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MA AGI G SUPPLIER-BUYER RELATIO SHIPS AS A SOURCE OF COMPETITIVE ADVA TAGE I TRA S ATIO AL COMPA IES - DOCTORAL THESIS

DISPOSITION – (WORK IN PROGRESS)

Doctoral candidate: Matevž Rašković Faculty of Economics University of Ljubljana Department for International Economics, Department for Marketing (associate member) Kardeljeva pl. 17, 1000 Ljubljana, Slovenia E-mail: matevz.raskovic@ef.uni-lj.si Phone: + 386 31 307 049 Mentor: PhD Maja Makovec Brenčič, associate professor Faculty of Economics University of Ljubljana Department for International Economics, Department for Marketing (associate member) Co-mentor: Prof. dr. ir. Jan C. Fransoo Technical University Eindhoven, The Netherlands Department for Technology Management

MA AGI G SUPPLIER-BUYER RELATIO SHIPS AS A SOURCE OF COMPETITIVE ADVA TAGE I TRA S ATIO AL COMPA IES - DOCTORAL THESIS DISPOSITION – 1. I TRODUCTIO An important shift in understanding MNCs was reached by Bartlett and Ghoshal (1989) by the end of the 1980s in their revolutionary book Managing across borders: the transnational solution, where they outlined four fundamental mentalities of the generic MNC and with special emphasis on the transnational company (TNC), as the revolutionary new form of the MNC. As outlined by Bartlett and Ghoshal (1989) an internationally active company must fulfil three strategic goals in order to develop world-scale competitive advantages and global reach. It has to develop: (1) global efficiency in existing activities, (2) international flexibility (local responsiveness), ensuring appropriate managing of risks and opportunities and (3) world-wide learning through its exposure to international and local contexts and opportunities. It must also be able to use them in their international business. While the (a) multinational mentality focuses on international flexibility (local responsiveness), (b) global mentality on global efficiency (through standardization and centralization), the (c) international mentality aims to take advantage of knowledge and capabilities of the managing mother company through world-scale expansion and adaptations (Bartlett and Ghoshal 1989/2003). With the first 3 mentalities giving priority to 1 of the 3 listed strategic goals, the (d) transnational mentality is the only one that strives simultaneously towards a unique balance between all 3 strategic goals at the same time. According to the Bartlett and Ghoshal typology transnational companies (TNCs) may be viewed as the most advanced form of an internationally active company so far, mainly because they strive to balance the three key strategic goals. What is important in this perspective is that in a sense a TNC is an idealized concept. Out of all the companies on which the Bartlett-Ghoshal typology was created, none were an identical match with the transnational company in its absolute form. This means that above all, transnationality as a mentality should be viewed as a relative concept of harmonized attempts to simultaneously strive for global efficiency, international flexibility and world-wide learning. In this view, transnational mentality is a dynamic category and a propensity to achieve a higher level of harmonization of the three listed strategic goals. Thus, a company cannot simply be characterized as being transnational or not, a simplistic dichotomous state, but must be evaluated in its attempt to efficiently and sustainably balance global efficiency, international flexibility and world-wide learning. In this context, Bartlett and Ghoshal view transnationality as a "new managerial mentality" (Bartlett and Ghoshal, 1989). Having said this, understanding transnationality calls for a shift from a structured, dichotomous classification to a broader organizational philosophy that manifests itself in the organizational capabilities and managerial mentalities of an internationally active company (Bartlett and Ghoshal, 1989), where a successful management of inter- and intra-company relationships and networks is key to its success of functioning as an integrated network of business unites (Bartlett and Ghoshal, 1989). Having worked as a researcher with Danfoss extensively within Translearn (a 6th EU research framework project), I believe it (Danfoss) to resemble many characteristics of transnationality that Bartlett and Ghoshal demonstrated in their company cases studies and subsequent
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typology. Thus, Denmark’s biggest industrial organization, family-owned and run, will be my area of research. 2. DESCRIPTIO OF THE MAI SCIE TIFIC AREA If MNCs are indeed to be understood as transnational communities and spaces of social relationships (Morgan, Kristensen and Zeitlin, 2003) they should no longer be studied as individual ‘black boxes’ exiting in a vacuum environment, but rather as social and economic actors embedded in many social spaces (i.e. buyers, suppliers, competitors, etc.). If these actors are companies, they are thus economically and socially linked to myriad other companies, forming a business network. While business networks are defined as interconnected business relationships (Prenkert and Hallén, 2006), they are not a sum of business relationships, bur contingent on each other (Prenkert and Hallén, 2006). Importantly, Claro (2004) emphasizes how business networks, supply chains and buyer-supplier relationships are all types of business relationships "raging from a web of connections to a dyadic relationship." Such a view also complements the view of Ellegaard, Johansen and Drejer (2002), who see companies as units and integrated parts in global supply networks. This is particularly relevant with the global competition trends, where businesses have become too complex and expensive for internalization of all functions, processes and activities within a company (Ellram, 1998). Such a shift has led to a widespread acknowledgement of core competencies and sources of competitive advantage, which should remain internalized within a company, and an outsourcing trend of all non-key activities (Prahalad and Hamel, 1990). Such developments have lead to an increased awareness and focus on the importance of creating and managing a competitive supplier-buyer base (Caniëls and Gelderman, 2004). Figure 1 represents the main approach to the study of supplier-buyer relationships at the Danish TNC Danfoss, which will from the position of Danfoss examine both the upstream relationships Danfoss companies have with their suppliers, as well as downstream relationships, where Danfoss companies closely work with their buyers to provide them with tailored solutions to fit their individual needs. Figure 1: A simplified visual representation of the approach in studying supplier-buyer relationships at Danfoss Main vantage point
DA FOSS (as a transnational network of empowered units) ORGA IZATIO AL BUYERS (in a network perspective)

SUPPLIERS (in a network perspective)

Source: own representation.

One of the key characteristics of contemporary internationalization and international business theory is also its multidisciplinary and an integrative research approach. In this view Figure 2 displays a graphical representation of the multidisciplinary approach of my doctoral dissertation, which will build on the integration of three main theoretical streams: (1) internationalization and MNC theory, (2) study of business relationships and (3) business and social network theory. Business relationships and network perspectives are explained in more detail in the next sections.
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Figure 2: A visual representation of the conceptual approach of the doctoral dissertation
INTERNATIONALIZATION AND MNC THEORY (Theoretical perspective) BUSINESS RELATIONSHIPS (Dyadic perspective) BUSINESS AND SOCIAL NETWORKS (Network perspective)

Evolutionary perspective of internationalization and M C theory

Marketing channels and Supply chain management (Buyer-seller)

Social network theory (Exploratory network analysis and generalized blockmodeling)

T Cs and 4 M C mentalities (Barlett and Ghoshal)

Relationship marketing and IMP group

Social exchange theory

Source: own representation.

