Exploring perceptions of interdependencies: Strategic options in supplier-customer relationships

This paper investigates how three indicators, 1) convergence-divergence in actor characteristics, 2) relationship atmosphere, and 3) degree of overlap in the network pictures of collaborating partners, relate to the perceived interdependencies and strategic options seen in specific supplier-customer relationships. The paper presents the case of a Danish food company, which offers the same pallet of new products to different customers. Joint developments are coordinated equivalently across customer relationships, and the customers draw on the same company technology and knowledge resources. Still, the company perceives interdependencies and related strategic options as very divergent across the customer relationships.     

Role of competences in creating customer value: A value-creation logic approach

This paper addresses the issue through what kind of competences companies are producing value for their business customers. First, a value typology, clarifying the complex character of value, is constructed, together with suggestions on how the question of value creation can be framed. In order to understand and manage supplier-customer relationships, it essential to comprehend how both customers and suppliers perceive value and their roles in value creation. The matching of customers' and suppliers' perspectives is discussed by developing a framework depicting the business-to-business marketing types. Then the competences needed for creating value for customers and suppliers alike are examined by identifying what kind of competences are required in each marketing type.     

How does green innovation affect supplier-customer relationships? A study on customer and relationship contingencies

As the demand for eco-friendly products arises, many suppliers have devoted significant effort to green innovation. Prior studies have investigated how green innovation influences product and firm performance; however, its influence on the relationship between suppliers and organizational buyers (customers) is still unknown. Organizational buyers' receptivity to green products is uncertain as they must adjust their current systems to accommodate the new products. As such, understanding how supplier green innovation effort affects the supplier-customer relationship is essential for green innovation success. Using data collected from 196 B2B customers, we find that the relationship between supplier green innovation effort and relational performance depends on several customer- and relationship-level contingencies. Specifically, green innovation benefits a relationship more if customer participation and relational embeddedness are high, or if customer risk aversion and customer-perceived product criticality are low. This research provides valuable guidance for the effective implementation of green innovation.     

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.     

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.     

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.     

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.     

Customer approaches to product development with suppliers

It has long been accepted that a realistic view of what happens between customer companies and their suppliers cannot be achieved by examining single purchases alone. Instead, a single purchase can only be understood as part of a supplier-customer relationship which both affects and is affected by it. Also in business markets, a customer's purchase behaviour is not simply a passive response to the marketing actions of a supplier, but part of the interaction between an active customer and supplier. A major element in this interaction is likely to arise from the efforts of the customer to develop its own products interactively with a network of suppliers. This paper reports on a study into the ways in which customers employ the skills of their network of suppliers and attempt to direct that network in product development projects. The paper suggests that customers are likely to use either of two alternative strategies for product development, that we term “network delegation” and “network intervention”. The paper draws on four in-depth case studies to highlight the types of situation where customers are most likely to employ each of these strategies and draws conclusions for marketers about the implications of each approach.     

Initial relationship development in new business ventures

This paper seeks to investigate some of the issues faced by an existing company when developing the initial customer relationships for a new venture. All companies face the challenge of new-relationship development in order to achieve growth and to replace relationships which have been lost or are in decline. But the challenge of developing the first customer relationships of a new venture is likely to be particularly acute because the new venture's marketing function and its offering to customers are likely to be undefined and undeveloped. This paper is based on a case study of initial customer relationship development in a new venture of an established business. The paper analyses the issues that the company faced in developing these initial relationships and the approaches to relationship development that it took. The case analysis leads to the conclusion that the development of initial relationships can be facilitated by an ‘open marketing function’ involving a number of functional areas both in the supplier and in the initial customers. The paper draws managerial implications from the case analysis for the task of marketing in this situation.     

Exploring the concept of asymmetry: A typology for analysing customer-supplier relationships

In seeking to understand relationships between smaller suppliers and larger customers, there is a growing interest in examining the characteristics of asymmetry in relationships. However, there is a paucity of research that looks at the consequences of size asymmetry for smaller suppliers. Building on IMP (Industrial Marketing and Purchasing Group) research, this paper presents a typology for analysing the consequences of size asymmetry in customer-supplier relationships from the smaller supplier's perspective. The paper reports on the findings from a study involving a total of 48 interviews and eight in-depth case studies of suppliers in the UK textile industry involved in relationships with larger customers. The findings from the study show that the consequences of size asymmetry may vary widely across different relationship characteristics, with both positive and negative outcomes for suppliers. The implications of these findings are that suppliers may take advantage of the positive and constructive consequences of size asymmetry to capitalise on developing their current relationships with customers. In addition, by focusing on the positive consequences of size asymmetry, suppliers may develop the confidence and assurance to develop constructive and more balanced new customer relationships. The paper concludes by identifying the managerial implications for the development of opportunities and customer relationship options for suppliers in asymmetric relationships and proposes that it is important for suppliers to have an assessment instrument to identify the extent of asymmetry or symmetry across their customer relationships.     

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.     

How value and trust influence loyalty in wireless telecommunications industry

Despite making significant investments in enhancing the customer service experience, long-term customer loyalty remains an elusive dream for many service providers. Particularly in the telecommunications industry, switching providers even from within continuous contract relationships is easy and companies struggle to retain their customers. Trust and value are considered cornerstones of long-term relationships, so it is perhaps surprising that previous research on how relationship age and usage level actually affect value, trust and loyalty is inconclusive. The current research is set in the telecommunications services field and draws on a large-scale survey undertaken in Finland. The findings support the contention that perceived value relates positively to loyalty, and that trust mediates that relationship. Surprisingly, in the telecommunications industry, increasing relationship age and usage level strengthen neither value and loyalty nor the links between trust and loyalty. The results may be explained by the unique characteristics of the highly competitive mobile telecommunications sector, and confirm the view that loyalty does not pay without strategies that value long-term customers and thereby build trust with new customers.     

