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Value-creation initiatives in buyer-seller relationships
Trond Hammervoll
Harstad University College, Harstad, Norway, and

Value-creation initiatives in BSRs 539
Received July 2008 Revised April 2009 Accepted May 2009

Kjell Toften
Nofima, Tromsø, Norway
Abstract
Purpose – The purpose of this paper is to identify and explore important value-creation initiatives in buyer-seller relationships (BSRs). Design/methodology/approach – Following a literature review and the presentation of an appropriate conceptual framework, an exploratory study of 14 BSRs in a variety of European industries is undertaken using in-depth semi-structured interviews with key informants. Findings – The findings justify a distinction being drawn between two types of value-creation initiatives: those that are important in transaction-based arrangements (in which efficiency is paramount); and those that are important in interaction-based relationships (in which effectiveness is paramount). Of the ten value-creation initiatives identified in the literature review, seven were found to be of importance in the BSRs of the present sample. Research limitations/implications – Despite genuine attempts to select a heterogeneous sample, most of the data did come from sellers. Future studies could look more deeply into buyer data to explore these issues in BSRs. Practical implications – The paper provides managers with practical guidance on the selection of appropriate value-creation initiatives in various types of BSRs. Originality/value – The paper reports the first known empirical study of value-creation initiatives in BSRs. Keywords Value analyis, Buyer-seller relationships Paper type Research paper

1. Introduction The emphasis in business relationships in recent years has shifted from transactions to interactions, and it is now generally accepted that firms can create and sustain significant competitive advantages by nurturing cooperative relationships between buyers and sellers (Anderson et al., 1994; Blankenburg et al., 1999; Dyer, 1997; Dyer and Singh, 1998; Lambert et al., 2004; Sheth and Sharma, 1997; Wilson, 1995). Managers who had traditionally added value by nurturing internal competencies now seek to generate value for their firms by initiating and managing external partnerships (Kay, 1993; Prahalad and Ramaswamy, 2000). In particular, firms are now seeking innovative ways of unleashing the creativity of their business partners and taking advantage of their expertise (Sahay, 2003; Swink, 2006; Tyndall et al., 1998). The traditional transactional focus was consistent with the classical economic premise that production occurs within firms, whereas outputs are exchanged between them (Alchian and Demsetz, 1972). According to this view, “cooperation” merely involves the coordination of exchanges between trading partners. In contrast,

European Business Review Vol. 22 No. 5, 2010 pp. 539-555 q Emerald Group Publishing Limited 0955-534X DOI 10.1108/09555341011068930

Nevertheless. 1995). value-creation is the process whereby the capabilities of the buyer and seller are combined to enhance the competitive advantage of one or both of the partners in the BSR (Borys and Jemison. Hammervoll. 2005). a demanding customer can communicate information about desired product attributes. the value-creation that occurs when a supplier gains ideas or other valuable inputs from a customer firm (Larson. 1993. 1976. 1987. Hakansson and Snehota. For example. have both explored the motives of firms that cooperate in technological development in seeking business opportunities. despite a growing awareness of the theoretical and managerial importance of value-creation through cooperative interactions between firms. followed by a presentation of the findings and conclusions. The purpose of this study is. together with suggestions for further research.. reducing the development time of innovations.1 Value-creation in BSRs A BSR can be understood as an organisational arrangement between a buyer and a seller that utilises the resources and/or governance structures of the two partners (Borys and Jemison. For example. For example. and jointly developing new technology in relationships of reciprocal interdependence. it is difficult to accept the notion that deep and trusting relationships always represent the optimal solution for the majority of firms as they strive to survive (with limited resources) in today’s competitive marketplace. The motivation for embarking upon such value-creation initiatives has received some attention in the literature. Within such a relationship. and Gulati and Singh (1998) have studied motives for sharing complementary technology. The paper concludes with a description of the main managerial implications and research limitations of the study. A list of value-creation initiatives identified in a review of the literature is used as a basis for mapping “real life” value-creation initiatives in 14 BSRs with a view to ascertaining whether these initiatives are really useful to firms in their efforts to create value in cooperation with other firms. these studies of cooperative motivation in technological value-creation have not directly addressed the question of value-creation initiatives in relationships between buyers and sellers. 1989). However. Contractor and Lorange (1988) and Hagedoorn (1993). to identify and describe important value-creation initiatives in buyer-seller relationships (BSRs). The remainder of this paper is organised as follows. the concept of “trust” has often been proposed as ˚ a means of enhancing cooperation (Dwyer et al. therefore.EBR 22.5 540 an interaction perspective perceives “cooperation” as including the creation of productive resources (Brousseau. The methodology for the qualitative study of the issues is then described. The aim is to analyse how buyers and sellers can contribute to value-creation within their respective firms and in the BSR itself. For example. 1992). thus motivating suppliers to improve their products in particular . This understanding of value-creation in a BSR implies that the partners to the relationship produce something that they could not otherwise achieve independently. 2. 1989). van de Ven. Literature review and conceptual framework 2. However. In the following section. Other studies have focused more directly on how buyers and sellers can contribute to value-creation in BSRs – even if there is no formal cooperative process involved. the relevant literature on value-creation initiatives is reviewed. the mechanisms by which this occurs remain poorly understood.