2.1 Understanding business and supplier-buyer relationships: the dyadic view 2.1.1 Business relationships in business-to-business markets Several characteristics of business-to-business (B2B) markets substantially distinguish the socio-economic relationships, vis-à-vis business-to-consumer (B2C) markets. Hutt and Speh (2004) define a B2B market as a market, where companies, organizations, government bodies and institutions purchase and exchange supplies, products, semi-products and services for the consumption, use or re-sale. A key differentiating characteristics of B2B markets is a closer and more interdependent business relationship, where especially buyers are much more active in the whole value-adding process (Kotler and Keller, 2006; Minett, 2002). The reason for this lies in a smaller number of buyers and users, compared to B2C markets, which are in turn bigger and often more geographically focused. In B2B markets only a few organizational buyers can represent a substantial part of sales in the industry. The decision-making process is much more complex, involving a many participants and decision-stakeholders, while the complexity of products and services offered ranges between simple to highly complex and tailored solutions (Möller and Wilson, 2001). The buyer-seller approach (marketing channel perspective) or the buyer-supplier approach (supply chain management perspective) of the business relationship is more individual, as buyers range in size and demand. Products and services on B2B markets are not usually standardized or even specified by the buyers and users (Ford, 1998). Demand is usually derived and fluctuating (Hutt and Speh, 2004). B2B markets are complex, prone to high levels of risk and have a global reach (Speckman, 2004). The relationships on B2B are more close, intense and stable. Transactions are not seen as the final result, but the beginning of a long-term relationship (Hutt and Speh, 2004). 2.1.2. Defining a business relationship Morgan and Hunt (1994) have outlined the relationships paradigm in the context of all activities directed towards the establishment, development and maintenance of successful relational exchanges. Within the relationship paradigm business relationships are defined as a
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link between at least two sides (actors) (Fournier, Dobscha and Mick, 1998) in a business dimensions (Stuart, 1997), with the intent to create value for all sides (Walter, Ritter and Gemünden, 2001). Veludo, Macbeth and Purchase (2006) stress how business relationships in general and the networks consisting of these relationships are "as diverse and complex as the individuals who participate in them". Håkansson and Snehota (1995) define a business (marketing1) relationship as a joint and orientated interaction between two (or more) mutually committed actors. Iacobucci and Ostrom (1996) point out, how the interactions in question are long-term, lasting and represent a dynamic process, opposed to transaction and non-connected exchanges. According to Lemke, Goffin and Szwejczewski (2003) in such a relationship, one side offers a value bundle of products, services, know-how, information, joint goals or trust, which have special meaning and value for the other side(s). The other side in return offers its own value bundle in the form of monetary compensation, long-term collaboration or part of the business. In terms of the exchange dimension of the relationship Day (2000) distinguishes between three different levels of relationships: (1) transaction exchange level, (2) added value exchange and (3) collaborative exchange. While transaction exchange is characterized by low trust, complete independence of actors, economic exchange, information asymmetry and manipulation, the collaborative exchange involves trust, interdependence of actors, social exchange, information sharing and mutual adjustment (Jančič and Žabkar, 2002). Another important point raised by Håkannson and Snehota (1995) is a two-level approach to understanding business relationships. On an organizational level these relationships should be seen as links between two collectives and are hence named as business relationships. The second level represents links between individuals within and between organizations, which are named interpersonal relationships. While definition of business relationship between organizations is key to understanding buyer-seller dynamics, the individual interpersonal relationship shape and influence the whole business relationship context (Čater, 2006). As one of the key characteristics of B2B markets are mutually interdependent (Hayes, Jenster and Aaby, 1996 and Van Weele, 1998), long-term and stable relationships (Brennan and Turnbull, 1997) the relationship paradigm has become a key conceptual approach to the study of business relationships. El-Ansary (1997), and Parvatiyar and Seth (2000) point to a clear distinction between business relationships and relationship marketing, which should not be seen as synonyms. While marketing (business) relationships can represent all relationships between buyers and sellers in the form of collaborative, competitive or independent relationships, relationship marketing represents a distinct marketing approach focused on the creation, development and management of (only) long-term and collaborative relationships between companies and their buyers and/or direct stakeholders in the market (El-Ansay, 1997). The view of relationship marketing will be explored in more detail further on. 2.1.3 Characteristics of business relationships Business relationships are defined by two important dimensions: content and function (Håkannson and Snehota, 1995). (1) Content pertains to all aspects that are affected by such relations on both (all) sides. In a business relationship three levels of content can be
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The authors use the term marketing relationship in its widest possible sense, which in turn corresponds to the notion of a business relationships used by other authors referenced in the disposition.

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indentified: (a) activity links, (b) resource ties and (c) actor bonds. Activity links are all activities that can, in the course of the relationship, be linked with the activities from another organization (i.e. purchase activities, administrative activities, etc.). Resource ties on the other hand refer to all resource connections with other organizations (i.e. financial resources, technology, know-how, human resources, etc.). Actor bonds link both organizations and individuals (two levels) and affect both actors’ perception and their identity (Čater, 2006). The (2) functional dimension refers to the effect of a business relationship on the actors. Håkannson and Snehota (1995) again define three different relationship functions: (a) a dyadic function, (b) function for the individual actor and (c) function for other actors. The dyadic functions stems from the two-way, dyadic link between two actors, their resources and activities. The function for the individual actor on the other hand relates to the impact a relationship has on the individual actor, its own internal relationships, as well as external relationships to other actors. The function for other actors represents an opposite view from the function for the individual actor. As each actor is embedded in myriad social networks, the individual actors both shape the network context for other actors, while at the same time the network also shapes them. Similarly, Veludo, Macbeth and Purchase (2006) developed a framework for examining four different dimensions in exploring intra-organizational relationships: (1) organizational context, where the characteristics of the actor are developed, with factors such as national culture, employment system links and subsidiary policies, (2) spatial context, pertaining to the context developed between the subsidiaries and the parent, (3) the relational context, pertaining to the creation of inter-organizational relationships between subsidiaries and external dyadic partners (i.e. supplier, buyers, etc.) and the (4) network context, putting into perspective also the interaction between actors and the network in which they are embedded. With regards to other characteristics of business relationships they are not static, but change in time (Cheung and Turnbull, 1998; Ritter and Gemünden, 2003). They are usually multidimensional and complex, consisting of multiple levels and can at the same time involve conflict, cooperation, deception, manipulation and selfishness (Cheung and Turnbull, 1998; Håkannson and Snehota; 1995; McLoughlin and Horan, 2000; Turnbull, Ford and Cunningham, 1996). Business relationships can also be symmetrical, with all active parties (Håkannson and Snehota; 1995; McLoughlin and Horan, 2000) or they can be asymmetrical, characterized by power and dependence (Gelderman and van Weele, 2004). Business relationships are also often directed (Cheung and Turnbull, 1998), structured as well as to a degree informal (Håkannson and Snehota; 1995). According to Bagozzi (1975) business relationships are both economic and social, often compared to romantic relationship, but usually less exclusive and with a lover personal involvement and commitment degree (Berghäll, 2003). 2.1.4. Supplier-buyer, buyer-seller and supply chain perspectives in business relationships The paradigm shift in marketing from the beginning of the 1990’s (Kotler, 2001; Parvatiyar et al. 1992) has transformed marketing in its view of business exchange to increasingly emphasize relational aspects of market exchanges and has given rise to the relationship paradigm. These exchanges can be viewed as exchanges on end markets, or as exchanges in the process of creating products, services and solutions intended for end markets. While the
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first puts into perspective the traditional buyer-seller relationship, the second focuses on the buyer-supplier relationship as shown in Figure 3. Figure 3: Conceptual approach to buyer-supplier relationships in the doctoral dissertation
Traditional supplier-buyer view Traditional buyer-seller view

SUPPLIERS

I DUSTRIAL ORGA IZATIO

(ORGA IZATIO AL) BUYERS

Whole value chain business relationship view (network embedded)

Source: own representation.

