Buyer‐seller relationships: A conceptual model and empirical investigation

Increasing emphasis is being placed by marketing managers on the need to build long‐term relationships between themselves and their customers. Analysis of long‐term buyer‐seller relationships has drawn heavily on the literature of social psychology, especially in making comparisons with family relationships. It has been proposed that buyer‐seller relationships go through some form of life‐cycle, paralleling cyclical relationships in other areas of human activity. However, models of the evolutionary development of buyer‐seller relationships have remained largely theoretical, with little empirical validation of the life cycle concept, or analysis of the changing composition of a relationship as it progresses through a life cycle.

This paper provides cross‐sectional empirical evidence of the existence of a buyer‐seller relationship life cycle within the investment services sector. The elements that buyers perceive as being important in holding a relationship together are dependent on the duration to date of the relationship. In the early stages of development, selling pressure is perceived as being a dominant element in relationship development, giving way to judgements of ethical credibility and empathy as the relationship develops.

From this initial survey of investment services customers, a number of implications for relationship marketing strategies within the services sector are suggested.     

Religiosity,Relationships and Consumption: A Study of Church Going in Ireland

Business‐to‐consumer relationships have been over‐conceptualised, but poorly understood in terms of the social factors that motivate or inhibit the development of such relationships. This paper seeks to integrate three streams of literature, buyer‐seller relationships, social relationships, and religiosity and develops a framework in which declining levels of participation in organised religion may be conceptualised as a failing relationship, which has been partially superseded by commercial relationships. This study uses an existential phenomenological approach to explore the complementarity or substitutability of individuals' relationships based on religion with those based on consumption. A survey of a sample of active and lapsed churchgoers in Ireland found mixed evidence of commercial relationships acting as a substitute for traditional religious‐based relationships.     

Culture's Influence on Business Negotiations in Four Countries

The usefulness of a theoretical model of the determinants of business negotiation outcomes is tested in a simulation with business people from four countries (the United States, Japan, Brazil and Spain). The article is an extension of Graham, Mintu, and Rodgers (1994), and also directly tests Hofstede's and Hall's theories of culture. A problem-solving approach results in higher negotiation outcomes for Americans when their partners reciprocate. Role (buyer or seller) is the key determinant of profits for Japanese negotiations; that is, buyers do better than sellers. For the Spanish negotiators, a problem-solving approach actually yielded lower profits. For the Brazilians, interpersonal attractiveness lead to higher partner satisfaction.     

Relationship Value in Thai Business-to-Business Marketing

This study focuses on value in the business-to-business relationship among buyers and sellers. Relationship value has long been one of the key research areas in marketing for business to business. By examining from the perspective of the buyers, this research identifies how business buyers can use marketing benefits, product benefits, technical benefits, logistics benefits, financial benefits, risk-reduction benefits, information benefits, and strategic benefits to predict buyer–seller relationship. The study confirms significant relationships among marketing benefits, product benefits, and value in retailer–supplier relationship. The analysis from this study supports that benefit in a business-to-business relationship can be created if suppliers work on mutual benefits with customers. The results also confirm that Thai business customers will look for business partners who can provide risk reduction and marketing benefits for their business.     

Loyalty or lethargy? Keeping sellers committed,not entrenched

While business sellers frequently enjoy long-term relationships with their buyers, not every extended association is based on a genuine sense of customer loyalty. Many organizations remain in relationships with providers for too long; while the seller has stopped providing value, the buyer sticks to the routine. Building from empirical research and theory on buyer-seller relationships, this research extends our understanding of customer complacency and seller entrenchment and introduces the concept of customer lethargy. Synthesizing theory from multiple domains with exploratory interviews conducted with business customers, this article offers insight into the functioning of organizational buying centers, the evolution of business exchanges over time, and how some exchanges can be undermined by various forms of relational dysfunction. I define customer lethargy, explore its root causes and offer business buyers a strategy which aims to help them self-audit their loyalty, avoid complacency and lethargy, and keep sellers committed, not entrenched.     

The Effects of Relationship Marketing on Share of Business: A Synthesis and Comparison of Models

ABSTRACT

Purpose: The article synthesizes the extensive empirical work on relationship marketing (RM) and compares the various conceptualizations to give a better understanding of the relational factors (i.e., characteristics of the business relationship) that improve a seller’s objective performance (i.e., share of business) in a business-to-business (B2B) services context. These conceptualizations, taken from the literature, link relational antecedents (i.e., communication, domain expertise, relational value, and mutual goals) to relational mediators (i.e., trust, satisfaction, commitment, relationship quality) to explore how they in turn affect a seller’s share of business.