As Borys and Jemison (1989) noted. interaction-based relationships require ongoing mutual adjustments by both buyer and seller and continuous adaptation to each other’s circumstances (Gulati and Singh. sellers can provide information to distributors regarding products and markets (Shipley et al. etc. Nevertheless. including personal interactions between buying personnel and selling personnel (Chen and Paulraj. 1998). 2002). buyers and sellers must understand their partner’s operations if they are to achieve transparency and boundary permeability. the present study contends that a distinction should be drawn between value-creation in transaction-based arrangements and value-creation in interaction-based relationships. conversely. however. A somewhat more formal arrangement in buyer-seller arrangements has been described by Raia (1991).. In contrast.ways (Porter. value-creation is concerned with mutual learning (Gulati and Singh. Table I summarises the value-creation initiatives identified in the present literature review in terms of: Value-creation initiatives Transaction specific investments Adaptation Motivate “right” effort Effort (problem solving) Logistical information sharing Information supply Relationship specific investments Coaching partner problem solving Knowledge sharing (strategic knowledge) Willingness to combine complementary strategic resources In transactions X X X X X X X X X X In interactions Value-creation initiatives in BSRs 541 Table I. who noted that Rank Xerox reduced product-development lead-time as a result of suppliers’ suggestions regarding quality and material savings. suppliers can become integrated in the buyer’s production processes and can even make valuable contributions to improving product quality. 1990). Similarly. whereas value-creation in an interaction-based relationship involves the joint participation of partners in producing a desired output or solving a mutual problem. Value-creation initiatives . In transaction-based arrangements the key concern is technical and administrative coordination. 2004). In the latter. sellers can utilise the knowledge of buyers to learn about a new market and the best means of selling to it (Chetty and Eriksson. 1997). suggest new materials. In general. terms. as such. 2. and there have been no studies of initiatives that foster value-creation specifically in BSRs. These examples of limited cooperation between buyers and sellers in value-creation have focused on transaction-based arrangements. This entails effective communication. as discussed below. 1980). has not been established in the literature. von Hippel (1988) has made similar observations about cooperation in value-creation being fostered by suggestions between buyers and sellers. To achieve this.2 Value-creation initiatives The concept of a “value-creation initiative”. value-creation initiatives in general have been discussed in the literature. 1998). and that this subsequently fostered greater participation of suppliers in the development work of Rank Xerox. value-creation in a transaction-based arrangement equates to cost-effectiveness (Burns and New. in accordance with Borys and Jemison (1989).

