Linking key account management practices to performance outcomes

Many suppliers practice relational strategies that aim to achieve competitive advantage through a collaborative business relationship with their customers. Key account management (KAM) is one such relational strategy that suppliers rely upon to manage their relationships with strategically important customers. Yet suppliers still struggle to put such programs into practice effectively, most likely because academic investigation has yet to report on what actions explain the performance of KAM initiatives. Aiming to fill this gap, we first identify a set of key KAM practices at the strategic, organizational, tactical and control levels of management. Next, we examine how these practices explain the performance of KAM through the mediating effect of the supplier's relational capabilities and the relational outputs that such capabilities produce. The results provide support for most of the hypothesized relationships, showing that the identified practices positively affect performance and dyadic outcomes through the mediation coming from the variables examined. From a theoretical perspective, the study adds to our understanding of the factors underlying effective KAM practices. From a managerial perspective, the results provide insights into how suppliers can achieve KAM effectiveness through relationship-oriented activities, skills and outcomes.     

Drivers and outcomes of relationship quality with professional service firms: An SME owner-manager perspective

Strong relationships are important, particularly for business partners dealing with business-to-business (B2B) professional service providers, as the quality of the relationship can serve as a proxy for evaluating the service delivery. Grounded in the RM paradigm, this study focused on this unique inter-firm business exchange between professional service firms (PSFs) and small and medium-sized enterprises (SMEs) in order to investigate the drivers and outcomes of relationship quality (RQ). Specifically, we utilized a mixed-methods approach to understand (i) the key dimensions of RQ and its drivers, (ii) the mechanism through which RQ affects relational outcomes (i.e. loyalty and willingness-to-pay premium price), and (iii) the moderating role of relationship duration and perceived risk among these relationships in a B2B professional service context. The results from a survey of 324 SME CEOs and/or owner-managers confirmed the importance of relationship value in mediating the effects of RQ and its outcomes, particularly in long-term relationships and under high-risk situations. The authors discuss the implications of the findings for theory and practice in the PSF context, and acknowledge the research limitations.     

Conceptualization and measurement of relationship quality: Linking relationship quality to actual sales and recommendation intention

Following over a decade of relationship marketing, this paper re-visits the notion of relationship quality to determine relational drivers of account profitability. Customer executives from multiple industries are interviewed to identify critical success factors in buyer-seller relationships. Based on their responses, a “back-to-the-basics,” grass roots approach to the measurement of relationship quality is offered. To further demonstrate its value for marketing practice, this measure of relationship quality is administered to a nationwide sample of key customer decision-makers to determine its link to profitable outcomes. The results support this measure as a driver of actual sales and recommendation intention.     

The process of evaluating business to business relationships facing dissolution: An SME owner manager perspective

Focusing on the Small and Medium sized Enterprise (SME) sector, this paper presents the owner manager (OM) process of evaluating business to business (B2B) relationships facing dissolution. Although research has brought new insights to the dissolution of relationships, few researchers have empirically examined how B2B relationships facing dissolution could be evaluated with a view to changing the negative state of the relationship into a positive one. Using SME OM experiences of evaluating relationships facing dissolution, the purpose of this paper is to extend dissolution research through the use of the critical incident technique to explore and interpret the OM evaluation process. The findings extracted from fifty-one critical incidents recounted by twenty-five OMs suggest that the OMs evaluation of B2B relationships facing dissolution is a dynamic process where OMs evaluate both past interactions and anticipated future interactions in the context of the state of the relationship before the critical incident occurs. These evaluations concentrate on relationship closeness, current and future relationship rewards and costs and relationship performance. During the process of evaluation OMs consider the relative state of the relationship: close relationships are those where mutual cooperation at interpersonal and B2B levels' is nurtured whereas arms-length relationships are those where satisfaction, trust and commitment is low. Depending on these different relationship states, the evaluation produces different outcomes regarding the OM's evaluation of past interactions and on the future of the relationship. If the outcome is that future interactions are expected to result in a positive net value to the SME OM, the relationship continues. In contrast where the evaluation outcome is a negative net value, the dissolution of the relationships proceeds now or in the future. The key contribution of this paper is that this is the first documented exploration and interpretation of the OM evaluation process when facing the dissolution of a B2B relationship.     