Methodology/approach: All 4 models derived from the literature review were assessed using a dataset drawn from a survey of 948 client firm representatives of a Portuguese hotel chain in a B2B services context.

Findings: The best of the models in terms of model fit and prediction of share of business shows that only customer commitment directly drives a seller’s share of business, and simultaneous interrelated changes in customer trust and satisfaction, as well as customer perceptions of relational value, drive customer commitment, and so exert indirect effects on performance. The model that proposes that a seller’s performance is strengthened by simultaneous interrelated improvements in customer trust, satisfaction, and commitment (i.e., with these three mediators being conceptualized as a single, combined, higher-order mediator, termed relationship quality [RQ]) shows inferior fit. No combination of mediators (satisfaction, trust, or commitment) improves the seller’s objective performance over and above their individual effects (i.e., there are no synergistic effects).

Research implications: The literature review suggested four ways of modeling RM antecedents, mediators, and their effect on performance. Complex second-order constructs such as RQ lack explanatory power when predicting outcomes and mask the effects of individual relational mediators. Correct conceptualization is important, as conclusions vary drastically even with the same set of relational mediators and same dataset.

Practical implications: B2B service providers’ investments in RM will lead to improved share of business only if customer commitment is high or there is at least the potential to improve it. This requires an understanding of how valuable

the customer believes the relationship to be, and how the customer rates the relationship with the firm in terms of satisfaction and trust. A customer segmentation approach to relationship building and maintenance is advocated and detailed suggestions are put forward.

Originality/value/contribution: Apart from the work by Palmatier, the relationships between RM antecedents and mediators have not yet been examined simultaneously and findings are fragmented. The article provides a synthesis of this expansive literature. It contrasts different interplays between RM mediators, including their interrelationships as a higher-order construct, and explores possible synergy effects. Unlike previous work, this study focused on an objective measure of seller performance (i.e., share of business), whereas previous studies have tended to examine subjective measures, especially within the B2B context. Furthermore, four full models were assessed here, each of which included the antecedents to RM mediators and their links to objective performance.     

Boundary spanner turnover in professional services: Exploring the outcomes of client retention strategies

Abstract

Studies suggest that the termination of the interpersonal relationship between boundary spanners at buyer and seller firms can have a damaging effect on the inter organisational relationship. Few studies have addressed this issue in detail, but those that do, advise supplier firms to implement strategies such as service teams and boundary spanner rotation to lessen the negative effects of boundary spanner turnover. By creating multiple bonds between the two firms, dispersing client-specific knowledge widely throughout the supplier firm, and preventing the development of a close bond between buyer and seller boundary spanners, individual interpersonal relationships become less important. However, a review of relationship literature on trust, commitment, social bonds, and knowledge suggests the potential for negative outcomes from the implementation of the strategies. Using case studies and one-to-one interviews with design buyers and their agencies, this paper explores the outcomes of the two strategies, and the contexts in which these outcomes occur. Adopting a critical realist approach, findings are presented in the form of context–mechanism–outcome models. Agency size, agency culture, client experience, and boundary-spanner autonomy are amongst the contexts that influence the outcome of strategy implementation.     

Key account management: Theory,practice and challenges

Key account management is a natural development of customer focus and relationship marketing in business‐to‐business markets. It offers critical benefits and opportunities for profit enhancement to both sides of the seller/buyer dyad.

This paper describes a framework for understanding the development of key account relationships. It has also incorporated a comprehensive guide to the current practice of key account management and comments on the challenges for the future of key account management practice. The paper is based on research involving in‐depth interviews with key account managers, their managers and their main contacts in the customer organisation.

The scope of key account management is widening and becoming more complex. The skills of professionab involved in it at strategic and operational levels need to be constantly updated and developed. This paper demonstrates how key account management can be implemented and points decision‐makers in the right direction for better practice in the long term.     