A sixth value-creation initiative is. 1990) and suggestions regarding material savings (Raia. the distinction between the first and second of these was unclear in the study of Ghosh and John (1999) – in that adaptation included revisions of both investments and actions. The first three are derived from Ghosh and John (1999). which they referred to as “logistical information exchange”. firms that enjoy interaction-based relationships collaborate to produce a desired output or to solve a particular problem. However. ´ ´ ´ Rodrıguez-Dıaz and Espino-Rodrıguez. “in transactions”. 2002. Dyer and Singh (1998) suggested another type of value-creation initiative in transactions. and so on) decreases transaction costs and promotes logistical integration (Chen and Paulraj. The first is the development of problem-solving skills through coaching (Krause. (2) adaptations in plans or actions. and (3) identification and motivation of appropriate partner efforts at problem-solving. Finally. 1997. 1991). However. delivery schedules. Four value-creation initiatives can be identified in such interaction-based relationships. In such relationships. 1998).1 Value-creation initiatives in transactions. indeed. Lorenzoni and Lipparini. Bello and Gilliland (1997) characterised such coaching in terms of insightful monitoring and guidance. The exchange of such logistical information (regarding the supplier’s production processes.5 . delivery reliability. thus serving as a foundation for developing new business opportunities. technical specifications. The exchange of logistical information is thus posited in the present study as a fifth value-creation initiative. therefore. and “in interactions”. successful value-creation depends on the recipient’s ability to establish an effective system for receiving and processing this information. who. it seems that making a transaction-specific investment is included in the notion of “adaptation” as formulated by Ghosh and John (1999). Fugate et al. 2004. identified three categories of value-creation initiatives in transactions: (1) transaction-specific investments. Examples from the literature include market information (Chetty and Eriksson.3 Value-creation initiatives in interactions As noted above. other valuable non-logistical information can also be supplied from one party to the other (Collins and Hitt. The present study identifies six value-creation initiatives in the literature relating to transaction-based arrangements. Shipley et al.. 2006. the former are made for logistical purposes (that is. In terms of transaction-based arrangements. Krause et al. Further.2. whereas the latter signal the effort that is made in terms of a long-term commitment to the relationship. cost-efficiency). . 2006).EBR 22. value-creation is essentially concerned with mutual learning and the development of capabilities. 542 2.. Dyer and Singh (1998) identify two . According to this distinction. information supply. drawing on transaction cost theory (Williamson. 2006). 1999.. 1985). 2. It is the contention of this study that the “transaction-specific investments” identified by Ghosh and John (1999) should be differentiated from what might be termed “relationship-specific” investments. the degree of effort that is made in terms of the long-term relationship can thus be posited as a fourth possible value-creation initiative in transactions.

Kogut and Zander.value-creation initiatives that are relevant to interaction-based relationships when they identified: (1) sharing valuable proprietary knowledge with trading partners. 1992). our review of the literature reveals that previous research has pointed to various types of value-creation initiatives. (1999). furniture. 1992). this list of these valuecreation initiatives is used as a basis for mapping “real life” value-creation initiatives in BSRs with a view to ascertaining whether these initiatives are really useful to firms in their efforts to create value in cooperation with other firms. . four Norwegian sellers of seafood (designated S1-4 in the present study). three Norwegian manufacturers of chemical products (C1-3). In the context of interaction-based relationships. Learning about partners occurs in all relationships. three French buyers of seafood (IMP1-3). two Norwegian sellers of technical (electronic) products (T1-2). The present study therefore contends that “relation-specific investments” are not necessarily made with a view to influencing coordination costs or other logistical aspects of value-creation that are essentially transaction-based. even if not intended. . who noted that commitment is strongly correlated with relation-specific investments. Such “relationship-specific investments” are therefore posited as a fourth value-creation initiative in the context of interaction-based relationships. Finally. Sampling was conducted in successful firms from a variety of industries (seafood. In sum. Indeed. The second requires an interactive knowledge of the other party’s organisation capabilities (Iyer. it can be argued that such investments are usually made with the aim of enhancing cooperation in general (rather than for specific transactions). The list is shown in Table I. 14 firms agreed to participate in the study: . Methodology 3.1 Design and setting Because previous research in this area is scarce. chemical products. the present paper posits “relationship-specific investments” (described above) as a fourth value-creation initiative in interaction-based relationships. such learning promotes a gradual increase in commitment as the partners develop expectations regarding future cooperation – as described in the reinforcement model of commitment proposed by Anderson and Weitz (1992). rather. Although some authors ( Joscow. 3. an exploratory approach was adopted in the present study. 1997) have used the term “relationship-specific investments” in the context of a framework of transaction cost theory. two Norwegian sellers of furniture (M1-2). and electronics) to represent best industry practice in a range of settings. Value-creation initiatives in BSRs 543 . and (2) willingness to combine complementary strategic resources. 2002. . and . 2007). the first of these refers to the sharing of information for purposes other than exchange (Wang and Wei. As shown in Table II. as recommended by Churchill (1979). and this learning affects what the partners need and what they can offer each other (Larson. This view is in accordance with Blankenburg et al. 1987. In this paper. Dyer. they signal commitment to the relationship as a whole and serve as a foundation for future cooperation.

