Return On Relationships Conceptual Understanding and Measurement of Mutual Gains From Relational Business Engagements

jbim cover (i).
qxd 19/07/2012 08:59 Page 1
ISSN 0885-8624
Volume 27 Number 5 2012
Journal of
Business & Industrial

Marketing
9th American Marketing
Association Relationship
Marketing Conference: Part I
Guest Editor: Dr Harriette Bettis-Outland
www.emeraldinsight.com
Journal of Business & Industrial Marketing
Volume 27, Number 5, 2012
ISSN 0885-8624
9th Relationship Marketing/AMA Conference

Guest Editor: Dr Harriette Bettis-Outland
Contents
342 Access this journal online 392 Clusters or un-clustered industries?
Where inter-firm marketing
343 Guest editorial cooperation matters
344 Return on relationships: conceptual Christian Felzensztein, Eli Gimmon and
understanding and measurement of Claudio Aqueveque
mutual gains from relational 403 A multistage behavioural and
business engagements temporal analysis of CPV in RM
Christian Grönroos and Pekka Helle Sriram Dorai and Sanjeev Varshney
360 Key account management: the inside 412 The antecedents of salespeople’s
selling job relational behaviors
James I.F. Speakman and Lynette Ryals Lei Guo and Irene C.L. Ng
370 Customer intimacy 420 Calls for papers
Jürgen Kai-Uwe Brock and
Josephine Yu Zhou
384 Using trade show information to
enhance company success:
an empirical investigation
Harriette Bettis-Outland,
Wesley J. Johnston and R. Dale Wilson
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orientation concept where the outcome variable is a measure
Guest editorial of benefits provided by this new trade show information.
Building on the model of the Return on Trade Show
Information (RTSI), this research aims to address the
common concern expressed by management of whether the
cost of trade show participation is worth the perceived
benefits. Prior to this research, the value of trade show
The contribution by Grönroos and Helle, “Return on participation was overwhelmingly determined by tangible
relationships: conceptual understanding and measurement benefits such as number of sales leads or the amount of sales
of mutual gains from relational business engagements,” tests a generated. This paper takes a broader view by including
model of mutual value creation and reciprocal return on intangible benefits such as better interdepartmental relations
relationships utilizing a case analysis approach. Grönroos and and shorter timeframe for the development of new products.
Helle offer a new definition of return on relationships that is The contribution by Felzensztein, Gimmon, and
based on mutual long term benefits and gains resulting from Aqueveque, “Clusters or non-clustered industries? Where
the establishment and maintenance of relational business inter-firm marketing cooperation matters,” analyzes inter-firm
engagement. The case study analyzes an industrial dyad relationships of organizations within three distinct industries
characterized by a long term, continuous relationship. The located in Latin America. Of these three industries, one is
paper provides an innovative perspective whereby the value of described as a well-defined cluster whereas the other two
customer relationships is measured by the financial outcome industries were not considered clustered industries. The focus
of customer relationship development and assessment of the of this research compares inter-organizational behavior and
return on customer relationships. firm relations relative to the achievement of marketing
“Key account management: the inside selling job,” is the cooperation. Findings indicate strategies that enhance inter-
subject of the paper by Speakman and Ryals. The authors firm marketing cooperation provides significant value,
discuss dual roles of key account managers, one being particularly for small- and medium-sized enterprises.
responsibilities to the sales organization and the other being Dorai and Varshney’s conceptual paper, “A multistage
responsibilities as an advocate for the customer. In contrast to behavioural and temporal analysis of customer perceived
the traditional perspective that views conflict as discrete, value in relationship marketing,” models how changes in
isolated events, Speakman and Ryals’ research incorporates customer expectations enable sellers to create value as
psychology literature that investigates conflict as inherent to exchanges mature into longer term relationships. The
social interaction. Consequently, this paper proposes that authors suggest that interactions and ongoing relationships
conflict is not an isolated event, but one that changes are crucial for organizations to create satisfactory value
constantly depending on the situation at hand. This research propositions for customers in spite of evolving customer
provides a significant practitioner contribution, particularly as needs. This model explains how components of customer
it pertains to key account management training and conflict perceived value and episodal value are transformed into total
resolution. relationship value; satisfaction, value added services, loyalty,
Brock and Zhou’s paper, “Customer intimacy,” represents commitment, trust and relationship quality are mediator
the first attempt to empirically measure and assess the variables in this model.
concept of customer intimacy. Recognized in both academic Guo and Ng contend that the measurement of relational
and industry research, customer intimacy impacts relationship behavior in a sales context is more often researched from a
commitment, repurchase intentions, word-of-mouth, consequential perspective as opposed to a causal relationship.
customer availability and information disclosure. Hence, In their paper, “The antecedents of salespeople’s relational
customer intimacy is deemed a relevant indicator of strong behaviors,” Guo and Ng look at the drivers of salespeople’s
customer ties and insight, particularly in a business-to- relational behaviors. These drivers include perceived
business context. This study will likely form the basis for reciprocity, liking of the customer, communal orientation
continued research in the area of customer intimacy. and exchange orientation. Social exchange theory forms the
“Using trade show information to enhance company theoretical basis for this study. Findings suggest that
success: an empirical investigation,” is a paper by Bettis- communal orientation, perceived reciprocity from the
Outland, Johnston and Wilson, empirically testing the customer and liking of the customer positively impacts
assertion that both tangible and intangible benefits should relational behaviors, while exchange orientation negatively
be considered when determining the value of new trade show impacts salespeople’s relational behaviors.
information to the firm. The study is grounded in the market Dr Harriette Bettis-Outland

27/5 (2012) 343
q Emerald Group Publishing Limited [ISSN 0885-8624]
343
Return on relationships: conceptual
understanding and measurement of mutual
gains from relational business engagements
Christian Grönroos and Pekka Helle
CERS Centre for Relationship Marketing and Service Management, Hanken School of Economics, Finland
Abstract
Purpose – Relationship is based on the idea of creating a win-win situation for parties involved in a business engagement. The purpose of the article is
to develop a model of mutual value creation and reciprocal return on relationships (RORR) assessment, which enables calculation of joint and separate
gains from a relational business engagement.
Design/methodology/approach – The approach takes the form of a conceptual analysis, which is tested empirically through a real-life case. The
empirical part is based on a longitudinal empirical study including several empirical cases.
Findings – Following a practice matching process, resulting in mutual innovation and aligning of their processes, resources and competencies, the
parties in a business engagement make investments in the relationship. This enables the creation of joint productivity gains. Valuation of joint
productivity gains produces an incremental value, which can be shared between the parties through a price mechanism. Finally, based on this shared
value and costs of investments in the relationship by the parties, a reciprocal return on the relationship can be assessed and split between the business
parties.
Research limitations/implications – The study addresses dyadic business engagements only. The findings enable calculation of reciprocal return on
relationships (RORR) and form a basis of further development of marketing metrics and financial contribution of marketing, and of developing financial
measures of intangible assets called for by the finance and investor communities.
Practical implications – Using the conceptual model and corresponding metrics, the financial outcome of the development of customer relationships
as well as an assessment of the return on relationships with customers can be established.
Originality/value – The approach to assess the value of customer relationships as a two-sided endeavor is novel, as well as the joint productivity
construct and the value sharing approach, and the way of assessing ROR as a reciprocal measure that can be split between the business parties.
Keywords Relationship marketing, Service logic, Service-dominant logic, Return on relationships, Reciprocal return on relationships,
Joint productivity, Marketing metrics, Marketing accountability, Value-in-use, Value chain
Paper type Conceptual paper
Introduction customers of relationship marketing exist, in spite of this

studies on relationship marketing normally look at this
The relationship marketing approach is based on a thought marketing approach from the supplier side only (see the
that two (or several) parties establish a business engagement criticism of relationship marketing in practice in Fournier
that enables both (or all) parties to gain something. In other et al., 1998), and as spending a budget instead of as an
words, it is assumed that a win-win situation can be achieved investment. In this way the win-win assumption is either
(see Christopher et al., 1991; Grönroos, 1994; Gummesson, implicitly taken for granted, or neglected.
1987 and, 2008; Morgan and Hunt, 1994; Sheth and However, relationships are two-sided. It takes two for a
Parvatiyar, 1995; Storbacka and Lehtinen, 2001; Little and relationship to exist, and this has to be true for a relationship-
Marandi, 2003; Tzokas and Saren, 2004). The parties may based approach to marketing as well. Hence, in the present
have differing and even conflicting ambitions and goals, but article we take as a starting point that possible benefits to be
nevertheless, according to relationship marketing the gained from a relational business engagement between two
possibilities to achieve mutual gains exist. Furthermore, parties, established through a relationship marketing
relationship marketing can be considered “investing in approach, have to be mutually perceived as beneficial
customers . . . (and having) an opportunity to make (compare Grönroos and Helle, 2010). In this sense, our
marketing relevant for shareholders, top management, (and)
work relates to the studies of “pie extension” by Jap (1999,
customers” (Grönroos, 2003, p. 172). Although benefits for
The current issue and full text archive of this journal is available at Authors names are in alphabetical order. Christian Grönroos is
responsible for the development of the first section of the article
www.emeraldinsight.com/0885-8624.htm
including sections on return on relationships (ROR), service approach to
calculating ROR, and practice matching and mutual value creation. Pekka
Helle is responsible for the reminder of the article including the
conceptual model of joint productivity, mutual value creation, metrics for
27/5 (2012) 344– 359 determining ROR based on mutual value creation, and the case
q Emerald Group Publishing Limited [ISSN 0885-8624] illustration. The authors want to thank the editors and the anonymous
[DOI 10.1108/08858621211236025] reviewers for their valuable comments.
344
Return on relationships Journal of Business & Industrial Marketing
Christian Grönroos and Pekka Helle Volume 27 · Number 5 · 2012 · 344 –359
2001), where she analyzed cooperation between firms in marketing can be calculated, in relational and non-relational
dyadic relationships which “. . . are designed to expand the contexts, is based on a one-sided view only. What returns
size of the joint benefit pie and give each party a share” (Jap, from customers marketing can create for the firm is in focus,
1999, p. 461). In her study she showed that, according to the and considered interesting. For example, studies of customer
respondents, the “pie” indeed could be grown, and that the asset management and customers as investments using
returns on investments in this “pie extension” for both parties customer life time value (Gupta and Lehman, 2003; Gupta
in a dyad ”. . . are products of the idiosyncratic contribution et al., 2006) and customer portfolio approaches (Venkatesan
and effort of the specific partners together”, and that these and Kumar, 2004; Kumar and George, 2007) are based on
incremental returns “. . . could not have been generated by such one-sided views. The same goes for analyses of customer
either firm in isolation” (Jap, 1999, p. 461). equity relating to current customers (Blattberg and Deighton,
In order to establish the outcome of collaboratively made 1996; Blattberg et al., 2001) as well as future potentials (Rust,
investments in a relationship, the benefits that mutually can Lemon and Zeithaml, 2004), where the customer side is
be created have to be calculated in some way. The purpose of included implicitly only, if at all.
the present article is to develop a conceptual understanding Moreover, because portfolio models are based on models
and model of how mutual gains in a business engagement are for analyzing financial instruments, customers are treated as
created, and to develop metrics for measuring the soulless assets that can be included in a portfolio or disposed
corresponding returns for the business partners in this of more or less as financial assets, without taking into account
relational engagement. Although supplier-customer the fact that unlike such assets, customers do their own
relationships frequently exist in networks of other calculations and have their own rational and less rational
relationships, where the outcome of business conducted in a decision-making criteria (Dhar and Glazer, 2003).
dyad may be influenced by how other relationships in the Furthermore, the existence of interconnectedness between
network function (Gummesson, 2006), for clarity we focus on customers is neglected. Clearly, it is not realistic to use such
a dyadic situation only in this study. models for calculating the value of customers as assets, and to
Larger firms engaged in close and on-going relationships treat customers in this way (compare Devinney et al., 1985).
with customers will probably benefit the most from the model The effects of the other side of the coin, what a firm can do
and metrics developed in the present article. Additionally, for its customers in terms of benefits for them, is left to
providers that become intertwined with their customers in traditional marketing measurements to cover, for example
terms of roles, activities, and risks are likely to benefit from applying customer satisfaction and brand awareness studies.
the model and metrics. Such a situation is frequently In addition to sales volumes and similar marketing
occurring when customers move ahead in their industry information very little information exists about the supplier
value chain, and by so doing open up opportunities for as an asset for its customer. If relationship marketing is to aim
providers to re-define existing arrangements for division of at helping the firm to create a win-win situation with its
labor. Another example of companies that may find the model customers, conceptual models and metrics geared towards
and metrics useful is industry innovators. These are one-sided measurements only are not theoretically sound, nor
companies that do not limit their strategies to dyadic make- are they helpful for business practice. Two-sided models and
or-buy decisions, but that aim to re-configure the surrounding corresponding metrics are needed.
value system in ways that make it more effective for all In the relationship marketing literature the concept return
involved parties. Furthermore, dynamic and uncertain on relationships, or ROR, is used (e.g. Gummesson, 2004,
environments as well as rising demands may increase firms’ 2008). Although there are other, non-monetary gains to be
willingness to engage in the collaborative relational efforts obtained as well, such as favorable word-of-mouth behavior
required. On the other hand, perceived risk of opportunistic and references (e.g. Ryals, 2002; Kumar et al., 2007), usually
behavior by the other party in the dyad, or of decreased return on relationships refers to monetary gains only.
flexibility to act on the marketplace may make firms less Gummesson (2008) defines it in the following way: “ROR is
inclined to engage in this type of business (compare Jap, the long-term net financial outcome caused by the establishment
1999). and maintenance of an organization’s network of relationships”
(p. 257; italics added). According to this definition, return on
Return on relationships relationships is a financial outcome over time, attributable to
the fact that a relational business engagement has been
Marketing accountability has become an important focus for established and functions. The definition also points out that
marketing research, and marketing’s failure to demonstrate its an organization’s relationships exist in a network. However,
financial accountability has been pointed out (McGovern the reciprocal nature of ROR is only implicitly accounted for
et al., 2004; Rust, Ambler, Carpenter, Kumar and Srivastava, in this definition. Therefore, we suggest the following
2004; Stewart, 2009). In the literature the complex and multi- definition of return on relationships as a mutual and
faceted process leading to customer relationship profitability
reciprocal construct:
has also been discussed (see, for example, the rather elaborate
Return on relationships (ROR) is the long term net financial outcome
conceptual customer relationship profitability model in emerging for all parties resulting from the establishment and mutual
Storbacka et al., 1994). The notion that customers or maintenance of a relational business engagement (Reciprocal ROR or RORR).
customer relationships are valuable assets is not new (e.g.
Bursk, 1966, Levitt, 1983; Wayland and Cole, 1994; Cravens This definition implies that return on relationships is an
et al., 1997). Customer relationships have been considered outcome of a mutual reciprocal process, and can be assessed
examples of firms’ market-based assets (Srivastava et al., on a relationship level as well as separately for the parties in
1998) and strategic assets (Amit and Shoemaker, 1993). the relationship. In the present article, we develop a
However, the discussion about how financial effects of conceptual model and metrics for dyadic relationships only.
345
However, in principle the model and the metrics can be the cost and revenue effects for both parties enables us to
extended to cover more complex relationships as well. establish a measurement of the engagement between the
In a discussion of the challenge of calculating the return on business parties as an asset for the mutual relationship.
investments in customer relationships, Ang and Buttle (2002)
emphasize problems associated with developing the metrics A service and value approach to calculating RORR
needed. Basically, as they observe, return on investments
(ROI) is a simple and straightforward idea. However, Because relationship marketing requires that the supplier aims
calculating returns on investments in customer relationships at supporting its customers’ processes, it has been claimed
is complicated by four issues: defining the boundaries of a that a win-win oriented relational approach must be based on
customer relationship and relationship marketing, a service perspective (Grönroos, 2000). In the discussion of
establishing what an investment in customer relationships service as a perspective on business and marketing (service
includes, deciding what is considered a return on such an logic, service-dominant logic), it has been claimed that service
investment, and choosing an appropriate time frame to use in is inherently relational (Grönroos, 2000; Vargo and Lusch,
assessing the return (Ang and Buttle, 2002). Although they 2008). Logically, this means that understanding the
discuss return on relationships in the traditional way as a one- underpinning logic of relationship marketing, and of
sided issue, the requirements they address are equally valid for relational business engagements, requires a service
developing a reciprocal ROR assessment model. In perspective. Therefore, we develop our conceptual model
subsequent sections when developing our model and related for understanding how return on relationships emerges, and
metrics, solutions to these requirements are suggested. the corresponding measurement model, in accordance with
In principle, the financial outcome can be calculated either such a perspective.
as returns on assets developed through the relational Following Grönroos (2011), we understand a service
engagement based on the calculation of the net present business perspective (service logic) from the supplier’s side
value of future earnings from customers (e.g. customer as follows:
portfolios or customers as assets), or based on changes in A service logic (service business perspective) means that a supplier does not provide
revenue and cost levels caused by the established engagement. resources for the customer’s use only, but instead it provides support to its customers’
business processes through value-supporting ways of assisting the customers’
Due to the two-sided nature of ROR adopted here – return- practices relevant to their business (business effectiveness instead of operational
and-relationships as a reciprocal construct RORR – the first efficiency only) (Grönroos, 2011, p. 241; italics added).
alternative would require not only calculating the value of the
customers as asset for the supplier, but also calculating the This means that the supplier gears its activities not only
value of the supplier as asset for the customer. towards supporting the customer’s various processes (e.g.
Due to the obvious complexity involved in such order-making, warehousing, manufacturing, cost control),
calculations, for our measurement approach we have chosen thereby creating operational efficiency. In addition, they are
to use effects on revenues and costs for the supplier and also geared towards directly supporting the customer’s
customer in a relational dyad caused by the changes taking business outcome through how efficiently operational
place in the way the relationship is developing. Cost effects for processes are supported. In this way the supplier also
the parties in the relationship relate to investments in the directly aims at having a favorable impact on its customer’s
mutual relationship made by them. This way of calculating business effectiveness. By taking this approach, it will be
financial outcomes minimizes the need to base financial possible to track down both the cost effects and the revenue
effects on estimates of future returns from customers, which effects of the way the supplier serves its customers. The
always are projections and not real figures. Normally, such expression “serve a customer” means influencing the
estimates only implicitly take costs of serving customers into customer’s business outcome favorably through support
account. Overall, in marketing research there has been a provided to customer practices relevant to the business
limited interest in cost effects, and in studies of customer outcome. In a business context, a practice is a process or
lifetime value, typically only assumptions about costs are activity performed by the customer or by the supplier, such as
made (Gupta, 2009). Customer-related costs effects are operational, administrative, financial, purchasing, or sales and
important and need to be taken into account (Ryals, 2005). marketing processes and activities (about practice theory, see,
However, normally the interest in cost effects is focused on for example, Schatzki, 2001).
acquisition, whereas costs of service are neglected. For that The win-win notion of relational business engagements,
reason analyzing costs caused by how customers interact with and the need for the supplier and customer to mutually
suppliers is lacking in marketing research (for exceptions, see maintain the relationship, means that both parties may need
Niraj et al., 2001; Van Raaij et al., 2003). to work in favor of the relationship. Hence, although it is the
In our study, cost and revenue effects of how a relationship supplier’s task to support its customer, the latter party may
develops are calculated separately. Changes in the cost level, also need to change some of its practices in order to improve
for the customer and supplier, respectively, can be calculated the possibilities for mutual value creation (about mutual value
as real cost effects, using activity-based costing, whereas only creation, see Grönroos and Helle, 2010). The service
calculations of revenue effects for the customer are based on perspective in a relational context emphasizes the value-in-
estimates. The revenue effect for the supplier is calculated use construct as a key indicator of value created for
through a price mechanism, determining the possible price customers.
increase made possible by the way the business engagement Value creation is a key concept in a service business
develops. Moreover, this approach makes it possible to perspective (cf. Grönroos, 2008; Vargo and Lusch, 2008).
combine financial effects caused for both sides in the Taking a service perspective approach, it is only natural that
relationship. In order to do win-win calculations in a we use value creation as a basis for calculating mutual returns
transparent way, this is a necessity. This way of calculating on a relationship. In a value creation context, Gupta and
346
Lehman (2005) observed that in a business engagement there correspond to the customer’s need to keep its operational
are two sides to value, namely, value for the supplier and value processes running in a smooth way, and so on.
for the customer. In the present article, we take this into In order to serve its customer well, and to effectively
account in the conceptual model as well as in the support its business outcome, the supplier must align its
measurement model. In this way the need to incorporate resources, competencies and processes with the
the mutuality of a business relationship into ROR metrics is corresponding customer resources, competencies and
observed. Value is defined as a function of revenues and costs, processes. At least those which are important for the
and therefore, incremental value created in a business customer’s business outcome need to be aligned. However,
relationship is measured as changes in costs and revenues as a business relationship is a mutual engagement, such
that are caused by activities in the relationship. Other value development processes may be needed on both sides. Hence,
aspects, such as trust in the other party, are not included in it is a matter of mutually innovating and aligning ways of
the model, but they do of course exist and influence the operating, and of resources and competencies used in various
relationship. Earlier indicators of value for customers used in processes. This mutual process of innovating and aligning
net present value calculations of customers as assets are based relevant processes, resources and competencies is called
on a value-in-exchange construct, and thus geared towards a practice matching.
transactional view of the business engagement. The service The practice matching concept, introduced by Grönroos
perspective and the value-in-use orientation enable and Helle (2010), is based on the notion of adaptation
calculations of value, and therefore also of return of between business partners (Håkansson, 1982; Hallén et al.,
relationships, which are relationally grounded. Thus, we get 1991; Brennan and Turnbull, 1999). Brennan et al. (2003,
indicators which are truly relational. p. 1,639) define adaptation as “. . . a behavioural or
Following the principles developed by Helle (2009; 2011) organizational modification at the individual, group or
value is treated as a productivity gain enabling the creation of corporate level, carried out by one organization, which is
incremental value. Moreover, because value for the parties in designed to meet the specific needs of one other
a relationship is created from the same business engagement, organization”. In Brennan and Turnbull’s (1999, p. 486)
improvements in productivity effects enjoyed by the supplier categorization of adaptation options, practice matching
and the customer are pooled and treated as joint productivity mainly corresponds to what they call strategic adaptation
gains. This leads to joint incremental value gain to be shared involving formal decision making. Both suppliers and
between the parties through a price mechanism. In order to customers may adapt, for example, their products and
be able to measure productivity in this way, an integration of production methods, delivery, pricing, information routines
productivity measurements for both the supplier and the and needs, and even the orgnization itself (Håkansson, 1982,
customer is needed. For this the concept joint productivity is p. 18). Hence, when firms adapt to their business
used (Helle, 2009; 2010; see also Grönroos and Helle, counterparts in relational contexts, both interfirm and
2010)1. This concept, and the relationship between value intrafirm adaptation have been found to be of importance
created for the business parties on one hand and joint (Brennan and Turnbull, 1999). Costs may arise in both the
productivity on the other hand are discussed in subsequent supplier and customer ends of the relationship (Axelsson and
sections of the article. Wynstra, 2002), but calculations of costs and benefits
stemming from an adaptive process have been found to be
rarely occurring (Schmidt et al., 2007). According to Brennan
Practice matching and mutual value creation
and Canning (2002), adaptations seem to take place primarily
The service perspective means that the supplier supports all for the benefit of the customer. However, from a relationship
necessary customer practices (processes and activities) marketing perspective, potentially both parties could benefit
required to have a favorable impact on the customer’s from adaptive processes. Moreover, in addition to financial
business outcome (business effectiveness). As MacMillan and effects, interfirm adaptation may also have positive effects on
McGrath (1997) observe, it is not enough for a firm to take trust and commitment in a business engagement (Brennan
well car of one, or even a few customer processes, for example and Turnbull, 1999).
with good product quality and fast deliveries. In order to Practice matching as an interfirm and intrafirm adaptive
distinguish itself from competitors it has to define all relevant process is the starting point for implementing mutual value
customer processes and activities, and serve them well. In creation, and for how to subsequently measure return on
Figure 1 a typical flow of customer and supplier processes are relationships. In Figure 2 the model of mutual value creation
illustrated in a schematic way. As can be seen from the figure, is illustrated2.
customer processes and activities have corresponding In the figure, the box in the center represents the actual
processes and activities on the supplier side. Corresponding practices (processes and activities) performed by the supplier
practices, at least the ones which are important to the and the customer, respectively. In essence, this part of the
customer’s business outcome, should function so that the figure is similar to what was illustrated by Figure 1. In the
supplier process supports the corresponding customer final analysis, the objective of performing these practices by
process. In this way the supplier does not only deliver the two parties is to create a favorable impact on the business
resources, but serves its customer by supporting its outcome of the parties involved in the business engagement.
performance. Sales and marketing corresponds to The upper side of the figure illustrates how this value creation
purchasing, order-taking and processing correspond to process progresses for the customer. The lower side shows
order-making, the supplier’s outbound logistics and how the process progresses for the supplier. The two
deliveries correspond to the customer’s inbound logistics processes are mirror picture of each other. As research into
and warehousing, invoicing corresponds to the customer’s interfirm adaptation indicates, adaptation by suppliers may be
need for cost control, repair and maintenance services more frequently occurring than adaption by customers
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Figure 1 Customer and supplier practices and their impact on the business outcome
Figure 2 The mutual value creation model
348
(Brennan et al., 2003), probably because it is more difficult possible, which in turn triggers a practice matching process.
for customers to decide what aspects of the supplier’s This process aims at aligning the customer’s and supplier’s
processes to adapt to, and how to do it (Boddy et al., 1999). processes, resources and competencies, for the sake of
However, in principle a practice matching process can be establishing combined cost effects for the parties and
initiated by any party in an on-going or potentially developing revenue effects for the customer (the revenue effect for the
business engagement, and it can result in changes in the supplier is established through a price mechanism in the value
supplier’s or in the customer’s, or in both parties’ processes. sharing phase). This combined effect equals a productivity
By developing and if necessary inventing processes, gain, in this process treated not as separate productivity
resources and competencies on either side of the measures for the supplier and customer, but instead as an
relationship, or when found appropriate on both sides, the integrated joint productivity gain attributable to the
supplier and customer flows of practices are aligned. The goal relationship itself. This is in line with the underpinning
of this practice matching process is to improve the technical logic of relationship marketing, and enables an assessment of
effects of the customer’s and supplier’s corresponding the incremental value in the relationship gained through the
processes, i.e. to have a positive effect on the practice developmental process. In the next stage, this incremental
efficiency of the two parties’ processes and activities. In the value can be shared4 between the supplier and customer
mutual value creation model this effect is labeled technical through a price mechanism, whereby the supplier gets its
value (Grönroos and Helle, 2010). This value dimension can share of the increased value as a premium price. The outcome
be measured in various operational terms, such as volume and of this phase of the process cannot be calculated, but is due to
quality. a negotiation process.
However, to be able measure the effects on business Finally, the value share of the two parties can be related to
outcomes, and subsequently on return on relationships, one the investment in the relationship development process,
has to be able to transform this technical, operational effect i.e. the possible additional cost required to establish and
into a financial value effect measured in monetary terms. For implement this relational business engagement, and thereby a
the customer (on the upper side of the model), such monetary return on the relationship (RORR) as it has been developed
measures are additional revenues created through possibilities can be assessed, and subsequently split into ROR for the
to capture growth opportunities, or through premium pricing, supplier (RORS) and the customer (RORC). In subsequent
and cost level changes. For the supplier (on the lower side of chapters the calculation model and the metrics required as
the model), such monetary measures are revenue increases well as the constructs required are developed and illustrated
through re-sales, up-sales and cross-sales possibilities and with a real-life case.
premium pricing opportunities, and cost level changes. If the
first-stage effect on operational practices – technical value/
Conceptual model of mutual value creation
practice efficiency effects – in a second stage can be
calculated as financial value of the business engagement, a To understand and estimate return on relationships (ROR),
measurement of the business effectiveness in terms of value we build on a recent approach to value creation in a relational
gains, or incremental value, for each party in the relationship business context (Helle, 2009; 2011), called mutual value
can be established. This incremental value created is due to creation (Grönroos and Helle, 2010). We posit that the
the implementation of the practice matching process, which in framework for mutual value creation has the capacity to
turn is based a service perspective on the business provide the missing link that connects investments associated
engagement. with a relational business engagement and the financial
For practice matching to work, the business parties need to consequences that accrue to the involved parties. In so doing,
open their books for each other, at least to some extent. This, the framework contributes to ongoing efforts to provide an
of course, requires a substantial amount of trust. However, answer to the question: Does relationship marketing pay off?
due to the nature of practice matching, an analysis of joint (Gummesson, 2004).
productivity gains, i.e. a combined and integrated The framework conceptualizes mutual value creation as the
improvement in both party’s practices following the driver of return on relationships (ROR). In so doing, the
relationship development process, is made possible. framework expands previous indicators of return on
Consequently, the incremental value, in the model for relationships, which delimit themselves to treating only
illustrative reasons depicted as separate financial value some aspects of exchange value as the underlying source of
outcomes for the customer and supplier, respectively, relationship returns. Instead, the framework claims that
emerges as a combined increase in the financial value of the return on relationships depends on the involved actors’
business engagement achievable through the practice relational competence rather than their ability to advance
matching-based developmental process. Hence, we have a each others’ separate strategies for well-being. The article
solid base for sharing this value gain through a price argues that doing so will align the concept of relationship
mechanism, and thereby also for assessing the return on the return more closely with the basic tenets of relationship
relationship for the parties involved as well as the value for the marketing. In Figure 4 the process flow illustrated in Figure 3
parties of the whole relationship as an asset3. is further developed for the purpose of assessing mutual value
As Figure 2 illustrates the mutual value creation model, the and creating the ROR metrics.
logic of the total process for assessing ROR in a relational
business engagement and for establishing the value of the First facet of mutual value creation – practice matching
relationship as an asset for the parties in this engagement is Following Helle (2009, 2011; also Grönroos and Helle,
schematically summarized in Figure 3. By adopting a service 2010), the paper defines mutual value creation as an
perspective on business (a service logic), a mutual support of integration of two distinct, yet closely intertwined facets.
both parties in a relationship to be developed is made The first facet of value creation comprises practice matching
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Figure 3 The logic of the return-on-relationship assessment process
Figure 4 Mutual value creation and return on relationships (ROR): calculation model
(Grönroos and Helle, 2010). Within the literature on point of view of valuation implies looking at how the monetary
relationship marketing, the role of comparing and aligning results of practice matching, when shared through price
resources in value creation – and the interactive resource accrue as value to the involved parties (Helle, 2009; 2011).
alignment it entails – is well established (Gummesson, 1995). Put differently, valuation determines whether the monetary
It implies that customers and suppliers engage in interactions worth of the performance gains actually exceeds the costs of
during which they learn from each other, which in turn may resource inputs (the investment in the relationship), when
help them align their respective resources and competencies shared through a price mechanism. Thus, value is a measure
for the purpose of creating win-win outcomes (Berry, 1995; of the profitability of the practice matching.
Morgan and Hunt, 1994; Gummesson, 2004). This view of value is conceptually in line with many – if not
However, practice matching is only half the value equation. most – value concepts that treat customer value as some form
That is, although practice matching does involve processes in of assessment, evaluation, or outcome of value creating
which performance benefits are created, it does not in itself activities (Zeithaml, 1988; Cravens et al., 1988; Monroe,
imply value creation. Whereas practice matching denotes a 1990). Underscoring the supplier view, Porter (1985) seems
process of creating a new way of operating as the underlying to intimate a similar view when he suggests that value to the
source of value – or utility – a process of valuation supplier is the difference between the price the customer pays
determines whether the performance gains de facto imply and the cost of serving that customer.
value creation for the involved parties (Helle, 2009, 2011).
The interplay between productivity and value – key to
Second facet of mutual value creation – valuation mutual value creation
The second aspect of value creation involves a process of How does the conceptual framework presented here help
some form of valuation. Examining value creation from the understand mutual value creation, and consequently return
350
on relationships (ROR)? The framework illustrates that The framework expands previous indicators of return on
mutual value creation – and ROR – is an outcome of the relationships (ROR). It shifts the focus from exchange value
interplay between practice matching and valuation. Through and supplier earnings to the process of mutual value creation
practice matching, involved actors create performance joint as the underlying basis of ROR. This means that ROR is not
gains. When these performance gains are shared through a driven by the involved actors’ separate strategies for success
pricing mechanism, their monetary worth accrues to the and well-being – as is suggested by transactional marketing –
involved parties as value. but their joint effort to make both parties better off.
Following Davis (1955), the framework posits that the The framework presented here also illustrates that the value
concept that captures these performance changes and of the relationship as an asset can be understood in terms of
translates them into monetized joint-gains is productivity. In the mutual value created. The higher the worth of the mutual
a process of valuation, the monetary worth of those joint gains value created, the higher the value of the relationship for the
is shared through a price mechanism as value to the involved involved parties. Mutual value that is created thus reflects the
parties. involved actors’ relational competence. Hence, return on
But how are productivity and value related? Put simply, relationships can be understood, and assessed, as a joint,
value is a measure of the profitability of practice matching reciprocal ROR (RORR) relating to the relationship that has
(Davis, 1955; Courbois and Temple, 1975; Gollop, 1979; been developed as such, and as individual RORs for the
Kurosawa, 1975; Pineda, 1990). That is, whereas parties in the relationship.
productivity captures the success of practice matching, value
captures the effects of practice matching in the involved Metrics for reciprocal return on relationships
actors’ monetary process. To understand how relational
investments associated with practice matching generate
(RORR) based on mutual value creation
financial consequences for the involved parties, we must This section illustrates metrics that enable estimating return
understand the interplay of productivity and value and the on relationships (ROR) based on mutual value creation
interplay between productivity outcomes for the parties in the (Helle, 2009, 2011; also Grönroos and Helle, 2010). As
business engagement. In the article the outcome of this illustrated by the conceptual framework, estimating mutual
interplay has been termed joint productivity. value creation is a process that takes place through two
The framework also highlights an interesting – and all-out phases. First, we need to quantify and monetize joint
crucial – dynamics between practice matching and the productivity gains that are created through practice
business effectiveness of the involved parties. For the matching. Second, we need to share the joint productivity
customer, the business effectiveness is a direct consequence gains through price as value to the involved parties. Both
of practice matching. Whatever performance benefits that the phases are illustrated below.
practice matching process creates for the customer directly
impact the customer’s external effectiveness (additional Determining joint productivity gains
revenues) and internal efficiency (changes in cost level), and Joint productivity gain is determined in two steps as follows:
thus its value-in-use. For the supplier, however, the link
between practice matching and business effectiveness is more JPG ¼ f ðD External Effectiveness Customer ½DEEC ;
indirect. This means that the supplier’s business effectiveness D Internal Efficiency Customer ½DIEC ;
can only be determined once the joint productivity gains are D Internal Efficiency Supplier ½DES Þ
shared through a pricing mechanism as value to the supplier
and customer. That is, the supplier’s business effectiveness is such that:
a function not only of its own success, but also the success of
the customer. In investment terms, therefore, value to the JPG ¼ ðD EECC 2 D IEC Þ 2 DIES
customer is the supplier’s investment and must come first.
Value to supplier then becomes the return on that original where:
investment, and must naturally come second. JPG ¼ Joint productivity gain.
Based on the above, the framework defines mutual value (D EEC 2 D IEC) ¼ A change in customer’s value-in-use.
creation as an interactive process of creating and sharing joint D EEC ¼ (Customer revenue Proposed –
productivity gains (Helle, 2009; 2011; also Grönroos and Customer revenue Current).
Helle, 2010). Mutual value is created when the monetary D IEC ¼ (Customer costs Proposed –
worth of the gains from practice matching exceeds the costs of Customer costs Current).
resource inputs incurred during that process. How that value D IES ¼ (Supplier costs Proposed – Supplier
accrues to the involved actors depends on how the joint costs Current).
productivity gains are shared through a price mechanism as The first step involves examining whether the practice
value to the involved parties. matching leads to a change in the customer’s revenue-
generating capacity that exceeds the change in customer’s
Return on relationships (ROR) costs. The net difference between the two concepts
The framework posits that return on relationships (ROR) is corresponds to a net change in customer’s value-in-use. The
driven by three factors: the cost associated with each party’s second step involves determining whether the net change in
relational investment following from the practice matching customer’s revenues and costs exceeds the change in costs
process, the capacity of the actors to create joint productivity that the supplier incurs, when following the practice matching
gains, as well as their ability to negotiate a share of the joint process, it helps the customer create more value-in-use. When
productivity gain through price as value. the net change in customer revenues and costs more than
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compensates the change in costs that the supplier may have accrues to the supplier when shared through price exceeds
incurred in the practice matching process, a joint productivity zero. Inversely, negative supplier value – a loss – is created
gain (JPG) is created. Inversely, when the net change in when the difference between joint productivity gain and the
customer revenues and costs does not exceed the change in share of the joint productivity gain that accrues to the supplier
costs that the supplier has incurred in the practice matching when shared through price is smaller than zero.
process, a joint productivity loss is created (JPL).
Return on relationships (ROR)
Sharing joint productivity gains through price as value In a very basic sense, return on relationships (ROR) denotes
The second phase in estimating mutual value creation the extent to which a relational business engagement leaves an
involves sharing the joint productivity gains through a price involved party better off. Thus, it answers the question:
mechanism as value to the customer and the supplier. That is, “Does it pay off to engage in a relational business engagement
value simply denotes the share of the joint productivity gain – and if yes, to what extent”? More technically, ROR denotes
that the involved parties obtain, once the gains are shared the ratio of money gained or lost on an investment in a
through a price mechanism. Thus, pricing denotes a means of relationship relative to the amount of money invested. ROR
distributing the fruits of practice matching among the thus captures whether investments in time, knowledge
involved parties. building, and efforts in reconfiguring joint processes
generate a pay-off that more than compensates for the costs
Customer value incurred by the involved parties. To that end, this section
Sharing joint productivity gain through price as value to the illustrates metrics that enable estimating return on
customer is determined as follows: relationships based on mutual value creation.
CVC ¼ ð ðD EEC 2 D IEC Þ 2 D IES Þ £ ð1 2 PÞ
Reciprocal return on relationship (RORR)
where: The reciprocal return on relationships (RORR) denotes the
joint return that the involved parties can expect from the
CVC ¼ Customer value creation relationship. As both parties contribute towards this return, it
(D EEC – D IEC) ¼ A change in customer’s value-in-use is a reciprocal construct. It is determined as follows:
(D EEC – D IEC) –
D IES ¼ Joint productivity gain ð ðD EEC 2 D IEC Þ 2 D IES Þ
RORR ¼ £ 100
(1-P) ¼ The share of the joint productivity DCC þ DCP
gain that accrues to the customer
when shared through price. “P” in where:
(1-P) denotes here the relative share RORR ¼ Reciprocal return on relationship.
of the joint productivity gain that JPG ¼ Joint productivity gain, defined as: JPG ¼ ((D EEC
accrues to the provider. This means – D IEC) – D IES).
that the remainder of the joint DCC ¼ Cost of customer’s relational investment.
productivity gain accrues to the DCS ¼ Cost of supplier’s relational investment.
customer; i.e. (1-P)5.
As illustrated by the equation, customer value (CVC) is Return on relationship (ROR) for the customer
created when the difference between joint productivity gain Return on relationship for the customer (RORC ) is
and the share of the joint productivity gain that accrues to determined as follows:
customer when shared through price is larger than zero.
Inversely, negative customer value – effectively a loss – is CVC
RORC ¼ £ 100
created when the difference between joint productivity gain, DCC
and the share of the joint productivity gain that accrues to
customer when shared through price is smaller than zero. where:
CVC ¼ Customer value; defined as ((D EEC – D IEC) – D
Supplier value IES) £ (1-P).
Sharing joint productivity gain as value to the supplier is DCC ¼ Cost of customer’s relational investment.
determined as follows:
Substituting the equation for customer value for CVC gives:
PVC ¼ ð ðD EEC 2 D IEC Þ 2 D IES Þ £ P
ð ðD EEC 2 D IEC Þ 2 D IES Þ £ ð1 2 PÞ
RORC ¼ £ 100
where: DCC
PVC ¼ Supplier value creation. Thus, return on relationship for the customer is a function of
(D EEC – D IEC) ¼ A change in customer’s value-in-use. customer value; i.e. the share of the joint productivity gain
(D EEC – D IEC) (JPG) that accrues to the customer once that gain is shared
– D IES ¼ Joint productivity gain. through a price mechanism, and the cost of customer’s
D IES ¼ A change in supplier costs. relational investment. There is a positive return on the
P ¼ Supplier’s share of the joint customer’s relational investment when the ratio between the
productivity gain once the gain is value that accrues to the customer and the cost of customer’s
shared through price. relational investment is larger than 1. Expressed as a
As illustrated by the equation, supplier value creation takes percentage, there is a positive return on the customer’s
place when the share of the joint productivity gain that relational investment when the ratio between the value that
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accrues to the customer and the cost of investment is larger Step 1 Identifying and monetizing operational changes
than 100. In very basic terms, positive return on a relationship associated with the practice matching
for a customer implies that the customer has become better The first step is to identify the operational changes for the
off by participating in the relational business engagement. customer and the supplier that would be caused by re-aligning
buyer and supplier resources. While the proposal implies work
Return on relationship (RORS) for the supplier time savings and additional revenues for the customer, both
Return on relationship for the supplier (RORS) is determined parties are required to invest in relationship development as
as follows: shown in Table I.
CVS Step 2 Putting the figures together for joint productivity