With its focus on the end customer, the relationship marketing theory has focused on longterm customer satisfaction and value-added selling through customer-oriented strategies (Williams, 1998). In this view the relationship between industrial organization (in the function of seller) and the organization or individual buying (buyer) has become the main focal point of the business relationship. However, the buyer-seller relationship is shaped also by an antecedent relational relationship between the organizational seller and its suppliers, where the organizational seller is in the position of the buyer (from the suppliers). This approach has been emphasized more within supply chain management theory. With the emergence of companies as integrated systems, with frequent outsourcing and collaborative arrangements the hierarchical boundaries between who is buying and exchanging with whom have blurred. Nowhere is this more prevalent than in TNCs. In this context buyer-supplier and buyer-seller distinction may often become obsolete in the perspective of the whole value-chain business relationship, where industrial organizations such as Danfoss often play the role ‘moderators’ between the supplier and final buyer networks. Having said this, any reference to buyersupplier relationships in the dissertation should be understood in this context. In the broadest of terms buyer-supplier relationships may be understood as a sub-set of business relationships. Stevens (1989) defines a supply chain as a system, consisting of material suppliers, production facilities, distribution services and buyers, who are linked together by a feed-forward flow of materials and feedback flow of information and financial value. Similarly, Christopher (1998) sees a supply chain as a network of organizations involved in upstream and downstream links in different value-adding processes and activities in the form of products and services for the end buyer. Importantly, Coyle, Bardi and Langly (2003) outline buyer-supplier relationships in two ways: as (1) vertical relationships, as traditional linkages among organizations in the supply chain from material and parts supplier to retailer, and as (2) horizontal relationships, referring to more collaborative ties between organizations on same supply levels. Davis-Sramek, Fugate and Omar (2007), Gibson, Mentzer and Cook (2005); Lambert (2004), and Mentzer, Flint and Hult (2001) point out, how today the concept of supply chains is associated with a plethora of different definitions, typologies and methodological frameworks, which in turn all give merit to the their complexity, relativity and contextual rationality. Bowersox, Closs and Cooper (2002) stress that despite the illusiveness and ambiguity of a
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more general definition, the main focus in supply chain management is and should be, how to strategically design all business processes in a systematic way, to optimize long-term success of all units and entities engaged in creating and maintaining value to final buyer and user through collaboration and partnerships. Regardless of the definition, Lambert and Cooper (2000) have outlined four important characteristics of a supply chain: (1) a stage by stage evolution of increasing intra- and interorganizational coordination, going from the initial supplier’s supplier to the end buyer’s buyer; (2) it usually consists of many independent organizations, implying the importance of managing relationships between them; (3) the supply chain is characterized by a two-way flow of materials, products, services, value and information, with associated managerial and operational activities; and (4) the ultimate goal of a supply chain is to provide high value to the end buyer and user through an appropriate utilization of resources that build long-term competitive advantage. Van der Vorst (2000) on the other hand views supply chains as an intermediate supply system between a fully vertically-integrated system on one side, and a system where all members operate independently on the other side. Even in more detail, Slack, Chambers and Johnston (2001) define five types of organizing relationships in a supply-chain: (1) short-term trade, (2) semi- and long-term trade, (3) coordinated profit-sharing, (4) long-term alliances and (5) joint ventures. Claro (2004) has further expanded this view in a 7-level continuum ranging between spot market transactions on one side and complete hierarchy (ownership) on the other side. 2.1.5 Marketing channel perspective of supplier-buyer relationships Traditional management of marketing channels theory outlines two main streams relevant to buyer-supplier relationships: the (1) microeconomic and (2) behavioural streams (Stern, ElAnsary and Coughlan (1996). While the first may be seen as an extension of TCE and draws on functional and institutional marketing perspectives, combined with neoclassical economics to explain how individual marketing functions are allocated to various institutional types, the behavioural stream is focused on mechanisms that can control performance of given channel actors (Stern, El-Ansary and Coughlan, 1996). In this view channel governance is a matter of establishing control and power (Gaski, 1984). However, Heide (1994) criticizes the behavioural stream for disregarding important antecedent conditions to relevant behavioural phenomena. Hunt and Nevin (1974) combined the microeconomic and behavioural streams into a general costs vs. control trade-of channel decision (Claro, 2004). Recently, the behavioural stream of the marketing channels perspective has seen the introduction of additional concepts, such as: (1) trust and joint action (Dwyer, Schurr and Oh, 1987; Heide, 1994), (2) social structures of buyer-supplier relationships (Anderson and Narus, 1990; Doney and Cannon, 1997), (3) relationship embededness (Anderson, Håkansson and Johanson, 1994; Antia and Frasier, 2001) and (4) antecedents of buyer-supplier relationships (Heide, 1994; Stern, El-Ansary and Coughlan, 1996). 2.1.6. Relationship marketing perspective of supplier-buyer relationships Relationship marketing evolved conceptually as an extension or upgrade of the basic TCE view. According to relationship marketing theorists, buyer-seller interaction resembles more a relationship and not a distanced interaction, absent of trust and based solely on transaction costs and the bottom line. In this context, relationship marketing in addition to underlying economic parameters, also takes into account complementary non-economic characteristics
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also important in exchange-based relationships (Grönroos, 1997; O'Malley, Tynan, 2003; Zaheer, Venkartraman, 1995). The most frequently referred and cited factors associated with relational exchanges in include the following six: trust, commitment, cooperation, keeping promises, shared values and communication (Hunt, Arnett and Madhavaram, 2006). Žabkar and Makovec Brenčič (2004) outline: values, trust and relationship commitment as key components of relationship marketing. Adding to this, Rojšek and Matajič (2002) distinguish between socio-psychological factors (i.e. trust, commitment, duration and interpersonal relationships, etc.) and organizational factors (i.e. adaptation in inter-firm relationships, relationship specific investments, contractual terms, etc.) relevant to relationship marketing. Based on extensive empirical data the following key variables, important for understanding relationship marketing were noted: trust, commitment, cooperation, common goals, interdependence and power, satisfaction with results, comparison with alternative partners, adjustment, irreversible investments, joint technology and structure and social ties (Wilson, 1995). A similarly extensive outline of the key variables in terms of relationship marketing was conducted by Harker (1999), who outlined seven conceptual stages: creation, development, maintenance, interactive, long-term, emotional content and output. In 2004 Hunt and Arnett introduced an expanded model of factors contributing to relationship marketing success, which moved from the prevalent focus on only (1) relational factors (the six most widely referred factors) and included (2) resource factors, (3) competence factors, (4) internal marketing factors, (5) information technology factors, (6) market offering factors, (7) historical factors and (8) public policy factors. Despite relationship marketing putting a greater emphasis on social interaction, some authors like Cannon, Achrol and Gundlach (2000) still believe that relationship marketing represents just an extension of transaction cost mentality, with the interaction between actors not being so one-sided and distant (Ellegaard, Johansen, Drejer, 2003). Similarly, Achrol (1997) also believes, how relationship marketing just adds a dyadic approach to an old transaction cost view and neglects the impact of the network. 2.1.7 Interaction-based model of the Industrial Marketing and Purchasing Group IMP The mostly Scandinavian IMP group developed a special interaction model for studying B2B markets, based on extensive experience in the area of researching industrial relations from the 1980s onwards. The initial approach of the IMP group was to study individual links between two companies in a dyadic relationships (i.e. buyer-seller). The model was soon upgraded to included the whole network where the dyad was embedded, and thus the interaction model of the IMP group is today associated with network analysis, where a network being examined consists of myriad dyadic relationships, all based on actor interaction, activities and resources (Håkansson, Johanson, 1994; in Ellegaard, Johansen, Drejer, 2003). The IMP interactive model introduces a new social component to the study of industrial relationships, which manifests itself in the social interaction and exchanges between actors (companies or employees between companies). This social component and the development of relationships through a process of social exchanges in the area of B2B markets was acknowledge also by Anderson and Narus, 1990; Dwyer, Shurr and Oh, 1987, and Morgan and Hunt, 1994, while McLoughlin and Horan (2000) point out, how such relationships may be based on financial and economic interaction, technological interaction, exchange of knowhow, legal interaction and exchange of information.