000þ 20 1. although two respondents were interviewed in three instances.000þ 500 25 1. The purpose of the interview was explained to each respondent in terms of learning about how the firm related to its buyer/supplier firms. Respondents were asked whether they agreed with the general findings. In total we contacted 18 firms. The respondents were first asked to describe how they categorised these partner firms according to their strategic importance. Characteristics of the sample As recommended by Eisenhardt (1989). They were then asked to categorise the partners in terms of cooperation (and to provide examples of such cooperation).2 Data collection and analysis In accordance with the recommendations of Miles and Huberman (1994). On most occasions a single key informant was interviewed. whereof four refused to participate.5 75 125þ N/A 125þ 125þ 75 125þ 125þ 125þ N/A 125þ 6. . Drawing on Larson (1992). in accordance with each respondent’s request. General company information was collected before the interviews to avoid wasting time during the interviews. Additional respondents were contacted as required to contribute appropriate additional insights to the study. 1989).EBR 22. Care was taken to ensure that the questions were not biased towards preordained theoretical perspectives (Eisenhardt. involvement in exports and main activities (manufacturing and retailing). The questionnaire was tested for face validity by a pilot test of marketing scholars. Each interview lasted 75 minutes on average. so in total 17 interviews were conducted. The interviews were conducted either at the location of a given firm or by telephone.25 544 Table II.000þ 1.75 37.000þ 300 400 1. All respondents understood the proposed list of value-creation initiatives and found them interesting. and total interview time for the study amounted to 20 hours. data were collected through semi-structured in-depth personal interviews that allowed for discussions and follow-up questions. The key informants were all general managers or export managers who were chosen on the basis of their first-hand knowledge of BSRs. no objections were raised. Respondents from each of the firms were identified by academics with a good knowledge of the industry in question.000þ 50 Turnover (in EUR million) 3. the sample was heterogeneous in terms of size of firms. At the end of each interview the findings were summarised according to relationship types and value-creation initiatives.5 Firm SF1 SF2 SF3 SF4 IMP1 IMP2 IMP3 M1 M2 C1 C2 C3 T1 T2 Function Manufacturer Agent/trader Manufacturer Manufacturer Salmon curing yard Supermarket chain Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer Newly established manufacturer Manufacturer Manufacturer Products Fish fillet Wild caught fish Farmed salmon Farmed salmon Farmed salmon Fish Fish Furniture Furniture Paints Industrial antiseptics Polymers Electronic systems Electronic systems Number of employees 30 15 110 1. 3. an interview guide had been developed before the interviews.

Findings Six of the ten value-creation initiatives identified in the literature review were spontaneously mentioned by the respondents during the interviews. 4. and summaries of preliminary findings were then independently reviewed by two researchers – thus fulfilling the generally accepted criteria regarding reliability and validity of qualitative data analysis (Fugate et al. even non-supply were tolerated by one respondent (IMP1). Some respondents saw this as a necessity.3 Motivate “right” effort. C3 made continuous efforts to motivate its customers in terms of transactions. This is not surprising – research on logistics and supply chain management (Chen and Paulraj. relevant documents. 1989).2 Logistical information sharing. In some instances.1. 4.. IMP3’s efforts to “motivate effort” is better described as an effort to enhance interaction.The record of each interview was machine typed in full immediately after completion. In particular. This was a prominent value-creation initiative. 1989). In this regard.. rather than an effort to enhance transactions (Borys and Jemison. the customer was . 4.1 Spontaneously mentioned initiatives 4. The findings can be summarised as follows. cooperative relationships with them.1. as the respondent from C3 observed: One party cannot choose not to adapt. rather than a chosen initiative. This finding with regard to logistical information sharing as an important value-creation initiative in BSRs was in accordance with Dyer and Singh (1998). Interpretations. IMP3 attempted to motivate some suppliers to engage in differentiation efforts by establishing long-term. 2006) stresses the importance of information sharing as the main facilitator of effective coordination in BSRs. Fugate et al. the respondent from C3 stated that it was essential to have good communication between the two firms because product handling of polymers requires specialised equipment and high levels of safety. when C3 was asked to customise its products to conform to specific customer requirements. In the seafood and chemical industries. as long as these were exceptions to the rule.1 Adaptation. In addition. 4.1. This finding confirmed that adaptations in plans and actions were important in BSRs as they create flexibility and improved market competitiveness (Ghosh and John. interactive. Qualitative analysis of the data was then conducted manually. If this target was not met. The present findings regarding the importance of adaptation and flexibility as an important value-creation initiative in BSRs were in accordance with previous theoretical studies (Ghosh and John. Any value-creation initiatives that were not mentioned spontaneously in any given interview were discussed at the end of that interview. Borys and Jemison. 2006). For example. The importance of logistical information sharing was frequently mentioned by the respondents. 2004. C3 repeatedly asked its customers to find new areas of application and to simplify product specifications. two of SF4’s customers were reported to be “demanding” customers in setting product requirements. the respondents reported that parties to the BSRs were often required to adapt to fluctuating demand and deviations from planned quantities. 1999. Value-creation initiatives in BSRs 545 Flexibility in transactions was required. it demanded a minimum purchase volume from the customer. In contrast. 1999).

