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Paper info: Understanding the non-economic value of business relationships

Title


Understanding the non-economic value of business relationships

Authors


François Durrieu and
Tibor MANDJAK
ECOLE DE MANAGEMENT DE NORMANDIE
France
Tibor MANDJAK

Place of Publication


The paper was published at the 16th IMP-conference in Bath, U.K in 2000.

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Abstract


This article contains a review of relationship value literature which is structured by episode,relationship, and network level. We propose characteristic value dimensions in each level.The article concludes by a three levels and two dimensions framework of focal relationshipvalue in business network. This value combines economic and non economic aspects andepisode, relationship and network levels."All relationships are valuable?,but some are more valuable than others." (Ford andMcDowell 1999 pp.430) The value should be measured at the activity level (Porter 1985),also at the product level (Reddy 1991). But it is not certainly enough to measure itscomplexity in the business markets. That is why it is important to understand this complexitythrough the value of the business relationships. Business relationship value is also aproblematic concept. "The value concept and value adding seem to be one of the most recentand popular trends today. However, the concept of value is multifaceted and complicated?."(Ravald and Grönroos 1996 pp.19). And Wilson said "value is a problematic concept whichcannot be ignored" (Wilson and Jantrania 1996).So value creation is now a central purpose of marketing (Jantrania and Wilson 1999) andparticularly to understand the dynamics of the business relationships (Anderson and Narus1991). It is because delivering superior value to customer enhanced his satisfaction, hiscompetitive position and his loyalty for sustaining long-term business relationships.To understand business market the basic and now days familiar concept is the businessrelationship. Our starting point about business relationships is the well known IMPinteraction model (Hakansson 1982). We emphasise that the business relationship is a processof bounded interactive exchange episodes (products/services, information, finance, and socialexchanges) between the groups of actors involved in it. Business relationships are realisedbetween the buyer and seller and demand different level of efforts in investments (money,time, skill?), organisational learning, adaptation, co-ordination, commitment and trustbuilding from both parties. The main goal and incentive to do it are to create a superior valuefor each and to share it.There are differences in the frequency, the structure and the perception of the exchangeepisodes and relationships. These are the main, but not the only, causes of the heterogeneityand dynamics of business relationships. Business relationships have different, non-sequentialdevelopment stages (pre-relationship, exploratory, developing and stable) (Ford 1980, Ford atal.1998). For each stage there is a decision situation to continue or not if so how (Valla 1986,Anderson 1995, Wilson 1995). The focal relationship is embedded in its atmosphere(Hakansson 1982), and its network (Ford at al.1998). This complexity leads to see thebusiness relationship management as an integrated element of the strategy redefinition inbusiness markets (Hakansson and Snehota 1989, Ford at al.1998). It seems that the value ofthe relationship participates to this management.Relationship management has three levels: episodes, relationships and networks. We noticethe importance of the management of the portfolio the relationships (e.g. Turnbull andZolkiewski 1995, Turnbull and Topcu 1996) even to understand the value of businessrelationships (Krapfel at al. 1991, Ford at al 1998, Ford and McDowell 1999). In our purposewe are interesting about the value of a focal business relationship at episode, relationship andnetwork level.