RORS ¼ £ 100
DCS gain
With all the changes in costs and revenues identified for both
where: parties, the next step involves putting the figures together to
CVS ¼ Supplier value; defined as ((D EEC 2 D IEC) 2 D determine the joint productivity gain. As the focus here lied
IES) £ P. on understanding the value-creating effects, all figures during
DCS ¼ Cost of supplier’s relational investment. the three-year analysis period were treated as real figures, and
only in subsequent sales negotiations were the annual cash
Substituting the equation for supplier value for CVS gives: flows discounted with a proper discount factor. The analysis
ð ðD EEC 2 D IEC Þ 2 D IES Þ £ ðPÞ illustrated that the outsourcing initiative would generate a
RORS ¼ £ 100 joint productivity gain of some 2,970,000 to be shared
DCS
between the customer and the supplier during the three-year
Similarly, return on relationship for the supplier is a function period (Table II).
of the value that accrues to the customer once joint
productivity gains (JPG) are shared through a price Step 3 Sharing the joint productivity gains through
mechanism, and the cost of supplier’s relational investment. price
There is a positive return on the supplier’s relational The next step involves sharing the joint productivity gains
investment when the ratio between the value that accrues to through a price mechanism as value to the buyer and value to
the supplier and the cost of supplier’s investment is larger the supplier. Through a series of iterations, the buyer and
than 1. Expressed as a percentage, there is a positive return on supplier agree to share the joint productivity gain during the
the supplier’s relational investment when the ratio between three years so that the supplier obtained 30 percent (p ¼ 0:30)
the value that accrues to the supplier and the cost of of the documented gains while the customer obtained its
investment is larger than 100. In very basic terms, positive share of the joint productivity gain as value 70 percent (1 -
return on a relationship (ROR) for a supplier implies that the P ¼ 1 2 0.30 ¼ 0.70). The process of sharing the joint
supplier has become better off by participating in the productivity gains through price can be seen in Table III.
relational business engagement.
Step 4 Determining the return on relationship (ROR)
Determining the return on relationship (ROR) is carried out
Determining return on relationships (ROR): case in two steps. First, the customer and the supplier estimate the
industrial dyad total return on relationship for the whole business
engagement (RORR). This means estimating how much
In this section, the process of determining return on better off both parties would be jointly if they went ahead with
relationships (ROR) is illustrated through a real-life case the proposal Table IV.
example6. The case example involves an industrial dyad with The second step involves determining return on
years’ worth of common history. The customer is a leading relationship (ROR) for each of the parties individually. The
supplier of water, air, and liquid measurement services that process is shown in Table V.
buys technology platforms, equipment, and spares to keep its
measurement systems running smoothly. The supplier is a Case summary
technology and product supplier with a long history of As the case analysis illustrates, the relational business
manufacturing and technology excellence. engagement would imply a healthy business opportunity for
The challenge facing the customer and the supplier is as both the customer and the supplier. Throughout the three-
follows. The supplier has suggested the customer a joint year contract period, both companies would indeed earn an
business opportunity where the supplier would take over the impressive profit in excess of current margin levels. In real
operational management of customer’s measurement terms, the return on relationship for the customer (RORC)
processes through an outsourcing agreement. According to would amount to 1,730 percent whereas the return on
the supplier, doing so would help the customer move ahead in relationship for the supplier (RORS) would be 150 percent.
the value chain and, in so doing, save operating expenses. The The reciprocal return on relationship – the return on the
proposal also involves the supplier launching a new data relationship as such (RORR) – is 421 percent, or in excess of
processing technology to help the customer create additional four times the combined costs of the joint investment in the
revenue. Although the proposal seems promising, one relationship. With both parties confident in the soundness of
question remains: does the relationship strategy pay off? To the opportunity, all that was needed now was to plan how to
that end, the supplier and customer deploy a new approach move ahead with the process and to ensure an end-to-end
that helps them understand the financial consequences of the value realization for both the customer and the supplier. A big
practice matching. difference between RORC and RORS, as in this case, may of
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Table I
Customer changes Supplier changes
Relational investment. The customer’s relational investment consists of a Relational investment in outsourcing capacity. Carrying out the outsourcing
one-off project cost of 45,000 required to carry out the necessary changes in initiative would require that the supplier invest 85,000 up-front in additional
operating processes, a one-off development cost of 50,000 to make use of measurement capacity. Hiring three new measurement operators to run the
the supplier’s new data processing technology, and final investment of automated measurement process would cost 135,000 yearly during the three
25,000 required to train the involved workers. In total, the cost of these years. Reconfiguring the data delivery to match the quality requirements of
relational investments amounts to 120,000 the customer would set the supplier back with a one-off cost of 70,000
Reduced work time. Outsourcing former core measurement activities to the R&D investment. For the supplier, launching the new data processing
supplier would reduce an amount of work equivalent to 15 man-years of technology would require a one off R&D investment of some 25,000 the first
labor for the customer. The monetary worth of these savings are estimated to year
amount to 900,000 yearly during the three years
Revenue increase. Deploying the supplier’s new data processing technology
would help the customer to launch its existing measurement services into
three new usage areas, thus creating an estimated revenue increase of some
five per cent annually. All in all, the monetary worth of the additional revenue
is estimated at 325,000 yearly for the customer
course trigger continued discussions about how the mutually supplier and the customer – achieved through a price
created incremental value should be split, and further price mechanism, based on a negotiation process between the
negotiations parties, and the ROR process model introduced here is also a
basis of value-based pricing. The potential of the process flow
Discussion and implications for research model (see Figures 3 and 4), including service perspective,
practice matching, joint productivity gain calculation,
The study demonstrates ways of moving from viewing incremental value assessment, value sharing, and reciprocal
customers as assets to understanding and measuring and party-separate ROR calculation, for developing such
relationships between business parties as an asset. This is an pricing models should be studied. When motivating a price
interesting research avenue to pursue. Furthermore, the tag on service, this model may also be helpful. Here
approach to relationship development and management as an interesting research opportunities exist.
investment that yields a return that can be calculated is an The article has a number of additional research implications.
answer to the recently voiced call for marketing to produce First of all, the article develops a conceptual model and metrics
and disseminate useful marketing metrics to finance and for understanding and measuring return on relationships in a
accounting (e.g. Wiesel et al., 2008). Simultaneously, it also relational business engagement, and although the study the
answer the call for supporting more transparency in financial present article is based on includes several empirical tests of the
reporting of intangible assets, such as customer bases, model and the metrics, only one empirical case is presented in
portfolios and relationships, for the benefit of investors’ this context. Hence, further research is required to test the
decision making (e.g. Whitwell et al., 2007). As Kumar and usefulness of the model and metrics.
Petersen (2005) notice, increasingly firms assume that Furthermore, how the antecedents for mutual value
marketing and finance work together. The article provides creation indicated in the model influence the party’s
metrics that helps marketers to move closer to finance. willingness to engage in mutual value creation is only
Moreover, as normally used marketing metrics, such as conceptually developed. The role and relative importance of
customer life time value and customer equity have not created the various antecedents, and how they have an impact on the
any real attention in finance circles (Gleaves et al., 2008), the practice matching process should be further developed and
way of approach investments in customers and relationships empirically studied. Also the nature of the practice matching
as well as of calculating return on relationships presented in process, and what it takes from a managerial perspective to
the present article may be more successful in doing so. Herein successfully implement it need further research.
ample opportunities for further research can be found. As pointed out by Jap (1999) in her research into “pie
The importance of moving away from traditional extension”, interorganizational collaboration aiming at jointly
approaches to productivity assessment, where productivity is creating incremental value and returns on joint investments in
considered a one-sided construct, and treated as separate a relationship may be a source of competitive advantage, due
issues for the supplier and customer, towards a relationship- to “. . . the inimitable nature, which is due to the specific
oriented joint productivity construct is demonstrated in the investments and coordinated efforts of the dyad” (p. 471).
study. Only the development of joint productivity gains Further research on the magnitude of the competitive
enables a valuation of relationship development in the form of advantage created by the mutual value creation and sharing
incremental value, which can be used as a base for assessing process is warranted by our study. Also under what external
reciprocal return on the relationship efforts. Furthermore, it is conditions competitive advantage can be achieved needs to be
demonstrated how this incremental value can be shared studied.
between the business parties as returns on the relationship for Finally, although it has been noted throughout the article
the supplier and customer, respectively. The value sharing – that frequently relationships in the marketplace are not dyadic
the process of splitting the incremental value between the only but exist in networks of relationships, the conceptual
354
Table II
A. Change in customer’s use value

Formula D Customer’s value-in-use: (D EEC 2 D IEC)
where:
D EEC ¼ change in external effectiveness for the customer; D IEC ¼ a change in internal efficiency for the customer (includes
the customer’s relational investment of 120,000 for the first year)
Inserting values Year 1:
D EEC ¼ 325,000 2 0a ¼ 325,000
D IEC ¼ 2900,000 þ 120,000 ¼ 2780,000
Year 2:
D EEC ¼ 325,000 – 0a ¼ 325,000
D IEC ¼ 2900,00
Year 3:
D EEC ¼ 325,000 – 0a ¼ 325,000
D IEC ¼ 2900,00
Result Year 1: 325,000 2 (2 780,000) 2 0 ¼ 325,000 þ 780,000 2 0 ¼ 1,105,000
Year 2: 325,000 2 (2 900,000) ¼ 325,000 þ 900,000 2 0 ¼ 1,225,000
Year 3: 325,000 2 (2 900,000) ¼ 325,000 þ 900,000 2 0 ¼ 1,225,000
B. Change in supplier’s cost
Formula (DIES)
(85,000 2 0) þ (135,000 2 0) þ (70,000 2 0) þ (25,000 2 0) ¼ 315,000
Year 2:
(135,000 2 0) ¼ 135,000
Year 3:
(135,000 2 0) ¼ 135,000
In total: 585,000
C. Determining joint productivity gains
Formula JPG ¼ (D EEC 2 D IEC) 2 (DIES)
where:
JPG ¼ Joint productivity gain; (D EEC 2 D IEC) ¼ a change in customer’s value-in-use (includes the customer’s relational
investment of 120,000 for the first year); D IES ¼ change in supplier’s costs
(D EEC 2 D IEC) ¼ (325,000 2 (2 780,000) 2 0) ¼ (1,105,000 2 0)
D IES ¼ (315,000 2 0)
Year 2:
(D EEC 2 D IEC) ¼ (1,225,000 2 0)
D IES ¼ (135,000 2 0)
Year 3:
(D EEC 2 D IEC) ¼ (1,225,000 2 0)
D IES ¼ (135,000 2 0)
Result Year 1: (1,105,000 2 0) 2 (315,000) ¼ 790,000
Year 2: (1,225,000 2 0) 2 (135,000) ¼ 1,090,000
Year 3: (1,225,000 2 0) 2 (135,000) ¼ 1,090,000
Total (Years 1-3): 790,000 þ 1,090,000 þ 1,090,000 ¼ 2,970,000
Note: aZero (0) denotes the existing level of revenues when compared to a revenue increase in the proposal. In this case the start level is zero. However, in other
cases it could amount to some other figure
foundation and metrics have been developed for dyadic relationships and measuring it in network contexts is, of
business engagements. This has been a deliberate choice. course, an important research task for the future.
Mutual value creation in larger networks than dyads adds
considerable complexity, and the metrics become more
complicated. Therefore, keeping in mind the initial stage of
Implications for management
research into the field, starting with a network context would The article points out a number of important management
not have been productive. At this point it was determined implications. First of all, it provides a system for analyzing
more fruitful to consider a business dyad. This already makes how a relationship can be developed with an aim to making
the development of considerable new insight possible. both the supplier and the customer better off by engaging in a
However, further research into understanding return on relational business engagement. It demonstrates the need for
355
Table III and customer-side antecedents for successful practice

matching. The parties must understand each other’s
Formula Customer: business logic and be prepared to engage in matching
CVC ¼ ((D EEC 2 D IEC) 2 D IES) £ (1-P) practices with each other, and in the final analysis, if needed,
Supplier: be prepared to change their operational processes and
PVC ¼ ((D EEC 2 D IEC) 2 D IES) £ P routines. A willingness to do this, and ability to
Inserting values Customer: communicate one’s intentions in a trustworthy manner are
(D EEC 2 D IEC) 2 D IES ¼ 2,970,000 imperative. As Canning and Brennan (2004) observe in their
(1-P) ¼ (1 2 0.30) ¼ 0.70 discussion of interfirm adaptation, “. . . managers from each
Supplier: company are involved in exchanged episodes in order to
(D EEC 2 D IEC) 2 D IES ¼ 2,970,000 decide how to realize the sought after change” (p. 12). To be
(P) ¼ (0.30) prepared to open up one’s books and engage in the practice
Result Customer: matching process requires that a considerable amount of trust
CVC ¼ 2,970,000 £ 0.70 ¼ 2,079,000 in the other party exists, or is allowed to develop during the
Supplier: process.
PVC ¼ 2,970,000 £ 0.30 ¼ 891,000 The article also demonstrates how a relationship can be
seen as a mutual investment, where reciprocal return on this
investment in the relationship can be assessed, and moreover,
how this investment pays off as ROR for the supplier and
Table IV customer, respectively. The metrics developed, and used in
the study, provide the instrument to do the needed
Formula Reciprocal return on relationship (ROR)
calculations.
RORR ¼ ð ðD EEC 2 D IEC Þ 2 D IES Þ £ 100 The joint productivity approach presented in the present
DCC þ DCS
Inserting values RORR ¼ (2,970,000/(585,000 þ 120,000)) £ 100 article opens up a new way of treating productivity
Result RORR ¼ (2,970,000/705,000) £ 100 management and the assessment of productivity gains.
¼ 421% Unlike the established productivity models that see
productivity management as separate processes in selling
and buying firms (or several firms in a network), the joint
productivity construct is based on the view that a relational
Table V business engagement is a truly two-sided endeavor. Hence, it
is claimed that in order to implement relational business
Formula Customer: aiming at a win-win situation, productivity as a phenomenon
RORC ¼ ð ðD EEC 2 D IEC Þ 2 D IES Þ £ ð1 2 PÞ £ 100 and the management of productivity have to be considered a
DCC
Supplier: joint issue. It is not enough that the parties in the engagement
attempt to become more productive separately. Instead they
RORS ¼ ð ðD EEC 2 D IEC Þ 2 D IES Þ £ ðPÞ £ 100 should aim at becoming more productive together. In fact,
DCS
Inserting values Customer: because effects on the other party in a relationship are
RORC ¼ ð2; 970; 000 £ 0:70=120; 000Þ £ 100 considered an exogenous issue, pursuing higher productivity
Supplier: separately probably has a detrimental effect on the joint well-
¼ (2,970,000 £ 0.0/585,000) £ 100 being of the parties. When the incremental value created
Result Customer: mutually is assessed by the business parties, and the reciprocal
RORC ¼ (2,970,000 £ 0.70/120,000) £ 100 return on the relationship is calculated, such effects have to be
¼ 17.3 £ 100% ¼ 1,730% treated as endogenous variables (compare Jap, 1999). Hence,
Supplier: when adopting a relationship marketing approach,
RORS ¼ (2,970,000 £ 0.30/585,000) £ 100 management must learn how to understand and analyze,
¼ 1.5 £ 100% ¼ 150% and ultimately manage productivity jointly. In the article a
conceptual understanding of joint productivity as well as
measurement formulas to be used for calculating joint
the parties to open up their books and in a transparent way productivity are presented.
approach the development process. If the parties are not In the article the importance of understanding value
prepared to share enough information about their operational creation as a mutual phenomenon between the two (or
principles, and cost and revenue drivers, a solid basis for several) parties is emphasized, and a model of mutual value
developing a win-win relational business is not established. If creation is presented. This is a basis for understanding how
this base is lacking, a win-win business engagement is joint productivity, shared value and eventually return on
difficult, if not impossible to achieve. Successful relationships are calculated. In pointing out that it is not
implementation of the process of practice matching aiming enough to offer solutions to the customer’s various everyday
at aligning the business party’s processes, resources and operational and administrative processes aiming at improving
competencies is a prerequisite. However, this requires a operational efficiency only, but that the firm instead should
transparent approach from the two (or several parties) offer support to the customer’s business performance and
involved. business effectiveness, it has implications for sales and sales
Although they were not tested in this study, the model of management as well, emphasizing the importance of value-
mutual value creation pointed at a number of supplier-side based selling, and of selling solutions as service to customers.
356
Notes Axelsson, B. and Wynstra, F. (2002), Buying Business Services,