Buyer/supplier partnering in British industry: The automotive and telecommunications sectors

Practitioners and academics in the fields of marketing and purchasing management share an interest in the effective management of inter‐firm buyer‐seller relationships. Buyer/supplier partnering has been advocated as an effective approach to the management of key customer or supplier relationships. Within both the automotive and telecommunications sectors of the British economy there is intense interest among major buying organisations in the development of durable partnerships with key suppliers. However, within both industries the major UK and American owned firms have to operate under the shadow of traditionally antagonistic relations with suppliers. The current state of buyer/supplier partnering within the two industries is evaluated within this historical context, and the key problem identified is the need to overcome antagonism within the inter‐organisational culture. The costs and benefits of partnering approaches to both marketing and purchasing are discussed, and implications for marketing managers seeking to develop partnerships with major customer organisations are outlined.     

A Temporal Model of Vertical Relationships

Purpose: The authors developed a model framework for buyer–supplier relationships and used it to extend theory in 4 areas: (a) maintenance of long-term relationships; (b) conversion of relationships from adversarial to cooperative; (c) changes in relationships over their lives; and (d) levels of commitment and trust between partners.

Methodology/approach: The authors analyzed existing research on buyer–seller relationships and theoretical concepts in various disciplines to develop a 3-stage temporal relationship model consisting of pre-deal (t–1), deal enactment (t), and deal continuation (t+1) stages. From the model and existing research, the authors drew propositions for relationships in the areas of buyer and seller power, several forms of commitment and trust, intellectual capital, and financial performance.

Findings: Briefly, the authors proposed that (a) at the pre-deal stage, increased buyer power may instigate supplier input commitment or vice versa; (b) at deal enactment, both parties may commit to a written contract and build contractual trust through a low degree of relational commitment; and (c) in the deal continuation stage, contractual trust, and attitudinal commitment of one of the parties is likely to foster attitudinal commitment in the other party. The authors found that buyer's and supplier's total commitment fosters goodwill trust and helps build intellectual capital and financial performance, and that the weaker party in the relationship likely gains more from the partnership than the stronger party.

Research implications: In addition to existing research, the authors used several actual situations to provide support for our propositions. However, more research should be done in all areas to additionally confirm our propositions and otherwise add to theory development.

Practical implications: By looking at buyer–seller relationships in three stages, the authors developed several implications for both parties. These included long-term results of short-term actions, importance of industry factors on buyer and seller commitment, and the role of commitment in determining whether long-term relationships are developed.

Originality/value/contribution: The authors extended and coordinated existing theory by consolidating the implications of previous research into a cohesive buyer–supplier relationship model. This model should enable both researchers and managers to better comprehend the dynamics of vertical relationships with a multi-dimensional, reciprocal approach. The results should also provide managers an additional tool to gauge and forecast the fate of a relationship by analyzing levels of trust and commitment as the relationship progresses.     

The effects of reciprocation wariness on negotiation behavior and outcomes

This study examined the influence of reciprocation wariness, a general fear of exploitation in interpersonal relationships, on negotiators’ motivational orientation, direct information sharing and negotiation outcomes. We predicted that low-wary negotiators are more likely to be prosocial and to engage in direct information sharing, and low-wary negotiators will perceive their opponents more positively after the negotiation. We asked 150 graduate students of business administration to formed 75 dyads to participate in a simulated business negotiation, each taking the role of a buyer or a seller. The results showed that reciprocation wariness had a significant effect on negotiators’ motivational orientation and the amount of information sharing. Negotiating dyads with low–low reciprocation wariness got higher joint gains than those with high–high reciprocation wariness, and information sharing fully mediated the relationship. After the negotiation, low-wary negotiators evaluated the other party more positively and were more willing to interact with their opponents in the future. Contributions and limitations are discussed.     

Factors of determining long-term orientation in interfirm relationships

Marketers have witnessed a paradigm shift in which establishing, maintaining, and forging long-term buyer–seller relationships are considered the core of marketing activities. Accordingly, investigating a long-term orientation (LTO) has become a steady research stream in the marketing literature. Building on this on-going research stream, this study confirms that an essential precursor of a manufacturer's LTO is trust that, in turn, is formed by relational norms and satisfaction with supplier performance. Interestingly, however, the seemingly strong trust–LTO path is moderated by both power asymmetry and environmental uncertainty in buyer–seller relationships. The empirical findings suggest that regardless of emerging relationship marketing where buyer and seller are portrayed as parts of a team, power is still in use to control suppliers. In addition, a manufacturer facing uncertainty is less likely to form LTO toward its supplier for fear of losing flexibility in the time- and quality-based competition.     

What Sells in Romania: Performance or Relationships?

