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Paper info: Managing the informal side of business interaction: Personal contacts in the critical phases of business relationships


Managing the informal side of business interaction: Personal contacts in the critical phases of business relationships


Aino Halinen
Turku School of Economics and Business Administration
Aino Halinen and
Asta Salmi
Helsinki School of Economics
Asta Salmi

Place of Publication

The paper was published at the 17th IMP-conference in Oslo, Norway in 2001.


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The aim of this article is to analyse the vital role that personal relations play in the existence anddevelopment of business relationships. While personal contacts are often seen to enhance initiationof business relationships their role in other critical phases of business relationship evolution havebeen ignored. Moreover, the emphasis in research has so far been on the positive features ofpersonal relations, while there is no doubt that they may also have negative effects on relationshipdevelopment. Personal contacts are in many ways at the heart of business interaction, and thereforethe issue of their management and control also becomes acute. In order to give managerialimplications, it is useful to examine the situations where personal relations are, or can be, explicitlyresorted to, or where they even risk the existence of a business relationship.In this paper we therefore concentrate on the critical phases of business relationships: initiation,crisis periods and ending, and also pay attention to the negative effects that personal contacts mayhave on business relationships. Secondary case data is used inductively as a source of ideas andempirical evidence. The cases (7) have been conducted by Finnish researchers during the pastdecade. They deal with the development of business relationships in various business contexts. Onthe basis of the data we distinguish four basic functions of personal contacts that are necessary forany business relationship to exist and develop: exchange of information, assessment, negotiationand adaptation, and service production and transfer. It is suggested that personal contacts may eitherpromote or inhibit the materialisation of these important functions. In addition, the role of personalrelations as change forces is analysed. Six dynamic functions of personal contacts are separated: therole of door opener and gatekeeper, the role of door closer and terminator, and the role of peacemaker or trouble maker. This latter separation makes it easier to view personal contacts asmanageable assets and is therefore particularly valuable for business practitioners.