Risk management system in business relationships—Polish case studies

The article discusses the problem of risk management in business relationships. The authors' research (including a case study analysis of 5 different relations) enabled them to identify and characterize the risk management systems based on a combination of formal control and relational mechanisms. In the authors' research it has been assumed that relational risk has a negative influence on the cooperation results and therefore it should be a subject of management. The main objective is not to avoid taking risk in relationships, but to reduce it to the minimum possible level. Companies' cooperation, including partnerships with different entities and participation in business networks, is an immanent characteristic of contemporary business. Therefore managers should look for the most efficient methods of dealing with additional relational risk and opportunistic behavior of potential partners.In the paper the case study analysis of five relationships of companies operating on Polish market was presented. The main objective was to demonstrate the relation between the level of trust and the intensity of formal control (including contract and formal monitoring). The range of social control applied in analyzed relationships was also an important issue of consideration.The research presented in the paper indicated that companies located in Poland in order to reduce relational risk aimed at diversification of its partners or full integration. Managers often underlined their fear of being dependent on one particular partner. This phenomenon could comprehensively decrease the advantages of intensive and deepened inter-organizational cooperation in Poland. Furthermore, the research demonstrated the decisive role of relational mechanisms and limited significance of contract in business relationship risk management. However, relatively higher importance of contract was observed in unbalanced relations between partners representing diverse bargaining power. A positive relationship between application of relational tools and cooperation results was identified as well.The aim of the paper is to demonstrate the nature of the relationship risk management system and the role of particular mechanisms that enable to reduce risk and its negative influence on cooperation results.     

Drivers of supplier-customer relationship profitability in China: Assessing International Joint Ventures versus State Owned Enterprises

Business relationship performance depends on the context(s) in which the relationship is being conducted, including the cultural context and the nature of the organizations participating in them. Here, we examine the drivers of performance in Chinese supplier-customer relationships for two types of Chinese suppliers - International Joint Ventures (IJVs) and State Owned Enterprises (SOEs). The results indicate there are marked differences in the links between relationship drivers and perceived relationship profitability for these different types of suppliers. The profitability of SOEs' customer relations is associated with ongoing personal and hierarchical linkages, whereas for IJVs, it is associated with interactive product adaptation and production planning. Drivers with significant associations for both types of suppliers include relational quality and financial exchange factors. This research has implications for the ongoing management of international supplier-customer relationships, Chinese government policy with regard to SOEs as well as the inclusion of organization types as a consideration for business marketing relationship and value creation theory.     

Customer business development: identifying and responding to buyer-implied information preferences

Customer business development (CBD) transforms the selling function from ‘pushing products’ towards creating value by developing the business customer's business. For key accounts, CBD salespeople align their customer relationship management tasks of planning, selling, and implementing solutions to best integrate customer needs with the seller's strategic account management goals. A vital process mechanism involves the salesperson's observations of their business buyer's tendencies to favor solutions steeped in information characterized here as either market-centered or cost-centered. Findings show that CBD salespeople use signals from buyer commitments to identify and adapt selling behaviors (relationship-forging tasks) to achieve relational and financial objectives. To align with market-centered preferences, CBD salespeople share information about the buyer's market and propose plans for market development. In contrast, to align with cost-centered preferences, CBD salespeople focus on coordinating interfirm activities. While cost-centered adaptations yield expected positive financial returns, interestingly, market-centered adaptations negatively impact on the seller's financial returns.     

Investigating guanxi dimensions and relationship outcomes: Insights from Sino-Anglo business relationships

This study aims to develop and test a concept for improving Anglo-Chinese business relationships. By piecing together and incorporating both Chinese and western relationship constructs into a cohesive framework and testing this on a sample of Taiwanese importers, the study conceptually and empirically advances our understanding of the discipline further. Specifically, three facets of guanxi, namely ganqing (an affective element), renqing (reciprocation and favor), and xinren (personal trust) are conceptualized to determine cooperation and coordination, which in turn lead to improved performance. Based on a sample of 208 buyers (surveying perceptions of their relationships with Anglo suppliers), we provide empirical support for our concept and reveal that ganqing, renqing and xinren are crucial for fostering the development of such Sino-Anglo relationships. By providing an international flavor in terms of the constructs outlined and the importer-exporter context, the study provides fresh insights to help broaden our horizon further and understand more about relationships in an international context. Several implications are extracted from the study which a) western marketers importantly need to practice as they grapple to enter Chinese markets and nurture business relations, b) Chinese buyers can consider when managing their supplier portfolios and c) academics can use to help measure important relational constructs and undertaking research in a Chinese context.     