In contrast. service agreements. ´ ´ ´ Lorenzoni and Lipparini.4 Information supply. 1999). This finding is in accordance with empirical observations reported in the literature (Chetty and Eriksson. However. the respondent from T1 stated that information from customers was not important for product development. . The respondent from SF4 described the process in the following terms: If a customer has an idea for improving a product. 1999.] only to the extent that the customers require it. The present findings support the contention that “motivation of right effort” is an important value-creation initiative in BSRs (Ghosh and John. . any decision to invest in new production technology was always preceded by careful analysis. As the respondent from C2 observed: We ask about their views on the future. The customer can be requested to estimate demand. firms from the seafood. The respondent from IMP2 noted that many customers: [.] transmit specific wishes about products they would like to buy. C2 then initiated its own research-and-development processes. As can be seen from Table III. . C2 relied heavily on information from customers. Raia.5 546 required to compensate C3 to cover its development costs. T1 utilised this information to improve customer service. 2006. . These requirements concern product size. 2002. 1991. and comes to us. and delivery times. After obtaining the information. which did not involve further involvement from customers.] by using our own networks of contacts. This can be a highly unstructured process and it can go on for a long time before we eventually decide to commit to the idea or not. . indeed. design. From time to time customers make special requests and then production processes must be adapted. other market opportunities for this product are explored [. and so on. Collins and Hitt. . 4. C2 undertook no value-creation initiatives other than explicitly asking for information from its customers during visits to customer sites and trade fairs. furniture and chemical products industries in the present study supplied information other than for logistical purposes – including various aspects of innovation and development regarding markets and new products. including the prospects of their product portfolio. production technology. etc. colour. The present study thus found that the supply of non-logistical information was important in the BSRs of the present sample. 2006. [such as] “biologically farmed” seafood. C2 also provided information.1. Rodrıguez-Dıaz and Espino-Rodrıguez. Customers as suppliers of information . but: [.EBR 22. we examine this idea in our laboratory. rather. In addition. SF4 relied on such information to stimulate improvements in packaging. Case firms Provide ideas for product attributes Provide estimates of expected market demand Signal appropriate production technology Provide market wants Give feedback on prototypes Give feedback on new product ideas SF4 X X X X M1 M2 C1 C2 X X X X X C3 X X X Table III.

