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ISBM at the Penn State Smeal College of Business – Academic Institute supporting B2B Research. Switch to 

ISBM Pulse: Interfirm relationships

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Applications of Agency Theory in B2B Marketing: Review and Future Directions

Agency theory has proved to be useful as a theoretical and empirical lens for examining a wide range of issues in business to business markets. This chapter attempts to explore the current and potential (future) applications of agency theory in business markets. First, the chapter explains the major constructs embedded in agency theory, the assumptions underlying the theoretical structure, and the classes of problems to which this structure is inherently well suited. Next, the key characteristics of business to business marketing are discussed, as well as the demands that these characteristics impose on incumbent theories which seek to shed light on business markets. Following, the the range of issues in business markets to which agency theory might be productively applied is outlined, along with modifications/extensions required to accommodate unique features of these markets. Finally, emerging areas of interest are reviewed, identifying promising areas for future research.

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Progress and Prospects for Governance Value Analysis in Marketing: When Porter meets Williamson

This chapter provides an analysis of how the Governance Value Analysis (GVA) framework offers a better understanding of how the design and management of cooperative inter-firm relationships (with suppliers, channel partners, and customers) is integrally tied to strategic marketing decisions. The fundamental links between a firms’ positioning choice and its inimitable resource profile with the attributes and governance design choices in the relationship, and their links to both value creating and claiming, are elaborated on. Implications for future research and applications in a wide variety of strategic marketing decisions including branding, design of pricing contracts, product-form choice (vertical positioning), and bundling are discussed. 

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Network Governance

This chapter provides an overview of various network governance mechanisms in business markets, by discussing the control and coordination benefits as well as the constraints that result from firms and dyads being embedded in social networks. First, network control mechanisms are discussed that help firms monitor and steer the behaviors of their exchange partners. Second, the chapter covers how social networks can stimulate positive behavior and help align different parties for the sake of mutual gain. Third, a dark side of social networks is discussed.

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Evolution of Buyer–Seller Relationships

The importance of understanding how interorganizational buyer–seller relationships are created, persist, sometimes destroyed and occasionally re-established has been raised in multiple contexts. For many reasons, continuity is a focal construct of interest in business marketing contexts. To date empirical research on buyer–seller relationships in business markets has largely concentrated on studying the status of an existing relationship, though, typically through cross-sectional investigations. Compared with longitudinal investigations, cross-sectional approaches have advantages, such as more cost effective data collection efforts. Many aspects of buyer–seller relationships in business markets evolve only slowly over time, in which cases cross-sectional studies are an acceptable approach. Considerably less attention has been devoted to the longitudinal aspects of relationships, though, so the objective of this chapter is to synthesize existing empirical research that examines the longitudinal aspects of buyer–seller relationships, with an eye to understanding how they form, evolve over time and sometimes break down.


Relationship Marketing

Relationship marketing (RM), in both business practice and academic research, has received ever increasing attention. This chapter provides a framework for understanding relationship marketing. It provides a review of the mechanisms that underlie the relationship process. Next, it highlights the importance of analyzing the multiple dyadic ties between firms at an aggregate level to appreciate the complementary nature of various types of relationships and their impact on performance. Furthermore, the chapter offers insights into the various drivers of inter-firm relationships and connect these relationships to previously measured performance-related outcomes. Following, the moderators that leverage the effectiveness of relationships are discussed. As a conclusion directions for additional research are suggested.

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Trust, Distrust and Confidence in B2B Relationships

Trust is central in B2B relationships. It increases the ‘ability to adapt to unforeseen problems in ways that are difficult to achieve through arm’s-length ties’ (Uzzi 1996, p. 678) and is the foundation for greater commitment and performance. Meta-analysis reveals that the ‘effect of trust on satisfaction and long-term orientation is even substantially larger than the direct effect of economic outcomes’ (Geyskens et al. 1998, p. 242). However, ‘while the effects of trust on attitudes and perceptions have been . . . fairly consistent and positive, its effects on behavior and performance’ have been weaker (Langfred 2004, p. 385). Although trust has been theorized to improve performance, its actual effect is questionable (Atuahene-Gima and Li 2002; Gundlach and Cannon 2010). Why does trust not consistently generate more favorable performance? Is this due to confusion about what trust is?

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Strategic Alliances in a Business-to-Business Environment

To acquire and utilize a diverse set of capabilities, firms develop alliance strategies that help integrate different disciplines and bodies of knowledge; provide access to technologies, markets and customers that might not be easily reached otherwise; enable the acquisition of R&D; and employ innovations that might otherwise be too costly to implement and might allow one technology or set of standards to dominate another. This chapter on strategic alliances begins by discussing the different conceptual frameworks used by scholars to develop the notion of alliances. Next, alliances are defined in the context of these prevailing conceptual frameworks. The stages of alliance development are discussed, beginning with strategic intent and partner selection. Then alliance governance is discussed. The chapter concludes with managerial and academic implications.

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Learning in Coopetitive Relationships

Current literature provides a deep understanding of firms’ vertical relationships, but knowledge of horizontal relationships among firms that occupy similar positions along a supply chain is rather limited. The main purpose of this chapter is to explicate issues related to cooperation among competitors, or ‘coopetition’. This chapter provides a broad overview of the major facets of coopetition. It seeks to increase awareness of this important strategic option among managers who plan to develop inter-firm collaborative relationships and to provoke further discussion and investigation of this phenomenon among marketing scholars.

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B2B Relationship Underpinnings of Outsourcing

Firms often enter into strategic alliances (also a B2B relationship) with firms in other industries operating in the same stages of the value chain. These firms, which historically have not been suppliers, customers or competitors of the focal firm, are called ‘collaborators’. This chapter specifically focuses on B2B relationships in the realm of outsourcing, a long-standing business practice that spans multiple organizational functions. The chapter covers selected theoretical perspectives on outsourcing, outsourcing relationships between a focal firm/business and its suppliers, customers, competitors, and collaborators, the role of outsourcing in achieving competitive cost advantage and differentiation advantage, and governance issues.

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Designing B2B Markets

Researchers and practitioners face unique challenges in understanding B2B online pricing mechanisms, as well as their design and execution, compared with B2C or consumer-to-consumer (C2C) markets. mplications for product assortment managements and the general design of B2B markets. This chapter examines three issues in depth. The first issue regards the product to be auctioned and the various options for which these products would be offered within an auction, whether in regard to sequential product offerings or online and offline offerings. We then turn to the second issue of bidder behavior and strategies in B2B auctions. Third, we close with a section on the mechanism design, including issues of price visibility, and consider the roles of guarantees and price premiums. Within each of these broad themes we discuss the significance of differentiated bidders and inter-organizational relationships in B2B markets and the implications for the firm. We conclude with a consideration of additional issues germane to future research.