of supplier and customer integration are generally acknowledged, very few empirical research studies have examined how an organization can achieve better product performance through product innovation enhanced by such integration. This paper thus examines the impact of key supplier and customer integration processes (i.e., information sharing and product codevelopment with supplier and customer, respectively) on product innovation as well as their impact on product performance. It contributes to existing literature by asking how such integration activities affect product innovation and performance in both direct and indirect ways. After surveying 251 manufacturers in Hong Kong, this study tested the relationships among information sharing, product codevelopment, product innovativeness, and performance with three control variables (i.e., company size, type of industry, and market certainty). Structural equation modeling with correlation and t‐tests was used to test the hypothesized research model. The findings indicate a direct, positive relationship between supplier and customer integration and product performance. In particular, this study verifies that sharing information with suppliers and product codevelopment with customers directly improves product performance. In addition, this study empirically examines the indirect effects of supplier and customer integration processes on product performance, mediated by innovation. This has seldom been attempted in previous research. The empirical findings show that product codevelopment with suppliers improves performance, mediated by innovation. However, the sampled firms cannot improve their product innovation by sharing information with their current customers and suppliers as well as codeveloping new products with the customers. If the adoption of supplier and customer integration is not cost free, the findings of this study may suggest firms work on particular supplier and customer integration processes (i.e., product codevelopment with suppliers) to improve their product innovation. The study also suggests that companies codevelop new products only with new customers and lead users instead of current ones for product innovation. For managers, this study has demonstrated that both information sharing and product codevelopment affect performance directly and indirectly. Managers should put more emphasis on these key processes, especially when linked with product innovation. Managers should consider involving their suppliers and customers in the early stages of design. Information sharing with suppliers is also important in product development. As suggested by this study, extensive effort on supplier and customer integration should be made to directly augment current product performance and product innovation at the same time.     

Customer attractiveness,supplier satisfaction and preferred customer status: Introduction,definitions and an overarching framework

Industrial markets are frequently characterized by an oligopolistic market structure. As a result, suppliers may become highly selective with respect to decisions that involve collaborating with certain customers. Buying firms must therefore be more attractive than their rivals to obtain opportunities to collaborate with these selective suppliers. This apparently counterintuitive inversion of the classical marketing approach (that is, relationships that involve buyers competing for suppliers rather than the other way round) constitutes the foundation of the special issue that is introduced in this paper. In this paper, we present key terms and propose a model of preferred customership that uses a social exchange perspective to link customer attractiveness, supplier satisfaction and preferred customer status. The papers that contribute to this special issue are introduced within the context of this framework. Finally, this paper concludes with suggestions for future research directions.     

Supplier traits for better customer firm innovation performance

Previous research on embedded ties with suppliers in an innovation context has ignored the need for customer firms to assess and select suppliers on the basis of market orientation strategies and relationship marketing attributes. To address this void, this study investigates the effects of suppliers' downstream customer orientation and supplier-customer homophily (i.e., similarity of the supplier and the customer) on the customers' innovation performance. Data pertaining to new product development projects with contributions from supplier firms was collected on both sides of the supplier-customer dyad. The analysis shows that downstream customer orientation and supplier-customer homophily have a significant impact on the customer firms' new product efficiency (i.e., project cost and project speed) and new product effectiveness (i.e., innovativeness), which in turn positively influence new product performance in terms of profitability, market share, and growth.     

Channel relationship and business uncertainty: Evidence from the Hong Kong market

This study examines the dynamics of channel relationships between an end user and multiple suppliers in Hong Kong, a major international logistics hub in Asia. Drawing on the literature on channel relationships, we examine the links between different channel relationship variables and the contingent effect of business uncertainty on the links between these variables and supplier commitment. The results of the study indicate that expected relationship continuity mediates the effects of trust and relationship quality on commitment. Furthermore, the positive effect of trust on commitment is found to be stronger when business uncertainty is high than when business uncertainty is low. As supply chain management is becoming essential for firms to succeed in today's business, industrial marketing managers need to be aware of the dynamics in channel relationships and to better manage their supply chains. The implications of our findings for research and for the practice of channel relationship management are provided.     

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.     

The effects of customer and supplier involvement on competitive advantage: An empirical study in China

The focus of this paper is on the effects of customer and supplier involvement on competitive advantage in the firm. Using the resource-based view and knowledge-based view of the firm, hypotheses are developed concerning customer involvement, supplier involvement, and competitive advantage. Hierarchical multiple regressions are employed to test the hypothesized relationships. The data used was collected from 139 Chinese manufacturing firms across different industries. Each variable except control variables in the model is measured by a number of scale items. Both reliability and validity (content validity, convergent validity, and discriminate validity) are demonstrated. The results of the regression analysis show that (1) customer involvement has positive impact on product quality, delivery reliability, process flexibility, and customer service; and (2) supplier involvement leads to decreased cost. These findings are interpreted in the context of Chinese manufacturing setting and enhance the understanding of the roles of customer and supplier involvement in China's business environment.     

More is not always better: The impact of relationship functions on customer-perceived relationship value

Customer–supplier relationships have been promoted as a source of value for customers and as a way for suppliers to differentiate. Customer-perceived relationship value (i.e., a customer's overall assessment of the benefits and sacrifices of a given relationship with a supplier) is driven by relationship functions (i.e., the co\ntributions a supplier makes to a customer's value-creation processes). Earlier research categorizes relationship functions into two groups: direct, operation-related functions and indirect, change-related functions. This research finds that indirect functions have less impact than direct functions. Given the widely discussed advantages of supplier involvement in customer innovation, and the importance of information, access to market actors and motivation, this study analyzes why change-related functions have less of an impact than operation-related functions. The empirical results reveal that change-related relationship functions have a non-linear, inverted u-shaped impact on relationship value, and that the degree of customer innovativeness moderates this impact. Thus, while an analysis of all relationship functions is necessary, suppliers wishing to optimize business relationships should pay particular attention to customer innovativeness. The non-linear impact of change-related relationship functions gives rise to several interesting avenues for further research.     

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.