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Paper info: Risk Management System in Business Relationships: Polish Case Studies

Title


Risk Management System in Business Relationships: Polish Case Studies

Authors


Justyna Swiatowiec-Szczepanska
The Poznan University of Economics
Poland
Justyna Swiatowiec-Szczepanska and
Robert Szczepanski
The Poznan University of Economics
Poland
Robert Szczepanski

Place of Publication


The paper was published at the 27th IMP-conference in Glasgow, Scotland in 2011.

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Abstract


Abstract:
The article discusses the problem of risk management in business relationships. The authors’
research (including a case study analysis of 5 different relations) enabled them to identify and
characterise the risk management systems based on a combination of formal control and
relational mechanisms. In the authors’ research it has been assumed that relational risk has a
negative influence on the cooperation results and therefore it should be a subject of
management. The main objective is not to avoid taking risk in relationships, but to reduce it
to the minimum possible level. Companies’ cooperation, including partnerships with different
entities and participation in business networks, is an immanent characteristic of contemporary
business. Therefore managers should look for the most efficient methods of dealing with
additional relational risk and opportunistic behaviour of potential partners.
In the paper the case study analysis of five relationships of companies operating on Polish
market was presented. The main objective was to demonstrate the relation between the level
of trust and the intensity of formal control (including contract and formal monitoring). The
range of social control applied in analysed relationships was also an important issue of
consideration.
The research presented in the paper indicated that companies located in Poland in order to
reduce relational risk aimed at diversification of its partners or full integration. Managers
often underlined their fear of being dependant on one, particular partner. This phenomenon
could comprehensively decrease the advantages of intensive and deepened interorganisational
cooperation in Poland. Furthermore, the research demonstrated the decisive
role of relational mechanisms and limited significance of contract in business relationship
risk management. However, relatively higher importance of contract was observed in
unbalanced relations between partners representing diverse bargaining power. A positive
relationship between application of relational tools and cooperation results was identified as
well.
The aim of the paper is to demonstrate the nature of the relationship risk management system
and the role of particular mechanisms, that enable to reduce risk and its negative influence on
cooperation results.
Keywords:
business relationships, relationship risk management, control, trust