John Wiley & Sons, Chichester.
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Helle (2010).
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2 This figure is a combination and further development of
Vol. 74, July-August, pp. 136-44.
two figures in Grönroos and Helle (2010).
Blattberg, R.C., Getz, G. and Thomas, J.S. (2001), Customer
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Equity: Building and Managing Relationships as Valuable
value creation process, both of customer value creation
Assets, Harvard Business School Press, Boston, MA.
and supplier value creation. However, these are not tested
Boddy, D., McBeth, D. and Wagner, B. (1999),
in the present study. As indicated in Figure 2, there are
“Implementing collaboration between organizations: an
both customer-side and supplier-side antecedents. For a
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customer to involve itself in practice matching with a
Management Studies, Vol. 37 No. 7, pp. 1003-17.
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Brennan, D.R. and Canning, L. (2002), “Adaption process in
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Brennan, D.R. and Turnbull, P.W. (1999), “Adaptive
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Through Win-Win Strategies, McGraw-Hill, Singapore. Christian Grönroos is Professor of Service and Relationship
Storbacka, K., Strandvik, T. and Grönroos, C. (1994), Marketing at Hanken School of Economics Finland, and
“Managing customer relationships for profit: the dynamics founder and past chair of its research and knowledge centre
of relationship quality”, International Journal of Service CERS Centre for Relationship Marketing and Service
Industry Management., Vol. 5 No. 5, pp. 21-38. Management. He has published extensively on relationship
Tzokas, N. and Saren, M. (2004), “Competitive advantage,
marketing and service marketing and management issues as
knowledge and relationship marketing: where, what and
well as on reinventing marketing through a promise
how?”, Journal of Business & Industrial Marketing, Vol. 19
No. 2, pp. 124-35. management approach. Christian Grönroos is the
Van Raaij, E.M., Vernooij, M.J.A. and van Triest, S. (2003), corresponding author and can be contacted at:
“The implementation of customer profitability analysis: a christian.gronroos@hanken.fi
case study”, Industrial Marketing Management, Vol. 32 No. 7, Pekka Helle is a PhD student at Hanken School of
pp. 573-83. Economics Finland and program leader of a nationwide
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continuing the evolution”, Journal of the Academy of business in Finland. He has published on measuring joint
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359
Key account management: the inside selling job
James I.F. Speakman
IESEG Business School, Lille, France, and
Lynette Ryals
School of Management, Cranfield University, Cranfield, UK
Abstract
Purpose – Salespeople are frequently required to manage a wide range of complex internal relationships. This paper seeks to explore one aspect of the
key account manager’s internal selling role which has not been addressed before, specifically how the key account manager handles multiple incidents
of simultaneous conflict while carrying out their internal selling duties.
Design/methodology/approach – The research uses the critical incident technique together with an interpretive framework for data coding in order
to explore the complex behavioural sequences adopted by key account managers while managing the many incidents of conflict which they frequently
encounter within the organisation. Twenty-nine key account managers from seven participating FMCG, Blue Chip organisations in the UK and USA
participated in the research describing 112 incidents of conflict.
Findings – The research provides further insight into the complexity perspective of conflict management, suggesting that conflict episodes do not
occur as discrete, isolated, incidents, rather incidents occur simultaneously requiring a combination of behaviours in their management.
Practical implications – The implications for a complex role such as selling are that, while carrying out their internal selling duties, rather than
adopting a single managerial style or single combination of styles, key account managers are able to adapt and use a combination of management
behaviours which can be modified throughout and across conflict episodes.
Originality/value – In contrast to the majority of research into personal selling, this research takes an interpretive approach through the analysis of
transcripts from a series of CIT interviews with key account managers in the field.
Keywords Conflict, Conflict management, Key account management, Internal selling, Selling, Sales management, Managers, Role conflict
Paper type Research paper
1. Introduction The inside selling role, requires the key account manager to
represent the customer’s needs internally while negotiating for
For both academics and practitioners research that explains a wide variety of resources through a diverse portfolio of
and predicts key account manager performance has for a long interpersonal interactions and social business networks, in
time been at the centre of their attention and has become a many cases having to operate as part of a larger customer
requirement for sufficiently understanding the sales process focused team (Lambe and Spekman, 1997). When working
(Sheth, 1976). However research into personal selling is internally the key account manager is required to resolve a
limited and has primarily dealt with the key account wide range of interpersonal conflicts which can occur between
manager’s external relationships, with buyers and the themselves and other individuals within the sales function or
customer purchasing network (Dwyer et al., 1987; Krapfel other support groups. These conflicts have to be managed in
et al., 1991; Weitz, 1978), while another stream of research the best interests of the key account manager’s organization
considering the internal role of the key account manager has while also attempting to meet the customer’s needs thus
focused on the salesperson, sales manager relationships maintaining the external perception of customer orientation
reflecting issues related to key account manager motivation (Tellefsen and Eyuboglu, 2002). It is therefore very important
and performance (Ford and Walker, 1975; Pettijohn et al., that key account managers are able to understand the nature
2002). More recent research in the US has considered of any conflict they encounter and recognize the behaviours
another internal dimension of the key account manager’s and strategies for of handling conflict in order to gain the best
selling role; the way in which they navigate through the possible outcome (Bradford et al., 2004; Weitz and Bradford,
numerous, complex, intra-organizational relationships and 1999).
how affects their performance (Plouffe and Barclay, 2007). In In addition to exploring the internal selling role of the key
contrast this research investigates conflict and the key account account manager, this research also highlights some of the
manager’s internal selling role and the complex behavioural shortcomings of the traditional view of the nature of conflict
sequences key account managers adopt in the management of and how it is managed. The traditional view tend to treat
any intra-organizational, interpersonal conflicts encountered. conflict as a discrete, isolated events occurring in an otherwise
co-operative environment, and the resulting management
The current issue and full text archive of this journal is available at behaviours have tended to reflect the two-dimensional
www.emeraldinsight.com/0885-8624.htm managerial grid (Blake and Mouton, 1970; Thomas, 1976).
In contrast, this research draws on the psychology literature
and investigates conflict in the alternative paradigm, as an
Journal of Business & Industrial Marketing inherent condition of social interaction (Pondy, 1992). It aims
27/5 (2012) 360– 369
to explore the notion that conflict episodes do not occur in
[DOI 10.1108/08858621211236034] isolation, that certain conflict management behaviours will
360
Key account management: the inside selling job Journal of Business & Industrial Marketing
James I.F. Speakman and Lynette Ryals Volume 27 · Number 5 · 2012 · 360 –369
only be appropriate in certain situations and that the situation between their organization and the customer. When carrying
may change with any given conflict episode at any given point out the internal selling role, the key account manager is likely
in time. The implications for a complex role such as selling to encounter a wide range of conflict episodes and needs to
are that, while carrying out their internal selling duties, rather effectively resolve these conflicts in order to meet customer
than adopting a single managerial style or single combination demands and maintain long term relationships. In order to
of styles, key account manager are able to adapt and use a manage these conflict episodes the key account manager will
combination of management behaviours which can be need to fully understand the nature of the conflicts
modified throughout and across conflict episodes. encountered and the management strategies available to
deal with these incidents.
2. Key account management and the internal
selling role 3. Intra-organisational, interpersonal conflict
With greater competition and technological change in all Conflict is a potential consequence of all interdependent
markets, companies are increasingly attempting to gain a relationships, arising from the highly divergent needs of two
competitive advantage by forming strategic alliances and or more parties, disagreements, misunderstandings, miss-
closer longer lasting relationships with their key customers. alignment of resources or any of a number of intangible
This type of customer centric strategic alliance being referred factors. Conflict can occur between co-operating parties
to as key account management (Millman and Wilson, 1995). working towards similar objectives or between disputants
Depending upon the supplier’s position, a key account can aiming to achieve opposing objectives. Whatever the source of
differ in many ways; it can operate locally or globally, be larger the conflict, in order to get the best mutual advantage, it is
in comparison to their supplier or smaller and may exist as vital that those involved posses the necessary skills to
more than one customer or only one critical customer. They understand and manage any conflict to ensure mitigation
do however all exhibit a willingness to establish long term and the optimum outcome. It is intra-organizational,
relationships with their suppliers requiring the supplier to interpersonal conflict, which is considered in this study,
consider them of considerable strategic importance. In order specifically the conflicts that the key account manager
to establish these long term relationships the supplier needs to experiences when dealing internally, within their
invest in the necessary training, recruitment and development organization, with other individuals or groups while carrying
of key account managers to manage the communication out the internal selling role.
process across a wide variety of contacts both within the Conflict has been defined in a number of ways, as a reaction
customer and supplier organizations. For the purpose of this of the individual to the perception that the two parties have
research the key account manager is defined as the sales aspirations that cannot be achieved simultaneously (Putnem
manager who is responsible for speaking to large complex and Poole, 1987) or the process which begins when one
strategically important customers in one voice representing individual or group feels negatively affected by another
the full capabilities of their organization (Napolitano, 1997). individual or group (Thomas, 1992). These definitions are
Developing and managing these long term relationships is reliant upon the premise that an opposition or incompatibility
considered to be a key component of a key account managers is recognized by both parties, that an interaction is taking
success in the modern organization where interpersonal place and that there is some degree of interdependence.
contacts can vary widely (Leigh and Marshall, 2001). Within groups or organizations, conflict may be related to
Moreover, key account managers are becoming increasingly competition over resources, power differentials, work or role
more involved with internal networks outside of their ambiguity, negative interdependence between groups,
traditional external selling roles in order to more effectively tendencies to differentiate from the group and personal
carry out their business objectives. From the buyers’ values and sensitivities (Deutsch, 1973; Greenberg and
perspective this increased tendency to forge longer term Baron, 1993). Conflict in the organizational context or
relationships provides benefits in that the supplier better organizational conflict refers to the situations which arise
understands their business objectives and they are therefore when two or more people working within the same
able to provide service solutions in line with their tactical and organization perceive differences in beliefs, values or goals
strategic goals (Bradford et al., 2004). In order to continually which impact on their ability to work together and impedes
meet the customer’s needs the key account manager needs to their performance (Jameson, 1999). When occurring within
influence a wide variety of internal groups such as; teams or groups this interpersonal conflict has been defined as
production, logistics, marketing and finance while an individual’s perceptions of incompatibilities, differences in
undertaking a variety of tasks which may not be in line with views or interpersonal incompatibility (Jehn, 1995). This
the objectives of any one of these groups. The key account form of conflict is generally viewed negatively, being seen as
manager is very much the person in the middle having to highly adversarial (Ford and Walker, 1975) and can exist
perform a number of activities outside of the traditional between two individuals or multi party, between an individual
selling role. These activities or communications across a and another individual representing a group.
number of different groups both within their own organization
and the customer fall under the term boundary spanning Conflict management behaviours
(Battencourt et al., 2005). The boundary spanner takes up a Conflict management can be defined as the actions a person
position at the periphery of the organization and carries out typically engages in, in response to the perceived interpersonal
activities, which relate to elements both inside and out. With conflict in order to achieve a desired goal (Thomas, 1976),
the increased complexity of the key account management role, the way in which conflict episodes are addressed. Research
the key account manager becomes the boundary spanner has considered three different approaches; The “one-best-
361
way” perspective (Sternberg and Soriano, 1984), the behaviour have been considered with the effectiveness of
contingency or situational perspective (Munduate et al., complementarity or reciprocity behaviours being dependent
1999; Nicotera, 1993; Thomas, 1992) and the complexity or upon the situation, the micro-environment of the conflict
conglomerated perspective (Euwema et al., 2003; Van de episode and types of conflict present (Munduate et al., 1999).
Vliert et al., 1999). Finally the sequential, contingency perspective suggests that
It has been suggested that individuals have a behavioural conflict is a constant and inherent condition social interaction;
predisposition to the way in which they handle conflict and that conflict episodes do not occur as discrete isolated
that the manner in which individuals handle conflict remains incidents, that the effectiveness of the conflict management
consistent across conflict episodes (Sternberg and Soriano, behaviours is contingent upon and moderated by the actors’
1984). This “one best way” perspective takes the approach perception of the conflicts encountered, the characteristics
that any one conflict management style, avoiding, and relationships and any learning experiences from any
accommodating, compromising, competing or collaborating previously managed incidents of conflict (Speakman and
will be more effective than another. (Blake and Mouton, Ryals, 2010). This research explores the key account
1970; Thomas, 1976, and Sternberg and Soriano, 1984) managers internal selling role taking Pondy’s, 1992
From this perspective the most constructive solution is alternative viewpoint as a new paradigm for conflict within
considered to be collaborating or problem solving since it is the organizations and investigates the sequential, contingency
always positively interdependent having a joint best outcome. perspective of conflict management theory.
In contrast when a more aggressive, competitive, negatively
interdependent approach is taken the results tend to be 4. Research method
perceived more negatively (Janssen et al., 1999).
In contrast the contingency perspective maintains that any This research takes an approach, which is ethnographic in
one conflict management behaviour can only be effective in design and guided by the grounded theory method as
any one given situation, what is appropriate in one situation proposed by Strauss and Corbin in, 1994. In this research
will not be appropriate in another (Thomas, 1992). The approach, theory is grounded in the key account manager’s
problem with the “one best way” and contingency accounts of internal any conflict situation and is therefore
perspectives is their failure to deal with the fact that closely related to the realities of their actual daily routines.
individuals can frequently change their behaviour across and This research required multiple data sets from different
during conflict episodes (Medina et al., 2004; Munduate et al., organizations in order to investigate the influencing variables
1999; Van de Vliert et al., 1997). Moving beyond the and allow for more generalization. The unit of analysis is the
traditional two dimensions of Blake and Mouton’s (1964) actual conflict episode as experienced by the key account
management grid, the complexity or conglomerated manager.
perspective of conflict management, argues that any reaction The study was carried out using the critical incident
to a conflict episode consists of multiple behavioural technique (CIT – Bitner et al., 1990; Flanagan, 1954), as the
components rather than “one single conflict management data collection method, describing the naturally occurring
behaviour.” In the complexity perspective, using a mixture of behaviours the key account manager adopts when handling
accommodating, avoiding, competing, compromising and intra-organizational, interpersonal conflicts, while carrying
collaborating behaviours throughout the conflict episode are out their internal selling role. CIT is a well-established
considered to be the rule rather than the exception (Van de method; there are over 140 studies using the critical incident
Vliert et al., 1997). Complex conflict management studies to technique published in the marketing literature (Gremler,
date have adopted one of four different complexity 2003), and it has previously been used in the study of
perspectives: The first looking at simultaneous complexity interpersonal conflict resolution (McGrane et al., 2005) and
and how the interdependent modes of conflict management in the study of disputes resolution (Metts et al., 1991).
style are used to affect the outcome of the conflict (Munduate Moreover Talarico (2002) takes a similar interpretive
et al., 1999). That is the investigating the different approach in exploring coaching and management. This
combinations of behaviours used and the resulting outcome. method is therefore ideally suited to the study of intra-
Secondly, the behavioural phases through which the organizational, interpersonal conflicts in the key account
participants of a conflict episode pass or temporal management context, although it is new to this domain.
complexity, looking at the point at which behavioural style Despite many variations in procedures for gathering and
is changed and the effect on the conflict episode (Olekalns analyzing critical incidents by researchers and practitioners
et al., 1996). Third, the sequential complexity or the basic principles of what makes up the critical incident
conglomerated perspective concerned with the different technique remain the same. For an incident to be critical it
modes of conflict management behaviour, how they are must be an event, which deviates significantly, positively or
combined and at what point they change during the negatively, from what is normally expected (Edvardsson,
interaction (Janssen et al., 1999). In their study of 1992) and can be any human activity, which is significantly
conglomerated conflict management behaviour, Euwema complete and unique in its characteristics to allow inferences
et al. (2003) argue that the traditional approach under and predictions to be made about the behaviours of person
represents the individual’s assertive modes of behaviour and performing the task (Flanagan, 1954). The technique is the
have as a result added confronting and process controlling to method by which observable behaviours are collected in such
the traditional five behaviours in the management grid giving a way as to allow them to be used to determine future
seven possible behaviours. Two types of sequential pattern, behaviour in similar situations (Bitner et al., 1994; Flanagan,
reciprocity, responding to the other party with the same 1954). The critical incident technique, by a combination of
behaviour and complementarity, responding with an opposing the above definitions of its components can be defined as, a
362
set of procedures for systematically identifying behaviours that compressing many words of data transcript into fewer
contribute to the success or failure of individuals or content categories based on explicit rules of coding. It has
organizations in specific situations (Flanagan, 1954). The the added attractive benefit of being cautious and precise,
use of the CIT in this context avoids the participants dealing with less common important incidents while
expressing stereotype opinions about management, providing of data for analysis. The quality of the research
individuals, working procedures and processes but allows for centres on the reliability and validity of the data collected and
the assessment of organizational performance through the strict coding protocols applied in the data analysis.
analyzing the participant’s accounts of skills and behaviours
used to manage a specific incident or situation (Bitner et al., 5. Research findings
1994).
The organizations studied in this research were chosen The results show that key account managers do indeed have
because of their fit to the selection criteria as “Blue Chip” fast an extensive and time-consuming internal selling role to
moving consumer goods (FMCG) organizations in the food, perform which is vital in meeting their customers’ demands
drink and consumer goods market supplying major UK and and ultimately achieving their sales objectives. In addition this
US grocery multiple, wholesale and convenience retailers. For research demonstrates the extent to which conflicts are
this research 29 key account managers across seven experienced by the key account manager and shows that key
international organizations within the FMCG retail supply account managers frequently have to handle more than one
industry agreed to take part. conflict incident at any one time and that the duration and
The research was conducted retrospectively using open/ intensity of any conflict experienced can vary. Moreover, this
semi-structured interviews to collect the data. Rich subjective research expands the conglomerated complexity perspective
accounts of internal conflicts (“critical incidents”) were of conflict management (Janssen et al., 1999) within the
gathered through open/semi-structured interviews. The organization and how it is managed, empirically establishing
respondents made their own judgments on what constitutes the sequential complexity theory (Speakman and Ryals, 2010)
internal conflict and what the consequences were. In order to which takes into account the occurrence of multiple
fit with the critical incident technique each respondent was simultaneous incidents of conflict and the moderating
asked to recollect, in their own words, two types of incidents, factors influencing behavioural choice within the micro-
those, which were effectively resolved or mitigated, and those, environment.
which were ineffectively resolved or agitated. Through open
questions each participant was asked to recollect the skills and Conflict management: a KAM perspective
behaviours adopted in the management of these conflict When considering the best behaviour to adopt in any
incidents and their perceptions of the outcome. The situation, the key account manager considers all of the
interviews were recorded, the material verbatim transcribed options available and what the best possible outcome might
and the content analyzed using an open coding method. be, (with the exception of the pursuit of self interest where the
only perceived outcome is an outcome predetermined by the
Data analysis key account manager). This research shows that key account
The data analysis is a style of open, axial and selective coding managers were constantly dealing with some form of conflict
under the categories or themes which were established within the organization, some perceived to be more important
through a review of the literature, the analysis being based than others and some longer lasting than others. In handling
upon aspects of organizational conflict theory as opposed to these multiple, simultaneous conflict episodes the key account
true emergent coding (Strauss and Corbin, 1994). The manager adapted to each unique set of circumstances and
coding follows an interpretive framework (Spiggle, 1994) in chose a set of behaviours, which they felt would result in the
order to maintain a robust, structured approach. The best possible outcome. The behavioural choice was made
transcripts were open coded bottom up and the free nodes through their experience of previous conflict situations
categorized into related groups considering the research providing a learning opportunity for the key account
question and the themes under investigation that is; the manager and subsequently increasing their conflict
nature of conflict, conflict management behaviours and the management skills.
frequency or abundance of conflict. Revisions were made as Here the findings concerning the key account managers’
necessary, and the categories tightened up to the point that perspective on which behaviour was most effective and
maximizes mutual exclusivity and exhaustiveness (Spiggle, whether a combination of these behaviours could be used to
1994; Webber, 1990). In this way the data analysis moves influence the outcome are presented.
beyond simple word counting, making the technique
particularly rich and meaningful but reliant upon the coding The “one best way” perspective
and categorizing of the data (Spiggle, 1994). Sternberg and Soriano (1984) proposed what is arguably the
When used properly and following Flanagan’s (1954) simplest perspective on conflict management behaviour, the
methods, the critical incident technique is ideally suited to the “one best way” perspective, which suggests that individuals
observation of human behaviour in certain circumstances and have a particular preferred behavioural predisposition to the
linked with coding using the interpretive structure for coding way in which they handle incidents of interpersonal conflict
(Spiggle, 1994) it provides a powerful tool for data collection and that the manner in which individuals handle conflict
and analysis. The major benefit of taking this research therefore remains constant across conflict episodes. The “one
approach comes from the fact that it is based on the best way” perspective goes on to suggest that collaborative
observations of the participants in their own words with the behaviours will have the best outcome most of the time
data analysis being a systematic, replicable process for because of the high concern for both of the parties involved.
363
This research validates this position, suggesting that the appropriate in one situation may not be appropriate in
participating key account managers initially adopted the another (Thomas, 1992). In this paradigm, the best approach
behaviour, which they believed to be the one most likely to is dependent upon the particular set of circumstances.
result in a positive outcome from their perspective. When they This research shows that the participating key account
described the behaviours adopted in the management of managers adopted a behaviour which they perceived to be the
conflict all of the participating key account managers most suitable for the situation they were experiencing which is
described collaborative behaviours as their first choice. This consistent with the “one best way” perspective. However, this
is consistent with the “one best way” perspective, since research also makes some challenges to this in that the key
collaboration is always positively interdependent having a account managers also adopted behaviours, which did not suit
joint best outcome, frequently described as “win/win” by the the situation and would not have had the best possible
key account managers. Moreover previous research has outcome. This was demonstrated clearly where the
suggested that the problem-solving or collaborative style is behavioural choice was avoidance or accommodating when
generally, taking the one best way perspective, considered to dealing with conflicts which were perceived to be affective
be the behaviour best suited to reaching a constructive relating to people, goals and roles, here the perceived outcome
solution since it unites the interests of both parties. This was highly negative:
research also validates this, showing that the participating key I was almost passive and, you know, backing off a little bit thinking I don’t
account managers described their personal selling techniques really want to have these conversations and you know just trying to hide I
guess (Wendy, Incident No. 47, 15 October 2007).
from practicing win/win negotiations with customers in order
to get the best possible outcome from their negotiations, as
The avoiding and compromising strategies left the key
having had an influence on their internal behaviour. When
account manager at a disadvantage, in that the issues were
describing their internal selling skills the same approach was
resolved but resulted in the perception of a negative outcome.
taken, focusing on the win/win, resulting a collaborative
Therefore this research challenges both the “one best way”
behavioural choice. However, the described adopted
and contingency perspectives, in that the individuals involved
behaviour was not always collaboration even though, for key
selected a conflict management behaviour which did not
account managers it was their behaviour of choice, nor did the
produce the best possible outcome and did not suit the
collaborative behaviours always result in a positive outcome.
particular set of circumstances. Thus, for the key account
In fact, where collaboration was described by the participants,
managers in this research, conflict management behaviours
more than a quarter of these collaborations were perceived to
were regarded as a matter of choice rather than innate (as in
have had a negative outcome or to have agitated the conflict
the “one best way” view), or dependent on a specific set of
situation. In this respect Therefore, this research challenges
circumstances and a resulting positive outcome.
the “one best way” perspective suggesting that in certain
Until very recently, conflict research has been heavily
circumstances, the key account manager adopts different
influenced by the “one best way” and contingency
behaviours dependent upon how the source of the conflict is
perspectives, focusing on the effectiveness of a single mode
perceived and what the perceived outcome may be. The “one
of conflict management behaviour (primarily collaboration) in
best way” approach suggests that a more aggressive,
a single conflict episode (Sternberg and Soriano, 1984). This
competitive, negatively interdependent approaches (in fact,
research goes on to show that for the participating key
any conflict management approach other than collaborative)
account managers working within their organizations acting as
results in suboptimal outcomes (Janssen et al., 1999). This
the customer advocate, their behavioural choice when dealing
research however shows that the participating key account
with conflict was not always collaboration nor was it always a
managers frequently adopt a more competitive behaviour to
choice made in order to ensure the best possible outcome.
force the desired outcome. Twenty-one of the respondents
Thus, the “one best way” and contingency perspectives do
referred to this behavioural choice in 35 incidents with over
not offer a real-world view in which managers can and do
half having a perceived positive outcome. Thus this research
change their behaviours, perhaps trying different approaches
shows that the key account managers perceived conflict in a
to break a deadlock or to improve their bargaining position.
complex manner, as having multiple sources, a unique
Thus the “one best way” and contingency perspectives fail to
composition and that their behaviour choice was influenced
take into account the changing circumstances in the micro
by their perception of the conflict characteristics:
environment and the subsequent influence this may have
I suppose gentle at first if you like and then, and then get more pushy as and
when I need to, need to be and that would be. . .depend on the situation you upon the actions of the individuals involved in any subsequent
know, what is happening . . . (Dirk, Incident No. 12, 30 January 2007). conflict episodes (Olekalns et al., 1996).
The complexity perspective

The contingency perspective Since neither of the previous approaches approach makes
Previous research suggests that the “one best way” perspective allowance for the passage of time, for changes within the
is limited and does not explain how managers are able to micro environment, or of multiple simultaneous conflict
collaborate if they have different behavioural predispositions, episodes, a more complex perspective needs to be considered
nor does it provide evidence that collaboration always where conflict and the response to conflict can be viewed as
produces the best outcome (Thomas, 1992). In contrast to dynamic and changing over time. Therefore, for the key
the “one best way” perspective, in which collaborative account managers dealing with conflict within their
behaviours are always preferred, the contingency perspective organizations neither the “one best way” nor the
maintains that the optimal conflict management behaviour contingency perspective would always produce optimal
depends on the specific conflict situation, and that what is results. Moreover, if conflict does not occur discretely and
364
individually as previous research suggests (Pondy, 1992) then these are summarized in Table I. This suggests the key
the existing approaches do not describe the world as managers account managers try a combination of behaviours as a
actually experience it. In order to address these shortcomings potential “turn around” strategy when they feel they are not
of the traditional research into conflict management and to going to achieve their desired objective.
incorporate the complexity perspective, research has had to This is consistent with the key account managers’
move beyond two dimensions (Sheppard, 1992). In this perception that the management process was not achieving
perspective each conflict episode is considered to have unique the desired results prompting a behavioural change. The key
characteristics and composition, which may change over time account managers described collaboration and
requiring a specific adaptable approach in order to obtain the accommodation in four incidents where they perceived
best possible outcome. collaboration as a single behaviour was not achieving the
In recent research taking this complexity perspective it has desired outcome. This research shows that when behaviour is
been suggested that conflict episodes may not occur in combined with accommodating it changes the perceived
isolation (Euwema et al., 2003; Jehn and Chatman, 2000) and outcome. However, in this research, competing was perceived
that conflict episodes are more complex and dynamic in both to be the right complementary behaviour validating the
composition and management requirement than previously previous research by Van de Vliert et al. (1999).
suggested, arguing that the traditional approach under- In contrast one other combination of behaviours, avoidance
represents the individual’s assertive modes of conflict and accommodation had a largely negative outcome. Here the
management behaviour. This complexity perspective key account managers described incidents over which they
characterizes conflict within the organization as continuous had little influence and therefore not chose to collaborate and
and multi-dimensional. In such circumstances, the tended to avoid the situation rather than deal with it. The
behavioural style in dealing with any one conflict episode reason for the perceived negative outcomes could be because
may vary during, or between, conflict episodes (Medina et al., the study only considers the key account managers’
2004; Nicotera, 1993). This research validates this suggestion perception. If a dyadic perspective had been taken, it is
with the results showing that the key account managers were possible that the other parties involved would have perceived a
able to change their behaviour during a conflict episode when more positive outcome since the behaviours suited their
they believed the adopted behaviour was not achieving the objectives. Thus, this research adds new theoretical insights to
desired results, or where they perceived a change in the micro- the conglomerated complexity perspective in that the key
environment or relationship dynamic. The findings show that account managers were able to adopt a number of conflict
22 of the respondents made 29 references to multiple conflict management behaviours throughout the duration of several of
management behaviours across 33 specific incidents. In doing the experienced incidents of conflict. Moreover this research
so they also described those incidents, which had both a extends the conglomerated complexity perspective and
positive and negative outcome. provides empirical evidence in support of a new sequential
contingency perspective (Speakman, 2009; Speakman and
Multiple conflict management behaviours Ryals, 2010).
The complexity perspective of conflict management
behaviour moves beyond the contingency perspective, taking 6. Conclusions: the sequential contingency
into account that conflict management behaviours can change
perspective
over time (as the incident evolves) and the effectiveness of the
behavioural sequence involved. In their study of multiple Through exploring the complexity of conflict management
conflict management behaviours Van de Vliert et al. (1999) within the organisation this research extends the previous
proposed the conglomerated complexity perspective, adaptive selling (Weitz, 1981) research into the internal selling
considering the dyadic effectiveness of collaboration and situation, showing that the key account managers
competing behaviours. Their research suggests that under demonstrated adaptive behaviour within their organization
certain circumstances, alternation between collaborating and in the management of intra-organisational, interpersonal
competing behaviours until a state of collaboration produces conflicts. Moreover, from the salespersons’ external, customer
the desired outcome will be the most effective approach. perspective the challenge is to recognize and manage conflict
This research extends this perspective in that the most when it arises with the centre of attention being on
common sets of behaviour described by the key account maintaining long term relationships (Weitz and Bradford,
managers were collaboration and competing. However, the 1999). This research extends this theoretical perspective
outcome from the key account management perspective was showing that the same practice is applied to their internal
not always positive, with the findings indicating that the relationships which also have to be maintained in order to
outcome is just as likely to be negative as positive (see Table continually meet the customers’ demands. Previous research
I). Most importantly, this research shows that in half of the has shown that salespeople who are able to adapt their style to
cases where agitation was perceived to be the likely outcome, the unique selling situations experienced with each of their
using a combination of competing and collaborating resulted customer contacts will have a strategic advantage over those
in a change in outcome. Using a combination of competing who cannot or will not adapt. That is to say, those salespeople
and collaborating reversed the perceived negative outcome 50 who are able to and do change their behaviours based on
per cent of the time. Van de Vliert et al. (1999), however, did perceived information during a sales interaction will be more
not consider other behavioural combinations and the successful. These salespeople increase their performance
potential outcome. In total this study revealed eight through practicing adaptive selling, the altering of sales
combinations of behaviour (excluding mediation) with more behaviours during a customer interaction or across customer
of the combinations having a negative outcome than positive; interactions based on perceived information about the nature
365
Table I Summary of described multiple conflict management behaviours

Combination of behaviours used No. of respondents referencing No. of 1 ve incidents referencing No. of 2 ve incidents referencing
Collaborating and avoiding 1 0 2
Collaborating and competing 12 8 7
Competing and avoiding 2 0 2
Competing and accommodating 1 1 1
Collaborating and accommodating 4 2 2
Collaborating and compromising 1 1 0
Avoiding and Accommodating 6 1 6
Competing and avoiding 1 0 1
Totals 29 14 19
Notes: Total number of respondents referring to multiple behaviours in the management of specific incidents 22 (some described more than one set of multiple
behaviours)
of the selling situation. Applying the same principles to the The basic elements of the framework are (a) the conflict
management of conflict within the organisation, the key episode characteristics, the key account managers’ perceived
account managers who were able to adapt their behaviour to nature of intra-organisational interpersonal conflict. From this
each situation and either use any single or conglomerated research this is the key account managers’ perception of any
behaviour which they perceived would have the best possible intra-organisational, interpersonal conflict together with the
outcome were better suited to dealing with the issues of duration and intensity; i.e. the characteristics of the unique
conflict within the organization. In considering conflict as an incidents of conflict, which directly influence the key account
inherent condition of organizational life (Van de Vliert et al., managers’ behavioural choices; (b) the conflict management
1999) a fourth complexity perspective is supported – the behaviours adopted either as single or conglomerated
sequential contingency perspective for the management of behaviours; and (c) the outcome of the conflict episodes,
multiple, simultaneous conflicts (Speakman and Ryals, 2010), positive or negative (functional or dysfunctional), based upon
adapted from the contingency framework for adaptive selling the choice of behaviour(s). In some circumstances the
behaviour (Weitz, 1981), this is presented here in Figure 1. incident of conflict experienced may not be resolved and the
Figure 1 KAM: a sequential contingency model for intra-organisational, interpersonal conflict management
366
issue may be agitated in which case the key account manager methods theory to emerge from the key account manager’s
would reconsider their assessment of the conflict they are real life accounts of conflict within the organization.
managing and consider adapting their behavioural style. The
Given the frequency and abundance of conflicts experienced
management of intra-organisational, interpersonal conflict
by the key account managers, this research also provides a
from a key account management perspective becomes an
valuable practitioner contribution, bringing attention to new
iterative process whereby the key account managers
training requirements for key account managers to develop
continually adapt to all existing conflicts and choose
their understanding of conflict and its management together
behaviours to best suit the situation, based upon previous
with their internal selling role.
experience and their perception of the outcome.
In summary, this research shows that the conflicts key
The basic postulate of the model is that conflict is a
account managers experience within the organization do not
constant and inherent condition of key account management
occur in isolation, that their perception of conflict is multi-
interaction within the organization; that conflict episodes do
dimensional and that conflict is seen as an inherent condition
not occur as discrete isolated incidents, that the effectiveness
of the key account management selling role. This research
of the conflict management behaviours is contingent upon
moves beyond the traditional two-dimensional dual concern
and moderated by the key account manager’s perception of
theory for dealing with conflict, showing that the key account
the conflict, the characteristics and relationships of the key
manager uses a wide and continually changing range of
account managers involved and any learning experiences
behaviours to attain the best possible outcome while
gained from any previously managed incidents of conflict. In
continuing to service the customer requirements.
addition to the elements explored in this research, the model
also proposes two other elements for future research which
may influence the behavioural choices of the key account
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Registered Representative of the London Stock Exchange
About the authors and a Fellow of the Society of Investment Professionals. She is
Dr James I.F. Speakman, PhD (Cranfield), MBA, BSc, is also the Pro Vice Chancellor at Cranfield University School of
currently Associate Professor and head of track: International Management.

369
Customer intimacy
Jürgen Kai-Uwe Brock
Department of Marketing, University of Strathclyde, Glasgow, UK, and
Josephine Yu Zhou
International University of Applied Sciences Bad Honnef Bonn, Bad Reichenhall, Germany
Abstract
Purpose – The term customer intimacy has been used both in academia and business, albeit lacking clear definition and empirical validation. The
authors in this paper aim to develop a measure of customer intimacy in business-to-business contexts and to assess its reliability and validity, as well as
its relevance, within a nomological relationship marketing network.
Design/methodology/approach – A multi-method (qualitative/exploratory and quantitative/confirmatory structural modelling), multi-staged (test,
re-test) research approach is used and applied in the UK and Germany.
Findings – The results show that customer intimacy is a second order construct reflected by the three formative dimensions of mutual understanding,
closeness, and value perception. The results also show that customer intimacy is a relevant relationship indicator, distinct from the central relationship
indicators of trust and commitment. It impacts relationship commitment levels, customer induced word-of-mouth, repurchase intentions, information
disclosure, customer availability, and leads to an advisor status with the customer. Moreover, customer intimacy mediates relationship marketing’s
central trust commitment link.
Research limitations/implications – The main limitations that should be addressed by future studies are: reliance on the key informant technique on
one side of the supplier-buyer dyad; cross-sectional design.
Practical implications – This study shows that achieving and managing customer intimacy is a relevant managerial goal and task for firms and shows
managers how it can be measured and managed.
Originality/value. – This study, for the first time, presents a measure for customer intimacy and assesses its quality and impact empirically. The
measure will be of significant value in making customer-centric, relationship management approaches more accountable.
Keywords Customer intimacy, Relationship marketing, Trust, Commitment, Business-to-business marketing, Customer orientation, United Kingdom,
Germany
1. Introduction definition of customer intimacy and refine and validate it in

Four out of ten CEOs believe that customer intimacy will provide the greatest two business-to-business contexts. Specifically we address the
opportunity for revenue growth . . . (IBM, 2004, p. 20). following four key research questions:
1 What is customer intimacy?
In recent years, practitioners and consultants have referred to 2 What drives customer intimacy?
gaining customer intimacy as a relevant indicator for strong 3 How does customer intimacy relate to existing key
relational customer ties and customer insight, especially in relationship constructs?
business-to-business markets (e.g. Aufreiter et al., 2000; 4 What impact does customer intimacy have on key
Cruz, 2006; Eisenfeld et al., 2004; IBM, 2004). The term relationship outcome variables?
customer intimacy itself was coined and popularized in the
management literature by Treacy and Wiersema in, 1993. In The remainder of this article is organized as follows: In the
Academia this interest in customer intimacy has not yet next section, existing perspectives on intimacy are reviewed.
occurred. Although several authors refer to it in their writings Then, the analytical framework of the paper is presented and
(e.g. Aaker et al., 2004; Akçura and Srinivasan, 2005; research hypotheses are proposed. The third section presents
Fournier et al., 1998; Johnson et al., 2006; Price and Arnould, the applied methodology and data collection procedures. This
1999; Rust et al., 2000, p. 60) to the best of our knowledge no is followed by a presentation of the results and an assessment
rigorous conceptualization and assessment exists. of the hypotheses. Finally, key results and their theoretical
This leads us to the critical question, Is such neglect and managerial implications are discussed. Limitations and
warranted? Drawing on relationship marketing literature and directions for future research close the article.
interpersonal relations literature we develop a working
The current issue and full text archive of this journal is available at The authors thank Fujitsu Siemens Computers for financial support of
this research and the Department of Marketing at the University of
Strathclyde, especially Dr Stephen Tagg, for support in parts of the
empirical phase of this project. They also thank Professors Jagdish Sheth,
Werner Reinartz, Thorsten Henning-Thurau, and Gillian Hogg for their
participation in parts of this project, and Professor Florian v. Wangenheim
27/5 (2012) 370– 383 for comments on an earlier version of this paper. Special thanks go to
q Emerald Group Publishing Limited [ISSN 0885-8624] Professor Wynne Chin for providing the PLS software and explaining the
[DOI 10.1108/08858621211236043] PLS method.
370
Customer intimacy Journal of Business & Industrial Marketing
Jürgen Kai-Uwe Brock and Josephine Yu Zhou Volume 27 · Number 5 · 2012 · 370 –383
2. Perspectives on intimacy Drawing on social exchange theory and transaction cost

theory, of particular importance are trust (Crosby et al., 1990;
Collins Dictionary defines intimacy as “close or warm Doney and Cannon, 1997; Dwyer et al., 1987; Morgan and
friendship or understanding; personal relationship” (Collins Hunt, 1994) and commitment (Anderson and Weitz, 1992;
English Dictionary, 1994, p. 809). The noun intimacy has its Dwyer et al., 1987; Morgan and Hunt, 1994). Trust is a
etymological roots in the Latin terms “intimatus”, meaning necessary foundation in enduring business-to-business
closely acquainted, very familiar, and “intimus”, which means relationships (Doney and Cannon, 1997; Dwyer et al.,
“inmost” or close friend. Reasoning by analogy suggests that 1987; Morgan and Hunt, 1994) due to high
customer intimacy is referring to a close and understanding interdependencies and commitment-based opportunity cost
relationship between buyers and suppliers. Consequently we that are characteristics of relationships in industrial markets
applied relationship marketing as the theoretical frame and (Iyer et al., 2005; Wuyts and Geyskens, 2005). Commitment
one of the literature streams analyzed. requires the development of trust (Dwyer et al., 1987; Morgan
and Hunt, 1994). The deployment of relationship specific
2.1 Intimacy and relationship marketing
assets, as well as the coinciding emergence of relational norms
The focus on relational rather than transactional economic
such as solidarity, mutuality, and flexibility (Kaufmann and
exchanges in marketing emerged in the 1980s (Berry, 1983;
Dant, 1992), is a characteristic example of such commitment.
Dwyer et al., 1987). At the outset, intimacy was an integral
Due to their relationship specificity committed relationship
albeit implicit concept (e.g. Dwyer et al., 1987, p. 14).
partners face high opportunity cost that they are only willing
Despite this early reference the concept customer intimacy
to sustain if they can be confident that this dependency is not
remained largely dormant and unspecified, although various
exploited and that overall future relationship benefits
academic contributions refer to attaining customer intimacy
outweigh associated costs. This in turn explains the
as an important aspect to develop and maintain successful
importance of customer intimacy attributed by practitioners
customer relationships (e.g., Akçura and Srinivasan, 2005;
(e.g. Aufreiter et al., 2000; Cruz, 2006; Eisenfeld et al., 2004;
Fournier et al., 1998; Johnson et al., 2006; Price and Arnould,
IBM, 2004). Without perceived value and a close and
1999; Rust et al., 2000, p. 60). At present, to the best of our
understanding relationship, commitment is less likely to
knowledge, no grounded definition currently exists. Only
occur. Consequently, besides developing a measure of
papers by Aaker et al. (2004), Frenzen and Davis (1990), and
customer intimacy, the assessment of this implied
Yim et al. (2008) consider customer intimacy, all in a
relationship to trust and commitment will be a central part
consumer service context. None of the studies provide
of this study.
evidence of a thorough construct development process.
2.2 Intimacy in interpersonal relations 3. Customer intimacy: analytical framework and

Since the 1970s the interpersonal relations literature has hypotheses
discussed, conceptualized, and measured intimacy from a
non-economic perspective (e.g. Descutner and Thelen, 1991; We develop and assess customer intimacy within a
Hook et al., 2003; Miller and Lefcourt, 1982; Orlofsky et al., nomological framework of antecedents, outcomes, and
1973; Repinski and Zook, 2005; Schaefer and Olson, 1987; related relationship marketing constructs. Figure 1 exhibits
Sternberg, 1997). Intimacy in this literature stream is mainly the framework. Next, we develop the research hypotheses.
viewed as closeness in personal relationships (e.g. Repinski
and Zook, 2005; Sternberg, 1997). Such relationships are 3.1 The nature of the customer intimacy construct
characterized by high levels of mutual understanding and Given the above, customer intimacy should be best
attitudinal congruence (Heller and Wood, 1998), which operationalized as a second order factor with three reflective
involves the positive validation of relationship partners first order factors, namely closeness, value perception, and
(Kouneski and Olson, 2004). As such, intimacy is the mutual understanding. This implies that customer intimacy
outcome of a process, emerging over time (Heller and Wood, emerges as, jointly, customer perceptions of relationship
1998; Kouneski and Olson, 2004). Of note is the closeness, positive relationship value, and mutual relationship
characteristic positive validation aspect of intimacy. Without partner understanding develop.
positive validation intimacy cannot emerge and develop H1. Customer intimacy is a second order relationship
(Kouneski and Olson, 2004). In economic exchanges, construct with three reflective first order factors
appreciation is congruent with value perceptions (e.g. closeness, value perception, and mutual
Sirdeshmukh et al., 2002; Woodall, 2003). understanding.
Given the above, we propose the following working
Customer intimacy as a construct reflects different
definition of customer intimacy:
relationship aspects from trust and commitment. We
Customer intimacy is a customer’s perception of having a very close and
valuable relationship with a supplier, characterized by high levels of mutual surmise that trust is a necessary foundation for successful
understanding. long-term business-to-business relationships to emerge and
develop (Doney and Cannon, 1997; Dwyer et al., 1987;
Morgan and Hunt, 1994), with customer intimacy referring
2.3 Customer intimacy and business-to-business buyer- to central qualitative aspects of a trusted relationship, namely
supplier relations closeness, value perception, and mutual understanding. As a
Research on buyer-seller relationships in business markets has consequence, commitment might then be best seen as
not yet considered the role of customer intimacy explicitly. tangible and intangible investments (see Gundlach et al.,
The existing body of literature stresses the importance of a 1995) into an intimate relationship. This refines the central
variety of key elements in business-to-business relationships. proposition of the commitment-trust theory (Morgan and
371
Figure 1 Analytical framework
Hunt, 1994) suggesting that trust is a major determinant of H2 we surmise that customer intimacy should also positively
commitment by arguing for customer intimacy acting as a influence the degree of customer WOM. Stated formally:
mediator to this central relationship. If this logic holds, the H4. Customer intimacy is positively related to customer
following derived hypotheses should find empirical support: word-of-mouth communication.
H2a. Customer intimacy is a distinct relationship construct Expectations as to the continuation of a relationship in the
from the trust construct. form of repurchase intentions is another widely studied and
H2b. Customer intimacy is a distinct relationship construct influential outcome variable within the relationship marketing
from the commitment construct. literature (Palmatier et al., 2006). Again, both trust and
H2c. Trust is positively related to customer intimacy commitment were shown to positively influence repurchase
(antecedent to customer intimacy). intentions (Palmatier et al., 2006). Following the logic behind
H2d. Commitment is positively related to customer
H4 we surmise that customer intimacy also positively
intimacy (outcome of customer intimacy).
influences repurchase intentions. Formally we propose:
H2e. Customer intimacy mediates the trust and
commitment relationship. H5. Customer intimacy is positively related to customer
repurchase intentions.
In business-to-business open information exchange is
3.2 Antecedents of customer intimacy important and characteristic of relational exchanges (e.g.
The review of the literature stresses the importance of mutual Cannon and Perreault Jr, 1999). We surmise that the
understanding as a defining element of customer intimacy. An likelihood to disclose sensitive or confidential information
important basis for understanding to develop is the increases with higher levels of customer intimacy. Maintaining
development of customer knowledge (Joshi and Sharma, information asymmetries would be incongruent specifically
2004). Only through an iterative process of learning about a with the closeness aspect of customer intimacy. Therefore H6
customer’s preferences and needs can understanding, that is states:
the knowledge of “why” for example a customer preference
exists, develop over time. Given that we defined customer H6. Customer intimacy is positively related to sensitive
intimacy as a perceptual construct, perceived customer information disclosure.
knowledge of the product/service supplier should operate as
an additional antecedent. Without some level of customer
knowledge it is unlikely that a customer considers a product/ 4. Methodology and data collection
service supplier to exhibit customer understanding and We employed a multi-phased qualitative and quantitative
thereby customer intimacy. Consequently H3 stipulates: research approach.
H3. Customer knowledge is positively related to customer In phase 1, we conducted exploratory, qualitative interviews
intimacy. with a heterogeneous convenience sample of experts from
different domains and countries. In total we interviewed 20
experts. Five leading academics in the field of relationship
3.3 Outcomes of customer intimacy marketing from the US and Europe, three consultants that
In addition to commitment, we consider three additional have published articles on customer intimacy, and 12 business
outcomes of customer intimacy. managers from different customer facing functions,
A widely studied outcome variable within the relationship hierarchical levels, and countries (UK, Germany, Denmark,
marketing literature is word-of-mouth (WOM) (Palmatier US). In a two-rounded Delphi-like setting we asked them two
et al., 2006). WOM is influential in growing a firm’s customer open questions:
revenue (e.g. Reichheld, 2003) and its overall long-term value 1 What is customer intimacy in your view?; and
(Villanueva et al., 2008). Both trust and commitment 2 What do you consider to be an indication of customer
positively influence WOM (Palmatier et al., 2006). Given intimacy?
372
In addition, to the expert interviews ten customer interviews firms and industry composition), and survey method
were also conducted with clients of the sponsoring (interviewers equipped with notebooks). Tests for non-
organization. Again, we interviewed firm representatives response and common method bias were conducted along
from different levels and countries. The data analytical the lines of research phase two. The results showed no
procedures followed the guidelines of Miles and Huberman significant non-response or common method bias. Of the 600
(1994). visitors contacted, 100 usable responses could be obtained.
In phase 2, we tested the results empirically. We used the IT
industry as the context, assessing perceived customer 5. Results
intimacy with key informants in charge of strategic IT
procurement decisions. This context was purposely chosen 5.1 Phase 1: exploratory interviews with experts and
for its generalizability. It covers a broad set of industries and customers
organizations (e.g. Powell and Dent-Micallef, 1997). Data Overall, the thematic categories (Miles and Huberman, 1994)
were collected from a sample of large UK firms. We used a that emerged supported and helped to further elaborate our
commercial sample frame from MIS, which lists all firms in working definition of customer intimacy, especially by
the UK. Employees with IT procurement authorities were specifying its dimensions. Table I lists some exemplary
contacted and interviewed via CATI or a web-based statements.
questionnaire. In order to reduce common method bias ex All three dimensions of customer intimacy synthesized from
ante (Podsakoff et al., 2003) clear survey guidelines were the literature featured in the recorded statements, lending
given, item order was randomized, different scales were used, support to our initial, rather expansive working definition. It
response anonymity was assured, items pre-tested for also shows that the purely affect-based conceptualization of
ambiguity, and only a limited number of items were shown intimacy by Yim and colleagues (2008) reflects only a partial
per screen. Of the 1,200 contacted firms 155 responded. 141 aspect of what customer intimacy might actually be.
questionnaires could be used, yielding an effective response The perception of the two dimensions value and closeness
rate of 12 per cent. Appendix 1 (Table AI) lists the constructs revealed some specific insights. The dimension value, as
and items. exemplified for example by the quote of Peter, should not only
refer to economic value, but also other aspects of value such
4.1 Characteristics of the sample as emotional value. This substantiates previous arguments
The average firm size was 10,429 employees though the vast stating that affective value is also an important aspect of value
majority of firms were smaller (mode: 1,000 employees). In perception (Woodall, 2003). Thus, value takes a more holistic
terms of industry membership 42 per cent were in services, 28 meaning and its subsequent operationalization needed to
per cent in the public sector, 10 per cent in manufacturing, reflect this. Details concerning the dimension closeness
and 20 per cent in other sectors such as media or retail/ turned out to be rather controversial. Although it featured
wholesale. All key respondents were in charge of IT in quite a few statements, various interviewees considered it
procurement (63 per cent manager level, 18 per cent vital that the relationship be of a personal or even private
director level, and the rest at the head of division level (16 nature to be considered close. Others explicitly, and
per cent) or above). unprompted, opposed such a view, as can be seen in
Michael’s quote. As a consequence of the mixed picture that
4.2 Non-response, sample generalizability, and emerged, we included an item that represents the existence of
common method bias personal relationships, but left that part of the definition of
Potential non-response bias was assessed by comparing early customer intimacy unchanged. With regards to the overall
vs late respondents (Armstrong and Overton, 1977) on two nature of closeness a more consistent picture emerged.
indicators: size of the firm and industry sector. No significant Respondents viewed it as a representation of numerous direct
differences were found, suggesting that non-response bias is and personal contacts between the supplier and the customer,
not a serious concern. Also, we compared the overall sample at different levels, and with a sense of “commonality” or as
characteristics with the sample frame to assess sample Robert puts is “a friendly/friendship type”. The remaining
generalizability. This was done by comparing the size dimension, mutual understanding, was seen very similar by all
distribution of firms in the sample with that in the overall respondents. They stressed the importance of understanding
sample frame. The results show that the sample did not to reflect more than mere customer knowledge (e.g. see
exhibit significant departures from characteristics of the comments by Steve and Robert in Table I) and they all listed a
sample frame, suggesting that the results derived from the variety of attributes they considered vital for mutual
sample can be generalized to the population of large UK understanding to be of key relevance. Reflecting those
firms. Due to our reliance on single source surveys, we also insights we kept the working definition of customer intimacy
controlled for potential common method bias ex post. This unchanged and detailed its dimensions (see Appendix 2,
was done via Harman’s single-factor test, as well as the single- Table AII).
common-method-factor approach (Podsakoff et al., 2003). The second goal of research phase one was to generate
The findings suggest that a strong common method bias is indicators of customer intimacy by asking interviewees what
unlikely1. they would consider to be indications of customer intimacy.
In phase 3, we re-tested the model. This was done in a The interviews led to an initial set of 57 indicators for
maximally different, albeit comparable setting. The re-test customer intimacy and its dimensions, which was further
differed compared to the original survey in terms of time (one amended by potentially fitting indicators from the literature.
year after the original survey), country (Germany), sample Each indicator was subsequently rated by a group of
frame (convenience sample: IT procurement decision-makers academics and practitioners in terms of construct fit,
participating at a trade show), sample characteristics (size of dimension fit, and clarity in wording. Only indicators that
373
Table I Exemplary statements and thematic categories