ABSTRACT

The norm for sales organizations is the pursuit of long-term profitability through positive relationships with key accounts. Sales professionals begin and end their activities with the customer in mind, aiming to maximize their relationships over a long period of time. This article examines the association between buyer and seller relationships and customer satisfaction as well as the association between customer service orientation and customer relationships. Findings suggest that the ability to meet customer sales service expectations as well as the existence of positive relationships between buyers and sellers is associated with customer satisfaction. Implications for managers are explored.     

Salespeople,Fairness, and Buyer Satisfaction: What about Emotions?

Purpose: Although most studies focus on rational decision-making in organizational buying, this research examines the satisfaction through the integration of fairness and emotion theories. It thus broadens knowledge about the formation of satisfaction in buyer–seller relationships, through an integration of justice and emotion theories.

Design/methodology/approach: A survey of 130 buyers was conducted. The test of the proposed model relied on structural equation modeling. To examine the mediating role of positive emotions, we followed the procedure proposed by Baron and Kenny (1986). That is, we compared the proposed framework against two competing models: a non-mediated model and a saturated model that featured all possible causal paths.

Findings: Results show that both distributive and procedural fairness have a positive impact on buyer’s satisfaction, following two different paths: a rational path with fairness acting directly on satisfaction; and an emotional path where emotions play a mediator role.

Research limitations/implications: Buyers evaluate satisfaction through an emotional lens. Business relationships are not completely rational, a consideration with importance for buying and customer relationship theory.

Practical implications: Sellers must pay attention to their customer policies from the perspective of their customers. In addition to guaranteeing a “fair” outcome, sellers must ensure that buyers are subject only to procedures that customers perceive to be fair. Indeed, since buyers in business relationships are not completely rational, business-to-business (B-to-B) experts should acknowledge the influence of emotions in their sales strategies.

Originality/value: The mediating impact of emotion in the fairness–satisfaction relationship has not been explored in buyer–seller settings previously. Deconstructing satisfaction with the decision process into its cognitive and affective elements, we examine the emotional dimension of B-to-B buying process.     

Buyer–seller relationships of the dental devices industry in Taiwan: perspective of relationship

Purpose: While research in marketing and management has addressed characteristics associated with buyer and seller, relatively little research has been reported on the marketing of relationship benefits and relationship bonding tactics, particularly involving their relationships with customers. Given a dyadic perspective, it can be surmised that gaps in buyer and seller perceptions may well dampen relationships, and will inevitably occur, since a perfect match is highly unlikely between two exchange parties. To enhance relationships, major gaps need therefore to be identified and eliminated. Therefore, the purpose of this study is developing matrices of customer relationship benefits and relationship bonding tactics separately from buyer’s and seller’s perspectives, together with the insights of interrelated propositions.

Methodology: This research subjects chosen for this study consist of those distributors of dental devices, procurement in hospitals, and dentists. Using the grounded theory, four stages of coding analysis are conducted.

Findings: The results indicated that buyers and sellers differed in their perceptions in all field interviews due to their different attitudes toward different benefits. While buyers’ perceived benefits were based on the consideration of confidence and trust in the practical use of purchased medical devices, sellers primarily considered specialized issues of provided services and technologies. Based on this, buyer and seller perspectives were distinguished.

Research Implications: As a self-enclosed system, the medical device industry is difficult to enter for new manufacturers. Therefore, from the perspective of product providers, academic support can increase their product visibility, improve their company’s image, and provide more opportunities to contact new clients. From the perspective of medical institutions, the participation of hospitals and clinics in relationship marketing activities and seminars can raise their prestige and provide more opportunities for gaining new information.

Originality/Value/Contribution: Theoretical contribution of this study is in building matrices of customer relationship benefits and relationship bonding tactics separately from buyer’s and seller’s perspectives, together with the insights of six propositions. These insights shall expose the undisclosed systems of the dental devices industry.     

An Empirical Study of Buyer–Supplier Relationships within Small Business Organizations

A paradox exists in small business organizations; although effective buyer–supplier relationships are essential to the success of small businesses, these organizations may not have the purchasing and selling power in terms of managerial resources to implement them. This provides us an opportunity for research to determine how well developed are buyer–supplier relationships within small business organizations. Grounded in transaction cost and resource dependence theory, this paper presents and empirically tests a model that examines the relationships between buyer and supplier specificity and long‐term buyer–supplier relationships and the latter's impact on organizational performance from the buyers' perspective. The results of this study provide insight into the development and impact of buyer–supplier relationships within small business organizations. Several managerial implications can be determined.     