four examples were identified of buyers acting as coaches for sellers in their problem solving. Inspect production processes (at different stages) 3. These findings support the contention that coaching is important in value-creation in interactions (Borys and Jemison. and vice versa. Contribute to seller’s development of logistical systems 2. 1998). In other words they provided examples of the Case firms The buyer acting as a coach 1.. .1. The findings in the present study are summarised in Table III. Because they are not salespersons themselves.Shipley et al. in these instances. There were also three examples of sellers acting as coaches. 4. these findings provide new insights into how coaching occurs in BSRs. the dominant theories on value-creation presented by Ghosh and John (1999) and Dyer and Singh (1998) do not consider information supply as a value-creation initiative in its own right. Contribute to problem solving (production and packaging) The seller acting as a coach 1.. In addition. 1997.] go through these with them on a strictly professional basis. T1 was motivated to do this because its involvement usually resulted in more deliveries to these projects. 4. 1997. Although such way of creating value has been reported in the literature (as empirical observations). Krause. Design inbound logistic system SF3 X X SF4 M1 M2 C3 X X X X X X Table IV. They point to misspecifications and inconsistencies and suggest what the customers should contract for. Contribute to seller’s product development 4. Krause et al. The respondent from SF3 emphasised that the combination of information exchange and problem solving (in cooperation with the other party) was the most important value-creating initiative: Customers come to us with their product specification. Train and advise customer’s staff on selling issues 3. the respondent from T1 described how the firm coaches some of its customers in the following way: These customers often need our assistance for better designing or carrying out projects [because] they do not possess the required skills themselves. thus augmenting earlier empirical observations (Bello and Gilliland. . Several informants in the seafood industry reported that buyers had sent staff to participate in problem solving at the seller’s plant. The “serial” (as opposed to the “interactive”) aspects (Borys and Jemison. these were all related to product and production issues. 1990). Value-creation initiatives in BSRs 547 Other respondents reported similar concerns for their partners’ problem solving efforts.5 Coaching partner problem solving. The respondents from SF3 and SF4 reported specific research-and-development projects in which the strategic resources of both parties had been combined to generate joint learning.6 Knowledge-sharing (strategic knowledge). For example.1. 1989) of how the information is taken advantage of is striking. customers listen to [our staff] and their advice. Coaching partner problem solving . in addition to product issues there was also one example (observed in two companies) of the seller training and advising the customer regarding its selling approach. Discuss product specifications 2. but our staff [. As shown in Table IV. 1989).

4. and so on). No respondent used the term “relationship-specific investment” during the interviews. 1989) contributes to making use of such information.1 Transaction-specific investments.2 Other value-creation initiatives Four value-creation initiatives were not spontaneously mentioned by the respondents during interviews. the respondent from one seafood supplier described how the firm had installed special equipment at its buyer’s site to reduce transportation costs. Several examples of transaction-specific investments were detected. C3 then developed the product.2. Dyer and Singh. we developed the idea that a certain chemical substance could be introduced in our basic product. In addition. 2007). Although the equipment could be used by the buyer in transactions with other suppliers. and so on). 4. As the respondent from SF3 observed: . It is clear that this was a transaction-specific investment (Williamson. 1998). although they were not spontaneously mentioned by respondents as examples of value-creation initiatives. Respondents from both SF3 and SF4 reported that cooperative partnerships entail the sharing of upturns and downturns as they occur. in this and other instances. which tended to emphasise buyer-seller cooperation. This response might have been an artefact of the methodology employed in the present study. Feedback from the customer then led to the product being modified during several iterations. 1998). These were all discussed with respondents at the end of each interview. 4. While the importance of knowledgesharing is recognised (Wang and Wei. exploring new product designs. the literature actually contains few examples of this value-creation initiative in BSRs. which was subsequently tested by the customer. we obtained concrete observations of how different types of strategic knowledge were exchanged and how “interactive” cooperation (as opposed to “serial”) (Borys and Jemison.5 548 importance of sharing strategic knowledge (Dyer and Singh. it seemed that the respondents classified such investments as “adaptation”. However.2. or (2) exploring new market opportunities (comparing different seller production processes with regard to further processing by customer. This joint learning was related to either: (1) joint problem-solving (aligning product characteristics and customer’s production processes. 1985) for the seller. Informants in other industries also noted that knowledge sharing was often essential to successful value-creation in interactions. but all appeared to recognise that such investments are always present in value-creating cooperative relationships. the costs of installing the equipment were paid by the supplier. 1989.2 Relationship-specific investments. These findings provide support for existing theories on value-creation in interactions (Borys and Jemison.EBR 22. For example. developing new packaging solutions. The respondent from C3 reported that collaboration with a customer began with a joint recognition that a new product was required to solve a particular problem: Together.

