Interaction behaviors in business relationships and heuristics: Issues for management and research agenda

Various empirical studies have evidenced that interaction is a critical process in the development of buyer–seller relationships in business-to-business markets. Research examining the different aspects of interaction processes and the consequences of interaction in business relationships for the development of the businesses involved has tended to black-box the interaction process. Limited attention has been given to how interaction behaviors of individuals arise and the interplay between cognition and behaviors in interaction. At the same time, recent research offers some insights into the use and role of heuristics in contexts analogous to those individual actors face when they interact in business relationships. In this paper we review current research on interaction processes in business relationships as well as on heuristics in the management context and argue that focusing on heuristics used in interaction in business relationships offers valuable insights on how interaction behaviors emerge. In particular, we discuss the notion of heuristics as an “adaptive toolbox,” and how it relates to adaptations in business relationships. We also discuss implications for management and outline a future research agenda.     

Processes of business model evolution through the mechanism of anticipation and realisation of value

This study applies a process approach to analyse the evolution of a business model in a network environment. The business model provides a context in which to observe change processes arising through interactions amongst network actors. Based on a systematic search of the literature, the study proposes six processes by which business models evolve, motivated by the causal mechanism of value anticipation/realisation. We argue that actors' anticipations and realisations of value, arising continuously through repeated interactions, motivate changes in their interactions, which cause their interlinked business models to evolve over time. We explain the connection between the evolving business model and value in a way that accommodates interactive and time dimensions of value. The process explanation is demonstrated with empirical evidence from the longitudinal case history of an IT company. What appear to be discontinuous phases in the history of the focal firm's business model are shown to be causally connected by continuous event sequences. The study contributes to process methods by providing a worked example of a strong process explanation applied to a network business phenomenon.     

Creating value in business relationships: The role of sales

Understanding the creation of value in business relationships has been a long-standing goal of researchers and managers alike. By adopting a relational perspective, recent research on business relationships has made much progress in understanding value-creating processes. As the sales function is thought to be a pivotal part of the value-creating processes in business relationships, the evolving view on creating relationship value clearly has implications for our understanding of the role of sales in these processes. In contrast to its importance, the question of how the sales function contributes to creating value in business relationships has been largely neglected in extant literature. The objective of our paper is to answer this question by systematically linking the relational value creating process to the sales function's content. Interpreting value creation as interaction process, we identify four features of value-creating processes in business relationships suggested in recent research (i.e., jointness, balanced initiative, interacted value, and socio-cognitive construction) and, based on these, outline a framework that is used to define a set of tasks that are key to creating value in business relationships and hence become critical for sales in its hitherto neglected role as co-creator of relationship value. We illustrate the various tasks of this new role of sales with data from 43 interviews with sales managers and salespeople. Along with related normative recommendations in extant literature, the interviews provide support for the validity and relevance of our framework for understanding the role of sales in creating relationship value. This framework puts forward a much-needed first effort towards a theory of sales' role in creating relationship value and offers several opportunities for future research.     

The role of information technology in strategic buyer–supplier relationships

Information technology (IT) has long been acknowledged as an integral part of inter-organizational business exchange. The extant research, however, tends to emphasize the focal company perspective and focuses on operational issues, perceiving IT and business relationships as separable. Through a qualitative dyadic case study, our study defines how IT is positioned with regard to various elements of a strategic buyer–supplier relationship and the respective actors' operational and managerial behaviors. The study defines the role of IT regarding the structural, action, and management layers of a relationship and shows how IT can be a strong element around which relationship management activities are implemented to improve the consistency and performance of the relationship. The study prepares the ground for further qualitative and quantitative research to enhance a holistic understanding on IT in relation to the structures and processes in inter-organizational contexts of business relationships and networks.     

Actor network pictures and networking activities in business networks: An experimental study

In recent years, there has been increasing interest among business-to-business marketing scholars in the processes of managerial cognition. In particular, actors' network pictures, defined as the cognitive representations of managers' business surroundings have attracted much attention. However, there has so far been no empirical research on the impact that network pictures have on managerial behavior. The purpose of this paper is therefore to understand if and how specific pertinent network picture characteristics — namely power, dynamics, broadness, and indirectness — are associated with different behavioral choices, i.e. networking strategies. Based on an experiment with 445 Executive MBA students, all international managers across different industries, we find that managers' choices when managing business relationships, their strategic actions, are affected by the way they perceive their surrounding business network. However, amongst the different theoretical models of networking activities tested, only the power dimension showed significant associations with all four network picture characteristics. This study represents the first to empirically study the connection between cognition and behavior in business-to-business markets, as well as one of the few to apply an experimental design to study a business-to-business marketing related phenomenon. Also, it paves the way for future understanding of the association between network picture characteristics and networking strategies in interaction between actors.     