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The implication of the interaction model of the IMP group is a high level of interdependence of one actor with regards to other actors in the network. This can be directly linked to Kristensen’s and Zeitlin’s view of companies as transnational communities. Different to transactional economics and relationship marketing view, a buyer within the IMP model does not have any power per se on the buyer-seller relationships. Both actors engaged in the dyad have incomplete control over own activities and only partial control over the activities of others. Such interconnectivity and interdependence triggers a high level of interaction and coinfluence, because "a company cannot single-handedly develop and control its relations with other actors. Even less, it can develop and influence the wider network surrounding it" (Ford, 1992). Ellegaard, Johansen and Drejer (2003) note this is not only true for industrial and business relationships, but all social relationships in general. In the end, some scholars (Cannon, Achrol and Gundlach, 2000; Achrol, 1997) clearly distinguish between relationship marketing and the work of the IMP group, while others see them more connected, with the work of the IMP group representing just a network upgrade of the basic dyad model outlined by relationship marketing theorists. In a sense, trying to distinguish between the two may seem pointless, since both examine relationship aspects between interdependent industrial actors, embedded in different contexts, some in the form of networks, other model individual. 2.2 Supplier-buyer relationships as business networks: a (social) network perspective 2.2.1 Social science and social network theory Social sciences focus on the study and explanation of various social structures, like human group structures, communities, organizations, institutions, markets, society, etc. In this context, social structures may be understood as networks of social ties in their most generic form. Social networks are also an important part of many commercial activities, business contexts and economic development (Bih-Ru et al., 2006). From a social science perspective, society is not an aggregate of individuals and their characteristics, as assumed by statistics, but rather a social structure of inter-actor ties (de Nooy, Mrvar and Batagelj, 2006). Social network analysis offers the methodology for the analysis of social relationships, enables conceptualization of social networks and provides guidelines to their analysis (de Nooy, Mrvar and Batagelj, 2006). According to Kadushin (2004) social network theory is one of a few theories in social sciences that is not reductionist, and may be applied to a variety of levels of analysis in society, from small groups to entire global systems. Berkowitz (1982) and Rogers (1987) argue that network analysis has as a tool become revolutionary for the social sciences and link it to the emergence of a new network paradigm. The early beginnings of contemporary social network analysis go as far back as 1736 and L. Euler’s groundbreaking article the “Science of networks.” Indeed the foundation of network analysis stems from the graph theory and the analysis of common social ties in visual format. While early graph theory paved the way, it is the evolution of modern Sociometry led by J.L. Moreno (1934) that has propelled network analysis to become an integrated social science specialty (Doreian, Batagelj and Ferligoj, 2005). 2.2.2 Business and supplier-buyer networks Business networks are defined as interconnected business relationships (Prenkert and Hallén, 200; Blakenburg and Johanson, 1992), they are not a sum of business relationships, bur
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contingent on each other (Prenkert and Hallén, 2006). This contingency relates to the influence of one network relationship to other relationships in the network and vice versa (Håkansson, 1982; Håkansson and Johanson, 1992; Håkansson and Snehota, 1995). Similarly, Claro (2004) emphasizes the contingency of connected relationships that influence a focal relationship, while Holmlund and Törnroos (1997) outline three dimensions of relational concepts in business networks: (1) structural dimension (links, direction of links, institutional bonds), (2) economic dimension (investments and economic bonds) and (3) social dimension (commitment, trust, atmosphere, attraction and social bonds). The authors stress the problem of grouping relational terms into the three dimensions, due to their interconnectedness through communication mechanisms. Based on social exchange theory (Cook and Emerson, 1978) a business network may also be seen as a type of exchange network (Blalenburg and Johanson, 1992), with exchange networks defined as sets of interconnected exchange relationships (Prenkert and Hallén, 2006). An alternative approach to the social exchange theory perspective is the market exchange theory perspective (Easton and Araujo, 1994) building on the concept of the organized behavioral system of (Alderson and Cox, 1948; and Alderson, 1950) and reinterpreted by Bagozzi (1974), where the business network is understood as an organized behavioral system of exchange and the main focus is on the transformations and exchanges of resources and less on the social exchange component. It is from this perspective that buyersupplier networks (sometimes referred to as supply networks) should be interpreted. They are thus networks of interconnected and contingent buyer-supplier relationships, where both market exchange (transformation and exchange of resources), as well social exchange perspectives (trust, collaboration, etc.) play equal parts. In the end Claro (2004) emphasizes how business networks, supply chains (networks) and buyer-supplier relationships are all types of business relationships "raging from a web of connections to a dyadic relationship" with often blurred boundaries. 2.2.3 Business and supplier-buyer networks as a source of competitive advantage Today’s business networks have shaped the notion of competition (Kandampully, 2003), which Best (1990) refers to as the new competition. In Best’s view individual firms no longer compete in the global marketplace. "Rather, it is networks that compete, and competitive advantage in such a scenario is largely determined by the competitive advantage of the network to which the firm belongs" (Kandampully, 2003; Lakhal et al., 1999). Pivotal to the competitive advantage of the network is collaboration and actor cooperation in the network, which can be either friendly or competitive (Hamel et al, 1989). Thus, collaboration and cooperation are common core determinants of business network competitive advantages (Jarillo, 1988; Jap, 2001), where actors enhance network value, as well as profit from being in the partnership (Kothandaraman and Wilson, 2001). Important elements of business network competitive advantage building include: trust (Barney and Hansen, 1994); resource sharing (Barney, 1991) and transaction-specific investments (Claro, 2004; Dyer and Singh, 1998) which lead to reducing risk of opportunism and shortages (Claro, 2004), and better information flow and knowledge management (Claro, 2004; Stern, El-Ansary and Coughlan, 1996; Jarillo, 1993; and Granovetter, 1985) which leads to higher added value and saving costs (Anderson and Narus, 1990; Mohr and Speckman, 1994). In addition networks minimize essential costs of infrastructure, maximize access ability to network partners, and facilitate exchange of products and services within the network (Kandampully, 2002).
