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Paper info: Conflict in Business Relations. The core of conflict in oil industrial development projects.


Conflict in Business Relations. The core of conflict in oil industrial development projects.


Terje Ingebrigt Vaaland
Norwegian School of Management
Terje Ingebrigt Vaaland

Place of Publication

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


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Interaction between buyer and seller has been studied a long time within marketing,with different research streams and traditions being applied. Some of these studiesfocus on conflict motivated from a genuine interest for conflict per se, others as a wayto understanding the interaction or business relation. Following the latter I believe thatthe core of conflict is found in two interrelated sets of governance mechanismsembracing events of conflict: Formal and informal governance mechanisms. In theformer weaknesses are found in terms of i.e. lack of predetermined prescriptions forbehavior caused by planning deficits. In the latter weaknesses can be expressed throughlack of informal judgement and improvisation caused by low trust and low commitmentbeyond rules and contract. My study explores these two governance mechanisms inrelation to selected conflict events from the oil industry. In this study I extracted 266conflict events from 5 dyads which were then assessed by both the buyer and seller side(counting 738 observations) to place the events in relation to the two categories ofcauses. I found that the informal relational mechanisms are significantly moreimportant than formal plans and contractual specifications. One implication of this isthat resources spent on planning should be balanced, and possibly redirected towardsskills in handling situations than cannot be planned. This is particularly relevant whenfacing complex managerial and technological challenges common in developmentprojects characterized by a high degree of uncertainty.