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.     

Managerial perceptions of service-infused IORs in China & India: A discursive view of value co-creation

This paper explores the managerial challenges facing firms seeking to build relationships with other network actors while doing business in foreign markets. By taking a critical perspective on an area of increasing importance in both manufacturing and service sectors, that of value co-creation, the paper explores how managers in different cultural contexts make sense of the notion of ‘value’ in inter-organizational B2B relationships between New Zealand service and service-infused supplier firms and buyers in China and India. From an analysis of the interview-based accounts on both sides of the buyer–seller dyad marked differences emerge regarding value-creation within managers' discourse around partnerships, collaboration and cooperation. Our findings suggest that the Indian manager's discursive use of ‘partnership’ draws on service-dominant logic in viewing this type of interaction as a means for co-creating value; they and their New Zealand suppliers are jointly involved in co-creating value within a service system, creating value-in-use. In contrast, the predominant perspective seen in the discourse of Chinese managers is the use of cooperation as a means of making transactions more cost-effective, or to fill gaps in their supply chains, resulting in the creation of transaction-based, co-production of value, which suggests a value-in-exchange orientation. In both cases, there is repeated reference to more peripheral actors whose efforts result in what we interpret as network value creation, based on their interactions with actors within the buyer–seller dyad.     

The transition from products to solutions: External business model fit and dynamics

This article provides empirical evidence and contributes to theory building concerning business model fit and dynamics in the area of solutions business. Business models are seen in this context as going beyond considerations such as offerings and internal processes or even relationships, and as including network and market considerations. Indeed the paper highlights the fact that a business model is not firm-focused, nor dyad-focused, but rather network-, and even market-focused, demonstrating that a business model is not static, but dynamic. Manufacturer and customer continuously shift form and content of their respective business models to adapt both to the needs of the counterpart and to market context. A qualitative case study approach is adopted, with subsequent content analysis. The case study relates to the aerospace industry with focus on a complex engineering firm, one of the largest aircraft manufacturers in the world, its customer — a national airline — and their network partners of various kinds. The data were collected through multiple face-to-face interviews with managers in both companies, as a part and parcel of a network of actors that influences and is influenced by the supplier–buyer relationship. Relationships over time between these firms and network partners are described, highlighting the interplay of products and services related to the provision of solutions. Findings highlight the dynamic nature of business models over the relationship lifecycle between supplier and customer in a complex engineering environment, and the need for reciprocal adjustment of models.     

A relationship value perspective of social capital in networks of software SMEs

Utilizing theories on social capital, business networks, social networks and relationship value, we explore the aspects that provide specific value in relationships with different actors in the software industry. The motive for the study is the assumption that some relationships are regarded as more important than others, and companies strive to focus on fewer relationships with greater outcomes. The study is guided by the premise that social capital is a foundation for relationship value, and its identified elements differ among relationships. We take the perspective of software companies and classify their relationships with business partners into three distinctive types according to their function in the value creation process. The findings of our empirical analysis, based on a qualitative case study of eight software SMEs indicate that the aspects of social capital, like the sources of relationship value, vary systematically by the types of relationships. Thus, we are able to provide some theoretical and managerial implications on the management of small- and medium-sized companies.     

Customer referencing as business actor engagement behavior – Creating value in and beyond triadic settings

The rising impact of customer engagement is increasingly evident in business markets. This paper studies customer referencing as an important manifestation of engagement behavior in the business-to-business (B2B) context. To extend extant research, which has thus far examined referencing almost exclusively from the seller's viewpoint, we study how referencing affects value creation in business networks. We explore resources contributed and gained though referencing and the resulting value outcomes for the entire reference triad (the seller, the reference customer, and the prospective buyer). Empirically, the paper draws on an extensive field study conducted in knowledge-intensive business service industries. The results explicate how customer referencing affects value creation within and beyond the triad, by i) enhancing or impairing actors' internal processes; ii) strengthening or damaging relationships between the triad actors; and iii) facilitating exchange in their broader business network. The paper contributes to research on customer referencing by explicating its role in value creation on a network level. As one of the first studies on engagement in the B2B context, this paper contributes to the emerging actor engagement research by analyzing how influencing behavior operates in a business network. These insights can help firms to facilitate exchange in complex markets.     