Name
(synonym) Sample Statement Thematic category
Carl Consultant “Customer intimacy is a term that refers to a close relationship, in which both parties to Closeness value
the relationship take value out of it”
Marian Manager “. . . being capable to understand the customer’s problems and able to select the right Understanding value
values for the customer”
Mike Manager “An especially intensive, personal customer relationship beyond the business Closeness
relationship . . . ”
Steve Academic “Customer intimacy is about understanding the customer, not just knowing the customer Understanding
. . . It is about understanding what a customer really wants . . . This is often different to
what a customer says . . . ”
Peter Academic “Customer intimacy is an on-going business relationship characterized by mutually Value
perceived economic value, customer perceived emotional value and customer perceived
associative value”
Paul Academic “State of being in a very private, personal relationship, which involves more than the Closeness
dyad”
Michael Customer “Customer intimacy refers to a good relationship and partnership with a customer based Understanding closeness
on mutual understanding and closeness . . . a personal relationship is not so important”
Robert Customer “Customer intimacy . . . is hard to define by words. You feel it. It is a relationship Closeness understanding
characterized by a less official nature, more a friendly/friendship type, less distant. It is
about customer needs understanding, knowing and thinking like the customer . . . It is a
desirable state”
were, on average, rated high on each of the three rating indicators generated. Rather than reflecting each of the three
categories and that exhibited high levels of inter-rater dimensions of customer intimacy, with characteristic high
agreement were kept for stage two of the research. For the content overlap, most of the indicators appeared to be
inter-rater agreement the average deviation index and its formative, with characteristic low content overlap, of its
proposed upper limit for item acceptance was used (Burke dimensions. At this stage of the research we therefore
and Dunlap, 2002). This process, which was repeated twice suspected that the three dimensions of the focal construct are
led to a set of 21 indicators. A semantic pre-test of this set of possibly captured best by formative indicators, while the three
indicators using sample frame members reduced the set dimensions themselves are reflective first order factors of the
further; to a final set of 14 indicators that were used in second order factor customer intimacy. Thus, customer
research phase two. intimacy might be a type III multidimensional construct
During the course of this research phase two additional (Jarvis et al., 2003).
important findings emanated. First, the descriptions of
customer intimacy given by the sample of managers yielded 5.2 Phase 2: empirical validation and hypothesis testing
Before testing the focal construct and the hypotheses stated
potential outcome variables of customer intimacy, two of
we needed to establish whether the results of phase one,
which we did not consider ex ante and added to research
suggesting a formative indicator approach to the three
phase two. Availability was the first and advisor status the
dimensions of customer intimacy, is warranted. We followed
second. Availability refers to the availability of the customer
recommendations in the literature and analyzed the
when the suppliers calls or visits. According to various
correlation matrix of the customer intimacy indicators first
managers customer unavailability is a key barrier to develop and the variance inflation factor second (Diamantopoulos and
business in small and smaller customer accounts, while it is Winklhofer, 2001). The correlation matrix largely confirmed
usually not a problem at all in their key account relationships. the formative nature of the indicators. The majority (58 per
Consequently they argued that achieving customer intimacy cent) of the 91 bi-variate correlations exhibited small effects
should increase the likelihood of the customer being available sizes and none of the correlations exhibited a large effect size.
when the supplier intents to interact. The second outcome Similarly, the variance inflation factor came to a maximum of
variable, advisor status, refers to a desired relationship state 2.04, below the suggested threshold of 3.33 for formative
cited by both the managers and consultants. According to constructs (Diamantopoulos and Siguaw, 2006). In addition,
their view the ultimate role a supplier can play is the role of a we performed an exploratory factor analysis. The poor results
trusted advisor, where customers proactively ask the supplier provided additional confirmation to our formative
for advice before decisions are made and budget is allocated. conceptualization of the three dimensions of customer
They reasoned that customer intimacy might be a potential intimacy2.
path to achieving such a status. We incorporated both new To test the customer intimacy construct and its nomological
outcome variables, availability and advisor status, in the next relationship with the other variables of this study the
research phase (as ex post H7 and H8). component-based Partial Least Squares (PLS) structural
The second finding that emanated from this phase of the modelling technique was applied using PLS-Graph (Chin and
research concerns the nature of the customer intimacy Frye, 2001). PLS has several strengths in comparison to
374
covariance, full information based structural modelling indicators for each construct exist (Chin et al., 2003), which
techniques that made it appropriate for this empirical was the case here.
investigation. First, the less demanding sample size Following traditional reliability assessment guidelines,
requirements of PLS allowed for its use in this study. With researchers are usually asked to report on the internal
141 (test) and 100 (re-test) usable observations to assess the consistency of the construct (Churchill, 1979). However, for
full model it exceeded the minimum requirements of ten constructs that consist of formative indicators such an
times the scale with the largest number of indicators (Chin approach is not applicable (Diamantopoulos and
and Frye, 2001). Second, the PLS method can handle Winklhofer, 2001). Formative indicators are assessed by
formative indicators (Hsu et al., 2006) which are required for their empirically derived weights to gauge their relevance in
the dimensions of the focal construct of this study. For the measurement model (Chin, 1998). Although no
covariance-based structural modelling technique the inclusion minimum thresholds for weights have been established, the
of formative measures is problematic and has been shown to statistical significance of the weights can be used to determine
lead to identification problems (MacCallum and Browne, their relevance in forming the latent variable (Chin and Frye,
1993). Third, only PLS can estimate scores for formative 2001). These were estimated using the bootstrap re-sampling
latent constructs (Hsu et al., 2006), a requirement of this technique. 1,000 sub-samples were used to estimate the
study. parameter means and standard errors. This process led to the
elimination of additional items and resulted in a total of ten
5.2.1 Assessing the multidimensional nature of customer intimacy items forming the three dimensions of customer intimacy.
A necessary condition for the definition of a multidimensional Four items formed the dimension mutual understanding, four
construct is that the relations between the overall construct items formed closeness, and two items formed the value
and its dimensions, or first order constructs, are specified dimension (see Appendix 1 (Table AI) for an item overview).
(Law et al., 1998). Jarvis et al. (2003) distinguish between Since it is important that the final item list still captures the
four types of second order constructs. This typology is based complete conceptual domain of each dimension
on the reflective or formative conceptualization of the first and (Diamantopoulos and Winklhofer, 2001), a closer look at
the second order construct: the items’ content is warranted. The four mutual
.
Type I constructs consist of reflective second order and understanding items capture key aspects in business-to-
reflective first order constructs. business relationships, namely customer/supplier culture,
.
Type II constructs consist of formative second order and needs, product/service offerings, and decision-making
reflective first order constructs. structures (e.g. Cannon and Perreault, 1999; Palmatier et al.,
.
Type III constructs consist of reflective second order and 2008; Ulaga and Eggert, 2006; Wuyts and Geyskens, 2005).
formative first order constructs. The two value perception items also capture the essence of its
.
Type IV constructs consist of formative second order and defined domain. Both, the rational and the emotional side of
formative first order constructs. value perception, are still captured. The four closeness items
also represent the concept of closeness rather well. Of note is
Given the preceding discussion, customer intimacy is that the rather controversial socialization aspect of closeness,
surmised to be best conceptualized as a type III construct. which was suggested by some respondents in research phase
Empirical support for such a conceptualization is given if the one, exhibited significant weights too. Overall, we can attest
following six characteristics hold (Chin and Gopal, 1995; that the ten items capture the central aspects of each
Fornell and Larcker, 1981): dimension adequately.
1 the constituting dimensions of the second order construct The empirical results support our assessment:
(the first order constructs) are significantly correlated but .
the resulting dimensions exhibited high R2s;
only limited so3; .
strong second order factor loadings; and
2 the indicator weights for each dimension are significant; .
the dimensional correlations are below their respective
3 the R2 of each dimension exceeds 0.5; second order factor loadings.
4 the construct reliability of the second order construct
exceeds 0.7; This supports the proposed dimensionality of the customer
5 its AVE (average variance extracted) exceeds 0.5; and intimacy construct (see Tables II and III). Finally, the
6 the dimensions loading are significant, ideally exceeding composite reliability and AVE of customer intimacy itself also
the interdimensional correlations. exceeds recommended thresholds as shown in Table II
(Fornell and Larcker, 1981). In summary, the
Within the PLS measurement model two methods to assess operationalization of customer intimacy resulted in a reliable
second order constructs have been proposed. The repeated second order construct, with three reflective dimensions. This
indicators method (Chin et al., 2003) or the latent variable supports research H1. The other constructs, mainly trust and
score method (Bagozzi, 1985; Chin et al., 2003). The former commitment, also exhibited good levels of reliability (see
repeats the use of the formative indicators for both the second Table II)4.
order construct and the first order constructs. The latter uses
the PLS algorithm to create a latent variable score for each 5.2.2 Assessment of rival models of customer intimacy
first order construct. Since the resulting latent variable scores Two rival models to the one proposed and tested were
reflect the underlying construct more accurately than any of considered. For each model we applied Kettenring’s goodness
the individual constructs (Chin et al., 2003), we applied the of fit measure as proposed by Tenenhaus and Hanafi (2010)
latent variable score method. In addition, the repeated to assess the predictive relevance of the competing models, as
indicators method can lead to unstable estimates if an inflated well as indicators of reliability and validity for different
indicator to constructs ratio and an unbalanced number of construct conceptualizations.
375
Table II Construct assessment results I

Item loadings
(t-values)
Composite reliability AVE Test Re-test
Test Re-test Test Re-test (n 5 141) (n 5 100)
Construct/items *, dimensions (n 5 141) (n 5 100) (n 5 141) (n 5 100) Loadings Loadings
Trust 0.924 0.904 0.669 0.613
Item 1 0.803 (26.169) 0.777 (17.655)
Item 2 0.805 (21.984) 0.673 (9.115)
Item 3 0.892 (59.065) 0.828 (25.678)
Item 4 0.819 (25.846) 0.775 (14.754)
Item 5 0.778 (22.242) 0.814 (22.614)
Item 6 0.789 (19.821) 0.846 (26.471)
Commitment 0.884 0.848 0.657 0.590
Item 1 0.830 (23.552) 0.894 (36.466)
Item 2 0.803 (19.231) 0.842 (19.193)
Item 3 0.698 (11.231) 0.517 (4.843)
Item 4 0.899 (56.681) 0.755 (11.940)
Repurchase intention 0.875 0.868 0.777 0.767
Item 1 0.860 (20.999) 0.863 (17.855)
Item 2 0.899 (31.528) 0.886 (34.125)
Customer intimacy 0.877 0.902 0.703 0.755
Mutual understanding 0.817 (22.574) 0.775 (17.686)
(test: R2 0.56; re-test: R2 0.56)
Closeness 0.845 (25.039) 0.897 (39.876)
(rest: R2 0.50; re-test: R2 0.50)
Value perception 0.853 (45.991) 0.932 (71.465)
(test: R2 0.67; re-test: R2 0.79)
Notes: *Item details are listed in Appendix 1 (Table AI)
Table III Construct assessment II: interdimensional correlations clear what all the constituting dimensions of this construct are
customer intimacy (Palmatier et al., 2006; Palmatier et al., 2008), the present
study does include at least two constructs that have been
Correlations to dimension central in this stream of research, namely trust and
loadings commitment. Therefore we modelled customer intimacy as
Sample Dimension MU CL VP a third dimension of relationship quality, using its derived
Test Mutual understanding MU 0.817 latent scores as described above. Lacking specific guidelines as
Closeness CL 0.632 0.845 to the exact multi-dimensional nature of relationship quality
Value perception VP 0.514 0.535 0.853 we conceptualized the three dimensions to be reflective. The
Re-test Mutual understanding MU 0.775 rational for assuming a reflective relationship is grounded in
past empirical observations that showed significant factor
Closeness CL 0.493 0.897
correlations between commitment and trust (e.g. Morgan and
Value perception VP 0.606 0.787 0.932
Hunt, 1994). The correlations between trust, commitment,
and customer intimacy found in this study further support
such a conceptualization. The results show that while the
Customer intimacy as a first order, formative construct:
construct relationship quality performed well (composite
customer intimacy was conceptualized as a multidimensional
reliability 0.909; AVE 0.770), the quality of the model as
construct, but it could also be conceptualized and
measured by Kettenring’s goodness of fit measure
operationalized as a first order, formative construct, with
deteriorated (from 0.42 to 0.38).
each of the ten indicators directly causing customer intimacy.
Overall, the assessment of the two rival models show that the
The results showed poor fit. The AVE of customer intimacy original conceptualization of customer intimacy as a separate
was low (0.398) and only three of the ten indicators had type-III multi-dimensional construct is the strongest in terms of
significant weights. predictive relevance and construct conceptualization.
Customer intimacy as a relationship quality dimension:
some authors have challenged the assumed central role of the 5.2.3 Assessment of H2-H8
constructs trust and commitment in relationship marketing, H2a and H2b propose that trust and commitment are distinct
arguing for a broader aggregate relationship construct, usually constructs from customer intimacy. To assess this, we estimated
termed relationship quality (e.g. Crosby et al., 1990; DeWulf their discriminant validity from the customer intimacy
et al., 2001; Hennig-Thurau et al., 2002). Though it is not construct following the proposal of Fornell and Larcker
376
(1981) stating that the squared construct correlations should be in the mediated model is still significant, its strength is
smaller than the respective construct AVEs. Table IV shows that reduced by nearly 50 per cent (down from 0.644 to 0.347)
this test is met. All of the squared construct correlations are and the Sobel test is significant (Sobel test value 4.761, p:
smaller than the construct AVEs. As hypothesized, trust and 0.000; see Table V). Thus, customer intimacy mediates the
commitment can be considered distinct from customer trust commitment relationship, supporting H2e.
intimacy. The data therefore support both H2a and H2b. H3 proposes that customer knowledge is positively related
H2c proposes that trust is positively related to customer to customer intimacy. Table five shows that the data support
intimacy. Table V shows that the result of the path analysis this hypothesis too. The path from customer knowledge to
confirms this hypothesis. The path from trust to customer customer intimacy is significant and positive.
intimacy is significant and positive. Related to this, H2d H4 to H6, and ex post H7 and H8, relate to outcomes of
proposes that customer intimacy is positively related to customer intimacy. Table V shows that all of the hypothesized
commitment. This hypothesis also finds empirical support. outcome variables of customer intimacy are significant and
The customer intimacy to commitment path is significant and positive. Customer intimacy is positively related to WOM,
positive (see Table V). H2c and H2d also proposed that trust repurchase intentions, information disclosure, customer
is an antecedent to customer intimacy and commitment and availability, and an advisor status.
outcome of customer intimacy. Given this logic we proposed In summary, the results of research phase two showed that
in H2e that customer intimacy mediates the trust customer intimacy is a type III construct (Jarvis et al., 2003)
commitment relationship. To test for mediation we followed and a distinct relationship construct from the two central
the logic of Baron and Kenny (1986) to model and test three relationship marketing constructs trust and commitment. It is
path models. The direct trust to commitment path model, the driven by customer knowledge and exhibited significant and
direct customer intimacy to commitment path model, and the positive directs effects on a variety of important relationship
joint trust and customer intimacy to commitment model outcome variables, namely WOM, repurchase intentions,
controlling for the trust to customer intimacy path. Mediation information disclosure, customer availability, and advisor
is confirmed if the direct paths for models one and two are status with the customer. Moreover, customer intimacy
significant and the trust to commitment path in the third mediates the central trust commitment relationship.
model is significantly reduced, ideally becoming insignificant
or approaching zero as evidence for complete mediation 5.3 Phase 3: empirical re-validation
(Baron and Kenny, 1986). Significance is assessed using the The results of the re-test largely confirmed the factor
Sobel test (Baron and Kenny, 1986). The results support the structure and nomological network of phase two (see Tables
mediation hypothesis. Although the trust to commitment path II, III, IV, and V), but for the following notable difference.
Table IV Construct assessment III: discriminant validity

AVE to construct correlation2
Sample Construct Hypothesis Tr. Co. C.i.
Test Trust H2a – supported Tr. 0.669
Commitment H2b – supported Co. 0.387 0.657
Customer intimacy C.i. 0.517 0.410 0.703
Re-test Trust H2a – supported Tr. 0.613
Commitment H2b – supported Co. 0.488 0.590
Customer intimacy C.i. 0.488 0.423 0.755
Table V Results of the PLS path analysis – hypothesis assessment

Standardized path loading
(t-values)
Test Re-test
Path (n 5 141) (n 5 100) Hypothesis
Trust ! Customer intimacy 0.639 (13.106) 0.664 (11.740) 2c Supported
Customer intimacy ! Commitment 0.583 (10.949) 0.623 (8.899) 2d Supported
Trust ! Customer intimacy ! Commitment Sobel test: Sobel test:
(mediation test, customer intimacy as mediator) 4.7605 ( p ¼ 0.000) 3.0602 ( p ¼ 0.002) 2e Supported
Customer knowledge ! Customer intimacy 0.280 (4.022) 0.177 (2.450) 3 Supported
Customer intimacy ! WOM 0.606 (13.226) 0.511 (6.341) 4 Supported
Customer intimacy ! Repurchase intentions 0.405 (5.464) 0.623 (10.326) 5 Supported
Customer intimacy ! Information disclosure 0.246 (2.539) 0.210 (2.112) 6 Supported
7
Customer intimacy ! Customer availability 0.423 (5.844) 0.513 (5.809) (ex post) Supported
8
Customer intimacy ! Advisor status 0.388 (5.891) 0.282 (3.038) (ex post) Supported
377
Two of the ten items of customer intimacy failed to achieve intimacy. The finding that value perceptions, an element of
significant weights: the perceived mutual understanding of customer intimacy, mediate the trust loyalty link in consumer
decision-making structures and the “socialize item” of the contexts (Sirdeshmukh et al., 2002) provides further evidence
closeness dimension. While for both items this might be the supporting this view.
result of lower statistical power of the re-test and although the Third, we add advisor status as a new customer-focused
exclusion of both items does not significantly alter the defined relationship outcome variable together with customer
domain of each dimension, the result for the controversial availability. Following the view that customers are essentially
“socialize item” of research phase one warrants further always also co-producers (Vargo and Lusch, 2004), both
discussion. We will pick up on this in the proceeding outcome variables should play a vital role in relationship
discussion section. marketing due to their customer engagement nature. Given
In summary, the results of research phase 3 confirmed that the operationalization of advisor status, customers
customer intimacy is a type III construct (Jarvis et al., 2003) considering their supplier to be one are proactive with
and a distinct relationship construct from the two central regards to communication of their future needs and customer
relationship marketing constructs trust and commitment. availability increases the likelihood of information exchange
Research phase 3 also confirmed that it is driven by customer between supplier and buyer. As such, we surmise that
knowledge and that it impacts significantly and positively a customer intimacy might play a central role in the customer as
variety of important relationship outcome variables5. Also, co-producer view of relationship marketing.
and consistent with the original sample, the re-test showed Fourth, while the central constructs of this study exhibit
that customer intimacy mediates the central trust stable characteristics with regards to their reliability and
commitment relationship. validity, the nomological structure overall differed in parts and
customer intimacy’s construct domain differed in one detail too.
6. Discussion Due to the purposely chosen difference in context of both
studies, we suspect that those results are a reflection of
Academics and practitioners alike promote the focus on moderators we did not control for. Those moderators must be
relational rather than transactional economic exchanges. One rather specific compared to the higher-level moderators usually
relationship attribute characteristic of a relational rather than found in the relationship marketing literature (e.g. Palmatier
transactional exchange is customer intimacy. Although its idea et al., 2006), given the fact that both studies concerned product-
featured implicitly since relationship marketing emerged in based, direct exchanges amongst organizations. We can only
the 1980s (e.g. Dwyer et al., 1987) and explicitly since Treacy speculate what those “micro moderators” might be, but one is
and Wiersema (1993) coined the term over 15 years ago, no likely to relate to culture. The first study explored customer
rigorous conceptualization and empirical assessment exists to intimacy in the UK and the second study explored customer
date. This research extends the relationship marketing intimacy in Germany. According to one recent culture model
literature by conceptualizing, measuring, and assessing (Schwartz, 1999) Germany is representative of a Western
customer intimacy. Several of our findings offer important European cluster while the UK represents an English speaking
theoretical and managerial implications. cluster. Both differ on various cultural values. This difference
might explain the inclusion of the “socialize item” of closeness
6.1 Contributions to theory in one sample (UK) and not the other (Germany). Post-survey
With regards to theoretical contributions we see four key interviews with some practitioners support this argument. For
implications of our findings. them, it is standard practice in the UK to meet after work, while
First and foremost, the results of this study support the they considered this rather unusual for German business men.
notion that customer intimacy is important and a distinct As a consequence, social, friendship like relationships might be
relationship attribute. It positively impacts relationship less likely to emerge in Germany compared to the UK,
commitment levels, behavioural loyalty/ repurchase explaining the inclusion of the “socialize item” in one case and
intentions, customer availability, advisor status, and, the exclusion in the other. Consistent findings in the
customer induced WOM. As such, we add a new and international business literature demonstrating the influential
relevant relationship marketing construct to the literature, role of cultural aspects in exchange relationships (e.g. Katsikeas
thereby addressing Palmatier’s recent call (Palmatier et al., et al., 2009) are supportive of this line of argument.
2008) for additional relationship attributes that can account
for relationship marketing’s effect on performance beyond
6.2 Managerial implications
established measures such as commitment and trust.
The results of our study have clear implications for
Second, the findings suggest that the group of key relational
practitioners. We show for the first time:
mediators as synthesized by Palmatier and colleagues .
what customer intimacy is;
(Palmatier et al., 2006) is itself composed of at least one .
how it can be measured;
intra-group mediator. Customer intimacy mediates the trust .
what causes customer intimacy; and
commitment path. This is an interesting observation that not .
what impact does it have.
only details relationship marketing theory and its central
trust-commitment path further, but it also might help to With this we could demonstrate that achieving and managing
explain some findings of the past. For example, Doney and customer intimacy is a relevant managerial goal and task.
Cannon (1997) found that trust often operates as an “order With regards to the measurement of customer intimacy, a
qualifier” not an “order winner”. Trust levels failed to direct basis for its management, the rather economic measure of
impact current supplier choice in their study. Given the found customer intimacy developed here should be seen as an ideal key
role of customer intimacy in this study we surmise that the performance indicator for managers. It allows tracking its
trust supplier choice link might be mediated by customer development over time and benchmarking it versus key
378
competitors. Related to this, we also consider the construct at study using manipulative variables can explore this. Third,
the item level to be much more informative and “actionable” for since the nomological network assessed focussed on a limited
managers compared to the more abstract items used in number of variables and the commitment-trust framework,
traditional reflective marketing scales such as trust and future research should explore additional nomological
commitment scale. networks such as the relational norms framework
With regards to the causes of customer intimacy the results (Kaufmann and Dant, 1992; Blois and Ivens, 2007), as well
suggest that managers should aim at both building a trusted as additional antecedents and outcomes of customer intimacy.
relationship and developing customer knowledge with their Especially an assessment of the financial or competitive
strategic business partners in order to truly understand their outcomes of customer intimacy might be an interesting
motives and behaviour. Mere customer knowledge is not research path for the future. Such studies should incorporate
enough. Managers should move beyond the what – for an assessment of the suggested hierarchical nature of
example, what is the installed product base of the customer – relationship outcome variables. Does such a hierarchy exist
and understand more about the why. Why does a customer use a and, if so, how is it structured? Finally, the given research
given product? Why does a customer work with a given setting is limited to a business-to-business context. Future
competitor? Or, why has a customer stopped using a given research should explore the role of customer intimacy in other
offering? Managers should note that this in-depth marketing relationships such as business-to-consumer or
understanding of the customer should be mutual for customer lateral marketing relationships.
intimacy to emerge. Especially diversified firms should make
sure that their customers also understand them, their product/ Notes
services portfolio, their business needs, and their business
culture. Besides increasing the intimacy of the business 1 The exploratory, unrotated factor analysis of all survey
relationship, such mutual understanding, if shared across the variables did not reveal one general factor (10 factors with
firm, should also increase the likelihood of business synergies eigenvalues over 1). Comparison of the standardized
across business units of diversified firms. Related to this, parameter estimates in a constrained full-information
structural model (Podsakoff et al., 2003) when common
managers should also embrace the often forgotten value of non-
method variance was and was not controlled for revealed
rational relationship aspects. The value perception dimension that construct relationships were unaffected.
of customer intimacy is not purely rational. Emotional motives, 2 E.g. six factors with eigenvalues larger than one were
simply enjoying the relationship with the supplier, also matter. extracted with nearly half of the items exhibiting high
Of the various outcomes variables of customer intimacy, cross-loadings on at least two factors.
managers should specifically note its impact on advisor status, 3 The dimensions in a type III second order construct
a central managerial goal in at least the IT industry. As the should correlate significantly, because they collectively
managers themselves stated during the interviews, when reflect the higher order factor. Only if the dimensions
customers view a supplier as a trusted advisor they become cause the higher order factor – i.e. a type II or IV
more open, responsive, communicative, and pro-active. construct according to the Jarvis, Mackenzie, and
Relationship marketing and sales efforts should therefore Podsakoff 2003 taxonomy – is a correlation across the
lead to higher levels of conversion and, subsequently, higher dimensions not required. Yet too strong a correlation
between the dimensions constitutes a conceptual
returns on marketing.
violation, because this would signal uni-dimensionality
In summary, the results suggest that managers are well and a multidimensional construct conceptualization
advised to add customer intimacy in their relationship should be abandoned. To the best of our knowledge no
management tools and systems as a leading key performance cut-off points for interdimensional correlations have been
and comparative benchmark indicator in order to monitor and established. We suspect correlations in the range of 0.4 to
manage desired outcome variables such as word-of-mouth, 0.8 (12 percent-64 percent explained variance) to be
loyalty, availability, and advisor status more effectively. indicative of dimensions reflecting a second order factor.
4 We also conducted a separate confirmatory factor analysis
6.3 Limitations and further research with the three focal constructs – customer intimacy, trust,
Naturally, this research has several limitations that should be and commitment – using the PLS-derived latent variable
addressed by future studies. First, this study relied on the key scores for the three customer intimacy dimensions as
manifest variables. The model was estimated using the
informant technique on one side of the supplier-buyer dyad. maximum likelihood method. The results indicated
Future research should try to assess the perception of acceptable model fit considering the small sample size
customer intimacy within the complete buying centre of the with less than 200 cases (e.g., Bentler and Yuan, 1999):
customer. Perceptions might differ by buying centre roles Normed x2 ¼ 1.93; GFI ¼ 0.88; AGFI ¼ 0.82;
leading to differentiated impacts on various relationship CFI ¼ 0.94; RMSEA ¼ 0.08; NFI ¼ 0.89; IFI ¼ 0.95;
outcome variables. A simultaneous assessment of both sides TLI ¼ 0.93.
of the supplier-buyer dyad might also be a fruitful future 5 We analyzed all hypothesized outcome variables of
research route to understand better the role of customer customer intimacy also at the level of its constituting
intimacy. Related to this, future research should also explore dimensions for both the original and the re-test sample.
whether differences exist when the firm versus the employee Only in one of the ten tests did a dimensional assessment
lead to a significant increase in the explained variance of
level is examined. Past research has shown that differences
the outcome variable (F-value 10.769, p.: 0.000; for
exist (e.g. Doney and Cannon, 1997). This might also apply WOM). Since this increase occurred only in the original
to the role of customer intimacy. Second, due to its cross- sample and could not be repeated in the re-test sample we
sectional nature this study could only infer causation. For conclude that the conceptualization and assessment of
example, does customer intimacy lead to commitment or does customer intimacy as a multi-dimensional, second order
commitment lead to customer intimacy? Only a longitudinal level is well justified.
379
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381
Appendix 1
Table AI 5 Overview of construct items

Constructs, individual items, (source)
Trusta (items 1-6) , Supplier . keeps promises it makes to our firm.

We believe the information , supplier . provides to us.
, Supplier . is genuinely concerned that our business succeeds.
When making important decisions , supplier . considers our welfare as well as its own.
We trust , supplier . keeps our best interests in mind.
, Supplier . is trustworthy.
(Adapted from Doney and Cannon, 1997; two reverse-scored items omitted from their original scale)
Commitmenta (items 1-4) The relationship that my firm has with , supplier . is something we are very committed to
The relationship that my firm has with , supplier . is something my firm intends to continue far into the
foreseeable future
The relationship that my firm has with , supplier . deserves our firm’s maximum efforts to maintain
Our firm has consistently invested in people and resources to support the relationship with , supplier .
(Adapted from Morgan and Hunt, 1994)
Repurchase intentionsb (Items 1 1 2) How likely is your firm to procure more often from , supplier . in the future
How likely is your firm to continue procuring from , supplier . in the future
(Adapted from Seiders et al., 2005)
WOM (Word-of-mouth)c How likely is it that you would recommend , supplier . to a friend, colleague, or acquaintance?
(Reichheld, 2003)
Customer knowledged Does the , supplier . know your existing IT landscape . . . not at all . . . completely?
(Interviews with practitioners)
Availabilityd When a representative of the , supplier . calls . . . you never have time . . . you always have time?
Advisor statusd Do you ask the , supplier . for advice on planned IT infrastructure changes . . . never . . . every time?
Share informationd To share IT budget details with the , supplier . is . . . unthinkable . . . absolutely no problem?
Customer intimacyd
Mutual understanding (items 1-4); The , supplier . and your firm have . . . no understanding of each others business culture . . . full
(t 5 test, rt 5 retest) understanding? (t þ rt)
The , supplier . and your firm have . . . no understanding of each others business needs . . . full
understanding? (t þ rt)
The , supplier . and your firm have . . . no understanding of each others product/service offerings . . . full
understanding? (t þ rt)
The , supplier . and your firm have . . . no understanding of each others decision-making structures . . . full
understanding? (t)
Closeness (items 1-4); (t 5 test, Do you have open and frank business conversations with the , supplier . . . . never . . . always? (t þ rt)
rt 5 retest) When working with the , supplier . . . . you never have a strong sense of a common bond . . . you always
have . . .? (t þ rt)
Do you engage with the , supplier . . . . only at an operational level. . . at all levels, including top
management? [t þ rt]
Do you socialize with representatives of the , supplier . outside your business dealings . . . never. . .
regularly? [t]
Value perception (items 1 1 2); Do you consider your overall relationship with the , supplier . as . . . not valuable . . . very valuable? (t þ rt)
[t 5 test, rt 5 retest] Do you enjoy interacting with representatives of the , supplier . . . . never . . . always? (t þ rt)
(Developed in this study)
Notes: aSeven-point Likert scale; bSeven-point semantic differentials scale; c11-point scale; d Seven-point phrase completion scale
382
Appendix 2
Table AII 6 Definitions of customer intimacy dimensions
Mutual understanding A customer’s perception of comprehending each other – the seller’s and the buyer’s firm – on various attributes
relevant to the business relationship
Closeness A customer’s perception of the firm having extensive person-to-person contact with a supplier, at different
functional levels, characterized by open personal and working relationships
Value perception A customer’s perception of the firm deriving value from the relationship with the supplier, whereas value is
understood as rational, economic, as well as, emotional, felt advantages arising out of the relationship
About the authors Research, Journal of International Entrepreneurship, International

Journal of Market Research, and International Small Business
Jürgen Kai-Uwe Brock (PhD) is co-founder and Managing Journal. Jürgen Kai-Uwe Brock is the corresponding author
Director at BeG (www.beg-projekte.com) a project and can be contacted at: Juergen.brock@strath.ac.uk
development firm and co-founder of Zhou Coansulting Josephine Yu Zhou (PhD) is a full Professor for Hospitality
(www.coansulting.com), a consulting firm. He serves as
and Strategic Management at the International University of
Senior Research Fellow at the Department of Marketing,
University of Strathclyde, UK, and is a Guest Lecturer at the Applied Sciences Bad Honnef Bonn, Campus Bad
Technical University of Munich, Germany. His research Reichenhall, Germany, and founder and Managing Director
interests include international business, the internet, strategic of Zhou Coansulting (www.coansulting.com), a consulting
management, (relationship) marketing, technology and firm. Her research interests include international business,
innovation management, and channel marketing and services marketing, and strategic management. She has
management. He has published in Industrial Marketing published in Industrial Marketing Management, Internet
Management, Journal of International Business Studies, Internet Research, and the Encyclopedia of Knowledge Management.