Organizational relationship termination competence: A conceptualization and an empirical test

Most firms are involved in a number of customer relationships that drain the firm's resources. However, many firms are hesitant to address this problem. This paper investigates customer relationship termination at the organizational level. We develop and analyze the organizational dimensions of organizational termination in order to improve our understanding of the management of termination. The impact of these termination dimensions on the percentage of unwanted customers is developed and tested using PLS on data gathered from a cross-sectional survey of more than 800 sales representatives. We find that a firm's percentage of unwanted customers decreases significantly as acceptance of termination increases, if the firm's definition of unwanted customers is well understood, and if a firm has clear termination routines. In addition, general focus on profitability and external constraints on relationship termination are found to significantly affect a firm's relationship termination competence. The findings suggest that managers should regard termination as a legitimate option in customer relationship management. In order to decrease the number of unwanted customers, managers must accept termination as a valid option, clearly define the types of customers that the organization does not want to serve, and implement termination routines within the organization.     

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.     

Selecting Influential Business-to-Business Customers in New Product Development: Relational Embeddedness and Knowledge Heterogeneity Considerations

This study examines how the most influential business‐to‐business (B2B) customers, both existing and potential, involved in providing input to a new product development (NPD) project influence new product advantage. As the relational literature suggests, involving customers who have had close and embedded relationships with a firm's new product organization, such as a firm's largest customers, and customers who have been involved in past collaborative activities, should lead to the development of superior products. To the contrary, the innovation literature suggests that a firm may become too close to its large, embedded customers resulting in less innovation and in lower performing products. Also, the relationship between the heterogeneity of the knowledge of the most influential customers and new product advantage is examined. A contingency perspective is hypothesized such that the degree of product newness sought in the project moderates the effects of both relational embeddedness and knowledge heterogeneity on new product advantage. Empirical findings from a sample of 137 NPD projects support this contingency view. For projects seeking to develop incremental products, where the product being developed is an extension or an enhancement to an existing product, new product advantage tended to be higher in projects using embedded or homogeneous customers. For incremental projects, projects using less‐embedded or heterogeneous customers tended to have lower product performance. For projects following a highly innovative product strategy, new product advantage tended to be higher in projects that involved heterogeneous customers. These heterogeneous customers provided NPD projects with a diversity of perspectives, competencies, and experiences that fostered significant product innovations. The study contributes to the literature by empirically testing relational and innovation theories in NPD projects and by providing evidence on the importance of relational embeddedness and knowledge heterogeneity in selecting influential customers in NPD projects.     

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.     

Improving firm positioning through enhanced offerings and buyer-seller relationships

We analyze the strategic repositioning of firms through changes in their market offerings and buyer-seller relationships. Based on literature from strategy, marketing, economics, and information systems, we formulate a two-by-two matrix to examine alternatives for positioning. We evaluate the framework with four case studies of companies that have recently moved toward more complete product/service offerings and stronger relational linkages with customers. These moves followed two different paths. The product/service path initially focused on the development of new and related products, product bundles, and the addition of product-related services. The relational path first focused on establishing closer relationships with customers including closer operational linkages, enhanced information sharing, more fully articulated legal and contractual obligations, and enhanced cooperation. In all the cases, the strategic repositioning was influenced by customer needs and enabled by information technology and the acquisition of new competencies through networking.     

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.     

Antecedents and consequences of logistics value: And empirical investigation in the Spanish market

In business practice and the academic study of logistics, the incorporation of concepts such as quality followed by value has been truly revolutionary. In addition, the use of information and communication technologies (ICT) has substantially modified the way inter-company relationships are managed. This has meant that logistics is no longer considered a routine, merely operational activity but a strategic variable which is a deciding factor in achieving customer satisfaction. There are, however, still a large number of companies which continue to ignore the differentiating potential of logistics and consider it to be a routine activity. Our contribution comes within the framework of this new perspective which is analysed on the basis of an emerging concept: logistics value. The objective of this study is to contribute to the knowledge on what logistics value consists of and how it is formed, in business to business (B2B) relationships in particular. On the basis of a theoretical framework obtained from the literature review of perceived value from a trade-off perspective, we carry out an empirical analysis to determine the antecedents and consequences of logistics value. Our results, through SEM analysis show that ICT, the benefits derived from supplier-customer relationship, logistics service quality and the sacrifices associated to logistics service delivery in terms of costs, contribute to creating logistics value which is the antecedent to the classic satisfaction-loyalty chain.     

Using cross-functional,cross-firm teams to co-create value: The role of financial measures

Increasingly, the involvement of representatives from all major business functions in cross-functional, cross-firm teams is being viewed as a means to develop and maintain profitable business-to-business relationships. However, if the measurements of the value co-created in these relationships with customers and suppliers do not incorporate the financial outcomes of joint cross-functional initiatives, managers can be led to make decisions that jeopardize the long-term profitability of the two firms. In this paper, the authors explore the differences in value co-creation when a company is linked to key customers and key suppliers through cross-functional teams and when it is not. Using a case study approach, the authors measured value co-creation in financial terms and describe how managers changed their behaviors toward customers and suppliers when they were able to compare the value that was being co-created in each relationship. In each pair of relationships, one involved cross-functional teams and the other did not. The results indicate that cross-functional, cross-firm involvement leads to increased value co-creation. The research suggests that marketing scholars and managers should emphasize the use of cross-functional teams that involve all major functions to manage relationships with key customers, and should incorporate financial measures in the evaluation of relationship performance.