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Paper info: Relationship significance: is it sufficiently explained?


Relationship significance: is it sufficiently explained?


Filipe J. Sousa
University of Madeira
Filipe J. Sousa and
Luis de Castro
Lisboa University
Luis de Castro

Place of Publication

The paper was published at the 21st IMP-conference in Rotterdam, Netherlands in 2005.



The Industrial Networks Theory (cf. Axelsson and Easton 1992; Hakansson and Snehota 1995) setsout to describe and explain the business relationships and markets in which the focal firm is deeplyembedded. One of its major propositions pertains to the (time-varying) significance of businessrelationships for the focal firm (Gadde et al. 2003), i.e., business relationships influence to someextent the focal firm’s survival. Such significance seems strongly related to the role played by businessrelationships and consequently the relationship outcomes accruing to the focal firm. The theoreticaljustification underlying this proposition is outwardly oriented, somewhat overlooking the inside of thefocal firm - in particular the influence of business relationships on what the focal firm does competentlywithin and across its boundaries. Arguably, the creation and appropriation of relationship value by thefocal firm is a necessary but not sufficient condition for relationship significance. A supplementary(internal) explanation supported by Knowledge-based Theories of the Firm (e.g., see Kogut andZander 1992), we suggest, may be missing. Our aim here has been to intuitively pinpoint a theoreticalflaw, further suggesting a feasible path for its solution.