383
Using trade show information to enhance
company success: an empirical investigation
Harriette Bettis-Outland
University of West Florida, Pensacola, Florida, USA
Wesley J. Johnston
Georgia State University, Atlanta, Georgia, USA, and
R. Dale Wilson
Michigan State University, East Lansing, Michigan, USA
Abstract
Purpose – This paper seeks to provide an exploratory empirical study of the variables that are part of the return on trade show information (RTSI)
concept, which is based on the use and value of information gathered at a trade show.
Design/methodology/approach – The research is designed to explore relationships and identify those variables that are a particularly important part
of the RTSI concept. The paper provides an exploratory test of the relationship between a series of variables that are related to the value of information
gathered at trade shows. Data were collected from trade show attendees approximately 60 days after the trade show. A multiple regression model was
developed that explores the relationship between the dependent variable that focuses on information value and the independent variables on various
aspects of information acquisition, information dissemination, and information use.
Findings – The final multiple regression model found a significant relationship for several variables and has an adjusted R2 value of 0.552. Four
significant independent variables were identified – one each in the information use and the shared information categories and two in the information
acquisition category. These findings present an interesting picture of how information is used within an organization after it is acquired at a trade show.
Research limitations/implications – The research is limited by the multiple regression model used to explore the relationships in the data. Also, data
from only one trade show were used in the model.
Practical implications – This paper focuses on the intangible, longer-term benefits as important considerations when determining the value of new
trade show information to the firm. The evaluation of trade show information also should include these intangible benefits, such as improved
interdepartmental relations or interactions as well as discussions with other trade show participants in finding new uses for information that impacts
the company’s future success, as well as shorter-term benefits such as booth activity.
Originality/value – The paper offers a unique approach for determining the value of information acquired at trade shows. Though information
gathering has been included as an outcome variable in previous trade show studies, no other research has studied the value of this new trade show
information to the company.
Keywords Return on trade show information, Market orientation, Trade show performance, Trade fairs, Marketing opportunities, Cost effectiveness
Introduction trade show performance for exhibitors is defined as

effectiveness of trade show booth personnel, generation of
A major, on-going consideration for tradeshow participants is, sales leads, image-building; and on-site sales (Bonoma, 1983;
“Was it worth it?”. Trade show effectiveness is often linked to Pitta et al., 2006; Herbig et al., 1997). On the other hand,
a company’s success. Previous scholars investigate company trade show performance for visitors is measured by
success based on performance during the trade show networking activities such as meeting with associates, new
(Gopalakrishna and Williams, 1992; Rosson and suppliers, or industry specialists; observing demonstrations of
Seringhaus, 1995; Li, 2006; Reychav, 2009), as well as new products; and comparing the offerings of various
company success based on activities that take place after the exhibitors (Godar and O’Connor, 2000; Evers and Knight,
trade show event (Blythe, 1999; Bonoma, 1983; Pitta et al., 2008; Smith et al., 2003).
Another measure of trade show performance is how, or
2006; Bettis-Outland et al., 2010; Smith et al., 2004).
whether, new information acquired at the trade show is used
In some cases trade show performance is measured
to provide future benefits for the company. This approach is
differently for exhibitors compared to visitors. For instance,
referred to as the Return on Trade Show Information (RTSI)
(Bettis-Outland et al., 2010). RTSI provides a measure of
The current issue and full text archive of this journal is available at both tangible and intangible benefits that accrue to the
www.emeraldinsight.com/0885-8624.htm organization as a result of utilizing information acquired at the
trade show that is then disseminated throughout the
organization by trade show participants. Due to the nature
Journal of Business & Industrial Marketing of trade show-related activities, it is possible that results of
27/5 (2012) 384– 391
actions taken based on trade show information may not be
[DOI 10.1108/08858621211236052] realized until months after the exhibit. For purposes of this
384
Using trade show information to enhance company success Journal of Business & Industrial Marketing
Harriette Bettis-Outland, Wesley J. Johnston and R. Dale Wilson Volume 27 · Number 5 · 2012 · 384 –391
study, post-trade show information is measured from the time short-term events, typically less than a week in duration that
the trade show ends up to six months after the exhibition. take place on a regularly scheduled basis. Trade shows enable
The purpose of this paper is to empirically test the Return various members of a certain market or industry to meet face-
on Trade Show Information (RTSI) concept based on the use to-face and share ideas, new product innovations, technical
of information gathered at trade shows. Models used in updates, industry information, connect with customers and
previous studies of trade show success include the prospects, as well as, in some cases, consummate sales
measurement of antecedents and consequences of (Herbig et al., 1997; Smith et al., 2004; Bonoma, 1983; Li,
relationship learning at trade shows (Li, 2006). Other 2008).
models offer concrete measures for evaluating the Trade shows comprise a multibillion-dollar business,
effectiveness of trade show participation such as number of accounting for 10-15 percent of the business marketing
new prospects, industry contacts, and sales (Gopalakrishna communications budgets of firms in the United States
et al., 1995; Bonoma, 1983; Herbig et al., 1997; Sharland and (Dekimpe et al., 1997; Smith et al., 2003). The percentage
Balogh, 1996). However, these previous models of trade show is even higher in the UK, where companies spend up to twice
success overwhelmingly focus on tangible outcomes, with as much of their business marketing communications budgets
little if any recognition of the longer-term intangible benefits on trade shows (Herbig et al., 1996; Dekimpe et al., 1997).
that result from trade show participation. This paper offers a Despite substantial levels of investment in trade shows and
unique perspective by addressing intangible benefits of trade widespread participation in trade show activities across
show information by integrating the market orientation various industries, academic research in this area has been
philosophy into a trade show context. limited at best. Partly in response to the scarcity of trade show
The next section reviews previous literature for constructs research, the Center for Exhibition Industry Research (CEIR)
used in this study, beginning with the market orientation has listed support for academic research as one of its top
concept. The market orientation review is followed by an objectives (Skolnik, 1987). CEIR also provides a variety of
analysis of trade show literature. The subsequent sections of empirical research reports to the trade show industry on
this manuscript present the RTSI model, data analysis and topics such as the value of exhibitions and personal
evaluation, managerial implications, and directions for future interactions (for example, see CEIR Research Reports, 2012).
research. In previous writings, return on trade show investment has
been referred to as trade show performance, trade show
The market orientation process effectiveness, and trade show motives (Hansen, 2004; Godar
The marketing concept is implemented through the market- and O’Connor, 2000; Dekimpe et al., 1997; Gopalakrishna
orientation method – a customer-centric strategy that focuses and Lilien, 1995). These descriptions of trade show return on
on superior value creation for customers based on investment are based on audience activity, audience quality,
responsiveness to market information. Kohli and Jaworski and the number of leads generated from the show; selling
(1990) define the market orientation process as: versus non-selling activities at the trade show; and the
.
information acquisition; satisfaction of information seeking and procurement needs of
.
information dissemination; and trade show attendees (Bonoma, 1983).
.
responsiveness, or use of this information. Due to the high levels of investment required to participate
in trade shows, concerns regarding the contribution of trade
A market orientation is a critical component of long-term shows to the organization’s bottom line are common across
strategy due to the competitive nature of the marketplace. For industries. Consequently, firms are demanding higher levels
instance, a meta-analysis conducted by Kirca et al. (2005) of justification for trade show involvement. The expectation is
found that a market orientation has an overall positive impact that trade show participation will yield positive results, similar
on organizational performance. The use of a customer-centric to other business investments (Hansen, 2004). At a round-
orientation stresses the importance of collaboration, and the table discussion of trade shows, “. . . investment accountability
trade show provides a superb venue for collaborating with [was identified] as the greatest challenge facing the
customers and other trade show participants. prospective exhibitor . . . ” (Gopalakrishna et al., 1995, p. 75).
Typical goals for trade show participation include The concept of Return on Trade Show Information (RTSI)
networking with established and potential customers, addresses the issue of investment accountability by placing a
observation of competitive offerings, and the opportunity to value on the new information acquired by trade show visitors
increase knowledge of industry trends. Interaction among and exhibitors (Bettis-Outland et al., 2010). The following
trade show participants offer a chance to acquire vast amounts section describes the RTSI concept.
of new information. In some cases this information is shared
with other members of the firm, but in other cases the
information is not shared. However, just because new trade The Return on Trade Show Information (RTSI)
show information is spread throughout the organization, there
is no guarantee that the information will be used. Higher The RTSI concept measures both tangible and intangible
levels of information use could result in greater potential benefits that accrue to an organization as a result of utilizing
benefits to the company and perhaps a better appreciation of information acquired at trade shows, as well as trade show-
the value of trade shows. related information acquired up to six months following the
trade show. RTSI is based on the market orientation model,
which involves information acquisition, information
Trade show literature
dissemination, and organizational use of this information,
The terms trade show, trade fair, exposition, and exhibition ultimately resulting in both tangible and intangible
are often used interchangeably. These meetings represent organizational benefits (Kohli and Jaworski, 1990).
385
Previous models of trade show effectiveness include Li When only a minimal amount of information is disseminated
(2006), who looked at antecedents and consequences of by trade show participants, there is the likelihood that
relationship learning at trade shows. Whereas the Li (2006) potential benefits of the information may be lost.
study is based on influential information shared between trade
show participants, this research goes beyond information Perceived trade show information quality
sharing between trade show participants to also include According to Maltz and Kohli (1996), perceived information
implications for information sharing with other members quality refers to the level of accuracy, relevance, clarity, and
throughout the organization. timeliness of the acquired trade show information. Accuracy
This research also expands the Gopalakrishna et al. (1995) defines the objectivity of the information, and implies a
model. In their model, Gopalakrishna et al. (1995) offer certain amount of information validity. Relevance describes
specific measures for evaluating the effectiveness of trade information that is perceived to be necessary and important
show participation. However, this model focuses only on for the task at hand. Clarity of information refers to whether
tangible outcomes of trade show participation (i.e. prospects, the information was easy to follow and “made sense” to the
leads, and sales) and looks at trade show participation from trade show attendee. Timeliness describes the usefulness of
the perspective of the exhibitor exclusively. information received at the trade show, based on temporal
The following sections explicate RTSI in more detail. priorities of the attendee.
Trade show information acquisition process Use of trade show information

The RTSI construct is derived from the perspective of trade Once the trade show information is disseminated throughout
show participants. Information acquisition at trade shows the organization, this information is either utilized or
could be formal, as that which occurs during seminar discarded. By utilizing this trade show information, the
presentations, panel discussions, or a keynote address. Trade organization will realize tangible benefits, including:
show information is also acquired informally, resulting from
.
new customers;
casual “hall talk” conversations, lunch and dinner discussions,
.
increased sales from current customers; and/or
or through message boards, blogs, and e-mail. Trade show
.
purchase of new products, services, technical training, and
information is also acquired from advertisements and updates to enhance customer support.
company brochures. Disseminated trade show information is also used by the
Trade show information includes information that is organization to produce intangible benefits. These intangible
gathered at the trade show event as well as additional benefits include:
information that is acquired within a certain timeframe after .
improvements in strategic planning;
the trade show. This post-trade show information acquisition .
improvements in policy development;
is a result of contacts made, ideas generated, and plans that .
new product development ideas; and
emanate from attending the trade show event. For instance, .
improved corporate image.
additional post-trade show information can include new
information acquired as a result of, or prompted by
conversations, survey feedback, brochures, demonstrations,
Questionnaire development and response
or business cards exchanged at the trade show. Building on the literature from the market orientation and
trade show literatures (especially the Bettis-Outland et al.,
Trade show information dissemination process 2010 model), the empirical research presented in this paper is
Dissemination of trade show information at the actual trade designed to focus on how trade show attendees acquire
show can take place in the context of a two-way dialogue; that information and then disseminate it and use it within their
is, an exchange of information among trade show participants, companies.
such as that occurring between exhibitors and visitors, The data used to evaluate trade show ideas and their uses
customers and suppliers, as well as other industry were obtained from attendees at a trade show who represent
stakeholders. After the trade show some organizations small- and medium-sized companies that compete in a variety
require formal dissemination of new trade show of manufacturing, service, retailing, non-profit, and
information. Examples of formal dissemination would be distributor businesses. With the support of the organization
departmental activity reports, office presentations, or feature sponsoring the trade show, a four-page questionnaire was
articles written by trade show attendees. In other cases, trade developed that focused primarily on a series of 44 Likert-scale
show information dissemination is a more informal process, response items related to Information Acquisition (eight
with key trade show information disseminated through e-mail items), Information Dissemination (eight items), Information
messages, voicemail, or “hall talk” conversations. However, in Use (eight items), Information Quality (13 items) and
some situations, this trade show information is not Information Value (six items) concepts that were derived
disseminated at all within the organization. from the marketing literature. The Likert items used a five-
The lack of trade show information dissemination point scale: 1 ¼ Strongly disagree; 2 ¼ Disagree; 3 ¼ Neutral;
throughout the organization could result from many causes, 4 ¼ Agree; 5 ¼ Strongly agree. There were a total of six of the
including: Likert items in the questionnaire that were semantically
.
the absence of a formal information dissemination policy; reversed (i.e. reverse-scaled) to encourage respondent
. a perceived lack of interest of other organizational thoughtfulness. The questionnaire also contained six
members regarding information acquired at the trade personal and organizational demographic items as well as
show; or one item measuring the perceived number of new ideas
.
a perceived lack of information quality attributed to the generated due to the trade show information that was
trade show information (Maltz and Kohli, 1996). available.
386
In developing the survey for this empirical analysis, many variability in the sample, the higher Cronbach’s alpha will
different trade show players were included. Exhibitors, be. Also, coefficient alpha will be higher when the variance
visitors, other industry personnel, and event facilitators were among items is similar rather then dissimilar. The most
among this group. Demographics of trade show attendees widely accepted cut-off point for alpha in published marketing
were as follows: research is 0.70 to be considered a valid scale. Bearden et al.
.
11 percent of the survey participants had been in their (1993, p. 7) use a series of rating criteria to identify how
current department for less than one year; different alpha levels can be useful in evaluating various
.
29 percent had been in their current department between marketing and consumer behavior scales. They identify alpha
one-to-three years; values in the 0.60-0.69 range as meeting a “moderate”
.
20 percent of participants were in their current criterion, coefficient alphas in the 0.70-0.79 range as meeting
department three-to-five years; and an “extensive” criterion, and alphas in the 0.80-0.89 range
.
40 percent had been in their current department in excess meeting an “exemplary” criterion (their highest rating).
of five years. Garson (2009b) indicates that a cut-off of 0.60 is common in
exploratory research, an alpha of 0.70 or higher is needed for
Companies represented at this trade show were primarily
a scale that is considered to be “adequate,” and many
manufacturers and distributors of promotional products. researchers require an alpha of .80 or higher for a “good”
Promotional products include items such as t-shirts, pens, scale. Iacobucci and Duhachek (2003) also point out that an
buttons, key chains, and other collectibles that perform both alpha of 0.70 may be high enough for exploratory research,
an advertising and a reward function. Customers of but higher levels are needed (0.80 or 0.90) are needed for
promotional product manufacturers include corporate other situations. But, alpha levels that are very high (0.95 or
businesses, retailers, non-profit organizations, and higher) may indicate that the items may be entirely
distributors. In terms of company demographics, redundant, whereas the objective in designing a reliable set
promotional product companies in attendance were very of scales is that similar items be related (thus achieving
small, small, and medium sized businesses; 11 percent had internal consistency), but that each item contributes some
revenues of less than $1 million, 33 percent had revenues of unique information as well.
$1-5 million, and 56 percent had revenues exceeding $5 Calculations for Cronbach’s alpha were conducted for each
million. Twenty-two percent of companies employed 25 or of the major questions that were contained in the
fewer people; 26 percent employed between 26-100 people; questionnaire, including the six Information Value questions
42 percent employed between 101-500 people; and 11 that are considered to be the possible dependent variables
percent had over 500 employees. available for use. Although it suffers from a small sample size
Surveys were sent out approximately 60 days after the trade of 31, the thirteen items in the Information Quality question
show, accompanied by a stamped, return envelope and a letter were also included in the analysis. Iacobucci and Duhachek
encouraging participation in the survey. A follow-up letter was (2003), in their empirical investigation of the characteristics of
sent approximately three months later and reminded those Chronbach’s alpha, conclude that alpha performs “. . . in a
who had not yet returned their completed surveys to respond. robust manner even for small samples (n ¼ 30)” (p. 484). As
Of the 340 surveys mailed, 66 were returned, for a 19.41 suggested by Garson (2008) and others, the six items reverse-
percent response rate. All survey participants described their scale items in the questionnaire were recoded to make sure
job category as “sales” and/or “marketing.” IBM SPSS that all items are coded in the same conceptual direction (i.e.
Version 19 software was used to analyze the data. positive). The results are presented in Table I.
The Information Quality items that were included in the The conclusion from these data is that the scales used for
questionnaire focused primarily on the quality of the formal investigating trade show information acquisition,
educational sessions that were offered at the trade show. Many dissemination, use, and quality, as well as the set of possible
of the respondents indicated that they did not attend these dependent measures in the Independent Value – are
educational sessions and left these Information Quality items internally consistent by conventional standards. This set of
blank. Only 31 of the 66 completed questionnaires provided results demonstrates strong internal consistency of the scale
usable responses for these items. Although the Information items.
Quality items were included in the internal consistency
statistics below, they were not used in the multiple regression Multiple regression model
model due to the reduced number of available responses. A multiple regression model was used as an exploratory tool
Also, there was one questionnaire that left the Information to investigate the relationships in the trade show data.
Acquisition items blank and these items thus were not Specifically, multiple regression was used to determine if the
available for the data analysis for one of the 66 respondents. questionnaire items in the Information Acquisition,
Information Dissemination, and Information Use categories
Data analysis results (i.e. the potential independent variables) could be used to
explain the Information Value items (i.e. the potential
Measures of internal consistency dependent variables). One specific Information value item
Cronbach’s alpha was used to measure the consistency with was chosen for the dependent variable in the multiple
which the respondents evaluate the items in the scale. The regression model – “New information was acquired at the
alpha value measures the extent to which item responses trade show that is critical to the success of the company.” – as
correlate highly with each other, thus providing a measure of it was thought to be a good representative of the six
internal consistency of the scale items (Garson, 2008). The Information Value items.
more consistent the trade show visitors’ within-subject The first major step in the multiple regression model
responses are and the greater the between-subjects building process was to examine for the potential of
387
Table I
Description of items included Number of items n Cronbach’s alpha
Information acquisition 8 65 0.690
Information dissemination 8 66 0.834
Information use 8 66 0.895
Information quality 13 31 0.884
Information value (dependent variables) 6 66 0.920
multicollinearity among the potential independent variables. space limitations, the factor analysis produced clear results
The importance of multicollinearity in multiple regression that provided an interesting perspective on the data. These
models is a problem that has received a great deal of attention results were used to guard against multicollinearity by
over the years (see Farrar and Glauber, 1967 for a classic including potential independent variables in the multiple
presentation of multicollinearity). Multicollinearity is a regression model only if they did not come from the same
potentially serious problem that can have severe effects on factor. A check of the final multiple regression model revealed
the estimation of regression parameters and selection of the there were no problems in this area.
independent variables that are selected for the final regression Due to the large number of potential independent variables
model (Mason et al., 1975). Ofir and Khuri (1986) (24 in all), a step-wise approach was used to build the model.
recommend that OLS regression modeling should not be The dependent variable is the Information Value item “New
used in marketing without using the proper diagnostics for information was acquired at the trade show that is critical to
multicollinearity. Therefore, in the regression modeling the success of the company.” The final model results are
process used in this paper, the potential for multicollinearity presented in Table II.
was diagnosed both before and after the model was built. The
first procedure was the careful examination of the Pearson Discussion of the multiple regression results
correlation matrix before the data were input into the model. InfoUse7 is the questionnaire item “Since I returned from the
Second, after the final model was built, the Variance Inflation trade show, the information I received at the trade show was
Factor (VIF) was used to check for evidence of rarely used.” This item is one of the six reverse-scale items
multicollinearity. that were included in the questionnaire. The regression
The Person correlation matrix was examined that contained coefficient is negative, which means that an increase of one
the Information Acquisition, Information Dissemination, scale value in this variable has a negative impact of 2 0.557 on
Information Uses categories. Multicollinearity was defined the dependent variable. As respondents move one scale value
as any Pearson bivariate correlation coefficient that was toward the agreement side of the InfoUse7 scale, the model
greater than the absolute value of 0.65. Using this criterion, predicts more disagreement that “new information acquired
only four correlations were found that met the condition of at the trade show is critical to the success of my company.”
multicollinearity. Prior to the building of the multiple Likewise, as respondents move one scale value toward the
disagreement side of the InfoUse7 scale, the model predicts
regression models, four variables were removed from the
that trade show visitors are more likely to agree that “new
data analysis that were involved in these high correlations.
information acquired at the trade show is critical to the
The correlations for the four variables that were removed
success of my company.” This negative coefficient suggests
were r ¼ 0.697, r ¼ 663, r ¼ 871, and r ¼ 20.695. This
that the respondents do not believe that the information they
definition of multicollinearity of r . j0.65j is conservative and
received at the trade show is being used to negatively impact
is intended to take adequate precautions against
the success of their companies. Therefore, respondents
multicollinearity. Some sources (e.g. Garson, 2009b)
consider the trade show information useful.
suggest a much higher criterion of r . j0.90j as the
SharedInfo2 is the information item “Information acquired
appropriate definition of multicollinearity.
at the trade show has been informally shared with other
As an additional anti-multicollinearity measure, an
exploratory factor analysis was conducted to investigate the
underlying structure of the three sets of items – Information Table II
Acquisition, Information Dissemination, and Information Independent variable Coefficient t-value p-value
Uses – that were considered as potential independent
variables in the multiple regression model. The factor Constant 4.077 4.605 ,0.001
analysis consisted of a principle components analysis with a InfoUse7a 20.557 25.712 ,0.001
varimax rotation. The six Information Value items, which InfoDessimination2 0.518 3.828 ,0.001
were considered to be candidates for the dependent variables InfoAcq2 20.665 24.211 ,0.001
in the multiple regression model, were also factor analyzed. InfoAcq7 0.368 3.387 0.001
The Information Quality items, due to their small sample size,
Notes: aReverse-scale item; R2 ¼ 0.580 and Adjusted R2 ¼ 0.552; the
were not included in the factor analysis. In accordance with
model explains 55.2 percent of the variance in the dependent variable after
the most recent sources on factor analysis, the factor analysis
R2 is adjusted for degrees of freedom; Model F ¼ 20.723, p , 0.001; the F-
was used to reduce the relatively large number of potential value for the regression model provides a statistically significant
independent variables in the multiple regression model that representation of the dependent variable and its relationship to the
follows. This approach is available in Garson (2010). While independent variables
the details of the factor analysis are not included here due to
388
departments in my company (e.g. ‘hall talk,’ informal phone model. The common cut-off of VIF . 4.00 was used as the
conversation, after-work get-togethers).” This coefficient is criterion, although some researchers use a more liberal cutoff
positive, which means that an increase of one scale value in of VIF . 5.00 or even VIF . 10.00 to determine that
this variable has a positive impact of 0.518 on the dependent multicollinearity is a problem (Garson, 2009a). The VIF
variable. As respondents move one scale value toward the calculations for the four independent variables indicated
agreement end of the SharedInfo2 scale, the model predicts above were 1.380, 1.359, 1.522, and 1.211, respectively; and
that trade show visitors are more likely to agree that “new all are well below 4.00. Thus, there was no evidence of
information acquired at the trade show is critical to the multicollinearity in the final model using the VIF approach.
success of my company.” This coefficient suggests that Additional indicators of multicollinearity – eigenvalues,
informally sharing information that was acquired at the trade condition indices, and variance proportions – were also
show with other departments in the respondents’ companies examined with no indication as to the presence of collinear
has a positive impact on company success. relationships in the first three independent variables using
InfoAcq2 is the questionnaire item “I discussed business standard cut-off criteria. See Garson (2009a) for a discussion
issues with the exhibitors at the trade show.” This coefficient of the statistics used for determining whether multicollinearity
is negative, which means that an increase of one scale value in is present in a multiple regression model. However, in spite of
this variable will have a negative impact of -0.665 on the a VIF of 1.211, the condition index and the variance
dependent variable. As respondents move one scale value proportions data would indicate that the fourth independent
toward the agreement side of the InfoAcq2 scale, the model variable – InfoAcq7 – seems to be approaching a collinearity
predicts more disagreement with the statement that “new problem. Therefore, it might be best to view the InfoAcq7
information acquired at the trade show is critical to the variable with some degree of caution. An ultra-conservative
success of my company.” Likewise, as respondents move one approach would suggest dropping the InfoAcq7 variable from
scale value toward the disagreement side of the InfoAcq2 the model thus leaving a revised final model with a constant
scale, the model predicts more agreement with the statement term and three independent variables – InfoUsers7,
that “new information acquired at the trade show is critical to SharedInfo2, and InfoAcq2. This revised model has an R2
the success of my company.” This result indicates that of 0.500 and adjusted R2 of 0.475, F ¼ 20.318, p , 0.001.
discussions with exhibitors fail to produce new information The revised regression coefficients for the constant and three
that increases business success and in fact can lead to a independent variables are 4.936 ( p , 0.001), 2 0.614 ( p ,
decline in the company’s success. In discussions with the 0.001), 0.461 ( p ¼ 0.002), and 2 495 ( p ¼ 0.003),
authors of this paper, several trade show attendees have respectively. The indicators of multicollinearity (discussed in
expressed an understanding of this result as the fear of giving the previous paragraph) suggest no problems with this revised
away too many company secrets to trade show exhibitors. In model. For example, the VIF calculations are all in the range
that light, the negative sign of the regression coefficient makes of 1.338 through 1.369 and the eigenvalues, condition
sense. indices, and variance proportions are all within conservative
InfoAcq7 is the item “From interactions and discussions tolerances as well.
with participants at the trade show, I was able to detect
changes in our customers’ product preferences.” This
Managerial implications
coefficient is positive, which means that, for an increase of
one scale value in this variable, the model predicts a positive Studies show that less than half of trade show exhibitors
impact of 0.368 on the dependent variable. As respondents attend trade shows with pre-defined objectives. When specific
move one scale value toward the disagreement end of the objectives do exist, the overwhelming majority of these
InfoAcq7 scale, the model predicts that trade show visitors are objectives measure tangible outcomes such as number of new
more likely to disagree that “new information acquired at the leads, new industry contacts and on-site sales. The Return on
trade show is critical to the success of my company.” This Trade Show Information (RTSI) concept represents the first
coefficient suggests that respondents’ ability to detect changes attempt to define both tangible and intangible results of newly
in customers’ product preferences had a positive impact on acquired trade show information. The results of the research
the success of the respondents’ companies. indicate that the longer-term intangible results from data
obtained can be an important outcome of trade show
Additional multicollinearity investigation participation and ultimately can lead to company success.
Stepwise multiple regression models are especially susceptible It is expected that by measuring the value of information
to multicollinearity. Therefore, once the final multiple gained from trade shows, management will be more informed
regression model was determined, two steps were taken to with regards to benefits obtained by proactively managing
determine if multicollinearity is an issue in the model. trade show information. This empirical study quantifies the
First, the Pearson correlation coefficients were again impact of this new information on the organization as a
examined to confirm low correlations among the whole, resulting in a new-found appreciation for trade show
independent variables that were included in the final model. investments. Specifically, the regression results indicated that
These correlations ranged from r ¼ j0.099j to r ¼ j0.414j with various aspects of information use, information
an average of r ¼ j0.335j. In addition, the factor analysis dissemination, and information acquisition had a
results indicated that the two dependent variables that came relationship on companies’ acquisition of new information
from Information Acquisition category were not part of the that was critical to its success as measured in excess of six
same factor. Therefore, on this measure of multicollinearity, weeks after participation in the trade show.
no problems were detected. It is important to consider the value of the different types of
Second, the variation inflation factor (VIF) was used as a benefits that result from information acquired at trade shows.
way to determine if multicollinearity was an issue in the For example, both tangible and intangible benefits should be
389
analyzed when assessing the impact of this new trade show show visitors (Mee, 1988). Perhaps exhibitors should behave
information on the company success. It is likely that – for more like visitors at trade shows, particularly when it comes to
intangible benefits in particular – many benefits derived from the valuation of intangible benefits that result from new trade
the utilization of trade show information have been show information. With these future research needs in mind,
undervalued. In addition, the long-term benefits of this new the area of trade show information should provide fertile
trade show information should be considered, not just the ground for future research.
short-term benefits. Trade shows provide an ideal venue for
new relationships to begin, for established relationships to
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Iacobucci, D. and Duhachek, A. (2003), “Advancing alpha:
measuring reliability with confidence”, Journal of Consumer Harriette Bettis-Outland is Assistant Professor of Marketing
Psychology, Vol. 13 No. 4, pp. 478-87. in the College of Business at the University of West Florida.
Kirca, A.H., Jayachandran, S. and Bearden, W.O. (2005), She received her MBA from the University of North Carolina
“Market orientation: a meta-analytic review and assessment at Chapel Hill and completed her PhD in marketing at
of its antecedents and impact on performance”, Journal of Georgia State University. She has over ten years of marketing
Marketing, Vol. 69 No. 2, pp. 24-41. and sales experience with IBM and Lotus Development. Her
Kohli, A.K. and Jaworski, B.J. (1990), “Market orientation: research interests include analysis of trade show information,
the construct, research propositions, and managerial impact of information on organizational effectiveness,
implications”, Journal of Marketing, Vol. 54 No. 2, pp. 1-18. customer relationship management, and sales. Her work has
Li, L.Y. (2006), “Relationship learning at trade shows: its been published in the Journal of Business & Industrial
antecedents and consequences”, Industrial Marketing Marketing, Journal of Strategic Marketing, and others.
Management, Vol. 35 No. 2, pp. 166-77. Harriette Bettis-Outland is the corresponding author and
Li, L.Y. (2008), “The effects of firm resources on trade show can be contacted at: hbettisoutland@uwf.edu
performance: how do trade show marketing processes Wesley J. Johnston is CBIM Roundtable Professor of
matter?”, Journal of Business and Industrial Marketing, Marketing at the J. Mack Robinson College of Business,
Vol. 23 No. 1, pp. 35-47. Georgia State University. He received his PhD from the
Maltz, E. and Kohli, A.K. (1996), “Market intelligence University of Pittsburgh. His research interests include
dissemination across functional boundaries”, Journal of application of behavioral sciences to marketing in the areas
Marketing Research, Vol. 33 No. 1, pp. 47-61. of customer relationship management and strategic account
Mason, R.L., Gunst, R.F. and Webster, J.T. (1975), programs. He is an expert in network dynamics and
“Regression analysis and problems of multicollinearity”, relationship strategies, especially in sales force management.
Communications in Statistics – Simulation and Computation, Johnston’s research has been published in journals such as
Vol. 4 No. 3, pp. 277-92. Journal of Marketing, Journal of Consumer Research, and
Mee, W.W. (1988), “Trade shows: this marketing medium Decision Science among many others. He has served on the
means business”, Association Management, Vol. 40 No. 6, editorial board of several journals and is currently the editor
pp. 50-5. of the Journal of Business & Industrial Marketing and the
Ofir, C. and Khuri, A. (1986), “Multicollinearity in Director of the Center for Business and Industrial Marketing.
marketing models: diagnostics and remedial measures”, R. Dale Wilson is Professor of Marketing at the Eli Broad
International Journal of Research in Marketing, Vol. 3 No. 3, Graduate School of Management, Michigan State University.
pp. 181-205. He received his PhD in marketing from The University of
Pitta, D.A., Weisgal, M. and Lynagh, P. (2006), “Integrating Iowa. He previously served on the faculties at Penn State
exhibit marketing into integrated marketing University and Cornell University (visiting), and he was Vice
communications”, Journal of Consumer Marketing, Vol. 23 President and Director of Marketing Sciences at BBDO, Inc.
No. 3, pp. 156-66. (a major New York-based international advertising agency).
Reychav, I. (2009), “Knowledge sharing in a trade show: a His work has appeared in publications such as Journal of
learning spiral model”, Journal of Information and Knowledge Marketing, Marketing Science, Journal of Marketing Research,
Management Systems, Vol. 39 No. 2, pp. 143-58. Journal of Advertising, Journal of Retailing, Journal of
Rosson, P.J. and Seringhaus, F.H.R. (1995), “Visitor and International Marketing, Journal of Business & Industrial
exhibitor interaction at industrial trade fairs”, Journal of Marketing, Industrial Marketing Management, and Journal of
Business Research, Vol. 32 No. 1, pp. 81-90. Business Research among others. His recent research interests
Sharland, A. and Balogh, P. (1996), “The value of nonselling include the use of interactive databases, web analytics, the
activities at international trade shows”, Industrial Marketing lead generation process, customer relationship marketing, and
Management, Vol. 25 No. 1, pp. 59-66. trade show relationships.

