Managing seller-buyer new product development relationships for customized products: a contingency model based on transaction cost analysis and empirical test

Sellers often customize their product offerings in order to increase the value offered to individual buyers and gain a competitive advantage over the seller’s competitors. However, such customization has a downside—it usually requires considerable seller-buyer interactions aimed at matching the seller’s technological capabilities with the buyer’s needs, which can pose exchange risks such as the safeguarding and adaptation problems noted in the transaction cost analysis literature. In the present study, we develop a contingency model to investigate the impact of product customization on sellers’ perceived relationship satisfaction and subsequent expectations of relationship continuity. We draw on the logic of transaction cost analysis to hypothesize that product customization’s effect on satisfaction and continuity may be moderated by three activities that sellers may engage in during the new product development (NPD) process: education, product knowledge generation, and joint new product development.Our substantive hypotheses were tested with data from a national survey of 296 small to medium size firms in several high-tech industries using a series of hierarchical OLS regression models. Overall, we found mixed support for our hypotheses. The results indicated that joint new product development reduced the negative effect of product customization on seller satisfaction and enhanced customization’s positive effect on continuity, as expected. Contrary to our expectations, product knowledge generation activities increased the negative effect of customization on satisfaction; it also had no significant moderating impact on continuity. Buyer education activities were found to reduce the negative impact of customization on satisfaction, but showed no moderating effect on continuity.This study offers important theoretical and managerial implications. It is one of the first to rely on transaction cost analysis as a basis for examining how various relationship activities conducted during the new product development process moderate product customization’s effect on qualitative outcomes. Whereas traditional NPD processes have emphasized unilateral approaches to product development, our study provides evidence of how bilateral approaches to NPD can benefit sellers of innovations. We provide new insights for managers to consider when deciding whether to engage buyers early on and then continue interacting with them throughout the product development process when developing customized products.     

ExpertLens: A system for eliciting opinions from a large pool of non-collocated experts with diverse knowledge

The complexity of policy decision-making raises the need to elicit opinions from large and heterogeneous groups of stakeholders with broad and diverse sets of expertise. Existing options for elicitation include small face-to-face panels of experts by using the Nominal Group Technique (NGT), large Delphi panels whose members do not interact with each other face-to-face, and crowdsourcing, which involves an open call for input issued to a large community of people. In an attempt to close the gap between the practical needs of policy makers and the methodological challenges associated with eliciting opinions of large, diverse, and distributed groups, we have developed a new online elicitation system and methodology called ExpertLens. By optimizing the direct interactions of NGT with the larger number of Delphi participants and the wisdom of “selected crowds,” our approach is designed to save on the costs associated with traditional expert panels, while increasing accuracy in elicitation by reducing the potential for group process losses that can occur in large, diverse, and non-collocated panels whose members interact via asynchronous online discussion boards. The ExpertLens approach is iterative, does not require participants to develop consensus, and determines what the group “thinks” by statistically analyzing data collected in all rounds of the elicitation. This paper describes the ExpertLens system and methodology, briefly discusses recent ExpertLens trials, provides conceptual arguments for why it is an appropriate model for eliciting expert opinions, illustrates its main components and analytics by using an infrastructure investment example, and discusses a research agenda for testing the underlying tenets of the ExpertLens approach.     

An information-based adaptive strategy for resource exploitation in competitive scenarios

Given an exploitation problem, in which a number of agents compete for a limited renewable resource, the optimal harvesting strategy depends on the ratio between resource availability and exploitation effort. For scarce resource a purely competitive, greedy strategy outperforms a more collaborative approach based on the Collective Intelligence, while for more abundant resource the opposite holds. The rationale for this behaviour lies in the amount of information each strategy is able to provide and a combined strategy is possible according to which agents choose dynamically the most informative strategy according to a minimum entropy criterion. This approach, which provides best performance for both under and over-exploited scenarios, can be used to monitor the resource status for management purposes and is effective in both centralised and decentralised decision making.     

Economic development and resource degradation: Conflicts and policies

The paper develops a model that shares common features with computable general equilibrium (CGE) models. It is used to address two questions. First, what are the future prospects of a green gross domestic product (GDP); should we be concerned with resource degradation or not; and, to what extent, and under which conditions? Secondly, which policies are more effective than others? Model closures are simulated using different specifications of exogenous variables. Further, alternative policies are treated: human capital, price incentives, property rights and poverty reduction. In the African context, we show that while the prospects of environment-friendly economic development, i.e. a rising green GDP, are weak in the medium-run, under certain structural conditions there is a range of effective policies that resolves the conflict between economic growth and resource degradation, thus contributing to a rising green GDP.     