The Use of Accommodation in Buyer–Seller Relationships: Encouraging or Controlling Opportunism in Business Markets Middle-grounds

ABSTRACT

Purpose: In the past decades, marketing researchers have explored different strategies to control opportunism in buyer–seller relationships. Accommodation, the cooperative response to partners’ exploitive behavior in exchange relationships, has received increasing attention from research on interfirm relationships. However, less is known about whether accommodation is an effective response strategy for controlling opportunism. Drawing on the self-enforcing agreement literature, this article focuses on exploring (1) what drives a firm’s accommodation response to its partner’s exploitive behavior, (2) how a firm’s accommodation helps govern its exchange partner’s opportunistic behavior, and (3) whether monitoring magnifies or buffers the effect of accommodation on the exchange partners’ opportunism.

Methodology: The survey data were collected from 173 seller-firms in Guangdong, Shanghai, Beijing, Wuhan, and Zhengzhou, representing the south, east, north, and middle regions of China. The initial questionnaires were distributed mainly by mail. By assessing the nonresponse bias and the potential bias of early and late responses, we detected no significant differences, implying that the aforementioned biases are not a concern. Because PLS can readily model both formative and reflective constructs, and accommodation is a formative construct, we deployed the SmartPLS software program to test our model.

Findings: This article enables a deeper understanding of accommodation as a response strategy in buyer–seller relationships. The data analysis offers supportive evidence that a firm’s level of accommodation is positively related to two exchange attributes: joint-specific investments and observability of the exchanges. Accommodation, as a cooperative response strategy, curtails opportunism in buyer–seller relationships, and such a curtailing role is magnified when accompanied with monitoring.

Originality/value/contribution: The authors develop a framework to examine previously untested relationships, which suggest accommodation is a cooperative response strategy to mitigate opportunism. We also contribute by exploring the antecedents of accommodation from the tangible transaction attributes perspective. Specifically, two exchange attributes, joint-specific investments and observability, can explain the emergence of accommodation. In addition, we examine the combined effect of competitive response strategies and cooperative response strategies on controlling partner opportunism. That is, competitive response strategies (i.e., monitoring) strengthen the governing effect of cooperative response strategies (i.e., accommodation).     

The relationship between Greek export manufacturers and UK importers: The dimension of exercised power

Although the dimension of power is critical to understanding buyer‐seller relationships, few studies exist regarding this issue in the framework of export distribution channels. This paper analyses some power‐related aspects of the exporter—importer relationship. An attempt to investigate the magnitude and pattern of perceptual differences between the parlies in a number of exporter‐importer pairs gives the analysis a unique character. It was found that in broad terms the importer exercises higher levels of power over the exporter rather than vice‐versa, and that mostly the perceptual differences between the two relationship partners followed no systematic direction. The research findings have significant implications for business practitioners in both developed and lesser developed countries. Areas for further research are also suggested in the light of the empirical findings.     

Strategic compliments in sales

Salespersons often spend time and money giving prospective buyers compliments such as kind words, meals and gifts. Though prior research has shown that compliments will influence a prospective buyer’s decision, it is unknown the extent to which salespersons should make these investments. In this paper, we develop an analytical model to examine how seller and buyer characteristics affect the equilibrium provision of compliments by the seller. We establish that the optimal magnitude of compliments is non-monotonic in the buyer’s sensitivity to compliments. We identify conditions for when a seller of a high-quality product will offer greater (or lesser) compliments than a seller of a lower quality product. We show that, under certain conditions, an uninformed buyer earns greater utility than a buyer who knows the quality of the seller’s product. The findings have implications for sellers in their choice of compliments and buyers in the inferences they draw from the compliments received.     

LOGISTICS SERVICE DRIVEN LOYALTY: AN EXPLORATORY STUDY

Based upon the extant literature and a qualitative study of buyer‐seller relationships, an exploratory model of the relationship between supply chain power, dependence, satisfaction, and loyalty is developed and presented. Four fundamental objectives are accomplished through this research and presented here. The first was to use a qualitative method to gain a deeper understanding of the logistics service driven loyalty that exists between suppliers and customers. The second was to develop a more thorough understanding of the gap in logistics service expectations between a supplier and their customers. The third objective was to examine how the power/dependence relationship affects both customer service expectations of the parties, and the actual logistics service delivered by the supplier. Finally, this research is intended to build a basis for future quantitative research of loyalty in supplier/customer relationships.