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Buyer-supplier networks have in particular been identified as an important source of company competitive advantage (Kandampully, 2003). Going even further, Dyer (1996) notes how specialized supplier networks are an important source of competitive advantage in the automobile industry. At this point, a clear distinction must be made, between an abundance of literature of buyer-supplier relationships as a source of competitive advantage and buyersupplier or supply networks as a source of competitive advantage; where the literature is much scarcer. Singh (2002) understands the competitive advantage of buyer-supplier networks mainly in its customization and value added potential, based on end-to-end buyer support extending along the whole value chain (Kandampully, 2003). On the other hand Zinkhan’s (2002) view of the contribution of the buyer-supplier network to the overall company competitive advantage is more in terms of information sharing, which manifests itself in shorter time to market, lower inventories, lower production and administrative costs. 3. RESEARCH FOCUS A D U IT OF OBSERVATIO The main research focuses of my doctoral dissertation are buyer-supplier relationships, their management and their impact on overall performance and competitiveness within a Danish transnational industrial organization of Danfoss. The main starting point of my observation and research is Danfoss, Denmark’s biggest industrial organization, a leader in research, development and production of products and services of various mechanical and electrical components for an array of industries. It is family-owned, with over 21,200 employees, 60 production facilities in over 25 countries and 110 sales companies world-wide, producing over 250.000 units per day and with consolidated revenues of over 22 billion DKK (Danish Krona) or over 2,8 billion EUR and EBIT of 1,6 billion DKK or over 210 million EUR in 2006 (Danfoss Annual Report, 2007). Danfoss has been chosen as a typical representative of a TNC, based on extensive collaboration on the Translearn research project, focusing on formal and informal institutional learning between Scandinavian countries and Slovenia. Organized as a network of interdependent units, Danfoss functions not on hierarchy but on empowering units to become excellence centres and to take on additional coordination roles for the three divisions. Based on this and many other similarities to the Bartlett and Ghoshal (1989) case studies of TNC, Danfoss was chosen as a typical representative of a European TNC. Danfoss is divided into three main divisions represented by colours: (1) BLUE, for all refrigeration and air conditioning activities; (2) RED, for all heating related activities and (3) GREEN, for all power related activities. Of particular interest is the Corporate functions and services body, acting as a intermediary between the executive committee and the three ‘divisions. Within this body, supply chain and procurement coordination is of particular importance to Danfoss, since it sources over 1,3 billion EUR of supplies from over 2600 active Danfoss suppliers world-wide, in a market with highly unpredictable demand and increased pressure for flexibility (Internal records of Danfoss Trata, 2008). From a supply/value chain perspective Danfoss acts as a middle link between upstream supplier networks and downstream buyer networks, where most of the added value is created by working closely with the buyer. Bartlett and Ghoshal (1989) emphasize the unique ability of a transnational company in reaching and balancing global efficiency, international flexibility and ability for world-wide learning. According to Bartlett and Ghoshal (1989) this is possible because a transnational organization functions as an integrated organizational network, linking myriad empowered units (subsidiaries), joined and governed by a common managerial mentality, not based on power and hierarchy, but on utilizing diversity through local embededness.
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Many authors like i.e. Backhaus and Buschken (1997); Cheung and Turnbull (1998), and Veludo, Macbeth and Purchase (2004) have studied and emphasized a shift from understanding generic MNCs from the perspective of classical TCE towards a greater focus on relationships. Such a shift must be understood in the context of a turbulent and fast changing international business environment, where competitive pressures and constant change have forced and facilitated companies to re-structure in so called network organizational forms, enabling externalization of non-key activities, while enhancing value through relationships (Veludo, Macbeth and Purchase, 2004). An important role is given to supplier networks and supplier relationships. Their emergence has created new issues in managing business relationships (Möller and Halinen-Kaila, 1999) and value-creating supplier networks (Campbell, Wilson, 1998). On the other hand, the role of corporate buyers and users has also drastically changes, as they today act more as partners and not as passive recipients of final solutions. This increased interest towards relationships, as socio-economic forms of interactions is consistent with the emergence and strengthening of the relationship paradigm where i.e. Hunt, Arnett and Madhavaram (2006) have pointed out an ever increasing relevance of business relationships in both economic and marketing theory. Before that, Hunt and Morgan (1994) elaborated on the importance of networking of relationships and competition shifting to networks, not individual players (Rese, 2006). Other authors like Ford (1980); Best (1990); Nohria (1992); New and Mitropoulos (1995); Harland et al. (1999); Gulati et al. (2000); and Lamming et al. (2000) have all in their work also explored the importance of a link between the competitive advantages of companies and their supplierbuyer networks. Thus Ford (1980) sees existing supplier relationships, as an important source of competitive advantage for a company, while Day and Wesley (1988) stress, how frequent interaction among supplier and buyer networks, from the perspective of an industrial company, increase product and service differentiation, and create exchange and exit barriers for buyers and suppliers in B2B markets (Theng Lau, Goh, 2005). On the other hand DavisSramek, Fugate and Omar (2007) warn that not every relationship is of strategic importance and that such relationships are often characterized by a high level of instability. 4. GOAL A D RESEARCH QUESTIO S The main goal of my dissertation is to identify important elements of buyer-supplier relationships at Danfoss, determine the impact of their management on company performance and competitiveness and introduce a network buyer-supplier network model that aims to explain all three functional dimensions of buyer-supplier relationships: (1) a dyadic function, (1) function for the individual actor and (3) function for other actors (Håkannson and Snehota, 1995). A second important goal of the dissertation is to apply and combine also different analytical approaches to the study of buyer-supplier relationships that have not been previously combined in this field. Thus, traditional SEM testing will be upgraded with exploratory network analysis and blockmodeling. Based on the outlined main goals of the dissertation, the following three research questions were drawn, namely: 1. What elements of buyer-supplier relationships are important for Danfoss? 2. How do specific elements of buyer-supplier relationships relate to Danfoss being able to function as a T C within the Bartlett and Ghoshal (1989) typology? 3. How does a T C like Danfoss manage buyer-supplier relationships and how does their management impact their overall performance and competitiveness of the company with regards to their main competitors in the industry?
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Building on these three main research question, a series of more specific research (sub) questions has been devised: 1. What are the key elements and characteristics of buyer-supplier relationships on B2B markets within Danfoss as a T C? 2. What network structures exist in buyer-supplier relationships on B2B markets in Danfoss and how does the network context influence the individual buyer-supplier relationship? 3. What impact does an individual characteristic of the buyer-supplier relationship on B2B markets have on their management from the viewpoint of Danfoss? 4. What impact does an individual characteristic of the buyer-supplier relationship on B2B markets have on the competitiveness of Danfoss, relative to other direct competitors in the industry? 5. What important managerial implications can be derived from the current management of buyer-supplier relationships on B2B markets for Danfoss? 6. In what ways can the current management of buyer-supplier relationships on B2B markets at Danfoss be further improved? 5. RESEARCH QUESTIO S A D HYPOTHESIS TESTI G In line with the alternative models approach of SEM and the two alternative models, two separate groups of hypotheses have also been created, corresponding to both models. In addition, a third group of research hypotheses is linked to network analysis. Having said this, the main research hypothesis of my doctoral thesis is however the following: “Special collaborative structures in buyer-supplier relationships and their management on a network level are important elements of balancing global efficiency, international flexibility (local responsiveness) and world-wide learning by Danfoss in B2B markets, which manifest itself in superior performance and competitive advantage, relative to other nontransnational competitors in the industry.” Figure 4: Graphical outline of all research hypotheses relevant to the first SEM model
Joint actions H 8: +