Importer and exporter capabilities,governance mechanisms,and environmental factors determining customer-perceived relationship value

Although value creation is the overarching goal of interfirm exchange relationships, there is little research on relationship value in business markets in general and in global business markets in particular. The current research draws on the theoretical perspectives of dynamic capabilities, relational contracting, industry structure view, and Uppsala model of internationalization and synthesizes their insights to develop a model of customer-perceived relationship value in importer-exporter relationships. A mail survey was used to collect data from 211 import distributors of industrial products. The study results indicate that exporter core offering and customer responsiveness capabilities, importer market-sensing and customer relationship management capabilities, relational governance, psychic distance, and environmental munificence are important determinants of relationship value, while contractual governance has no detectable effect. Theoretical and managerial implications of the findings are discussed and future research directions are presented.     

Strategic decision making in business relationships: A dyadic agent-based simulation approach

This study employs agent-based simulation to model strategic decision making in business relationships, examining the influence of two important strategy drivers in business relationships (performance and power) on relationship success (relationship survival and performance). The study offers insights into the complex and evolutionary interaction and feedback effects between networking strategy choice, relationship performance and power. Findings show that although certain strategies may be desirable for firms to manage their business relationships, they are not necessarily as successful in all situations. Results indicate that a trade-off exists between relationship context and performance which needs to be considered in strategic networking decisions. Further, the study shows that too many strategy changes cause relationships to become unstable and thus negatively affect performance. The authors refer to this phenomenon as strategy volatility — the rate at which actors change their networking strategies within relationships. This phenomenon arises when too many variables influence firms' decision making and thus cause firms to frequently change their strategy. Although strategy volatility has a relationship safeguarding effect in the short term, this effect diminishes over time.     

Relational key account management: Building key account management effectiveness through structural reformations and relationship management skills

Literature has widely recognised the importance of key account management (KAM) in building long-term customer relationships. Although KAM grounds significantly on the relationship marketing theory, most empirical studies focus on the financial impact a KAM programme can produce. Hence, only normative work can advise practitioners on the implications from adopting a relational approach in managing their business with customers who can help the supplier realise a broader set of strategic objectives. Drawing from 304 cases of different suppliers, this article seeks to start filling this gap in the literature and offer empirical evidence regarding the structural and relational implications from a KAM programme. In summary, the findings suggest that adopting a relational perspective through the development of key account management orientation (KAMO) will result in certain, necessary, structural reformation while allowing for specific relational skills to develop. Consequently, supplier's performance also improves. Moreover, this chain of effects remains strong independently of resources available to the supplier, suggesting that KAM can be a significant basis for developing a competitive advantage irrespectively of the supplier's size.     

The impact of coercive and non-coercive forms of influence on trust, commitment, and compliance in supply chains

A major premise in managing channel relationships is encouraging cooperation to achieve the aims of the relational partners. This often requires a balancing act between utilization of influence across the supply chain to motivate decisions, while employing tactics that do not damage the future of the relationship. This paper builds and tests a model of how influence strategies affect relational elements, specifically trust and commitment, which both promote strong inter-firm relationships and act as mediators of joint action, specifically cooperation and compliance across channel partners. Results suggest that coercive strategies are counterproductive in encouraging cooperation and compliance either directly or through relational intermediaries, while non-coercive influence produces positive outcomes and effects on intermediaries. Low levels of coercive influence do appear to generate positive outcomes. Managerial implications and future research based on these results conclude the paper.     

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.     

Transforming provider-customer relationships in digital servitization: A relational view on digitalization

Digitalization is viewed as a source of future competitiveness due to its potential for unlocking new value-creation and revenue-generation opportunities. To profit from digitalization, providers and customers tend to move away from transactional product-centric model to relational service-oriented engagement. This relational transformation is brought about through digital servitization. However, current knowledge about how providers and customers transform their relationship to achieve benefits from digital servitization is lacking. This paper addresses that knowledge gap by applying the relational view theory to a study of four provider-customer relationships engaged in digital servitization. The results provide evidence for four relational components – complementary digitalization capabilities, relation-specific digital assets, digitally enabled knowledge-sharing routines, and partnership governance – that enable providers and customers to profit from digital servitization. A key contribution is the development of a relational transformation framework for digital servitization that provides an overview of how the four relational components evolve as the relationship progresses. In doing so, we contribute to the emerging servitization literature by offering key relational insights into the interdependence of activities throughout the transformation phases of provider-customer relationships in digital servitization.     