IMP2. However. This finding was in accordance with Borys and Jemison (1989). who stated that knowledge of the partner organisation enhances value-creation in interactions. product range. respondents did refer to various competencies and resources of their exchange parties – including perceived competence.2. However. Seven of the ten value-creation initiatives identified in the literature review appear to have been important in BSRs. who suggested that such willingness is a precondition for value-creation in interactions.2.4 Willingness to combine complementary strategic resources. 1985). as the respondent from IMP2 observed: The supplier must earn our confidence by performing well over several years. and so on. SF4.. 4. A willingness to combine complementary strategic resources was perceived to be a prerequisite for cooperation and a signal of commitment by several respondents (SF3. respondents did not identify such relationship-specific investments as a specific value-creation initiative. several respondents mentioned the importance of attempting to maintain loyalty to exchange partners to ensure value-creation. “effort in problem solving” did not emerge as an important concern. a willingness to combine complementary strategic resources was perceived as a prerequisite for cooperation in interactions. BSRs gradually develop as commitment and dedication increases (Dwyer et al. indeed. As such.At times the sun shines. Anderson and Weitz. Value-creation initiatives in BSRs 549 In other words. and C3). the finding is in conflict with Dyer and Singh (1998) which suggests that their model on how value is created should be modified – willingness to combine complementary strategic resources should not be considered to be a value-creation initiative variable having direct effects on value-creation. If the BSR is satisfactory to both parties they will continue to invest in it. 4. 4. the findings of the present study are in accordance with the contention of Borys and Jemison (1989). However. had gradually increased the complexity of relationships. These seven include the six that were spontaneously mentioned by the respondents.3 Summary of findings The most important value-creation initiatives identified in the present study are summarised in Table V. at other times it rains. Moreover. as was the case with “relationship-specific investments”. 1999. 1987. and the respondent from IMP3 noted that the firm had invested considerable time and resources before feeling confident that it could embark upon constructive dialogue with a given producer: We have to invest much in order to know the producers. However. It was apparent that such relationship-specific investments were a prerequisite for establishing a cooperative relationship. Nevertheless. During the interviews. 1992).3 Effort (problem solving). The respondents from C3 and IMP2 noted that their firms. together with “transaction-specific . respondents noted that uncritical loyalty could result in bankruptcy. Williamson. respondents appeared to believe that this was self-evident. rather than as a value-creation initiative in its own right. Relationship development is resource-intensive. after several years of experience. The failure of the respondents to identify “effort” as a distinct value-creation initiative is in conflict with the recommendations of both governance value analysis and the transaction cost approach (Ghosh and John. However.

By and large. Value-creation initiatives as identified in this study investments” (which were apparent in the interviews without being identified as a specific value-creation initiative). Conclusion The objective of the present study was to identify and explore important value-creation initiatives in BSRs. All types of value-creation initiatives were detected in the seafood industry. other value-creation initiatives identified in the literature – such as relationship-specific investments and willingness to combine complementary strategic resources – were perceived by the respondents in the present study as being prerequisites for cooperation in interactions and commitment. technologies. 1985. transaction-specific investments.5 Value-creation initiatives Transaction specific investments In transactions In interactions 550 Undertake investments for increasing logistical efficiency in a BSR Adaptation Show flexibility with regard to requests for temporary/ad hoc changes in logistical operations Motivate “right” effort Identify valuable partner contributions and attempt to motivate partner to perform such activities Supply logistical information Supply information relevant to exchange partner’s logistical operations Supply other information Supply information regarding developments in markets. rather than value-creating initiatives in their own right. 1998). in particular related to interaction-based relationships.EBR 22. In the chemical. 1998) have also been demonstrated to be of importance. the study found that most of the value-creation initiatives identified in the existing literature played a prominent role in the BSRs of the sample of firms that was investigated. technical. the respondents did not believe that “effort” (in problem solving) was an important value-creation initiative. logistical information sharing (Borys and Jemison. and furniture industries several (but not all) types of value-creation . By and large. Dyer and Singh. Our findings further suggest that in the larger firms’ BSRs we find more examples of value-creation initiatives. However. as suggested by Borys and Jemison (1989). In addition. 5. In particular. and products Coaching Knowledge sharing (of strategic knowledge) Discuss and guide exchange partner’s problem solving Share knowledge to facilitate joint problem solving Table V. the present findings support extant theories on value-creation in the literature (Borys and Jemison. The study has thus found support for the theoretical studies on value-creation in the extant literature. Williamson. 1989) and coaching and knowledge sharing (Dyer and Singh. across the different industries focused in this research. as identified in governance value analysis of Ghosh and John (1999) have been shown to be important in BSRs. 1989. Ghosh and John. adaptation. 1999. and motivation of “right” effort. In addition.