H 4: + H 1: + Business etwork TSI

H 5: + H 7: + H 2: + Trust H 6: + Flexibility of adjustments H 9: + Performance

H 3: +

Source: Adopted from Claro, 2004.
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As a starting point Figure 4 graphically displays all the research hypotheses and the nature of the links between all the constructs relevant to Claro’s (2004) model and its testing within SEM. In the next section (due to space limitations) I provide just a brief and summarized theoretical background of the proposed links and corresponding hypotheses to the specified model. Hence, a more extensive theoretical overview has been carried out in setting up the model. H1 : The degree of information, obtained from the business network has a positive influence on the level of TSI in a buyer-supplier relationship. Hence, the more information an actor obtains from the business network, the more the business network will encourage TSI in a buyer-supplier relationship.

For the purpose of further statistical testing I have split this research hypothesis into two subhypotheses, namely: H1a: The degree of information, obtained from the business network has a positive influence on the level of TSI in people, as part of the buyer-supplier relationship. Hence, the more information an actor obtains from the business network, the more the business network will encourage TSI in people as part of a buyer-supplier relationship. H1b: The degree of information, obtained from the business network has a positive influence on the level of TSI in physical assets, as part of the buyer-supplier relationship. Hence, the more information an actor obtains from the business network, the more the business network will encourage TSI in physical assets as part of a buyer-supplier relationship. According to Carney (1998), network-based information acts as a safeguard, mitigating against dependency and risk of opportunistic behaviour (Claro, 2004; Uzzi, 1996). According to Claro, Claro and Zylbersztajn (2005) the network can be said to “posses informational advantages that go beyond information exchange” and impact both the antecedents (e.g. TSI and trust) of collaboration and the collaboration itself. Relationship embededness and the role of the network are strongly supported by information obtained from other relationships in the network by a given actor (Håkansson and Snehota, 1995; Burt, 1997; Gulati, 1998; Blankenburg, Eriksson and Johanson, 1999). According to Claro, Claro and Zylbersztajn (2005) experience, transmitted through information obtained from one relationship in the network will be related to at least some other relationships (Anderson, Håkansson and Johanson, 1994). H2 : The degree of information, obtained from the business network has a positive influence on the level of trust in a buyer-supplier relationship. Hence, the more information an actor obtains from the business network, the more the business network encourages trust in a buyer-supplier relationship.

For the purpose of further statistical testing I have split this research hypothesis into two subhypotheses, namely: H2a: The degree of information, obtained from the business network has a positive influence on the level of interpersonal trust in a buyer-supplier relationship. Hence, the more information an actor obtains from the business network, the more the business network encourages interpersonal trust in a buyer-supplier relationship.
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H2b: The degree of information, obtained from the business network has a positive influence on the level of inter-organizational trust in a buyer-supplier relationship. Hence, the more information an actor obtains from the business network, the more the business network encourages inter-organizational trust in a buyer-supplier relationship. Anderson and Narus (1990), Morgan and Hunt (1994), Olkkonen, Tikkanen and Alajoutsijärvin (2000), and Mohr and Nevin (1990) all emphasize the positive link between communication and trust. On one hand past communication establishes the level of trust (Anderson and Narus, 1990), while a trusting contexts further facilitates better and more open communication and information sharing (Mohr and Nevin, 1990). In addition Selnes (1998) believes that open and timely communication builds trust and has a direct impact on the level of satisfaction as well. H3 : The degree of information, obtained from the business network has a positive influence on the level of flexibility of adjustment in a buyer-supplier relationship. Hence, the more information an actor obtains from the network, the more the business network encourages flexibility of adjustment in a buyer-supplier relationship.

Claro, Claro and Zylbersztajn (2005) note, how network-based and network-obtained information has a direct impact on flexibility. According to Dabholkar, Johnston and Cathey (1994) and Williams (1998) information sharing in a relationship facilitates better understanding of the other partner’s position, needs and challenges, thus facilitating also greater flexibility in working towards new compromises. In their model Thakkar and Desmukh (2008) put the role of network-generated information at the core of collaborative elements, including also flexibility. Furthermore, Olorunniwo and Hartfield (2001); and Johnston et al. (2004) perhaps most clearly directly link flexibility and network-based information sharing to relational behaviour in a network that facilitates effective relationships. H4 : The degree of TSI has a positive influence on the level of joint actions as a form of collaborative behaviour in buyer-supplier relationships.