391
Clusters or un-clustered industries?
Where inter-firm marketing cooperation
matters
Christian Felzensztein
School of Business, Universidad Adolfo Ibáñez, Santiago, Chile
Eli Gimmon
Tel-Hai Academic College, Tel-Hai, Israel, and
Claudio Aqueveque
School of Business, Universidad Adolfo Ibáñez, Santiago, Chile
Abstract
Purpose – This paper aims to focus on the perceived role of clusters in inter-firm cooperation and social networks.
Design/methodology/approach – The study was carried out in a region of Latin America where limited research has been conducted in terms of
inter-firm relationships. Managers from three key natural resources-based industries in Chile participated in the survey; one of these industries
constituted a well-defined cluster whereas the other two did not. The survey assessed managers’ perceptions of the benefits and opportunities of inter-
firm cooperation in strategic marketing activities.
Findings – Results support the advantages of clusters. Managers of firms which are part of clustered industries tend to perceive more benefits and
opportunities for inter-firm co-operation in marketing activities. Additionally, significant differences between clustered and non-clustered industries in
terms of their co-operation behavior and objectives were found.
Research limitations/implications – The findings shed light on strategies for the enhancement of inter-firm cooperation in marketing, of particular
value for marketers in small-and-medium sized enterprises. The paper suggests establishing new clusters and promoting more regional clusters policies
since clustering seems to provide better and positive inter-firm interaction leading to cooperation.
Practical implications – There are lessons to be learned at national and regional levels for Latin American and emerging economies fostering new
industry cluster policies.
Originality/value – Clustered firms and industries may result in more innovative marketing strategies at both local and international levels than non-
clustered firms. The authors encourage regional development bodies to foster more cooperation among firms and trade associations.
Keywords Inter-firm cooperation, Knowledge exchange, Regional clusters, Industrial marketing, Latin America, Marketing information,
Relationship marketing, Chile
1. Introduction theoretically and empirically starting with Marshall (1920)

but limited research actually compared clustered and non-
The focus of this research is the comparison between clustered companies. Among the few studies dealing with this
clustered and non-clustered natural resources-based specific area of research are Lublinski (2003), Bagchi-Sen
industries. We specifically compare the issues of inter- (2004) and Van Geenhuizen and Reyes-Gonzalez (2007).
organizational behavior and firm relations for achieving Those studies also called for further research as conclusions
marketing cooperation. We also look at the specific social were mixed. For example, Van Geenhuizen and Reyes-
networking elements that help to reinforce these interactions Gonzalez (2007) studied the biotechnology industry in the
for collaboration at both horizontal and vertical levels. Netherlands and found that except for their largest cluster, a
The contribution of clusters to economic growth and the clustered location has no significant influence on innovation
extent to which governments should support clusters have and speed of growth.
been frequently researched (Jungwirth and Muller, 2010). Apart from the above, the business-to-business and
Advantages of agglomeration or clustering have been argued marketing perspectives of firms collaboration in regional
clusters compared to non-clustered firms has not been
reported. Brown and Bell (2001) and Brown et al. (2010)
The current issue and full text archive of this journal is available at argued that limited research explored the impact of clustering
This study is part of www.clusterinnovation.com Research Network on

Industry Clusters, financed by Conicyt Research Council Chile (grant
27/5 (2012) 392– 402 PBCT SOC 30). The authors thank the constructive comments received
q Emerald Group Publishing Limited [ISSN 0885-8624] in an earlier version of this paper presented at the 9th International
[DOI 10.1108/08858621211236061] Conference on Relationship Marketing, Freie Universität Berlin Germany.
392
Clusters or un-clustered industries? Journal of Business & Industrial Marketing
Christian Felzensztein, Eli Gimmon and Claudio Aqueveque Volume 27 · Number 5 · 2012 · 392 –402
on marketing activities in a domestic and international The cluster literature also emphasizes numerous benefits
context. Therefore, the purpose of this study is to compare for small businesses. This is especially the case given their
the inter-firm marketing strategies between a clustered resource constraints, absence of internal specialisms and
regional industry sector and non-clustered regional industry relatively weak supplier and market power (Blackburn and
sectors based on natural resources and located in an emerging Conway, 2008). Relationships of cluster firms are more likely
economy context in Latin America. This setting is different to to be long term and bonded (Ebers, 1997), with greater levels
the traditional research setting of high technology or of trust (Mackinnon et al., 2004) and inter-organizational
biotechnology industries studied in the USA or Europe. For governance (Bell et al., 2009). The subsequent development
example Pels et al. (2004) found that compared to the US, of trust between cluster members enhances the commercial
firms in less developed economies like Argentina, tend to have relationship between firms. Thus, clustering adds a new
lower use of information technology in marketing and a dimension to the marketing aspects of buyer-seller
greater emphasis on face-to-face interaction. This study’s relationships. Brown and Bell (2001) and Brown et al.
approach brings new perspectives from under-researched (2010) also noticed not only the benefits of clusters, but also
industry sectors and different geographical setting in order to the costs of industry clusters which they referred to as
advance the knowledge of inter-firm relations and inter-firm “negative externalities”. Examples include congestions,
cooperation. increased competition in firm costs, labour, ineffective
Based on the extant literature on the effects of geographical operation of network relationships, and exclusion of
co-location and social networks on general inter-firm newcomers or outsiders.
interactions, we specifically studied the firms’ relations for To evaluate localized networks of economic activity and
creating marketing cooperation. The research questions their ability to become a driving force of a region, it is crucial
surrounding this study are related to the significant to place their structure within the process of knowledge
differences between cluster and non-cluster industries and creation. Bathelt (2005) argued that knowledge creation and
the perceived overall usefulness of co-location for marketing better performance does not occur in every agglomeration
cooperation. To put it in another context, our key research automatically, rather it only occurs in firms in well-formed
question is “what are the significant differences in variables of clusters. Recent research (Eisingerich et al., 2010) draws on
inter-firm marketing cooperation among cluster and non- social network theory to develop a model of regional cluster
cluster firms?” performance, which suggests that high performing regional
clusters are underpinned by network strength and network
openness, but that the effects of these on the performance of a
2. Theory development cluster as a whole are moderated by environmental
uncertainty.
The economic geography and strategic management literature Acknowledging the literature, we define a regional cluster
does not provide a unique definition for a cluster. However, based on the geographical proximity of firms related to the
the cluster concept defined by Porter (1990) has stimulated same industry and by the extent they are linked by
discussion that goes beyond traditional explanations of commonalities and complementarities. A considerable
agglomeration in economic geography (Gordon and amount of research has dealt with clusters and industrial
McCann, 2000). Porter (1990) argued that leading export districts, while only limited previous research has explored
companies in the USA economy do not work in isolation. differences between clustered and non-clustered industrial
Consequently, these firms are grouping into what he called units (Lublinski, 2003). One such study was conducted by
“clusters”, which can be defined as a set of industries related Bagchi-Sen (2004), who examined the differences between
horizontally and vertically having different kind of collaborators and non-collaborators in the US biotechnology
interactions, ending with greater levels of productivity. cluster. In doing so, the relationships between R&D intensity,
According to Porter (2000), the geographic scope of a collaboration, innovation, and location were examined. The
cluster can range from a single city or state to a country or main conclusion of this study was that firms with higher levels
even a group of neighboring countries. This makes the cluster of R&D intensity are more intent on engaging in R&D
definition broader involving geographical and social aspects of alliances, especially research collaboration with universities.
inter-organizational behavior for firms and related Moreover, more firms located in defined clusters of the
institutions. There have been many other attempts to biotechnology industry engaged in collaborative R&D that
explain this concept from both business and economic firms located elsewhere. Thereafter, location continues to be
geography perspectives (see for example Enright, 1996; important for starting-up companies. On the other hand,
Rosenfeld, 1997; Feser, 1998). More recently, clusters have Sorenson and Audia (2000) assert that since clusters entail
been defined as “local or regional dimension of networks” stronger and unfavorable competition, the clusters’ advantage
(Van Dennerg et al., 2001, p. 187). based on geographical concentration, is heterogeneity in
It is well known that co-location allows for lower entrepreneurial opportunities, rather than differential
transportation and transaction costs as travel, time and performance. More recently, a similar vein of research
increased trust should produce lower costs (Lublinski, 2003). evidence has supported the notion that clustering does
Clusters can also attract the required skilled labour, the matter for firms’ performance (Tonoyan et al., 2010;
mobility of which can enhance the exchange of ideas and Jungwirth and Muller, 2010).
knowledge throughout the cluster (Camagni, 1991). There Notwithstanding the importance of those findings, it is
are also un-traded benefits that can arise such as mutual co- interesting to note that little has been done to examine other
operation, learning and resource sharing and are sometimes types of cooperation inside clusters, such as marketing.
referred to as either embedded benefits or “un-traded- Recent exceptions is the recent work of Felzensztein and
interdependencies“ (Granovetter, 1985 and Storper, 1993). Gimmon (2008, 2009) and Felzensztein et al. (2010) who
393
focused on market-based networking within natural resource 2.2 Social networks in clusters
clusters. This type of cooperation requires not only a It is well documented that networks can be the basis of a rich
proactive attitude towards cooperation and commitment information exchange that enables firms to learn about new
(Morgan and Hunt, 1994), but also the construction of alliance and market opportunities with reliable partners
social capital among the participants of a cooperative network (Lechner and Dowling, 2003). The development and gradual
(Gulati et al., 2000; Gulati, 2007). building of such networks of relationships, in which firms are
embedded, influences a firm’s conduct and its collaboration
2.1 Inter-firm marketing cooperation in clusters activities. This of course implies a degree of mutual trust
The relevance of geographical proximity for inter-firm among partners, reducing search costs for new partners,
cooperation and clusters benefits, especially for small firms limiting the cost of coordination between partners, and
has been questioned. Edwards et al. (2006) found evidence minimizing the unpredictability and risk of hazardous
that small firm owners are only loosely connected to their behavior by alliance partners which in turn shape behavior
local economy because the niche markets they serve go and outcomes of firms. The positive effects of network
beyond the local. There was also a reticence by owner resources are shown to be applicable even to newly formed
managers in becoming too involved with local partners, entrepreneurial firms (Gulati and Nickerson, 2008).
wishing instead to maintain their independence and The extant literature is clear that geographical proximity
autonomy that might be threatened if they became too facilitates repeated interactions, which, in turn, promote the
reliant on others in the local economy. This was seen as development of formal and informal social and professional
having a general constraining effect upon firm learning and networks. These networks serve as conduits for information
innovation because of the tradition of being insular and exchange about important technological developments and
autonomous (Laforet and Tann, 2006). emerging market opportunities (Liebeskind et al., 1996;
In a recent study, Arikan (2009) developed a model that Owen-Smith and Powell, 2004; Stuart and Sorenson, 2003).
outlines the antecedents, as they relate to inter-firm Furthermore, repetition of interactions enables the exchange
knowledge exchanges among cluster firms, of a cluster’s partners to observe and monitor each other’s behavior,
ability to enhance member firms’ knowledge creation efforts. providing a means for partners to develop norms of exchange
Overall, the model provides a comprehensive understanding and trust based on the expectation of future interaction (e.g.,
of the antecedents of enhanced knowledge creation within Axelrod, 1984; Eisingerich et al., 2010). Additionally,
clusters as well as new interest for scholars dealing with either Feldman and Lichtenberg (1998) have demonstrated that
cluster or firm-level outcomes. The study provides clustered co-location provides interaction opportunities and the sharing
firms with a better understanding of the role they play in of experience necessary for inter-organizational collaboration
determining their cluster’s innovative outcomes and the (especially when tacitness is high). This body of research has
knowledge-related implications. proved that by facilitating repeated interactions and
Taking the work of Arikan (2009), Bell et al. (2009) and development of overlapping social and professional
Brown et al. (2010) further, the kind of inter-firm knowledge connections, concentrations of firms engaged in similar
exchanges among cluster firms that we specifically refer to in activities in a particular location create an environment that
this study is inter-firm marketing cooperation. We define it as facilitates trust and the rapid and effective diffusion of ideas
the positive externalities that create specific marketing and collaborations (Coleman, 1988; Kogut, 2000).
benefits, as a result of active participation between co- Formal and informal social networks require interaction.
located firms. Inter-firm cooperation in marketing captures These inter-firm relationships refer to collaborative
arrangements between independent firms in order to share
many types of inter-organizational cooperative arrangements,
resources on an ongoing basis. This interactional context in
including: contractual and non-contractual joint ventures,
social networks includes issues of trust. Coutler and Coutler
market research activities and specifically joint marketing
(2003) asserted that trust may be seen as a complex construct
activities, such as joint distribution strategies, co-branding
that includes integrity, honesty and confidence that one party
and joint product development. This inter-firm cooperation
places in another. Trust also involves issues of credibility
can be vertical with buyers and/or suppliers or horizontal
among parties and implies an active participation in the “soft
across different value chain activities.
social elements” of inter-firm co-operation. Consequently,
The benefits from cooperative strategies among firms have
trust is an important influence on interpersonal and inter-
been a key research topic within the Industrial Marketing and
group behavior as well as a critical element of competitive
Purchasing Group (IMP) literature (see Hakansson et al.,
success in firms. Furthermore, being a member of a business
2006). Industrial relationships may lead to better forms of
network such as a trade association provides good
interactions among firms and then to cooperation, which is
opportunities for the development of ties, in which the
defined as “complementary actions taken by firms in inter-
maintenance of weak ties is an outcome (Granovetter, 1973).
dependent relationships to achieve mutual outcomes over
Personal ties also increase the likelihood of recognizing
time” (Anderson and Narus, 1990, p. 42). Previous literature
opportunities in regional clusters and facilitate the
on natural resources-based clusters also suggests that co-
mobilization of resources for a start-up, both activities
located firms may exhibit desirable levels of inter-firm
lowering the barriers to entry within clusters (Stam, 2009).
cooperation (Felzensztein and Gimmon, 2009; Felzensztein
However, high number of new entrants in a cluster also
et al., 2010).
increases the level of competition for the local resources,
Based on previous findings in the literature of inter-firm
negatively affecting the performance of firms (Braunerhjelm
cooperation, knowledge exchange and clusters, we propose:
and Feldman, 2006).
P1. Clustered firms may exhibit higher levels of inter-firm Geographically clustered firms must cooperate while they
cooperation in marketing than non-clustered firms. compete (Mesquita, 2007). Institutional aspects, formal
394
organizations, such as trade associations and the presence or industry. The products produced by 13 companies are
absence of social capital, may play a critical role in creating responsible for 97 percent of the Chilean local consumption
the right environment and then influencing the climate for and export of dairy products.
cooperation in regional clusters (Holbrook and Wolfe, 2005). The firms that participated in this study of non-clustered
Entrepreneurship in cluster formation is important with industries are located in similar regions in southern Chile, but
respect to new products and approaches to new markets. It is without having either strong horizontal relationships or trade
well known that entrepreneurs with business experience are associations. As such, these two industry sectors do not
more likely to build a sustainable business in a cluster. The comply with Porter’s (1990) definition of a cluster. Previous
public policy support of this entrepreneurial behavior in studies conducted by Felzensztein and Gimmon (2008)
clusters is an important element for successful clusters (Stam, showed low levels of inter-firm cooperation and trust in the
2009). However, Porter (1998) claims that this not means forestry and dairy industries, confirming that these industries
that clustered firms perform better than their non-clustered may not be considered as a cluster.
counterparts. The present study is part of a larger research project, which
Based on this literature we propose:
included qualitative data on clusters and competitiveness
P2. Clustered firms may exhibit higher levels of social (Felzensztein et al., 2010) and was carried out using primary
network behaviour that non-clustered firms. data obtained through the application of a self-administrated
questionnaire to managers from companies of the selected
industry sectors registered in the 2008-2009 Chilean trade
3. Methodology directory records. The questionnaire form is available upon
3.1 Context of the study request from the authors.
As the topic of study is of international relevance the sample
was taken from the emerging economy of Latin America.
Specifically we analyzed firms and industries located in the 3.2 Measures
southern regions of Chile in order to control for cultural, The constructs and questions for operationalization of this
regional, and country economics environmental effects, while study were taken mainly from the “case study” research
enabling the study of industry specificity based on the conducted by Brown and Bell (2001). With respect to the
comparison of cluster vs non-clusters sectors. social network elements analyzed in our study, we followed
As a way to validate the study, an analysis of the differences Granovetter (1973); Morgan and Hunt (1994); Coviello et al.
between clustered and non-clustered inter-firm interactions (2002); Coote et al. (2003); Coutler and Coutler (2003).
was conducted. The analysis involved the comparison of the Aiming to ensure validity, the questionnaire was reviewed by
judgments of the managing directors from firms belonging to more than ten leading international academics. It was also
three different industries in terms of their perceptions and pre-tested using suggestions from industry experts.
inter-firm interaction behavior. In order to control for firms, The perceived benefits of location (see Table I) was
which are not interested in inter-firm cooperation, we selected measured both in general and as they relate to cooperation in
only respondents of firms from both types of industries that, marketing activities. In both cases, these general assessments
prior to the detailed questioning, had declared that they had were made on a five-point Likert-type scale, where 1 ¼ not at
developed inter-firm co-operation in marketing activities. all useful and 5 ¼ extremely useful. Cronbach’s alphas were
For this study the regional industry sector selected as a 0.79 and 0.81 respectively. Regarding specific perceptions
cluster was the salmon industry. This industry has been related to cooperative marketing activities, we measured
defined as a strategic “cluster” for the current economic managers’ perceptions of the usefulness of location for
development and competitive strategy of Chile (Eyzaguirre, enabling specific activities. Assessments were made on a five-
2008). This industry sector consists of around 70 firms, 80 point Likert-type scale, where 1 ¼ not at all useful and
percent of which are located in the Los Lagos Region. The 5 ¼ extremely useful. Cronbach’s alphas were 0.84.
sector is export oriented, selling more than 95 percent of its Regarding relational context (see Table II), we measured
production in foreign countries, the main export markets the relative value of contacts for creating formal and informal
being the United States (37 percent), Japan (30 percent), the
social networks, namely relationships with other business
European Union (14 percent), Latin America (7 percent),
associates. Managers evaluated the importance of
and other markets (12 percent). Farmed salmon has become
relationships with business associates for inter-firm
Chile’s number two export after copper; external economies
cooperation using a five-point Likert-type scale where
and strategic value chain links are present. Other
characteristics are the importance of strong trade 1 ¼ no importance and 5 ¼ crucial.
associations and public support (Felzensztein and Gimmon, In addition to the above and related to propositions 1 and 2,
2007; Felzensztein et al., 2010). to better understand the differences in inter-firm cooperation
The industries selected as non-clustered were the forestry between firms that are part of clustered industries and those
and dairy industries. The forestry industry includes about 60 that are part of non-clustered industries, we analyzed and
firms with only 30 percent of the firms exporting to compared three different aspects of inter-firm marketing
international markets – mainly the Unites States. This cooperation (see Table III). First, we compared the
industry creates 33,930 direct jobs and currently has an differences in terms of the actors with whom firms
annual growth rate of 10.3 percent. In contrast, the dairy cooperate in marketing activities. Second, we compared the
industry has undergone significant change over the last 30 type of marketing activities that firms engage in when
years. A large number of artisan industries disappeared as cooperating. Finally, we compared the objectives pursued by
multinational companies have been incorporated into the firms by engaging in inter-firm collaboration in marketing.
395
Table I Comparison of managers’ perspectives of marketing collaboration between clustered (C) and non-clustered (NC) industries
Valid Mean diff. Mann-Whitney
Variables Group cases Mean SD (C-NC) U Z
How useful is being located in a specific region of your country (regional cluster) for providing the following opportunities to your firm/
organizationa:
Greater local market demand C 18 2.833 1.425 0.24 177.5 20.574
NC 22 2.591 1.368
Greater international market demand C 18 2.444 1.294 2 0.14 206.0 20.262
NC 24 2.583 1.472
New customers find your firm C 17 3.059 1.391 0.27 180.5 20.637
NC 24 2.792 1.615
Enhanced reputation or credibility of your firm and products C 18 3.278 1.127 0.23 177.0 20.591
NC 22 3.045 1.362
Finding new customers in new markets C 18 2.611 1.195 0.20 178.0 20.561
NC 22 2.409 1.182
Greater market and marketing information/knowledge C 18 3.333 1.455 1.20 104,0 22.618 * *
NC 22 2.136 1.082
Greater innovation and new product development C 17 3.176 1.131 0.59 143.5 21.646 *
NC 24 2.583 1.501
Inter-cluster referrals to your firm C 18 2.944 1.056 2 0.10 197.5 20.014
NC 22 3.045 1.290
Inter-cluster referrals from you to other firms C 18 3.000 0.907 0.14 174.0 20.690
NC 22 2.864 1.283
How useful is being located in a specific region of your country (regional cluster) for facilitating the following opportunities for co-operation in
marketing with trade associationa:
Joint trade fair participation C 17 3.765 1.251 0.76 111 21.864 *
NC 20 3.000 1.214
Joint marketing delegations C 17 3.353 1.367 0.50 133.5 21.177
NC 20 2.850 1.040
Joint trade missions to new markets C 16 3.750 1.125 1.00 84 22.504 * *
NC 20 2.750 1.118
Joint market information research C 17 3.706 0.985 1.01 90 22.518 * *
NC 20 2.700 1.218
Joint branding (co-branding) C 17 2.294 1.213 -0.11 164 20.192
NC 20 2.400 1.314
Joint sales to local markets C 17 2.235 1.348 0.29 155.5 20.468
NC 20 1.950 0.945
Joint sales to foreign markets C 17 2.235 1.200 0.09 163 20.231
NC 20 2.150 1.226
Joint distribution strategies C 17 2.706 1.312 0.71 118.5 21.646 *
NC 20 2.000 1.026
Joint new product development C 17 2.765 1.437 0.13 174.5 20.369
NC 22 2.636 1.177
Notes: *p , 0.05; * *p , 0.01; * * *p , 0.001 (one tailed); a1 ¼ Not at all useful; 5 ¼ Extremely useful; b1 ¼ Strongly disagree; 5 ¼ Strongly agree;
c
1 ¼ No importance; 5 ¼ Crucial
3.3 Sample characteristics We narrowed down the 88 respondents to 42, which

The initial sample contained 88 respondents, with 39 represented only firms engaged in cooperation in marketing.
respondents from the cluster industry and 49 respondents This final sample consisted of 18 respondent managers from
from the non-clustered industries. Each respondent came the clustered industry and 24 respondents from the non-
from a different firm and all held managerial positions, with clustered industries. Not all respondents answered all
questions and were inconclusive in their answers to some
the majority (80 percent) holding the title of Commercial or
questions. We found no conditional randomness for the
Marketing Manager or more senior. Respondents had been
missing responses hence we assess the missing data was
with their companies for an average of five years. random with a negligible impact of non-response bias.
An analysis of the basic characteristics of these two samples Correlations between variables measured with the same
shown no significant differences in terms of the origin of the method (and often self-report surveys) may be inflated due to
firms’ capital (regional, national or foreign) and in terms of the action of common method variance. We followed
their size (measured in terms of number of employees). Podsakoff et al. (2003, p. 887) recommendation that “the
396
Table II Comparison of managers’ perspectives of social networking for marketing collaboration between clustered (C) and non-clustered (NC)
industries
When people from your organization (e.g. managing directors, marketing managers) meet (or if they expect to meet) with people from other firms
to discuss about inter-firm co-operation in marketing, it is (or they will expect it to be)b:
Mainly at a formal, business level C 16 3.313 1.352 0.18 112.5 20.303
NC 15 3.133 1.506
Mainly at a formal level, yet personalized via the use of technologies C 15 3.333 0.976 2 0.07 101.5 20.472
NC 15 3.400 1.549
Mainly at an informal, social level C 15 2.800 1.521 2 0.13 105.5 20.302
NC 15 2.933 1.870
Mainly at a formal and informal levels on a one to one basis C 15 3.800 1.082 1.26 46.5 22.441 * *
NC 13 2.538 1.450
At both a formal, business and informal, social level (but not in a C 15 2.933 1.335 2 0.23 122 20.487
one-to-one basis) NC 18 3.167 1.618
For the one that you consider the most crucial source of advice for inter-firm collaboration in marketing, how important are the following
features of the relationship?c:
Trust C 18 4.833 0.514 0.21 171 21.541
NC 24 4.625 0.576
Respect reciprocity (i.e. give and take) C 17 4.706 0.470 0.29 169 21.088
NC 24 4.417 0.776
General business knowledge C 18 4.333 0.686 0.21 197 20.523
NC 24 4.125 0.947
Marketing knowledge C 18 4.167 0.857 2 0.12 193 20.633
NC 24 4.292 0.908
Local knowledge C 16 3.875 1.258 2 0.08 175 20.270
NC 23 3.957 0.825
International knowledge (e.g. about foreign markets) C 18 4.111 1.183 0.24 179.5 20.978
NC 24 3.875 1.035
Commercial acumen (business acumen) C 18 4.056 0.802 0.79 131 22.076 *
NC 23 3.261 1.251
Length of relationship C 18 4.056 0.873 1.35 76.5 23.652 * * *
NC 24 2.708 1.083
Personal or emotional support C 18 2.944 1.211 0.32 182.5 20.891
NC 24 2.625 0.924
Friendship C 18 3.278 1.274 0.54 98.5 21.357
NC 15 2.733 1.100
Collocation (close proximity in the geographical district/area) C 18 2.944 1.474 2 0.20 115 20.427
NC 14 3.143 1.292
Notes: *p , 0.05; * *p , 0.01; * * *p , 0.001 (one tailed); a1 ¼ Not at all useful; 5 ¼ Extremely useful; b1 ¼ Strongly disagree; 5 ¼ Strongly agree;
c
1 ¼ No importance; 5 ¼ Crucial
key to controlling method variance through procedural distributed. The results of these tests (Kolmogorov-Smirnov
remedies is to identify what the measures of the predictor and Shapiro-Wilk) revealed that most of the variables
and criterion variables have in common and eliminate or considered were not normally distributed for both groups.
minimize it through the design of the study”. The Therefore, the Mann-Whitney U non-parametric test for
categorization between clusters and non-clustered industries means comparisons was selected as the most appropriate way
is based on the literature (see Porter, 1990, 2000) to compare the means between the previous mentioned
independent of the questions for operationalization of this groups. This test has been reported as considerably more
study, which followed the research conducted by Brown and efficient and robust than a t-test when sample distributions
Bell (2001). Therefore, this study compares the two groups: are far from normal (Conover, 1998).
1 clustered; and
2 non-clustered industries.
Additionally, in order to select the appropriate procedure to 4. Results
test the differences between the perceptions and behaviors of
managers from clustered and non-clustered industries, Results of the Mann-Whitney U non-parametric test for
normality tests were conducted to determine if the values means comparisons between the two sampled groups are
obtained from the participants’ responses were normally shown in Tables I-III. This analysis provides evidence of
397
Table III Comparison of managers’ perspectives of other marketing collaboration issues between clustered (C) and non-clustered (NC) industries
b
If your firm develops any inter-firm co-operation in marketing activities, these are done :
Mainly with suppliers C 15 3.267 1.486 0.65 79.0 20.887
NC 13 2.615 1.895
Mainly with buyers C 14 3.500 1.653 1.36 50.0 22.282 *
NC 14 2.143 1.292
Mainly with one or more local producers C 14 3.286 1.437 0.36 78.0 20.654
NC 13 2.923 1.256
Mainly with one or more non-local producer C 14 2.714 1.684 0.25 85.0 20.304
NC 13 2.462 1.266
Mainly with one or more direct competitors C 14 2.571 1.604 0.19 83.0 20.405
NC 13 2.385 1.446
With the trade association C 15 3.600 1.454 1.14 61.0 21.750 *
NC 13 2.462 1.761
If your firm develops or expects to engage in inter-firm collaboration in marketing, the resources (people, time, money, etc) for the development
of these joint marketing activities are invested (or would expected to be invested) inb:
Joint product development C 17 3.765 1.393 0.62 101.0 20.749
NC 14 3.143 1.875
Joint price strategy and planning C 16 3.000 1.549 20.29 100.0 20.512
NC 14 3.286 1.437
Joint distribution activities C 16 3.250 1.342 20.54 85.5 21.147
NC 14 3.786 1.122
Joint promotion strategy C 17 4.412 0.795 0.55 79.0 21.700 *
NC 14 3.857 0.949
Co-branding C 16 2.563 1.413 0.06 108.5 20.150
NC 14 2.500 1.454
Joint database technology and internet to improve communication C 17 3.353 3.765 1.14 60.5 22.381 * *
with customers NC 14 2.214 0.975
Establishing and building joint personal relationships with individuals C 16 3.563 1.548 0.56 75.0 21.593
customers NC 14 3.000 0.961
Developing of firm’s network relationships with markets(s) or wider C 16 3.750 1.342 0.75 61.0 21.957 *
marketing systems NC 13 3.000 0.913
A combination of all the previous C 13 3.308 1.316 0.81 25.5 21.214
NC 6 2.500 1.517
If your firm develops or expects to engage in inter-firm collaboration in marketing, the joint marketing activities with other firms/organizations
are principally intended to (or would be expected to) beb:
Attract new customers C 18 4.444 0.922 20.31 121.0 21.025
NC 16 4.750 0.577
Increase sales in the short term C 18 3.611 1.290 20.96 72.0 22.182 *
NC 14 4.571 0.514
Increase sales in the long term C 18 4.611 0.608 0.18 105.5 20.899
NC 14 4.429 0.646
Retain existing customers C 18 4.389 0.608 0.32 107.5 20.763
NC 14 4.071 0.997
Develop cooperative relationships with customers, suppliers and buyers C 18 4.556 0.705 0.77 82.0 21.839 *
NC 14 3.786 1.369
Coordinate activities between the firm, customers, and other parties in C 18 4.500 0.707 1.63 72.5 23.788 * * *
the wider marketing system NC 24 2.875 1.393
Notes: *p , 0.05; * *p , 0.01; * * *p , 0.001 (one tailed); a1 ¼ Not at all useful; 5 ¼ Extremely useful; b1: Strongly disagree; 5 ¼ Strongly agree; c1 ¼ No
importance; 5 ¼ Crucial
several significant differences between managers of clusters in a specific region of the country as a source of opportunities
and managers of non-clustered industries. to their firm, results shown that respondents from the
In terms of the levels of inter-firm cooperation in marketing clustered industry perceive more benefits from its localization
of clustered firms compared to non-clustered firms (see Table in a specific region in terms of the market/marketing
I), we found evidence of several significant differences. In knowledge availability (MC ¼ 3:333, MNC ¼ 2:136;
terms of the perceptions about the usefulness of being located p , 0:01) and in terms of opportunities for innovation and
398
new product development (MC ¼ 3:176, MNC ¼ 2:583; results provide evidence of more collaboration associated with
p , 0:05). Therefore, it seems that cooperation in these activities oriented to “reach” the market in clustered
aspects is determined not only by co-location, but also industries. Finally, considering the objectives of cooperation
enhanced by a cluster configuration of the industry. in marketing, and compared to managers from non-clustered
In terms of the perceptions of the usefulness of being industries, managers from the clustered industry declared to
located in a specific region for facilitating the opportunities engage in inter-firm collaboration in marketing in order to
for cooperation in marketing with trade association, results develop cooperative relationships with customers, suppliers
show that respondents from the clustered industry have better and buyers (MC ¼ 5:556, MNC ¼ 3:786; p , 0:05), and to
perceptions of the usefulness of co-location. In particular, coordinate activities between the firm, customers, and other
managers for the clustered industry have higher perceptions parties in the wider marketing system (MC ¼ 4:500,
in terms of the benefits associated with co-operation with the MNC ¼ 2:875; p , 0:001), while managers from non-
trade association for joint trade fair participation clustered industries declared to be more oriented to engage
(MC ¼ 3:765, MNC ¼ 3:000; p , 0:05), for joint trade in inter-firm collaboration in marketing in order to increase
missions to new markets (MC ¼ 3:750, MNC ¼ 2:750; sales in the short term (MC ¼ 3:611, MNC ¼ 4:571;
p , 0:01), for joint market information research p , 0:05). These results provide evidence of a greater
(MC ¼ 3:706, MNC ¼ 2:700; p , 0:01), and for joint emphasis on the industry development in the long term in
distribution strategies (MC ¼ 2:706, MNC ¼ 2:000; collaboration activities between firms in the clustered
p , 0:05). As it is possible to appreciate, these activities are industry, while firms in non-clustered industries are more
all related to market analysis and entry, which are usually narrowly focused, short term oriented, and tend to
expensive activities. Therefore, co-operation with trade collaborate as a way to achieve particular goals.
association in these activities is sometimes the only option
for companies with scarce resources. Our results shown that 5. Conclusions
in clustered industries this option is better utilized than in
non-clustered industries. Therefore, proposition 1 is The conceptual model depicting the propositions and major
supported. results of this study is illustrated in Figure 1. This study
Regarding the social networking issues for marketing revealed significant differences in terms of inter-firm
collaboration, we also found some interesting and significant cooperation and social networking between clustered and
differences (see Table II). First, and related to the social non-clustered industries. The significant difference in
behavior of managers, it is interesting to note that, compared managers’ perception toward vertical relationships with
to managers from non-clustered industries, managers from buyers and external relationships with trade associations are
the clustered industry have higher expectations of discussions possibly due to the different proportions of international
about inter-firm cooperation in marketing between people markets between the clustered and the non-clustered
from their organization and people from other firms. This industries, as well as the industry-cluster development stage
would be conducted mainly at formal and informal levels on a and industry-cluster compliance of the salmon farming
one to one basis (MC ¼ 3:800, MNC ¼ 2:538; p , 0:01). industry. Other significant differences such as joint database
Therefore, we can conclude that the development and use of technology and coordinated activities are probably due to the
personal relationships at both formal and informal levels are distinction of clusters as described in the literature.
more frequent in clustered industries. In addition, managers While at a first sight results may imply significant
from the clustered industry gave more importance to differences due to industries, we believe that the differences
commercial acumen (MC ¼ 4:056, MNC ¼ 3:261; p , 0:05) were because one industry really complied with the clusters
and length of relationship (MC ¼ 4:056, MNC ¼ 2:708; definition (salmon farming), while the other two did not
p , 0:001) as important features of a crucial source of (forestry and dairy). Implications for practitioners can be
advice for inter-firm collaboration in marketing, providing clearly drawn from this research in support of clustering while
evidence of the importance attributed to relationships and recent studies (Jungwirth and Muller, 2010; Van Geenhuizen
business trajectory as key features of potential collaborators in and Reyes-Gonzalez, 2007) were not unequivocal in this
clustered industries. Therefore, proposition 2 is supported. issue.
In terms of the other inter-firm co-operation issues studied,
we found some interesting results (see Table III). First, and in Figure 1 Conceptual model – comparison of managers’ perceptions
terms of the partners selected to cooperate in marketing between clustered and non-clustered firms
activities, we found that compared to managers from non-
clustered industries, managers from the clustered industry
rated cooperation with buyers (MC ¼ 3:500, MNC ¼ 2:143;
p , 0:05) and with the trade association (MC ¼ 3:600,
MNC ¼ 2:462; p , 0:05). Second, and with regard to the
type of marketing cooperation, managers from the clustered
industry acknowledged the benefits of developing marketing
inter-firm collaboration in areas such as joint promotion
strategy (MC ¼ 4:412, MNC ¼ 3:857; p , 0:05), joint
database technology and internet to improve
communication with customers (MC ¼ 3:353,
MNC ¼ 2:214; p , 0:01), and the developing of firm’s
network relationships with markets or wider marketing
systems (MC ¼ 3:750, MNC ¼ 3:000; p , 0:05). All of these
399
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Achrol, R. (1997), “Changes in the theory of Administrative Science Quarterly, Vol. 42 No. 1, pp. 35-67.
interorganizational relations in marketing: toward a
network paradigm”, Journal of Academy of Marketing About the authors
Science, Vol. 25 No. 1, pp. 56-71.
Baraldi, E., Brennan, R., Harrison, D., Tunisini, A. and Christian Felzensztein, PhD in Marketing, University of
Zolkiewski, J. (2007), “Strategic thinking and the IMP Strathclyde, Glasgow, UK, is currently a Professor of
approach: a comparative analysis”, Industrial Marketing International Marketing at the School of Business,
Universidad Adolfo Ibañez, Chile. He has conducted
Management, Vol. 36, pp. 879-94.
international research on regional clusters in different
Enright, M. (1993), “The geographic scope of competitive
countries. The publication of his research appears in
advantage”, Geographical Studies, Vol. 155, pp. 87-102.
different journals such as Long Range Planning,
Frisillo, D. (2007), “An analysis of a potential cluster in an
Entrepreneurship Theory and Practice, Industrial Marketing
energy sector of Albany, NY”, Journal of Business
Management, and Small Business Economics, among others.
& Industrial Marketing, Vol. 22 No. 7, pp. 508-16.
He is the Founder Director of ClusterInnovation.com
Jack, S. and Anderson, A. (2002), “The effects of
Research Network in Industry Clusters and STEINbc.com,
embeddedness on the entrepreneurial process”, Journal of
specialized consultancy firm in international marketing
Business Venturing, Vol. 17, pp. 467-87. strategy. Christian Felzensztein is the corresponding author
Jarillo, J.C. (1995), Strategic Networks: Creating the Borderless and can be contacted at: c.felzensztein@uai.cl
Organisation, Butterworth and Heinemann, Oxford. Eli Gimmon is currently a Senior Faculty Member of Tel-
Krugman, P. (1991), Geography and Trade, MIT Press, Hai Academic College in Israel. He received his PhD in
Cambridge, MA. Entrepreneurship at the University of Strathclyde, Glasgow,
Kukalis, S. (2010), “Agglomeration economies and firm Scotland, UK. His interest in researching entrepreneurship
performance: the case of industry clusters”, Journal of and business strategy emerged from extensive field experience
Management, DOI:10.1177/0149206308329964. including serial co-founding of two American-Israeli IT
McPherson, J. (1983), “An ecology of affiliation”, American companies. His research and consultancy focus on
Sociological Review, Vol. 48, pp. 519-32. entrepreneurship, SME strategy, and international
Mentzer, J., DeWitt, W., Keebler, J., Min, S., Nix, N., Smith, marketing strategy. He has published in Long Range
C. and Zacharia, Z. (2001), “Defining supply chain Planning and Research Policy, among others.
management”, Journal of Business Logistics, Vol. 22 No. 2, Claudio Aqueveque, PhD in Management, University of
pp. 1-25. Bocconi, Milan, Italy, is an Associate Professor of Marketing
Nohria, N. and Eccles, R. (1992), “Network and and Director of the Executive Master of Marketing at the
organizations: structure, form and action”, in Nohria, N. School of Business, Universidad Adolfo Ibañez, Chile. His
and Eccles, R. (Eds), Network and Organizations: Structure, work has been published in Journal of Business Ethics and
Form and Action, Harvard Business School Press, Boston, Journal of Food Products Marketing, among others. He is also a
MA. marketing consultant of private companies.