In addition. Effecting changes in plans or actions to obtain satisfactory logistical performance. Transaction specific investments. . Logistical information sharing. or adapting to changing logistical requirements. Information supply. Exchange of knowledge that enables the two firms to engage in joint problem-solving efforts. . . the exchange partner must respond and contribute to the value-creation initiatives made by the focal party. products. simplification of product specifications. they should be tailored to the relationship such that they have lesser value in alternative uses if the relationship is ended. A specific instance of such a value-creation was investment in appropriate goodshandling equipment to facilitate transactions with an exchange partner. In the former. markets. Identifying and motivating the exchange partner to engage in appropriate actions (differentiation efforts. In these instances. value-creation initiatives aim to reduce logistical costs or improve logistical performance. in the latter. providing information for planning logistical flows. Theoretical implications The study suggests that it is important to distinguish between value-creation in transaction-based arrangements and value-creation in interaction-based relationships. 6. 7. . these initiatives did not constitute an overt aspect of the process of value-creation in existing collaborative arrangements. Such initiatives indicate a commitment to the long-term relationship and a desire to create new opportunities for cooperation in interactions. Examples of value-creation initiatives in transaction-based arrangements included transaction-specific investments. It would seem that the large firms in these industries had the resources to participate in a range of development activities and to transact high volumes.initiatives were identified. Investments made to enhance logistical performance (efficiency in technical and administrative coordination). Strategic knowledge sharing. This class of initiatives includes relationship-specific investments and willingness to combine complementary strategic resources. . the important value-creation initiatives that emerged from this study can be summarised as follows: . value-creation initiatives require a cooperative response from the exchange partner to create value. the study has identified a third class of value-creation initiatives that might be described as prerequisites for possible value-creation in a relationship. or technologies) and coaching. or technologies). However. For managers. Coaching. Value-creation initiatives in BSRs 551 . Examples of value-creation initiatives in interaction-based relationships included the provision of strategic information (on developments in products. in the present study. in contrast. Contributing to the other firm’s problem-solving efforts. Motivate “right” effort. Exchange of information to enhance technical and administrative coordination in logistical operations. . developing new production processes). Provision of useful non-logistical information (regarding developments in markets. Adaptation. Practical implications The study provides managers with practical guidance on the selection of appropriate value-creation initiatives in various types of BSRs.

and the efficient flow and processing of information between parties. The findings in this exploratory research suggests that some value-creation initiatives are prerequisites for value-creation in BSRs. First. care should be taken in attempting to generalise the findings to other contexts. despite attempts to obtain a heterogeneous sample. Which value-creation initiatives are important to them? 8. Possible avenues of research in this regard include: . Future research can shift the focus to other value-creation initiatives ˚ beyond the dyad and related to the network (Hakansson and Snehota. Managers must be conscious of: . with data collection at several points in time. would have produced more reliable findings. 1995). . this was a cross-sectional study.5 552 Value-creation in transactions is best managed by seeking mutual transparency. Value-creation in interactions is best managed by ensuring that each party has good knowledge of the other’s organisation. How their partners contribute to value-creation? . like learning and performance. most of the data in the present study did come from sellers. the sample included only 14 firms. whereas others are not. Such efforts comprise developing variables (including reliable and valid scales for measuring them) and developing comprehensive but parsimonious models.EBR 22. Research limitations Certain limitations in the study are acknowledged. Finally. managers should note that some value-creation initiatives are followed up. The lack of empirical research in this field means that there is little guidance on how to optimise cooperative activities with partners both from a practical and an academic point of view. The present study found that some firms did not fully exploit customer feedback. even though they recognised that they probably should do so. investigations of the management of knowledge redundancy and its implications for firm.and relationship performance. and . The framework for the present study was rooted in technological interdependence within BSRs. we will be on our way to increasing our knowledge and understanding the role of value-creation initiatives in value-creation. We suggest that a natural first step for further research should be to establish models that relate different value-creation initiatives to value-creation outcomes. or (2) the establishment of appropriate joint problem-solving arrangements. Value-creation initiatives should be in the form of either: (1) the provision of relevant expertise for coaching problem-solving efforts. A longitudinal study. Future research This study reports the findings of the first empirical study of value-creation initiatives in BSRs. Despite genuine attempts to assemble a heterogeneous sample and to capture general impressions of the subject matter being examined. a study of how internet technology can be used to promote value-creation in BSRs. 9. Third. adaptations. appropriate logistical planning. Only by doing that. Second. while others are important in “transaction-” and “interaction-” based relationships.

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