For the purpose of further statistical testing I have split this research hypothesis into two subhypotheses, namely: H4a: The degree of TSI in people has a positive influence on the level of joint actions as a form of collaborative behaviour in buyer-supplier relationships. H4b: The degree of TSI in physical assets has a positive influence on the level of joint actions as a form of collaborative behaviour in buyer-supplier relationships. Claro (2004) believes that joint actions are not just safeguards (Heide and John, 1990,) against opportunism in buyer-supplier relationships, but also as an essential management tool “in coordinating activities and resources” of high stake TSI. This has also been noted by Mukherji, Francis and Mukherji (2009). A study of buyer-supplier relationships in manufacturing firms by Zaheer, McEvily and Perrone (1998) displayed a positive and strong connection between the level of TSI in a buyer-supplier relationship and the level of joint actions among them. In a study of supplier and equipment manufacturers (Heide and John, 1990) increased joint problem solving and joint planning (manifestations of joint actions) were shown in high level TSI. A similar conclusion has also been made in a related study of
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joint ventures done by Kogut (1988), where joint ventures were formed in response to high levels of specific assets. H5 : The degree of trust has a positive influence on the degree of joint actions as a form of collaborative behaviour in buyer-supplier relationships.

For the purpose of further statistical testing I have split this research hypothesis into two subhypotheses, namely: H5a: The degree of interpersonal trust has a positive influence on the degree of joint actions as a form of collaborative behaviour in buyer-supplier relationships. H5b: The degree of inter-organizational trust has a positive influence on the degree of joint actions as a form of collaborative behaviour in buyer-supplier relationships. Ganesan (1994) sees trust in a relationship as a lubricant that binds actors together and facilitates joint actions, having also a profound impact on future intentions of actors in a relationship. According to Claro, Claro and Zylbersztajn (2005) “joint actions offer advantages in problem solving and planning because partners in a trusting buyer-supplier relationship” have more knowledge, experiences and creativity for indentifying and solving problems. Based on the views of Gadde and Snehota (2000) joint action is directly tied to trust in the sense that trust, manifested through closeness, impact the degree of integration and different behavioural manifestations of involvement. Moorman, Zaltman and Deshpande (1992) in their study of buyer-supplier relationships in market research show that high degree of trust in a partner increases the likelihood of engaging in joint actions. H6 : The degree of trust has a positive influence on the degree of flexibility of adjustments as a form of collaborative behaviour in buyer-supplier relationships.

For the purpose of further statistical testing I have split this research hypothesis into two subhypotheses, namely: H6a: The degree of interpersonal trust has a positive influence on the degree of flexibility of adjustments as a form of collaborative behaviour in buyer-supplier relationships. H6b: The degree of inter-organizational trust has a positive influence on the degree of flexibility of adjustments as a form of collaborative behaviour in buyer-supplier relationships. Morgan and Hunt (1994) outline how trusting relationships are characterized by higher levels of flexibility and tolerance, compared to relationships with lower degrees of trust. Sezen and Yilmaz (2007; referencing also Kumar, Scheer and Steenkamp, 1995) also link flexibility to uncertain and turbulent market channels and where high levels of trust are essential for building and maintain relationships. Several authors have tied the component of trust to levels of collaboration in the relationship (e.g. Pruitt, 1981; Anderson and Narus, 1990; Stern and El-Ansary, 1992; Morgan and Hunt, 1994), while Heide and John (1992; citing also Macneil, 1980) link it directly to flexibility. Anderson and Narus (1990) also link trust to the creation of a supportive atmosphere (outlined also by Holmlund and Törnroos, 1997) that encourages adaption to changing circumstances.

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H7 :

The degree of flexibility of adjustments as a form of collaborative behaviour has a positive influence on the degree of joint actions as a form of collaborative behaviour in buyer-supplier relationships. Hence, a high level of flexibility of adjustment encourages high levels of joint actions in buyer-supplier relationships.

In studies of contractual law in long-term economic relations, Macneil (1978 and 1981) found evidence that parties with more flexible relationships (absent of formal and rigid guidelines) are more inclined towards of joint action, vis-à-vis individual action. Thakkar and Desmukh (2008) have outlined, tested and confirmed joint action (namely joint decision making) as a key factor of success of buyer-supplier relationships, and outlined the level of joint activity as a key measure of success of trusting and flexible buyer-supplier relationships. In addition, Sheu, Yen and Chae (2006) indirectly also point to a need for both flexibility and joint action in order to build both competitive advantage and maintain responsiveness. H8 : The degree of joint actions as a form of collaborative behaviour has a positive influence on the overall performance and competitiveness of Danfoss in buyer-supplier relationships on B2B markets.

For the purpose of further statistical testing I have split this research hypothesis into two subhypotheses, namely: H8a: The degree of joint planning in buyer-supplier relationships as an element of joint actions (collaborative behaviour) has a positive influence on the overall performance and competitiveness of Danfoss in buyer-supplier relationships on B2B markets. H8b: The degree of joint problem solving in buyer-supplier relationships as an element of joint actions (collaborative behaviour) has a positive influence on the overall performance and competitiveness of Danfoss in buyer-supplier relationships on B2B markets. Several authors (e.g. Dwyer and Oh, 1988; Anderson and Narus, 1990; Mohr and Speckman, 1994; Zaheer, McEvily and Perrone, 1998; Claro, 2004; Sheu, Yen and Chae, 2006) have in their research and results outlined a positive and clear relationship between the level of collaboration (joint actions) and the performance outcome in buyer-supplier contexts. Mentzer, Foggin and Golicic (2000,) note how supply chain collaboration, particularly through joint action, builds competitive advantage. Jap (1999) calls this type of collaboration “pie expansion” where mutually beneficial strategic competitive advantages are created between suppliers and buyers. Lee, Padmanabhan and Whang (1997), and Lumms, Duclos and Vokurka (2003) have linked joint actions by supplier to performance of supply chains, through a reduction of the famous bullwhip effect, while other studies (namely Stank, Keller and Daugherty, 2001) link this view to a reduction in a series of logistics costs and enhanced cash flow in the supply chain. H9 : The degree of flexibility of adjustments as a form of collaborative behaviour in buyersupplier relationships has a positive influence on the overall performance and competitiveness of Danfoss on B2B markets.

Macneil (1981) links flexibility to a governance mechanism that also has a profound impact of performance in buyer-supplier relationships in terms of higher effectiveness and efficiency (Claro, 2004, pp. 57; Lush and Brown, 1996). Kannan and Tan (2006; referencing also Martin
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and Grbac, 2003) link improved responsiveness, one of the outcomes of flexibility, directly to relationship performance. According to Claro, Claro and Zylbersztajn (2005) actors through a collective initiative to maintain a successful buyer-supplier relationship engaged in flexible behaviours which leads to improved performance. Heide and John (1992) outline flexibility as one of three dimensions of relationship norms that govern relationships. As governance norms, they are thus linked performance. 6. DESCRIPTIO OF THE SCIE TIFIC METHOD 6.1. Basic research approach Outlined graphically in Figure 5 the overall research structure and approach in the doctoral thesis follows a three-step research approach and corresponds to the so called mixed research design, which consists of both a qualitative and quantitative research approach (Kaše, 2007). Such a mixed approach: “can frequently be observed in management research dealing with dyadic and network levels of analysis” (Kaše, 2007; referencing also Becerra & Gupta, 2003; Cross & Sproull, 2004). The first step, representing the qualitative part of the research, consists of a series of in-depth personal interviews. The purpose of this step was thus to obtain a more in-depth understanding of the relationships and characteristics of buyer-supplier relationships at Danfoss, and how they relate to Danfoss’ trasnationality. Figure 6: Graphical representation of the overall research structure of the doctoral thesis
Step 1: Explorative Qualitative Research (EQR) In-depth interviews with selected suppliers In-depth interviews with selected buyers