The changing importance of affective trust and cognitive trust across the relationship lifecycle: A study of business-to-business relationships

The purpose of this paper is to examine affective trust and cognitive trust and their effects on business relationship outcomes. Within a relationship marketing framework, the influence of affective trust and cognitive trust on the success of business relationships at the early and mature phases of the relationship lifecycle is examined. Both affective and cognitive forms of trust are demonstrated to be multidimensional constructs that indirectly influence relationship performance via the mediating variables commitment and liking.The development and use of five elements of trust to explain relationship performance extends existing understanding of relationship marketing. By combining five elements of trust (three cognitive and two affective) and testing them in two different relationship lifecycle phases, insights are generated into how a relationship can succeed. The model tested in this paper highlights the importance of affective trust in the early phase and cognitive trust in the mature phase of the relationship lifecycle. Further, the mediating roles of commitment and liking between trust and relationship performance are also developed. Hence, the research increases understanding of how relationships evolve, in particular the role of affective trust and cognitive trust in influencing relationship performance.The context of this research is business-to-business relationships in small and medium enterprises. A survey of 458 businesses people is used to evaluate both the early and mature relationship lifecycle phases. The data are analysed with structural equation modelling where the basic structural model testing is extended with multigroup analysis.     

The involvement and influence of emotions in problematic business relationships

This paper discusses emotions as mediators in business-to-business relationships which is an understudied topic. Yet within consumer marketing, emotions have been widely studied, and calls have been made for business relationship research to take account of managers' emotions. This study addresses the gap by firstly establishing the relevance of emotions in problematic business relationships and secondly showing how emotions are a major component in determining the outcomes of the problematic relationships. Interview data in the form of narratives describing problematic relationships is analyzed and identifies both the emotions experienced by participants and their role in the future course of the business relationship.     

Religiosity and psychological contracts in Asian B2B service relationships

The growing significance of Asia in global trade has meant that service organizations within the region need to build robust relationships with customers that may reside in nations with different socio-cultural backgrounds. This paper draws on the theories of social exchange and social capital to examine how Indonesian service providers build B2B relationships with their Asian customers in the region, when the customers are from non-Islamic nations. This study used a survey to collect its primary data. Data from 312 Indonesian firms revealed that Asian cultural-specific concepts of religiosity not only had a positive impact on transactional and relational psychological contracts, but also dampened psychological contract breaches. Only relational psychological contracts had a positive effect on relational capital and relational wellbeing, despite transactional contracts being intrinsic to these relationships. Relational capital helped to reduce psychological contract breaches and improve relationship wellbeing, whereas psychological contract breaches reduced such wellbeing. Our findings significantly extend research on B2B service relationships and offer valuable managerial insights for service decision makers operating in Asia that involves B2B relationships between organizations with specific and different socio-cultural backgrounds.     

Outcome-based contracts as new business model: The role of partnership and value-driven relational assets

This paper investigates the new business model of outcome-based contracts where the firm is tasked to achieve outcomes of equipment as a service contract instead of the traditional maintenance, repair and overhaul activities (e.g., power-by-the-hour® engine service contract). Through a qualitative study of two outcome-based contracts between BAE Systems, MBDA and the UK Ministry of Defence, we derive three value drivers of information, material and people transformation. Mapping it with transaction cost literature we propose five relational assets based on the value drivers; three value-driven alignments and two partnership inputs. We then study the relationships between the relational assets and contract performance through a quantitative survey by applying the partial least square (PLS) method. Our study shows that behavioral and information alignments are important to achieve outcomes. However, material and equipment alignment (i.e., joint supply chain) does not have a significant effect on contract performance. In addition, perceived control and empowerment mediated the relationship between partnership inputs and value-driven alignments. Our study provides a more integrated view of how various theoretical management domains overlap in the understanding of business models, and contribute to the understanding of value drivers and partnership factors in achieving performance in outcome-based contracts.     

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.     

Linking account portfolio management to customer information: Using customer satisfaction metrics for portfolio analysis

When appropriate variables are used, account portfolio analyses engender a convenient framework for the relationship composition of companies and allow management to reconsider which customers and relationship dimensions need attention. Based on an industrial company's key account relationships, the portfolio approach considered in this study employs Customer Satisfaction (CS) metrics as a portfolio dimension and suggests a new and more customer oriented approach to account portfolio analysis. Proposed portfolio matrices provide insights into the strength and stability of customer relationships. Furthermore, the matrices force managers to adopt a future perspective on customer relationships by evaluating the business potential of customers along with CS information and allow prioritization with respect to resource allocation. The study attempts to put forward customer heterogeneity in industrial markets and offers a managerial guideline embracing customer specific marketing actions. In addition, the paper proposes a new use for CS information in strategic decision making.