Critical events in time and space when cooperation turns into competition in business relationships

This study aims to improve our understanding of the processes of critical events in time and space that lead from cooperation to competition in dyadic business relationships. Within the business network approach there has recently been a call for research into both time and competition, and research combining both is novel. The study identifies and analyzes critical events in time, their connections with each other and the inner and outer space related to each event. The empirical study is based on four qualitative cases. The findings contribute to existing research by presenting several new perspectives on events and spaces, which improves our understanding of time and process in business networks. Business relationships may evolve from cooperation to competition through chronological events involving information sharing, sales-related and opportunistic activities. In space, these events mostly relate to the focal business relationships, the individual companies and third parties, such as customers.     

Interpersonal attraction in buyer–supplier relationships: A cyclical model rooted in social psychology

The concept of attraction is not reserved for the study of interpersonal relationships between husband and wife, family members, or lifelong friends. On the contrary, it contains much potential as a variable describing interpersonal business exchange relationships. This potential has been noted by well-known industrial marketing scholars in the past, and recent theoretical advances have incorporated attraction to describe buyer–supplier exchange, although primarily at the interorganizational level of analysis. The in-depth understanding of interpersonal attraction between boundary spanners representing buying and supply companies has yet to be developed. By drawing on social psychology and social exchange literature, this paper attempts to fill some of this gap. It contributes by uncovering the elements and process of interpersonal attraction. Furthermore, propositions are formulated to guide future research efforts on interpersonal attraction in the buyer–supplier context. Finally, the managerial value and challenges of applying attraction to buyer–supplier exchange relationships are discussed.     

Empirically derived models of strategic decision-making processes

This paper reports on an empirical study of strategic decision-making processes and organizational learning in 32 business organizations facing complex environments. The decision processes were found to vary in four prototypical patterns described here as the strategic decision-making models. These models are proposed as an initial step towards the development of a taxonomy of strategic decision processes. The relationships between strategic decision-making models and organizational learning systems that support them are explored. These models may help researchers to conceptualize and practitioners to manage strategy formulation processes in organizations.     

Creating value through mutual commitment to business network relationships

A structural model of business relationship development in a business network context is formulated and tested on data from the European International Marketing and Purchasing (IMP) project. The empirical analysis demonstrates a causal chain from business network connection through mutual commitment and mutual dependence to value creation in the relationship. The results show that mutuality in business network relationships is critical in developing interfirm systems of workflow interdependence that promote the creation of value. This also implies that, through their interaction in business network relationships, firms in business markets organize and share an unbounded structure of interdependent activities, enabling them to achieve greater value than would be the case if they did not engage in relationship development. Copyright © 1999 John Wiley & Sons, Ltd.     

Buyer attractiveness as a catalyst for buyer–supplier relationshipdevelopment

The concept of buyer attractiveness has received increasing scholarly attention in the recent business marketing literature, yet empirical studies of the dynamics between buyer and supplier attractiveness and their implications for relationship development are scarce. The research framework presented in this study suggests that buyer attractiveness is connected, first, to supplier's experienced and expected business outcomes within the focal relationship, and second, to the leverage impact of the focal relationship on supplier's other relationships. A qualitative case study of two buyers and their key suppliers scrutinizes the dimensions of attractiveness associated with relationship development. The findings indicate that attractiveness and adaptations performed by the buyer and the supplier are interlinked in a mutually reinforcing or deteriorating manner, forming a mechanism that catalyzes relationship development. These findings and the resultant empirically grounded framework provide a conceptualization and enhanced understanding of the dynamics between attractiveness, adaptations and relationship development.     