SUPPLIERS

DA FOSS

BUYERS

Step 2: Structural Equation Modeling (SEM)

SEM: 1) SEM 1 (Claro model) 2) SEM 2 (alternative model)

SEM: 1) SEM 1 (Claro model) 2) SEM 2 (alternative model)

Step 3: Network Analysis (NA)

Explorative network analysis & Blockmodeling

Source: Own depiction. Based on the information obtained from the in-depth interviews and an extensive, multitheory overview, the second step of the research approach involved the use of SEM and the testing of two alternative models, from two different perspectives, that of supplier and that of buyers. In the third step, SEM was complemented by exploratory network analysis of the double two-mode network of Danfoss supplier and buyers, where the use of blockmodeling was used to search for specific patterns and characteristics in these networks.
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6.2. Outline and description of the main quantitative methods applied Analysis on both sets of data (supplier and buyer data) will first include simple univariate statistics; such has frequencies, means, standard deviations, etc. This will be mainly performed on basic questions pertaining to selected ‘demographical’ characteristics of suppliers and buyers (i.e. number of employees, Danfoss’ share in their total revenues, etc). For this the SPSS statistical package will be used. The univariate statistics will be complemented by bivariate statistics; mainly applying partial correlations, measures of association (Chi-square and/or Cramer’s V coefficient) and mean testing (simple t-test, independent sample t-test, ANOVA, etc.), again using SPSS statistical package. In the next step multivariate statistical approaches will be applied. Based on a series of Likert scales, pertaining to different dimensions of buyer-seller relationships outlined in the conceptual model (Figure 4 on page 19) both exploratory as well as confirmatory factor analysis will be applied. For testing of conceptual models, linear structural equation modelling (alternative model testing approach – 2 models) will be applied using LISREL. The main analytical approach will be based on exploratory network analysis and will be used for analyzing the linkages between Danfoss and its suppliers, and Danfoss and its organizational buyers from a network perspective, taking into account a more interactionbased approach, where the actors’ embededness in the network and the network itself influence the individual dyadic relationships. Such an analytical approach is in line on one side with the interaction model of the Industrial and Marketing Purchasing group (Håkansson and Johanson, 1994; Ellegaard, Johansen and Drejer, 2003), while on the other side it also emphasizes the importance of structure and inter-actor ties within that structure, the two main focuses of social network analysis (de Nooy, Mrvar and Batagelj, 2006). One of the key approaches within exploratory network analysis will be the application of generalized blockmodeling for the purpose of identifying specific structural characteristics of the networks. For this the Pajek software package will be used. 7. POTE TIAL SCIE TIFIC CO TRIBUTIO OF THE DISSERTATIO In an extensive overview of academic literature on B2B marketing only 268 works out of a total of 2194 works (12.2%) explored buyer-supplier relationship perspectives (Reid and Plank, 2004). This has triggered a growing interest in buyer-supplier relationship perspectives over the last decade. While Claro (2004) points out how buyer-supplier relationships "have become fashionable in management literature over the last decades", particularly with references to networks. Prenkert and Hallén (2006) also point out to a need to study, develop, uncover business networks (they understand them in the widest possible sense as exchange networks) and to refine methodological tools, since their exist discrepancies between theoretical conceptualizations of business networks and their empirical identification. From a scientific contribution point three views of my doctoral dissertation need to be emphasized: (1) theoretical, (2) research (methodological) and (3) managerial. In terms of the theoretical contribution the dissertation will include an extensive and holistic overview of the evolution of theory on internationalization and MNCs. In this view, both chronological, as well as ‘philosophical’ views will be applied. The dissertation will further explore the concept of transnationality within the Bartlett and Ghoshal (1989) typology and link it with other fields such as relationship marketing, supply chain management and social network analysis. An important theoretical contribution will also be in the extensive overview and comparison
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of both operationalization of constructs and elements of buyer-supplier relationships, as well as methodological approaches to their research and measurement. In terms of research contributions as Veludo, Macbeth and Purchase (2004); and Johston, Lewin and Spekman (1999) acknowledge B2B relationships in an international setting are due to their complexity and harder accessibility of sufficient quantitative data much less researched compared to domestic B2B relationships. In particular the doctoral dissertation aims to improve two key points outlined, where research on the topic of supplier-buyer relationships in an international setting is of particular value: (1) it goes beyond simple dyadic exploration of B2B relationships between two business players, as it is usually the case in such research and takes into equal consideration also the interacting role of the whole network. Especially Bello, Lohtia and Dant (1999) stress the importance of looking at partnerships in international B2B contexts, while Lagendijk (1997) emphasizes the need for a better understanding of partnerships and collaboration within increasingly complex organizational structures, embedded in national as well as international contexts. Perhaps the most relevant to this first point is also the view of Harland (1996), who emphasizes an increased importance and link between dyadic and network approaches in the area of examining supplier-buyer relationships. The second aspect emphasizes the (2) move from a partial value chain perspective, taking into account only a part of the chain from the viewpoint of a single dyad and looks at the whole value chain. While in the case of Danfoss this value chain is not thought to be triadic per se, it consists of linked and interrelated dyads, with a bull-whip effect of one dyad on the other dyad in the value chain. The application of a 3-stage methodological research approach to buyer-supplier relationships also presents a novelty. By building on traditional conceptual model testing and upgrading it with exploratory network analysis, individual as well as integrated network buyer-supplier relationships views will be equally represented. The aspect of interdisciplinary pointed out by Möller in Halinen-Kaila (1999) is also a very relevant issue which this doctoral dissertation aims to address. While the topic of buyer-supplier relationships and their management at Danfoss may be approached from a (relationship) marketing, marketing channel theory, supply chain management, international management, strategic management or social networks perspectives, it is only by integrating all these perspectives that a fuller and more indepth understanding of true transnationality may be obtained. In addition the application of network analysis and generalized blockmodeling will hopefully promote this methodology also within supply chain management, marketing and international management, since it is today most widely used primarily in social science. Last but not least, the dissertation will also provide several managerial implications. An extensive theoretical overview of constructs and elements of buyer-supplier relationships should provide any MNC with a check list of potential areas it needs to address and manage in its buyer-supplier relationships. From the results of conceptual model testing the nature between specific buyer-supplier relationships constructs and their impact on company competitiveness and performance may help other companies to set their own systems of effective and efficient buyer-supplier relationship management. Of course the biggest managerial implication will be for Danfoss, as such a research will for the first time be applied in the study of buyer-supplier relationships on a company-wide scale. Due to space limitations a full reference list is available upon request and has not been included in this paper.
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