Consensus and collaboration: norm-regulated behaviour in industrial marketing relationships.

Introduction

Because of their ability to co-ordinate and control resource flows between trading partners, relational norms have long been of interest to both marketing scholars and practitioners involved with business-to-business exchange relationships (e.g. Achrol, 1991; Bonoma, 1976; Dwyer et al., 1987; Ford, 1982). Relational norms are relationship-specific expectations about behaviour that are mutually held by the involved parties (Heide and John, 1992; MacNeil, 1980). As business-to-business exchange relationships across a number of industries are becoming closer, a particular type of relational norm is gaining in importance. Wilson (1995) argues that buyer and seller relationships have become an integral part of business-to-business operating strategies.

In a collaborative exchange relationship, the boundary between buyer and seller often becomes blurred so that it is hard to discern where one firm begins and the other ends. Firms are more frequently choosing to implement this type of exchange relationship because collaboration is increasingly viewed as necessary to gain competitive advantage. For example, both Xerox and Motorola attribute a substantial portion of their success to their close relationship with a limited number of committed suppliers who wilfully contribute technical support and innovative ideas to the new product development process. Turnbull and his colleagues have also documented an effort to reduce the supply base among UK automotive manufacturers (Turnbull et al., 1993). Owing to the inherent lack of hierarchical and/or contractual control in collaborative relationships, managers must often rely on shared collaborative norms to ensure desired outcomes. These norms evolve over the life of the trading relationship and become an integral part of the role behaviour (e.g. Heide and John, 1992). Collaborative norms direct parties to cooperate with each other in order to co-ordinate their activities for mutual benefit and forgo the opportunity to pursue their own interests at the expense of their partners (e.g. Dwyer et al., 1987; Frazier, 1983; Powell, 1988). With shared collaborative norms, partners are compelled to align their expectations and actions.

Given this, collaborative norms have become a focus of managerial interest and scholarly inquiry; however, gaps remain. Previous empirical research has, for the most part, examined the norm of collaboration from the perspective of one of the trading partners, and not from a dyadic perspective. Because effective collaboration requires appropriate perceptions by both parties, a research approach that incorporates perceptions from only one exchange partner is naturally incomplete. Our objective is to address this shortcoming by utilizing a dyadic empirical approach to study collaboration. To this end, we begin with the proposition that collaborative norms are indicated by a set of mutually held expectations: both sides expect to learn about each other's needs; share their knowledge and experience; work for mutually beneficial outcomes; and, jointly anticipate changes that could affect their future relationship. The emphasis on "both sides" should be underscored for there must be consensus across the dyad. That is, partners' subjective interpretations of their relationship must be congruent for collaborative norms to emerge.

Utilizing a dyadic conceptualization, we will attempt to answer empirically the following managerial and academic questions. How does the shared norm of collaboration emerge between trading partners? What distinguishes arms-length relationships that simply persist over time from enduring, collaborative relationships? And when are non-collaborative relationships preferable to collaborative relationships?

The paper begins with a brief discussion of the conceptual foundations on which the research propositions are built. After an explanation of our methodology and data analysis, we then combine findings from a discriminant analysis and a post hoc analysis of descriptive field interview data to explore factors that distinguish buyer-supplier relationships in which collaboration is the norm from those in which it is not.

Conceptual development

Interdependence and collaboration

Marketing literature supports the notion that the supplier and buyer must perceive similar levels of dependence for collaborative norms to emerge (e.g. Anderson and Narus, 1990). When interdependence is balanced, partners exhibit a working consensus to collaborate. Here, partners interpret and define their relationship as one in which the stakes are high for both parties. If one party acts in a manner that interferes with the goal attainment of the other, both the relationship and one's own self-interest are threatened. Thus, mutual recognition of interdependence tends to reduce the probability that one party will act in a manner that produces a suboptimal result for the partnership. With this shared understanding, collaboration is more likely to emerge. Wilson (1995) links value creation to interdependence and commitment. Through greater recognized interdependence both parties work to create value of mutual benefit. Where interdependence is asymmetrical one party might extract value creating concessions from the other.

Antecedents of interdependence: relationship specific investments and barriers to exit

Two elements that have been used extensively in the marketing literature to explain relationship interdependence are relationship specific investments and barriers to exit. As one party adapts processes to accommodate to the other, partners tend to strengthen the ties that bind them together (Hallen et al., 1991). Relationship specific investments, whose theoretic origins lie in transaction cost analysis (Williamson, 1975, 1979, 1983), are specialized investments that partners make that are of little value outside their relationship owing to the idiosyncratic nature of the investments. For example, a supplier who dedicates engineering expertise to solve a unique design problem for a manufacturer has made a relationship specific investment. At least in the short run, the supplier's investment is neither easily transferred nor recovered if the relationship terminates; thereby increasing the supplier's dependence on the relationship (e.g. Anderson and Weitz, 1991, Hallen et al., 1991). As the level of a partner's relationship specific investment increases, so does the partner's dependence on the relationship and willingness to collaborate. When both partners believe that they have similar levels of relationship specific investments, mutual recognition of interdependence exists, as should a mutual willingness to collaborate (Heide and John, 1990). Ouchi (1980) refers to this process as equity whereby each partner is satisfied with the effort and contribution of the other.

Barriers to exit are present when partners believe that terminating the established relationship would be costly. A long standing proposition in the marketing literature is that the extent to which one party is dependent on the other is directly proportional to the level of difficulty faced in gaining access to alternative sources of valued outcomes (e.g. Cadotte and Stern, 1979). To the extent that valued resources and outcomes are available outside of the established relationship, dependency is minimized and partners are more easily pulled away from the relationship. Thus, if partners believe that both face high barriers to exit, they are likely to reach a working consensus to collaborate as a means of managing resource flows between their firms.

Facilitation of collaboration: working consensus

Central to this research on collaborative norms is the concept of working consensus because, although dependence may motivate collaboration, working consensus is necessary to facilitate collaboration. In other words, unless the trading parties have congruent perceptions of their interdependence, interdependence cannot motivate collaboration. From a symbolic interaction perspective, parties exhibit a working consensus when they mutually recognize and agree on their definition of their exchange relationship (Blummer, 1969; Goffman, 1959; Scheff, 1967). Utilizing symbolic interaction theory, we adopt the premiss that both buyers' and sellers' interpretations of events, and not simply the events themselves, become the bases for understanding their relationship. The phenomena of interest become the subjective interpretations and meanings that people give to events, behaviours, memories, and intentions as they construct mental models that define the situations in which they find themselves (e.g. Waller, 1970). …