Coopetition-based business models: The case of Amazon.com

Coopetition (collaboration between competing firms) is a phenomenon that has recently captured a great deal of attention due to its increasing relevance to business practice. However, current research on coopetition is still short on explaining how the potential advantages of coopetition can be realized over time as part of an individual firm's business model. In order to gain insights into this, we conduct a longitudinal, in-depth case study on the coopetition-based business models of Amazon.com. We find evidence of three distinct coopetition-based business models: (1) Amazon Marketplace, (2) Amazon Services and Web Services, and (3) the collaboration between Apple and Amazon on digital text platforms. We conclude by forwarding several propositions on how value can be created and captured by involving competitors in a firm's business model. As a whole, the results contribute to the current understanding of how firms – as well as their stakeholders – can better benefit from coopetition.     

Searching for Relationship Value in Business Markets: Are We Missing Something?

Economic value has always been the main consideration in decisions regarding alternative courses of action in management. The relationship perspective that became popular in service and business marketing research and practice involves the application of the value concept to business relationships. Recent research in marketing on the value of relationships has been concerned with identifying the various dimensions of relationships content that can, in principle, give origin to costs or benefits for the parties involved. The way in which parties in a business relationship perceive and interpret value and how their perceptions affect their behaviors have not been at the center of this research. We will argue in this paper that perceptions impact parties' behaviors and the way business relationships develop, and report findings of a longitudinal study of how buyers and suppliers perceive and interpret value of business relationships. We then revisit the concept of value and formulate three propositions regarding the meaning of value in the context of supplier-customer relationships.     

How business customers judge customer success management

In business-to-business markets, customer success management is gaining growing practical importance. The concept comprises customer-related activities that aim at monitoring, securing and enhancing customer success as well as the implementation of the corresponding organizational structures and processes within the supplier firm. In contrast to existing research, this article takes a customer perspective to customer success management and investigates how business customers judge respective supplier activities; first, to reveal the quality dimensions business customers apply when assessing suppliers' customer success management activities, and second, to investigate how the quality of suppliers' customer success management activities leads to business customers' perceived value. Addressing these questions, this research contributes to literature by exploring customer success management from a customer perspective. The findings elucidate that customers' perceived value in use does not simply develop over time. Rather, through the implementation of customer-related activities of customer success management, suppliers can actively influence customers' value-in-use experiences thus fostering customers' rebuy decisions. From managerial perspective, the findings support suppliers in successfully shape their customer-oriented customer success management activities as well as the necessary internal structures and processes.     

Control of intellectual assets in client relationships: implications for innovation

This empirical study of business‐to‐business service firms examines the determinants and effects of control rights to intellectual assets in a property rights theoretic framework. Regression analyses using survey data suggest that service suppliers that retain control over their intellectual output are more innovative. In long‐term relationships, service firms' clients may thus be better off balancing their need to control outsourced activities with the suppliers' incentives to invest in learning and innovation. Additionally, and aligned with property rights theoretic predictions, service suppliers' bargaining power and their indispensability in service projects are positively associated with their ability to retain control rights. In contrast, innovation capabilities are not very significant in determining control rights allocation between service suppliers and their clients. Copyright © 2008 John Wiley & Sons, Ltd.     

Networking capability in business relationships — Concept and scale development

In previous research on inter-organizational marketing and supply chain management the processes through which a focal company deals with the dynamic nature of its business relationships is not fully addressed or understood. To address this gap in the literature, this study proposes the concept of networking capability (NC) as the complex organizational capability oriented towards managing business relationships along all their main development stages. The main proposition is that such a NC capability exists and can be measured, for various types of business partners (especially customers and suppliers), and that NC represents an important aspect that influences firm performance significantly. In order to define the NC concept and develop as test a measurement model, this study uses empirical research and integrates it with the existing literature on business networking-related capabilities. This study distinguishes itself from previous research on networking-related capabilities which not only utilize activities and routines at the company level to measure relational capabilities, but incorporate instead emotions and attitudes of managers towards their exchange partners. Our study, on the other hand, develops and tests a measurement model of NC that is consistent with a grounding in the resource-based view of the firm, specifically the dynamic capability view of the firm. It thereby contributes to the theory and practice of relationship management by proposing a conceptualization and measurement model of NC with regard to all main relationship stages and main types of business partners. Our study adopts a three-stage process of scale development, including qualitative and quantitative research. In summary, our empirical research suggests our NC measurement model as reliable and valid with regard to two main exchange partners: suppliers and business customers. Nomological validity of NC construct is also supported through regression model with company performance as the dependent variable.