402
A multistage behavioural and temporal
analysis of CPV in RM
Sriram Dorai and Sanjeev Varshney
XLRI School of Business & Human Resources, Jamshedpur, India
Abstract
Purpose – Interactions and on-going relationships are crucial for organizations to create satisfactory value propositions for customers and meet their
evolving needs. Understanding the behavioural and temporal aspects of value creation from a customer’s perspective is crucial as customer perceived
value (CPV) is dynamic and contextual, and evolves over time. This enables firms to develop value laden offerings and bind customers through
interdependent relationships. This paper aims to focus on these issues.
Design/methodology/approach – Extant literature review on CPV and relationship marketing (RM) reveals the behavioural and temporal aspects of
relationship building and the role of CPV in generating desirable relationship outcomes.
Findings – A conceptual model explains how components of CPV, episodal value can be transformed into total relationship value mediated by
satisfaction, value added services, loyalty, commitment, trust and relationship quality.
Research limitations/implications – The model describes changing customer expectations and how sellers can create value as exchanges mature
into relations, but it does not include empirical testing of the model, which would validate the effectiveness of the proposed model.
Practical implications – Meeting customer needs through relation specific investments by suppliers creates value for customers and develops
interdependent relationships. Such relationships are long lasting and benefit both parties.
Originality/value – Based on extant literature review and combining emerging paradigms enables theory generation centred on customer’s
perspective. This not only ensures organization profitability, but also provides higher returns on customer equity.
Keywords Relationship marketing, Customer perceived value, Episodal value, Relationship value, Total relationship value, Customer satisfaction
1. Introduction Similarly, the concept of “value” is continuously evolving in

line with changes in marketing thinking, that is, from being
Marketing discipline has undergone a transformation from embedded in matter through manufacturing and determined
the marketing mix/exchange paradigm to recognition of by the producer (value distribution) to value-in-use and value
relationships, due to the fact that marketing is not merely a co-creation. Value co-creation, an emerging paradigm, has
decision making activity, but involves a social and economic value for all stakeholders and leads to greater interdependence
process, and the exchange paradigm being perceived as being amongst marketing actors, which in turn builds trust and
functional rather than strategic (Gronroos, 2002). sustains relationships (Sheth and Uslay, 2007).
Interactions and ongoing relationships are crucial for According to Vargo and Lusch (2004), in the evolving
organizations to meet the dynamic needs of customers and service dominant logic (SDL) of marketing, enterprise can
counter competition through developing long term only offer value propositions and customer must determine
relationships with stake holders (Hunt and Lambe, 2000), the value, and SDL is customer oriented and relational. More
especially in business-to-business exchanges. specifically, customers decide the effectiveness of a supplier’s
Relationship marketing (RM) has emerged as one of the offering and the value they derive from the same.
dominant mantras in business strategy circles (Palmatier et al., Additionally, organizations are expected to be responsive to
2006a), with relational exchanges as the basic unit. At a customers and are expected to develop long term
macro level, organizational and environmental factors like relationships with them for mutual well being (Vargo,
strategic network competition (Hunt et al., 2006), 2009). Hence, relationships and value creating processes,
technological advances, TQM programs, growth of service especially customer perceived value (CPV) assumes great
economy and organizational development programs (Sheth importance in current and emerging marketing paradigm.
and Parvatiyar, 1995) have been instrumental for Integrating CPV in relationship framework is expected to
development of RM, whereas at the micro level customers enhance interdependencies between marketing actors,
engage in relational exchanges when they believe benefits resulting in superior value offerings by providers and
exceed costs (Hunt et al., 2006). combined with a partnering orientation towards customers
may lead to co-creation of products and services.
The current issue and full text archive of this journal is available at In order to integrate CPV in RM theory, it is important to
www.emeraldinsight.com/0885-8624.htm strongly ground the study in related literature, identify
research gaps, and propose research questions that address
the gap (Eisenhardt and Graebner, 2007). Acknowledging
Journal of Business & Industrial Marketing this approach, the goal of this research is to develop a
27/5 (2012) 403– 411
conceptual model of CPV drawing from the review of
[DOI 10.1108/08858621211236070] literature on the behavioural and temporal aspects of
403
A multistage behavioural and temporal analysis Journal of Business & Industrial Marketing
Sriram Dorai and Sanjeev Varshney Volume 27 · Number 5 · 2012 · 403 –411
relationship development from a customer value perspective (Krapfel et al., 1991), and according to Vargo and Lusch
benefiting buyers and sellers. (2004), people will find themselves increasingly dependent on
What is the role of value in developing relationships? What the market, both for service provision and ability to self-serve.
role do customers play for enhancing seller value offerings? Consistent with longer time perspective required for enduring
Do quality relationships develop instantaneously? Through a and profitable relationship to develop (Gronroos, 1994) and
detailed review of significant contributions to value and RM the various stages in evolution of buyer-seller relationship
literature, we attempt to answer these questions through a (Dwyer et al., 1987), a temporal perspective may be relevant
conceptual CPV framework. Behavioural components of CPV to explain the effects of interaction frequency and relationship
provide an understanding of how transactions can mature into duration on building relationships. From a customer’s
repeated interactions including emergence of relational perspective, customer focused and dyadic antecedents are
norms. Similarly, temporal aspects explain the relevant to build relationships and a behavioural analysis
transformation of value from value-in-exchange to value-in- would reveal how they result in outcomes like WOM and
use. Initially, research gaps in RM and value literature are cooperation.
discussed, followed by the development of behavioural and Value is an important constituent of RM and relationship
temporal model of CPV. Finally, implications of the value is defined as aggregate worth of all exchanges that occur
conceptual model and the future research directions relevant between two firms (Hogan, 2001), resulting in safety,
for business-to-business relations are discussed. credibility, security and continuity leading to trust and
loyalty in a relationship (Ravald and Gronroos, 1996). To
2. Relationship marketing theory – research gaps incorporate value in the RM framework, a behavioural and
temporal analysis of the relationship antecedents in the meta-
RM refers to all marketing activities directed towards analytic framework is relevant to explain the role value plays
establishing, developing and maintaining successful in developing and maintaining relationships. Propositions are
relational exchanges (Morgan and Hunt, 1994). Sellers play developed through a review of value and RM research and the
an active part in the transactional exchanges, whereas findings are incorporated in a model.
customer interaction with sellers is prominent in relational
exchanges. The former has a short term focus, while the time
3. “Value” concept – research gaps
perspective is longer and profits accrue in the long run in the
latter. On a micro level, relational exchanges enable buyer- The concept of value has its roots in many disciplines and
seller relationships to develop over four phases – awareness, various explanations have been recorded from the time of
exploration, expansion and commitment (Dwyer et al., 1987), Aristotle till current times. From a strategy perspective,
whereas at a macro level multiple forms of RM exist involving product/service differentiation leads to competitive advantage
suppliers, lateral organizations, customers, employees and and superior performance (Porter, 1985). The basis for
business units (Morgan and Hunt, 1994). Relational differentiation is value creation for customers, which a firm
exchanges are also marked by technical solutions (physical can achieve either through lowering cost or by raising
goods and services) and functional solutions (additional performance, as perceived by buyer. Fernandez and Bonillo
services to improve relations), and functional solutions gain (2007) define “value” in a continuum from simple uni-
more prominence as the relationship progresses (Gronroos, dimensional models to complex multi-dimensional models, and
2002). conclude that perceived value is an ongoing assessment within
RM has been an intense area of research for the past two an evolving consumer relationship. Khalifa (2004) has
decades, and the research findings are summarized in a proposed three models combining behavioural and temporal
relational mediator meta-analytic model (Palmatier et al., aspects – “Value-exchange model” (value created up to
2006a). In this model, relationship strategy antecedents exchange), “Value-build up model” (value created during
include customer focused, seller focused and dyadic exchange) and “Value-dynamics model” (value perceived by
antecedents, leading to customer focused, seller focused and customers). The upward accumulation of value from “value
dyadic outcomes mediated by commitment, trust, exchange” to “value dynamics” models would fade away if core
relationship quality and relationship satisfaction. Among the needs of customers are violated. Woodall’s (2003) review
antecedents, seller expertise and communication emerge as conceptualizes value from a customer’s view point, called
effective RM strategies followed by relationship investment, “Value for Customer” (VC) and five types of VC are explained
similarity and relationship benefits in order to generate based on structural, attributional and dispositional
relationships. Seller dependence, frequency and duration are perspectives. More importantly, four temporal forms of VC:
ineffective in forming relationships. Conflict has the largest Ex-ante, Transactional, Ex-post and Disposition, was
negative impact on relationships. Among the mediators, conceptualized based on consumption, product and market
relationship quality, as a composite measure of relationship factors. Woodall (2003)’s quality-value-satisfaction-loyalty
strength has the greatest influence on performance. Similarly, framework concludes that VC is a “gestalt” construct. Payne
effective relationships lead to cooperation and positive word and Holt (2001) have integrated the value process and
of mouth (WOM). relationship marketing through a conceptual model of
However, the meta-analytic model has limitations like relationship value management with a central value process
possible misspecification of antecedents like seller dependence and stake holder groups, based on six markets model. However,
and lack of empirical evidence for frequency and duration. their model is strategic in nature and takes an organizational
Seller dependence has been specified as asymmetric perspective rather than a customer’s perspective.
dependence and imbalance of power, whereas there is Common findings among the reviews are:
evidence for balanced power position based on interest .
Value is a broader topic than generally recognized and is
commonality between actors resulting in collaboration construed as multi-dimensional.
404
.
Concept of “perceived value” implies an interaction and expectation and value as a richer and comprehensive
between customers and providers. measure of overall evaluation.
.
Value is not a “one-off” phenomenon, but relative and Five critical antecedents to CPV emerging out of research
preferential. include:
.
Customer’s evaluation of value will vary over time and 1 product quality;
may increase with use, age and/or functionality. 2 attributes (features);
3 service quality;
Fernandez and Bonillo (2007), stress the need for causal 4 relational attributes; and
modelling of value in relation to other variables (satisfaction, 5 extrinsic factors.
commitment and loyalty), and understanding of dynamic
nature of perceived value (culture, time and evolving Quality comprises of product and service quality,
relationship). These reviews, though exhaustive and encompassing factors like reliability, information, technical
conceptual, do not specifically define CPV in a RM context. expertise etc. Attributes are those that are associated with the
In summary, it is imperative to understand the antecedents product like design, aesthetics etc. Service quality includes
and processes through which CPV is fulfilled in the reliability, responsiveness, assurance and empathy associated
relationship continuum. with the intangible components of a product, and, service
delivery, after sales service and service recovery associated
with service. Relational attributes comprises of factors like
4. Customer perceived value (CPV) – behavioural contact intensity, mutual disclosure, co-operative intentions,
perspective special treatment, familiarity with customers etc. Brand name,
communication, country of origin, time to market and other
CPV is best described by Woodall’s (2003) definition of VC, factors make up the Extrinsic factors. Value experienced by
as “any demand side, personal perception of advantage arising the customer in products and (or) services lead to important
out of a customer’s association with an organization’s offering, outcomes like satisfaction, repurchase intentions, loyalty,
and can occur as a reduction in sacrifice, presence of benefit, positive word of mouth (WOM) and other factors like trust,
the resultant of any weighed combination of sacrifice and commitment and willing to pay premium price. The
benefit, or an aggregation over time, of any or all of these.” antecedents described above explain the benefits of CPV,
The theoretical basis for a behavioural perspective of CPV while costs (sacrifices) involved are price, risk, tension, time,
arises from the means-end model proposed by Gutman search, learning, emotional and process costs, effort, energy
(1982), according to which, acts of consumptions produce and conflict.
desired consequences and links personal value of the According to Oliver (1996, 1999), (customer perceived)
consumers to product attributes. Woodruff (1997) further value is a comparative operation, which customers apply in
expanded the means-end model and proposed the value- satisfaction responses. Value is a super ordinate concept
hierarchy model, which is more appropriate for business-to- subsuming quality and value becomes an input for
business exchanges. According to this model, customers think satisfaction. According to Juttner and Wehrli (1994), value
about attributes and attribute performance initially, form is a pre-condition and foundation for maintaining durable
preferences for certain attributes to facilitate achieving desired relations, and relationships arise from multiple transactions,
consequence experiences. Certain consequences are desired and relational attributes are antecedents to relationship value
according to their ability to help them achieve their goals. creation. In a relationship, product/service attributes lead to
Satisfaction feelings are experienced at the attribute episodal value, leading to repurchase intentions. Over
performance level, consequence experience and on multiple transactions mediated by relational attributes,
achievement of goals. Similar frameworks have been episodal value is transformed into relationship value.
developed by Sheth et al. (1991), Lai (1995) and Holbrook To summarize, CPV is a multi attribute higher order
(1996, 1999) explaining consumption values. CPV therefore, construct, where meeting customer expectations result in
emerges as a trade-off between benefits and sacrifice affected value, if the perceived benefit is higher than costs in
by extrinsic cues (Teas and Agarwal, 2000) including comparison to alternate products and services in a use
products, services and relationships (LaPierre, 2000), as situation. Relational attributes emerge as key antecedents
perceived by the customer. when customers are satisfied with attribute-based value, in
Extant literature defines value as addition function, trade- order to build relationships. Feedback from previous
off or ratio between benefits and sacrifices. While there is little experience influence future perceptions (Sweeney and
agreement on the metrics, the common thread is benefits Soutar, 2001). A temporal model with multiple value
should exceed costs and sacrifices. Spreng et al. (1996) adding interactions fosters and strengthens relationship.
explain value as a comparison between expectation and
perception. Bowman and Ambrosini (2010) explain value for
customers as a subjective judgement of use-value of supplied
5. CPV in relationships – temporal perspective
products compared with the exchange value (price) charged Dynamic nature of customer participation invites discussion
for it. Though value can be measured in financial terms, it has on how it evolves over time and past perceptions influence
attitudinal components (trust, ease of use etc) (Gronroos, future effects (Fang et al., 2008). Customers engage in
2008). Customers seek products and services to fulfil their relational market behaviours to simplify their buying and
needs and form expectations about them. Perceived need selling tasks, which include information processing, risk
satisfaction leads to re-purchase intentions. Many researchers reduction and psychic tensions (Sheth and Parvatiyar, 1995).
tend to equate value with quality, but many others like Bolton In order to incorporate CPV in a relationship perspective, an
and Drew (1991) explain quality as a gap between perception understanding of the process of relationship building is
405
relevant as interpersonal bonds take time and effort to recovery (Gronroos, 2004), information (Gronroos, 2004),
produce (Palmatier et al., 2008). As per Gronroos (2004), the cost reduction (LaPierre, 1997; Danaher et al., 2008),
temporal process starts with acts (interactional elements) and confidence (reduced anxiety, comfort), personal recognition,
transforms into episodes (negotiation, exchange) based on and special treatment (Hennig-Thurau et al., 2002) to
interrelated acts. Interrelated episodes lead to sequence and improve exchange efficiency. At this stage, value-in-
several sequences result in relationships. As the relationship exchange translates to value-in-use (LaPierre, 1997;
develops over time, customers shift focus from evaluating Woodruff, 1997), as suppliers make relation specific
separate offerings to evaluating relationship as a whole. investments (RSI) to increase alignment with customers.
Combined with the behavioural perspective, episodes Social and structural RM investments generate customer
transform to evolved relationships over time in stages. bonds and relational norms develop (Palmatier et al., 2006b).
The evolving customer expectations of customers
5.1 Stage I: episodal value continuously satisfied by suppliers over multiple episodes
Customer needs act as inputs to episodal value (Figure 1). results in relationship value (RV). RV is more efficient as it
Information regarding need resides within the customers, results from a combination of customer and supplier
while information regarding solutions is in the seller’s domain resources (Henneberg et al., 2009).
(Fang et al., 2008). Desired benefits may include product/ Relationship satisfaction would enable loyalty formation
service quality and extrinsic factors, while costs include intentions through commitment and trust (Figure 2).
monetary and non monetary costs (Zeithaml, 1988), risk Trustworthy behaviour in terms of operational competence,
(Sweeney et al., 1999), tension (Flint and Woodruff, 2001) operational benevolence and problem solving orientation by
and conflict. Perceived performance fulfilling customer needs frontline employees, and through management policies and
result in episodal value (EV). Value mediates quality practices [of sellers], fosters trust in a relationship
(attributes) and satisfaction (Oliver, 1996, 1999) and (Sirdeshmukh et al., 2002). An enduring desire to maintain
therefore, positive perceptions lead to episodal satisfaction, the relationship including affect and obligation leads to
leading to repurchase intensions, attitude and expectation commitment. Relationship value subsumes attribute related
formation about the products and suppliers. Customers will values (Sirdeshmukh et al., 2002) and through trust enables
not pay for benefits that they do not perceive (Porter, 1985). loyalty. Exchange partners at this stage have achieved a level
On the other hand, risks and conflicts have a negative impact of satisfaction from the exchange process that virtually
on value creation. If the customer perceives that the risks precludes other similar options (Dwyer et al., 1987). Conflict
involved in the transaction is very high or if there is a conflict is relevant even at this stage, and affects value negatively.
during the transaction, this may essentially wipe out the From the above, the following propositions emerge:
perceived benefits and hence, should be managed effectively P2A. Customer perceived relationship value is realized
during the interaction. Sellers need to package product/ when evolving needs and expectations of customers
service benefits properly, fully understanding the customer formed out of transactions are fulfilled through value
needs. In sum, it is proposed that: added services by sellers.
P1A. Customer perceived episodal value arises out of P2B. Relationship value leads to relationship satisfaction
perceived performance of products/services fulfilling and loyalty mediated by commitment and trust.
customer needs and when benefits exceed costs. P2C. Conflict negatively influences value added service
P1B. Episodal value leads to satisfaction and repurchase and relationship value.
intentions.
P1C. Risk and conflict negatively influence episodal value.
5.3 Stage III: total relationship value
Relationship quality may be conceptualised as a higher order
5.2 Stage II: relationship value latent construct with multiple first order factors like trust,
Attitude formation after a satisfactory transaction, leads to commitment, exchange efficiency etc (Palmatier, 2008).
repurchase intention, expectation formation and transactions Crosby et al. (1990), posit that salesperson expertise,
mature into exchanges. In order to convert exchanges to contact intensity (interaction frequency), similarity
relationship, suppliers should meet increased expectations of (consultative role), mutual disclosure of information and
customers including cost reduction and enhanced cooperative intentions elevates the relationship to realize total
performance. Value added solutions, in addition to core relationship value (TRV) (Figure 3). Although each first order
solutions are required (Storbacka et al., 1994), which typically factor captures unique aspects of the relation, relationship
include communication (Morgan and Hunt, 1994), quality as an aggregate construct indicates overall calibre of
innovation and customization (LaPierre, 2000), service relational ties (Palmatier, 2008). Having realized perceived
Figure 1 Creation of episodal value
406
Figure 2 Emergence of relationship value
Figure 3 Total relationship value
value, a fully committed customer propagates word of mouth The research gaps in RM and value literature addressed by
(WOM) and cooperates to achieve mutual goals (Palmatier the proposed model are as follows.
et al., 2006a). Thus, relationship quality mediates loyalty and In the meta-analysis of RM strategies (Palmatier et al.,
leads to positive WOM and cooperation. As mentioned above, 2006a), seller dependence (customer focused antecedent),
in the case of certain product categories like utilities and interaction frequency, relationship duration and similarity
monopoly products, loyalty may result due to non-availability (dyadic antecedents) were not effective in forming
of alternatives, but rarely do such relationships lead to WOM. relationships. Customers will be dependent on the market
Frequency of interaction, duration and similarity, which were for service provision and consequently develop relationship
ineffective in forming relationships (Palmatier et al., 2006a) with a limited number of organizations (Vargo and Lusch,
would be effective in enhancing relationship quality. 2004), especially those that can provide them with entire host
The above stage-wise discussion of the behavioural and of products/services over an extended period. Considering the
temporal analysis of CPV in a relationship context can be above, seller dependence is relevant. Relative dependence
summarized below as propositions: positively influences a partner’s ability to capture value and
influences division of value between suppliers and customers
P3A. Total relationship value, an aggregate of episodal
(Fang et al., 2008). Gratifications from (each) others’ role
value and relationship value develops over time.
performance and increasing reliance on role expectation
P3B. Total relationship value engenders cooperation and
secure the parties (buyers and sellers) in a web of
WOM, and is mediated by relationship quality.
interdependency (Dwyer et al., 1987). Seller dependence
positioned as a positive aspect is relevant for creating CPV and
6. Discussion building relationships. Similarly, duration, frequency and
similarity may not be effective in forming relationships at the
EV is the manifestation of the exchange value and results in episodic level. However, these are relevant for enhancing the
satisfaction/attitude formation and forms the basis for future relationship quality, realise TRV and for generating positive
buyer-seller interaction, and subsequent relationship WOM and cooperation.
formation. In order to continuously meet dynamic customer Causal modelling of value in relation to satisfaction,
needs, value added offerings are required, else consumer commitment and loyalty, and the dynamic nature of
perception may fall below expectations leading to conflict and perceived value with respect to time are explained by the
dissatisfaction. Value added offerings meeting customer temporal analysis. Needs/expectations lead to ex-ante value,
expectations over multiple episodes transforms EV into RV. which when compared with the perception of product and
By this time, customers develop trust and commitment and a service offerings leads to transaction value (EV). As
loyal relationship is formed. By enhancing the quality of the interactions continue, ex-post value emerges (RV, TRV).
relationship through duration, interaction, aligning processes Episodal value compares to ex-ante and transaction value
(similarity) and mutual disclosure, TRV is realized and results (Woodall, 2003). Continuous buyer-seller exchanges leads to
in positive WOM and cooperation, where customers become creation of ex-post value and at this stage intentions for
partners of the seller. The proposed model intertwines the relationship formation develops through seller’s relation
behavioural and temporal aspects of value creation and its role specific investments. The resultant benefits to the customers
in forming relationships. In summary, behavioural aspect is enable RV to emerge, fostering commitment, trust and
relevant for every episode, and layers of value added offerings leading to loyalty. Duration and interaction frequency
enables transactions to graduate into a relationship. enhances the relationship quality leading to co-operation.
407
Only at this stage, TRV is realised and buyers propagate countries, they also form manufacturing clusters with
positive WOM about sellers. A comparison of the conceptual ancillaries from their home countries establishing facilities
model with the meta-analytic model (Palmatier et al., 2006a) in close proximity enabling process integration; joint
and the longitudinal perspective of value (Woodall, 2003) is development of components suited to local operating
illustrated in Figure 4. conditions and overall cost optimization. Ancillaries, on
their part, invest capital, train manpower and benefit from
7. Managerial implications manufacturing and operating processes of the OE
manufacturers. Due to established relations over many
Business firms that increase customer performance by years, OEM – vendor cooperation is evident.
aligning with customer process and effectively signal the .
Customised software solutions: suppliers study customer
same create value (Porter, 1985). Understanding customer- processes, customise their products, share knowledge,
value chain (Slater and Narver, 1994) and designing customer train users and provide operations support. Large
centric marketing programs through value adding and multinational software firms like IBM, HP and
collaborative exchanges (Parasuraman and Grewal, 2000) Accenture engage in developing software solution and
enables CPV. Customisation, meeting higher technical needs provide value added services like studying the client’s
and frequent customer contact enhances relationships process, recommend improvement and enable
(Danaher et al., 2008) leading to loyalty which may increase implementation and provide post implementation
the supplier’s profitability (Zeithaml, 2000). From a supplier’s support. Clients on their part, reveal proprietary
perspective, developing competing capabilities (Day, 2000) processes and systems to benefit from the vendor’s
enable relationship orientation, knowledge, and skill expertise.
development, integration and alignment of processes helps
to manage customer relationships effectively. Evidence is Aligning with customer needs (Palmatier, 2008) and relation
abound for established supplier-customer relationships in specific investments are key drivers of supplier’s financial
business-to-business marketing: Based on authors’ experience performance. Customers too collaborate with suppliers
and review of marketing strategies of multi-national oil, through sharing proprietary information, coordinating
automobile and software development firms appearing in activities and adapting engineering/manufacturing processes.
popular business literature reveal the following: Both dependence and equity perspectives influence sharing of
.
“Total fluid management” (Wait, 2010): developed by oil value between parties. On the whole, integrating CPV in
majors (Exxon Mobil, Shell, BP, Indian Oil etc) for large relationships has potential for generating value for both
institutional customers, this program includes inventory buyers (customers) and sellers (suppliers).
management, product recommendation, technical support
and used oil analysis service provided at customer’s site 8. Limitations and future research
through seller’s manpower. Studying the type of
equipments used in manufacturing and allied processes The research has been successful in developing a conceptual
of customers, sellers develop/recommend, supply model incorporating temporal aspects of value in
products, provide services like vendor managed relationships. However, the pertinent question is: Is
inventory and coordinate with equipment suppliers to empirical testing of the propositions possible? Extensive
ensure cost savings and maximise uptime of equipments research has been conducted for the individual parts of the
for the customers, thus fostering long term relationship. model, but testing it as a composite model would prove the
.
“OEM-Ancillary” relationship (Okada and Siddharthan, evolving nature of value laden relationships. Evidence of
2007): involves ancillaries integrating their operational successful long-term supplier-customer relationships is
and manufacturing processes with original equipment available as explained in the previous section. However,
manufacturers (OEM) to ensure “just in time” supplies, consistent with Sweeney and Soutar’s (2001) observation,
participating in NPD through capital investments and CPV should be studied longitudinally. The conceptual model
reducing time-to-market for new models. International car is complex and quantitative testing is likely to be challenging.
manufacturers like Toyota, Suzuki, Ford and Hyundai A longitudinal quantitative analysis following Palmatier et al.
select manufacturing locations where local ancillary (2007) or Maxham III and Netemeyer (2002) including
industries are well established. In addition, because of waves of sample over different years would be relevant.
their established relations with ancillaries in their home Alternatively, a mixed method involving quantitative methods
Figure 4 Comparison of conceptual model with meta-analytic RM model and longitudinal model of value
408
for testing EV, and qualitative methods for RV and TRV is Danaher, P.J., Conroy, D.M. and McColl-Kennedy, J.R.
possible. The latter is preferred, as some of the factors that (2008), “Who wants a relationship anyway? Conditions
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miningweekly.com/article/bp-castrol-adopts-service-offer About the authors

s-will-cut-customer-costs-2010-12-03.
Woodall, T. (2003), “Conceptualizing value for the customer: Sriram Dorai is a doctoral student specializing in Marketing at
an attributional, structural and dispositional analysis”, XLRI, Jamshedpur, which is amongst the top five
Academy of Marketing Science Review, Vol. 12, pp. 1-42, management institutes in India. The author has more than
available at: www.amsreview.org/articles/woodall12-2003. 20 years of sales and marketing experience spanning
pdf automobile, lubricant and petroleum retail industries. He
Woodruff, R.B. (1997), “Customer value: the next source of holds a senior management position in the largest private
competitive advantage”, Journal of the Academy of Marketing sector organization of India while concurrently pursuing his
Science, Vol. 25 No. 2, pp. 139-53. doctoral program. Sriram Dorai is the corresponding author
Zeithaml, V.A. (1988), “Consumer perceptions of price, and can be contacted at: sriram.efpm@gmail.com
quality and value: a means-end model and synthesis of Professor Sanjeev Varshney is currently a faculty and Area
evidence”, Journal of Marketing, Vol. 52, July, pp. 2-22. Chair Person of Marketing at XLRI, Jamshedpur, one of the
Zeithaml, V.A. (2000), “Service quality, profitability and the top five ranking institutions of management in India. He is
economic worth of customers: what we know and what we Fellow of Management from MDI, Gurgaon, and submitted
need to learn”, Journal of the Academy of Marketing Science, his thesis on outshopping behaviour in India. A paper based
Vol. 28 No. 1, pp. 67-85. on his thesis was awarded the best paper at COSMAR 2006 (a
consortium of management researchers at IISC, Bangalore).
Further reading He has more than seven international publications to his
Butz, H.E. Jr. and Goodstein, L.D. (1996), “Measuring credit along with three management cases and he is a lead
customer value: gaining the strategic advantage”, researcher on at least two Government (GoI) sponsored
Organizational Dynamics, Winter, pp. 63-77. research projects.

