Adapting within relationships to adapt to market-led change: Does relationship success lead to marketplace inertia?

The use of relationships is a key means of adapting to marketplace needs. Paradoxically deepening relational commitments lead to inertia through the institutionalisation of relationship norms, resulting in less marketplace adaptability over time. This article examines this paradox and identifies how firms manage the dual process of adapting within relationships, and to a changing external environment. Findings are based on 24 case studies of New Zealand wineries, supplemented by 20 network interviews. Relationships were used by the firms to adapt to the marketplace, and firms that formed deeper relationships placed themselves in a better competitive position vis-à-vis those that didn't, if they fit their relationship strategy to the demands of the environment. To avoid inertia firms needed to complement strong relational ties with weak market-based ties to gain insight into emerging trends. This informed decisions regarding further relational commitments, and helped strengthen their position within established networks.