Category reviews as market-shaping events

This paper examines a series of category review meeting between manufacturers of fast-moving consumer goods and retailers as instances of market-shaping. Our point of departure is that markets are performed and shaped by multiple calculative agencies whose encounters are organized in routine fashion. Our empirical case focuses on the presentations of manufacturers of non-alcoholic beverages to one retailer during the annual cycle of reviews and negotiations that punctuate the implementation of exchange routines between these actors. Each presentation draws on a range of arguments, data, metrics, as well as ways of defining and segmenting the category to propose strategies that either reinforce the status quo or overturn well-established conventions. Category reviews illustrate both the negotiated and distributed character of market practices as well as their paradoxical character, at once dependent on stable institutional arrangements whilst continuously undermining the foundations of that stability.     

The effects of influence strategies on dealer satisfaction and performance in Taiwan's motor industry

The studies of influence strategies in channel relationships have focused on western, individualistic countries. This study seeks to extend the empirical findings in Taiwan's motor industry to elucidate differences among diverse context. The results reveal that the promise strategy must be separated from coercive strategies and the request strategy must be separated from noncoercive strategies under the context of Taiwan's motor industry. Moreover, discrimination between economic and social satisfaction helps relationships between influence strategies and satisfaction and the effects of satisfaction on performance to be understood. The dealer's satisfaction is positively related to his performance, and social satisfaction is more important than economic satisfaction.     

Measuring and managing customer relationship risk in business markets

There have been repeated calls from top management and marketing academics for greater accountability in marketing so that the financial returns of marketing investments can be more robustly evaluated. These are coalescing around the issue of whether or not marketing delivers shareholder value. One promising line of enquiry explores customer lifetime value and the profitable management of these relationships. Although helpful, this approach fails to make the final link with shareholder value since customer lifetime value is still essentially a profit or cash flow measure and does not fully account for customer risk. This paper describes empirical research which explores differing approaches to measuring customer risk and the creation of shareholder value through customer relationship management (CRM). We develop a customer relationship scorecard which proves an innovative tool for managers to use in determining the risks in their customer relationships and developing risk mitigation strategies. The scorecard is then used to forecast retention probabilities, from which a risk-adjusted customer lifetime value is calculated. Both the scorecard and the calculations have an impact on the CRM practices of the customer relationship managers. From a theoretical perspective, an enhanced consideration of customer risk and returns is an important additional step towards demonstrating that marketing creates shareholder value.     

Impeding insurgent attacks: The information management agenda

Recent confrontations in Iraq between coalition forces and insurgents have caused much havoc in the way of economic and political reforms. Insurgents use a wide range of tactics, from suicide bombings to kidnappings, to cause tension between the local factions and the Iraqi populace, and between the locals and the coalition forces. The strength of the insurgent strategy emerges from the nature of their attacks: highly erratic, yet potent. All-out-assault on these insurgents is impossible as they cloak themselves and exploit the advantages of guerrilla warfare tactics. In this paper, we will highlight the informational issues that the coalition forces must appreciate in order to curb and curtail these insurgent attacks. While we do not aim to propose any grand strategy to eradicate all insurgent attacks, we do believe that the true weapon that needs to used optimally (effectively and efficiently) against such attacks is information. Whether the insurgents or the coalition forces, the side that is more successful at managing and deploying information potently and with intent will ultimately prevail.     

Mature relationships: Why does relational orientation turn into transaction orientation?

One of the fundamental assumptions of relationship marketing is that the length of the relationship increases the relational orientation of the partners. Recently, however, researchers have suggested that the benefits of relationship marketing are not evident in a large number of industries [e.g., Journal of Marketing 64 (2000, October) 17]. In this paper, we examine these contradictory results and, using extant research in this area, we model the antecedents of mature relationships that lead to relational versus transactional orientation. Most buyer seller associations follow an s-shaped curve between partners' length of association and the relational orientation of the buyer. However, for some buyer-seller associations, we suggest that there is an inverted u-shaped relationship between relational orientation and length of association. We examine relational attributes and propose variables that are the antecedents of transactional orientation in mature relationships. Implications for theory and managerial practice are highlighted.     

The relationship between technology adoption and strategy in business-to-business markets : The case of e-commerce

Firms have been traditionally advised to adopt information and communication technologies (ICT) to support the achievement of existing business objectives. However, entry into business-to-business e-commerce may require the concurrent adoption of new business strategies. This paper argues, therefore, that ICT analysis needs to be considered at the same time and at the same strategic level, as internal, competitor and market analysis. This is because the source of the competitive advantage brought by ICT has changed, to be largely obtained through increase in customers' perceived value. The literature presents a confused picture of the likely consequences to a firm of its adoption of e-commerce. This paper concludes that any such adoption must be evaluated in the environment of the individual firm. A multidimensional analytical framework, taking a combined informational and marketing perspective, is presented to assist with such evaluations.