411
The antecedents of salespeople’s relational
behaviors
Lei Guo
Institute of Systems Science, National University of Singapore, Singapore, and
Irene C.L. Ng
Warwick Manufacturing Group, University of Warwick, Coventry, UK
Abstract
Purpose – This paper aims to examine the driving factors of salespeople’s relational behaviors in the business to business marketing context.
Design/methodology/approach – The hypotheses were tested through a quantitative study via an online survey. Data were collected from 224
salespeople dealing with business customers in manufacturing as well as service industries in China.
Findings – The results showed that perceived consequences, affect-based judgment and salespeople’s communal or exchange orientation influenced
their relational behaviors. In particular, communal orientation, perceived reciprocity from the customer, and a liking for the customer positively affected
relational behaviors, whilst exchange orientation had a negative impact on those behaviors.
Originality/value – This paper provides a framework of the antecedents to salespeople’s relational behaviors in the business to business marketing
context, filling in the gaps found in previous research by studying the driving factors, not the outcomes, of individual salespeople’s relational behaviors.
Keywords Relationship marketing, Business-to-business marketing, Salespeople, Relational behaviours, Singapore, China, Sales force, Behaviour
1. Introduction based judgement, and individual’s relationship orientations

influence salespeople’s relational behaviors. Research
Empirical research has demonstrated a link between hypotheses were then tested using a sample of 224
salespeople’s characteristics and customer relationships. salespeople from business-to-business industries in China.
Those characteristics include familiarity (Brown, 1995), All hypotheses were supported. The findings showed that
expertise (Brown and Swartz, 1989), customization (Smith salespeople’s perceived reciprocity from the customer, a liking
and Smith, 1997), similarity (Morgan and Hunt, 1994; for the customer and relationship orientations were driving
Bendapudi and Berry, 1997), empathy (Pilling and Eroglu, factors of relational behaviors. That is, communal orientation,
1994), likability (Jones et al., 1998), and power within the perceived reciprocity from the customer, and a liking for the
organization (Moorman et al., 1993). Moreover, the notion customer positively affected relational behaviors, whist
that customer relationships can become friendships is not new exchange orientation had a negative impact on those
to marketing research (Brown, 1950). Several studies in behaviors.
marketing have specifically examined the combination of The most striking factor of this paper was the finding of
friendships and business, and many suggest that the effects communal orientation as a primary driver for cultivating
are generally positive (Grayson, 2007; Beatty et al., 1996; relationship with customers as the concept of customer
Frenzen and Davis, 1990; Haytko, 2004; Johnson and Selnes, relationships has usually been viewed as exchange-oriented.
2004). Within some of the same literature (Grayson, 2007; This paper also demonstrated that both affect-based (e.g. a
Beatty et al., 1996; Haytko, 2004), together with others, have liking for the customer) and cognition-based (e.g. perceived
noted that combining friendship and business imposes a clear reciprocity from the customer) factors drive relational
instrumental goal and could therefore create potential behaviors. The findings confirmed that customer
conflicts (Heide and Wathne, 2006; Krugman, 1958; Price relationships, especially those at the individual levels are
et al., 1995). driven by a combination of social and economic
Despite the research interest, several important issues considerations. Interestingly, the result indicated that
remain unaddressed. In particular, it is unclear why individuals’ exchange orientation has a negative impact on
salespeople cultivate relationships with their customers. relational behaviors. This is particularly important for
Drawing on social exchange theory and interpersonal marketing practice and management thinking as short-term
relationships studies, this article presented the conceptual
based incentives may discourage salespeople from developing
argument on three factors: perceived consequences, affect-
long-term relationships with customers.
This paper is organized as follows. First, we review the
The current issue and full text archive of this journal is available at literature on relationship marketing focusing on social
www.emeraldinsight.com/0885-8624.htm exchange theory and interpersonal relationship studies.
Next, theoretical justification and hypotheses development
are provided. The methodology design, data analysis and
Journal of Business & Industrial Marketing results are also presented. This paper ends with a discussion
27/5 (2012) 412– 419
of contributions and limitations of the present study and,
[DOI 10.1108/08858621211236089] accordingly, directions of future research are highlighted.
412
The antecedents of salespeople’s relational behaviors Journal of Business & Industrial Marketing
Lei Guo and Irene C.L. Ng Volume 27 · Number 5 · 2012 · 412 –419
2. Literature review researchers have used SET to model the relationship

between buying and selling firms since the early 1980s. It
In general, customers may form a relationship with an has been used extensively to explain the process of
individual employee in the selling organization and/or with the relationship development and maintenance in marketing
selling organization as a whole. Firm-level relationships exchanges. SET (Blau, 1968; Emerson, 1962) identified two
usually start with first contacts between individual mechanisms that impact the relationship between individuals:
employees from two organizations, and business is supposed power and trust. Power plays a major role in the social
to be developed from their interactions (Ford et al., 2003). exchange process. According to Emerson (1962), the relative
Experimental research shows that when people evaluate power of the individuals is determined by their relative
another individual, they make stronger, quicker, and more dependence. Running counter to power and control is trust.
confident judgments than when they evaluate a group; those Trust and the interaction between the individuals are assumed
judgments are also more strongly related to outcomes and to develop over time as both continue demonstrate their
behaviors (Hamilton and Sherman, 1996). Accordingly, trustworthiness to one another through their mutual
customers’ judgments based on the relational characteristics commitment. It is not reducible to a trust component
of an individual employee will be stronger, more confident, though marketing relationships are correlated strongly with
and more strongly linked to outcomes than their judgments key marketing objectives. Morgan and Hunt (1994) propose
based on the relational characteristics of a selling firm that commitment and trust are “key” in relationship
(Plalmatier et al., 2007). A close salespeople-customer marketing. Specifically, Berry and Parasuraman (1991) and
relationship has been argued as having both beneficial and Berry (1995) maintain that mutual commitment and trust are
detrimental effects (Haytko, 2004). For example, many firms the foundation of relationship marketing. Trust has been
discourage staff from developing strong customer defined in marketing literature in many ways (Lambe et al.,
relationships for the fear that customers might divert their 2001). Moorman et al.(1992) denote trust as the willingness
loyalty to the salesperson (Plalmatier et al., 2007), and the to rely on an exchange partner in whom one has confidence
salesperson can “kidnap” the customer (Bendapudi and that they are reliable and will fulfill their obligations. Morgan
Leone, 2002) when they switch to other jobs. Nevertheless, and Hunt (1994) define trust in similar terms, the confidence
Plalmatier et al. (2007) find that customers’ loyalty to the in an exchange partner’s reliability and integrity. In marketing
salesperson directly contributes to the more tangible seller relationships, trust is therefore considered as a trait that
financial outcomes of sales growth and selling effectiveness, becomes embedded in a particular exchange relation. Prior
whereas both salesperson-owned loyalty and loyalty to the research in marketing suggests that trust is positively related
selling firm increase the customer’s willingness to pay a price to cooperation, communication, shared values, commitment
premium. As such, the positive effect of relational mediators and satisfaction (Lambe et al., 2001). It is an indicator of a
on outcomes will be greater when the relational mediator is growing relationship that tends to foster higher levels of
targeted toward an individual member of the selling commitment and cooperation (Schurr and Ozanne, 1985).
organization than when it is targeted towards the Although SET has often employed to model the
organization itself. relationship between the buyer and the seller, the research
However, the marketing literature does not have a lot to say in this stream is largely descriptive which focuses on the
about customer relationships at the individual level, other outcomes of relationships rather than explaining how those
than statements such as “personal relationships and outcomes occur. Moreover, SET has limited explanatory
reputations between boundary-spanning members play an power when studying affect-based interpersonal relationships,
important role in facilitating and enhancing inter- such as friendship. Research has long recognized that, for
organizational exchange” (Weitz and Jap, 1995, p. 316). example, both commitment and trust had an affect-related
Weitz and Bradford (1999) improved on this with a component. The first component of commitment describes an
relationship marketing perspective. They assumed that instrumental (Gundlach et al., 1995) or calculative (Allen and
salespeople, same as the firm, manage a portfolio of Meyer, 1990) view in which the committed party places a side
relationships ranging from transactional, long-term bet on or beliefs in consistent future behavior of the exchange
relationships to alliances, and the relationship type is partner (Becker, 1960). The second component has been
determined by the level of dependence on the customer described as attitudinal (Gundlach et al., 1995) or affective.
(Weitz and Bradford, 1999). Even this improved approach has The third component of commitment is continuance
a tendency to confuse interpersonal salesperson-customer commitment (Allen and Meyer, 1990), which is a direct
relationships with impersonal firm-level customer result of commitment inputs that create self-interest stakes in
relationships. the relationship. Similarly, just as for commitment, research
Hence in this literature review, we attempt to offer a holistic on trust has identified two distinct dimensions (Kumar et al.,
view of the salespeople- customer relationships, the marketing 1995). The first component of trust pertains to the partner’s
exchange perspective as well as the human relationship reliability and dependability, while the second component of
perspective. trust has been termed affect-based trust (McAllister, 1995) or
benevolence. Therefore, it can be argued that, especially for
2.1 The social exchange framework individual-level salespeople-customer relationships may
Social exchange theory (SET) is one of the earliest involve an affective component. Next, we review research on
frameworks used to examine business relationships (Rao the combination of business and friendship.
and Perry, 2002). SET is an extension of Homan’s (1958)
propositions suggesting that interaction is a process wherein 2.2 The combination of business and friendship
resources are exchanged between individuals through In marketing literature, several studies have specifically
activities directed toward one another. Marketing examined friendship in a relationship marketing setting.
413
Price and Arnould (1999) term this as commercial friendship performance and suggested that salesperson’s selling behaviors
and find that individuals engaged in business-to-business are influenced by a set of personal and organizational factors
relationships can easily distinguish business friendships from such as salesperson’s extrinsic and intrinsic motivation, sales
other types of marketing relationships. They conduct manager leadership style, psychological climate and
empirical studies in service encounters and conclude that empowerment (Martin and Bush, 2003). For example, Boles
commercial friendship is “correlated strongly with key et al. (2000) found that salesperson’s intrinsic motivation is
marketing objectives” (Price and Arnould, 1999, p. 51). positively related to whilst extrinsic motivation is negatively
Also, Haytko (2004) has investigated 109 brand managers’ related to salesperson’s relational behaviors. However,
interpersonal relationships with particular account managers demographic factors including salesperson’s age, gender, and
in advertising industry. In her study, four relationship marital status, seemed to be not relevant to relational selling
combinations have been mentioned most often: (Boles et al., 2000).
1 partner/business friends; Summarizing the discussion, the emphasis of previous
2 partner/personal; research was on the outcomes rather than the driving factors
3 vendor/strictly business; and of salespeople’s relational behaviors. Because of the strategic
4 vendor/business friends. role of salespeople, identifying useful predictors could prove
helpful in selecting, training and managing them (Franke and
The findings show that brand managers make little or no
Park, 2006). Hence, it is necessary to improve our
attempt to further develop relationships like vendor/strictly
understanding those antecedents that leading to
business and vendor/business friends, into closer international
salespeople’s relational behaviors. The primary objective of
relationships, or friendship in general term (Haytko, 2004).
this article is to fill this gap by exploring the link between the
Personal relationships in marketing bear some similarity with behavioral drivers and salesperson’s relational behaviors.
friendship, such as sociability (Price and Arnould, 1999), Therefore, we propose our research question:
both characteristics with regular and frequent interactions.
Geiger and Turley (2005) indicate that socializing with clients RQ. Why do salespeople cultivate customer relationships?
positively influenced on both the exchange and the relational
aspects of the buyer-seller interactions. In particular, several
service studies suggest that certain service encounters are 3. Hypotheses development
more similar to a meeting with friends than merely economic In the social exchange tradition, the approach of expectancy
transactions (e.g. Mars and Nicod, 1984; Siehl et al., 1992). theory studying salespeople’s motivations is particularly
Their findings indicate that “reciprocal self-discourse, an influential. The principle of expectancy theory is that:
important factor in friendship formation, can contribute rewards should be closely tied with behavior, rewards
positively to commercial exchange satisfaction” (Price and administration should be frequent and consistent, and
Arnould, 1999, p. 38). people are motivated by outcomes (expected or past)
The role of salespeople and customer engaged in the (Mitchell, 1982). Expectancy theory is dominating the sales
relationship are initially created and subsequently activated as force motivation literature since 1980s (Teas and McElroy,
friend and businessperson role. In contrast with business 1986), and expectancy (or instrumentality) model has been
relationships, friendship is expressive. A few studies in considered an effective framework for studying sales force
marketing have specifically examined the combination of motivation. According to expectancy theory, the motivational
friendships and business, and many suggest that the effects process is described as a circle: the motivational level of
are generally positive (Beatty et al., 1996; Frenzen and Davis, salespeople influences the effort or behavior, which leads to
1990; Haytko, 2004; Johnson and Selnes, 2004). However, some level of achievement on one or more dimensions of job
some of these same articles (Beatty et al. 1996; Haytko, performance (outcome), and the performance is rewarded,
2004), along with others (Heide and Wathne, 2006; then the rewards lead to motivation which again influence
Krugman, 1958; Price et al., 1995), have noted that behavior (Krafft, 1999).
combining friendships and business can also create potential Therefore, we propose that,
conflicts because doing business with friends imposes a clear
instrumental goal on existing friendship. Friends usually have H1. Salespeople’s perceived reciprocity from the customer
“a concern for the good of the friend for his own sake” (Blum, will positively affect their relational behaviors.
1980, p. 43) and encourage a minimal or nonexistent Nevertheless, this approach overlooks the significance of
instrumental orientation. Although people use friends to affect-based judgment. Zajonc (1980) has made a strong case
achieve instrumental objectives (Allan, 1989), true friendship for the primacy of affect in the formation of certain
is supposed to be expressive. The conflict between friendship preferences. For affect-based attitudes, affective reactions
and instrumentality can dampen the positive effects of the are primary and powerful influence on the individual. The
friendship on business outcomes (Grayson, 2007). As a result, attitude is initially acquired with minimal cognitive appraisal.
for example, some agents in the network marketing Relevant information that is acquired subsequent to these
companies are reluctant to use existing social network as a affective reactions may serve to confirm or bolster the initial
pool for recruiting new agents although they are encouraged attitude. Eventually, the individual’s attitude will be
to do so (Grayson, 2007). supported both by strongly felt emotions and by an arsenal
To date, little research has been published that studies the of facts and beliefs about the issue. The cognitive structuring
factors influencing on salespeople’s relational behaviors. Two that takes place is likely to be in service of the affect and does
articles, one is conceptual (Martin and Bush, 2003) and the not constitute the basis of the attitude (see Zanna and
other is empirical (Boles et al., 2000), have extended Walker Rempel, 1988). One possibility is that attitudes with affective
et al. (1977) original study on determinants of sales force origins may be relatively impervious to influence attempts that
414
rely on rational argumentation and might be more responsive Salespeople’s perceived reciprocity from the customer
to persuasive appeals that tap their affective bases (Zajonc, Salespeople’s perceived reciprocity from the customer may
1980), e.g. emotional arguments are more effective when they include economic and social incentives, however, it is not
come from attractive people. Zajonc thus suggests affective always recognized in marketing research. Following steps
reactions can occur without extensive perceptual and suggested by Churchill (1979), we interviewed a convenience
cognitive encoding, and can be made sooner and with sample of ten salespeople from diverse business-to-business
greater confidence than cognitive judgments (Zajonc, 1980). industries in China. On the basis of our qualitative research
Therefore, we propose that, and a review of literature, we then proposed the instrument
that measures the perceived reciprocity from the customer.
H2. Salespeople’s liking for the customer will positively
affect their relational behaviors. Salespeople’s liking for the customer
In management literature, customer’s liking for supplier, and
Moreover, Clark and Mills (1979) make a fundamental
the supervisor’s liking for subordinate (e.g. Wayne and Ferris,
distinction between two forms of relationships orientation: 1990) are often examined. We adopted the measurement
exchange and communal. When benefiting one another, instrument from Wayne and Ferris (1990).
individuals with exchange orientation have a specific
expectation of receiving comparable benefits in return. Exchange orientation and Communal orientation
Contrastingly, those with communal orientations give Clark (Clark and Mills, 1994) has developed the personality
benefits to others to demonstrate a concern for them and to scale to assess the extent to which people possess an exchange
attend to their needs. For example, in exchange relationships, orientation towards relationships. We adopted the instrument
people are concerned with equity and keep track of who is and further modified on basis of the context of the present
contributing what to the relationship. In communal study. Clark et al. (1987)’s communal scale measures whether
relationships, people are concerned less with who gets what people are inclined to watch out for others’ welfare as well as
and more concerned with how much help the other person whether they expect others to watch out for their welfare. As
needs. Clark and Mills propose that individuals with expected, it is found that people who have scored high in
communal orientation tend to foster relationships whilst communal orientation help significantly more often than
those with exchange orientation are more interested in the those who score low in communal orientation (Clark et al.,
1987; Clark and Mills, 1994). Yet, communal orientation can
instant benefits, which they can obtain from others.
be one-sided, in which one person cares for the other without
Therefore, we propose that salespeople’s relationship
the other party caring for him or her in return (Clark and
orientations will affect their relational behaviors.
Mills, 1994). In the present study, as we investigated the
H3. Salespeople with communal orientations are more salespeople’s perspective, we thus measured the salesperson’s
likely developing relationships with customers. communal orientation towards the customer. We modified the
H4. Salespeople with exchange orientations are less likely instrument of Clark et al. (1987) to fit the marketing settings.
developing relationships with customers.
Salespeople’s relational behaviors
We adopted the measurement instrument of relational selling
behavior developed by Crosby et al. (1990). As the original
4. Research method study focuses on customers’ perspective in a life insurance
context, we adapted them to fit the business-to-business
4.1 Design of measures
Salespeople’s relational behaviors marketing context.
There is no commonly accepted interpretation of
4.2 The sample
salespeople’s relational behaviors. In general, salespeople’s
Salespeople working with business customers were selected as
relational behaviors refer to a behavioral tendency exhibited
the primary informants because of their knowledge and
by sales representatives to cultivate the buyer-seller
involvement in their firm’s customer relationships, and their
relationship and see to its maintenance and growth. The tendency to maintain long-term relationships with their
extent to which such behavior positively influences the buyer- customers. To verify this assumption, the survey instrument
seller relationship depends on the expectations of the included ad hoc checks of the informant’s sales experience
customer about the role(s) to be played by the salesperson and the length of customer relationships. The questionnaire
(Solomon et al., 1985, cited in Crosby et al., 1990). More was initially developed in English and then translated into
precisely, Crosby et al. (1990) capture the concept of Chinese by the first author and reviewed by two bilingual
relational selling behaviors and conceptualize them as linguists. Upon revising the survey, the Qualtrics online
cooperative intentions, interaction intensity and mutual- survey tool (www.qualtrics.com) was used to administrate and
disclosure. Other research sees salespeople’s relational track responses. Invitations, both in English and Chinese,
behaviors as communication and conflict handling (Biong were sent via email to 1500 sales managers randomly selected
and Selnes, 1995), salesperson’s demonstration of from the business directory. A paper survey was distributed to
competence and use of low-pressure selling tactics those who had difficulty in accessing the online survey. No
(Kennedy et al., 2001). We followed Crosby et al.(1990) significant differences were found between the paper and
conceptualization and treated salespeople’s relational behavior online responses. The sample consists of 148 males (66
as cooperative intentions and interaction intensity. As our unit percent) and 76 females (34 percent) salespeople dealing with
of analysis was the individual salespeople not the relationship business customers. There were four (1.8 percent)
dyad, we did not take Crosby et al. (1990) third dimension of respondents below 20 years old, 168 (75 percent)
relational behaviors, e.g. “mutual disclosure” between respondents between 20 and 40 years old, with the
salespeople and their customers. remaining 52 (23.2 percent) above 40 years old. A total of
415
186 (83 percent) respondents have more than one year of Table I Measurement scales
sales experience while the remaining 17 percent had less than
a year’s sales experience. Fifty eight (25.9 percent) Factor
respondents were from the manufacturing industry, 110 loading
(49.1 percent) respondents were working in service industries, Relational behaviors (a 5 0.865)
and the remaining 56 (25 percent) respondents claimed that I would stay “in touch” and make sure the customer is
they were from other industries which included food, internet satisfied with product/service 0.691
media, health care, provision of equipment, training, and
I would keep abreast of changes in the customer’s needs
trading. A total of 127 respondents (56.7 percent) were from
for product/service 0.772
companies with less than 250 employees while the remaining
I would contact the customer to make changes in product/
97 were from companies with more than 250 employees.
service which better serves his/her needs 0.668
There was no missing data in this data set. Extreme scores
were checked for both independent and dependent variables I would explain to the customer why the product/service is
by inspecting the standardized residual plot and the Boxplot. good for his/her organization 0.595
Those with standardized residual values above about 3.3 (or I would help the customer make best purchase decisions 0.770
less than 23.3) (Tabachnick and Fidell, 2007), and extreme I would take the time to prepare product/service
points in the Boxplot were removed. Finally, 200 results were specification for the customer to evaluate 0.727
reported in the analysis. I would treat the customer the same whether we’re
talking about big or small business deals 0.630
5. Results Perceived reciprocity from the customer (a 5 0.801)
The customer would disclose required information to me 0.674
5.1 Assessment of measures The customer would make my job easier 0.754
Principal Component Analysis (PCA) was performed on all The customer would buy my product or service 0.787
variables to explore the underlying variables and the The customer would introduce new business to me 0.684
associated items. Factors were identified that had
Eigenvalue greater than one (1) based on the latent root A liking for the customer (a 5 0.823)
criterion. The method of rotation used in this analysis was I am fond of the customer very much as a person 0.523
Varimax wherein the columns of the factor matrix are I think the customer would make a good friend 0.607
orthogonally rotated to facilitate the interpretation of the I enjoy being together with the customer 0.577
resulting factors (Hair et al., 2009). All items demonstrated Even without our business ties, I would choose to be
high loadings (. 0.45) on six components which explained around the customer 0.524
65.734 percent of the variance. We decided not to retain Communal orientation (a 5 0.721)
component 6 as it has only one item loading. Kaiser-Meyer- When problems arise in our business, I would help out the
Olkin measure of sampling adequacy (KMO) was of 0.807 customer 0.506
(cut-of criteria is 0.45, Cureton and D’Agostino, 1983) and When making a decision, I take the customer’s needs and
Bartlett’s test of sphericity was significant at 0 percent level, feelings into account 0.456
both suggesting the strength of the relationship among I especially enjoy giving the customer assistance 0.727
variables loading on one component as strong and hence, we
I often go out my way to help the customer 0.675
accepted the factor extraction. As well, we evaluated the
internal reliability of the scales, all exhibited satisfactory Exchange orientation (a 5 0.758)
internal reliability with Cronbach’s alpha value above 0.7. I think the customer should feel obliged to repay me for
The results are presented in Table I. favors 0.739
I feel exploited if the customer failed to repay me for a
5.2 Hypotheses test favor 0.792
To learn the relationship between several predictors and one I give favors to the customer only if (s)he has given me
dependent variable, a multiple regression method was favors 0.678
appropriate (Pallant, 2007; Tabachnick and Fidell, 2007). When the customer receives favors from me, (s)he ought
As shown in Table II, all independent variables were to repay me right away 0.737
significantly correlated with the dependent variable,
relational behaviors. The correlation between relational Notes: Five-point Likert scale: 1 ¼ Strongly disagree, 5 ¼ Strongly agree
behaviors and exchange orientation was negative, whilst the
correlations between relational behaviors and other
independent variables were positive. There was no
Table II Correlation between variables
unreasonably large correlations (r . 0.7) (Pallant, 2007)
were found between any of the independent variables. Variable RB (DV) EO CO LC PR
Finally, the standard regression analysis was used to test the
Relational behaviors (RB) 1
effect of communal orientation, exchange orientation, a liking
for the customer and perceived reciprocity on relational Exchange orientation (EO) 20.263 * 1
behaviors. As shown in Table III, the results of the regression Communal orientation (CO) 0.497 * 20.212 * 1
indicated the four predictors explained 33.1 percent of the Liking for the customer(LC) 0.325 * 20.109 0.265 * 1
variance (R2adj ¼ 0.331, F (4,195) ¼ 25.661, p , 0.001), Perceived reciprocity (PR) 0.426 * 20.050 0.464 * 0.340 * 1
with relational behaviors positively correlated with communal Notes: *p , 0.01 (two tails); n ¼ 200
orientation (b ¼ 0.322, p , 0.001), perceived reciprocity
416
Table III Summary for standard regression analysis for variables behaviors. Taken together, these results suggested that, first,
predicting relational behaviors (n ¼ 200) increasing levels of salespeople’s communal orientation,
perceived reciprocity, and a liking for the customer had
Variable b driven salespeople to cultivate relationships with their
Communal orientation 0.322 * * * customers. Second, salespeople’s exchange orientation
Perceived reciprocity 0.217 * * tended to discourage them from relationship building.
Exchange orientation 20.168 * *
Liking for the customer 0.148 *
6.1 Theoretical implications
Adjusted R2 0.331
Salespeople-customer relationships are inherently
F 25.661 * * *
interpersonal, so it is necessary to employ an individual
Notes: *p , 0.05; * *p , 0.01; * * *p , 0.001 approach to distinguish them from the impersonal inter-
organizational relationships. This research was one of the few
attempts to empirically demonstrate the existence of mixed
(b ¼ 0.217, p , 0.01), and a liking for the customer relational behavior intentions of salespeople in the marketing
(b ¼ 0.148, p , 0.05); but negatively associated with context. The findings supported that marketing relationships
exchange orientation (b ¼ 2 0.168, p , 0.01). The model is are cognition- based as well as affect-based, and even bear a
presented in Figure 1. Overall, the results showed that communal orientation. As prevailing relationship marketing
communal orientation making the strongest unique research is usually dominated by the social exchange theme,
contribution to explaining relational behaviors whilst liking the present study first offered insights on the communal
for the customer making the least of a contribution. aspect of customer relationships.
Moreover, it was found that the maximum VIF for the
independent variables was 1.352 and the minimum tolerance
limit was 0.729, indicating that multicollinearity was not a 6.2 Managerial implications
problem. As discussed in the literature review, salespeople are of
significant importance to the achievement of the firm’s
marketing success. Many of the decisions made by salespeople
6. Discussion, implications, limitations and have major strategic and performance ramifications. The
directions for future research findings of this research may help marketing practitioners in
With data collected from a sample of 224 salespeople who had several ways. First, it provided a conceptual understanding of
business dealings with business customers from various why salespeople are involved in relationship-building
industries in China, four hypotheses have been supported activities. Such behaviors are not only driven by their
by the results of statistical tests of 200 cases. Overall, intention to help the customer, and what benefits they can
salespeople’s communal orientation, perceived reciprocity, recoup from the customer, but also by their liking for the
and a liking for the customer were positively related to customer. Second, an exploration of the causes of
salespeople’s relational behaviors whereas exchange salespeople’s relational behaviors would help managers of
orientation had a negative impact. The regression model marketing to better plan the personnel arrangement and
results presented a good fit for the proposed relationships incentive schemes. For example, managers need to be careful
among these variables based on the theoretical framework. when rewarding salespeople because the focus on short-term
The findings provided strong support for the importance of gains will discourage salespeople from developing long-term
cognitive (e.g. perceived reciprocity), affective (e.g. a liking for relationships with their customers.
the customer) factors and relationship orientations (e.g.
communal orientation) as drivers of salespeople’s relational
6.3 Limitations and directions for future research
However, there are some weaknesses in this exploratory study.
Figure 1 The model of antecedents of salespeople’s relational The present method only considered the salespeople’s
behaviors perspective. Although customer relationships are always a
dyad, we did not further investigate the pros and cons of
customers’ relational behaviors. It would be more reflective of
the relationship dyad if we had included the customers’
perspective as well. Furthermore, the present study did not
test possible interrelationships between the antecedent
factors. Yet, prior research suggests that positive affect such
as liking for the customer, may enhance the strength of
communal intention. For example, people tend to help those
whom they like. The findings in this study suggested several
paths for further research. First, future research can explore
the application of the framework in other types of employee-
customer relationships. Next, an examination of customers’
relational behaviors using this theoretical framework will
facilitate a better understanding of the interactive nature of
individual-level customer relationships.
417
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419
Call for papers
Journal of
Business & Industrial Marketing

Special issue on
Role of relationships and networks in radical innovation
The corporate importance of innovation is well documented, which has encouraged deeper understanding of the value of relationships, networks and interactions for the
much research into activities for developing and launching successful new products development of radical innovations.
(e.g. Brown and Eisenhardt, 1995; Hart et al., 2004; Montoya-Weiss and Calantone,
Papers from academics and practitioners in the area are welcomed. Papers that
1994; Henard and Szymanski, 2001; Cooper and Kleinschmidt, 2007). An important
take an inter-disciplinary approach to the role of relationships and networks in
distinction drawn within this literature surrounds the innovativeness of the
radical innovation are also encouraged. Contributions to this special issue should
development; between incremental innovations, which maintain the status quo, and
present new theories or research into relationships, networks and interactions in
radical innovations, which are more disruptive and potentially have a much more
radical innovation in business-to-business and industrial contexts. All types of
dramatic impact on competing firms and the marketplace (Tellis et al., 2009;
research study, including quantitative and qualitative analysis, case studies,
Srinivasan et al., 2002). Moreover, research suggests that key differences exist
conceptual and empirical research, are welcomed.
between incremental and radical innovation practices, in relation to management,
processes, structures, people, competences and network participants (e.g. Athaide The following themes represent some topics which are of particular interest to the
et al., 1996; Leifer et al., 2000; Pittaway et al., 2004; Rice et al., 2002; Salomo et al., overall focus of the special issue:
2007; Song and Montoya-Weiss, 1998; Story et al., 2009; Thieme et al., 2003; . Radical innovation in both manufacturing and service contexts
Veryzer, 1998). However, much research in this area is still focused on more . Relationship dynamics associated with radical innovation
incremental innovation. This is incongruous with the impact that radical innovation
can have due to its paradigm-shifting characteristics and the benefits that can
. Networks involved in radical innovation
accrue for firms from launching successful radical innovations, such as: securing . Innovation driven by external parties, e.g. customers, suppliers, users
market growth; dominating world markets; and improving the international . Coordination of activities and resources across boundaries during radical
competitiveness of their home economies (Atuahene-Gima, 2005; Sorescu et al., innovation
2003; Tellis and Golder, 2001).
. The role of boundary spanners in supporting radical innovation
Relationships and networks form the backbone of business and industrial marketing . Management issues relating to radical innovation in networks and relationships
in both traditional and more technically based markets (Håkansson, 1982;
Håkansson and Lundgren, 1995, Håkansson et al., 2009). This is particularly true . Resource mobilisation
when examining innovation activity, as few firms have the capability to develop . Characteristics of successful relationship development in a radical innovation
innovations internally; success often involves the transfer of resources between context
individual actors and organisations (e.g. Pittaway et al., 2004; Rice et al., 2002; . Do particular business networks support the development of radical innovations?
Story et al., 2009). Whilst much is known about how incremental innovation occurs
within stable partnerships, it is clear that the insights generated from this research
. Whether tightly coupled or loosely coupled networks yield stronger radical
have proven difficult to translate to radical innovation, where success is predicated innovation outcomes
on the search for and acquisition of diverse knowledge (Kelley et al., 2009), can . To what extent is it important for customers to be involved in the development of
involve both new technological investments (Herrmann et al., 2009) and new radical innovations?
relationship investments (Story et al., 2009), and can often require actors to operate
outside their technical and informational comfort zones (Gnyawali and Madhavan, Paper submission and review process
2001; Powell et al., 2005). Deadline for submission of papers: 1 October 2012
Given the centrality of RI to contemporary discourse around growth, sustainability,
and competitive advantage, it is vital that the research community generates a
www.emeraldinsight.com/jbim.htm Research you can use

Call for papers
Guest Editors Leifer, R., McDermott, C.M., O’Connor, C.G., Peters, L. S., Rice, M.P. and
Dr Judy Zolkiewski Veryzer, R.W. (2000), Radical innovation: How Mature Companies can Outsmart
Senior Lecturer in Marketing, Manchester Business School, Booth Street West, Upstarts, Harvard Business School Press, Boston, MA.
Manchester, UK M15 6PB Montoya-Weiss, M.M. and Calantone, R.J. (1994), ‘‘Determinants of new product
Dr Vicky Story performance: a review and meta-analysis’’, Journal of Product Innovation
Lecturer in Marketing, Nottingham University Business School, Jubilee Campus, Management, Vol. 11 No. 5, pp. 397-417.
Wollaton Road, Nottingham, UK NG8 1BB Pittaway, L, Robertson, M., Munir, K., Denyer, D. and Neely, A. (2004), ‘‘Networking
Tel. +44 (0)115 846 6192 and innovation: a systematic review of the evidence’’, International Journal of
E-mail: Vicky.Story@nottingham.ac.uk Management Reviews, Vol. 5 Nos 3/4, pp. 137-68.
Dr Jamie Burton Powell, W., White, D.R., Koput, K.W. and Owen-Smith, J. (2005), ‘‘Network
Lecturer in Marketing, Manchester Business School, Booth Street West, dynamics and field evolution: the growth of interorganizational collaboration in the
Manchester, UK M15 6PB life sciences’’, The American Journal of Sociology, Vol. 110 No. 4, pp. 1132-207.
References Rice, M.P., Leifer, R. and Colarelli-O’Connor, G. (2002), ‘‘Commercialising

discontinuous innovations: bridging the gap from discontinuous innovation project to
Athaide, G., Meyers, P.W. and Wilemon, D.L. (1996), ‘‘Seller-buyer interactions
operations’’, IEEE Transactions on Engineering Management, Vol. 49 No. 4,
during the commercialization of technological process innovations’’, Journal of
pp. 330-40.
Product Innovation Management, Vol. 13 No. 5, pp. 406-21.
Salomo, S., Weise, J. and Gemünden, H. G. (2007), ‘‘NPD planning activities and
Atuahene-Gima, K. (2005), ‘‘Resolving the capability-rigidity paradox in new product
innovation performance: the mediating role of process management and the
innovation’’, Journal of Marketing, Vol. 69 No. 4, pp. 61-83.
moderating effect of product innovativeness’’, Journal of Product Innovation
Brown, S.L. and Eisenhardt, K.M. (1995), ‘‘Product development: past research, Management, Vol. 24 No. 4, pp. 285-302.
present findings, and future directions’’, Academy of Management Review, Vol. 20
Song, X.M. and Montoya-Weiss, M.M. (1998), ‘‘Critical development activities for
No. 2, pp. 343-78.
really new versus incremental products’’, Journal of Product Innovation
Cooper, R.G. and Kleinschmidt, E.J. (2007), ‘‘Winning businesses in product Management, Vol. 15 No. 2, pp. 124-35.
development: the critical success factors’’, Research Technology Management,
Sorescu, A.B., Rajesh, K.C. and Jaideep, C.P. (2003), ‘‘Sources and financial
Vol. 50 No. 3, pp. 52-66.
consequences of radical innovation: insights from pharmaceuticals’’, Journal of
Gnyawali, D.R. and Madhavan, R. (2001). ‘‘Cooperative networks and competitive Marketing, Vol. 67 No. 4, pp. 82-101.
dynamics: a structural embeddedness perspective’’, Academy of Management
Srinivasan, R., Lilien, G.L. and Rangaswamy, A. (2002), ‘‘Technological
Review, Vol. 26 No. 3, pp. 431-45.
opportunism and radical technology adoption: an application to e-business’’,
Håkansson, H. (Ed.) (1982), International Marketing and Purchasing of Industrial Journal of Marketing, Vol. 66 No. 3, pp. 47-60
Goods, John Wiley & Sons Ltd, Chichester.
Srinivasan, R., Lilien, G.L., Story, V., Hart, S. and O’Malley, L. (2009), ‘‘Relational
Håkansson, H. and Lundgren, A. (1995), ‘‘Industrial networks and technical resources and competences for radical product innovation’’, Journal of Marketing
innovation’’, in Möller, K. and Wilson, D. (Eds), Business Marketing: An Interaction Management, Vol. 25 No 5/6, pp. 461-81.
and Network Perspective, Kluwer Academic Publishers, Boston, MA.
Story, V., Hart, S. and O’Malley, L. (2009), ‘‘Relational resources and competences
Håkansson, H., Ford, D., Gadde, L-E., Snehota, I. and Waluszewski, A. (2009), for radical product innovation’’, Journal of Marketing Management, Vol. 25 Nos 5-6,
Business in Networks, John Wiley & Sons Ltd, Chichester. pp. 461-81.
Hart, S., Hultink, E.J. and Tzokas, N. (2004), ‘‘Navigating the new product Tellis, G.J. and Golder, P. (2001), Will and Vision: How Latecomers Grow to
development process’’, Industrial Marketing Management, Vol. 33 No. 7, Dominate Markets, McGraw-Hill, New York, NY.
pp. 619-26.
Tellis, G.J., Prabhu, J.C. and Rajesh K.C. (2009), ‘‘Radical innovation across
Henard, D. H. and Szymanski, D.M. (2001), ‘‘Why some new products are more nations: the pre-eminence of corporate culture’’, Journal of Marketing, Vol. 73 No. 1,
successful than others’’, Journal of Marketing Research, Vol. 38 No. 3, pp. 362-75. pp. 3-23.
Herrmann, A., Tomczak, T. and Befurt, R. (2006), ‘‘Determinants of radical product Thieme, R.J., Song, X.M. and Shin, G.-C. (2003), ‘‘Project management
innovations’’, European Journal of Innovation Management, Vol. 9 No. 1, pp. 20-43. characteristics and new product survival’’, Journal of Product Innovation
Management, Vol. 20 No. 2, pp. 104-19.
Kelley, D.J., Peters, L. and Colarelli O’Connor, G. (2009), ‘‘Intra-organizational
networking for innovation-based corporate entrepreneurship’’, Journal of Business Veryzer, R.W. (1998), ‘‘Discontinuous innovation and the new product development
Venturing, Vol. 24 No. 3, pp. 221-35. process’’, Journal of Product Innovation Management, Vol. 15 No. 4, pp. 304-21.

Call for papers
Journal of

Special issue on
Innovation in business-to-business networks
Innovation as a collaborative phenomenon (Powell et al., 1996) has led to the 4. How do different goals co-exist in a business actor and how do they affect the
development of the concept of innovation networks (INs) (Dhanaraj and Parkhe, different innovation processes in which it is involved?
2006; Von Hippel, 2007), where actors interact to develop innovations of different 5. Are there any patterns in how actors’ goals and the innovation networks change
natures (Ahuja, 2000; Westerlund and Rajala, 2009): ‘‘An innovation network is over time?
[about] . . .the linkages between organizations . . in order to create, capture and
integrate the many different skills and knowledge needed to develop complex Submissions of papers
technologies and bring them into the market’’ (Calia et al., 2007, p. 427). Papers submitted must not have been published, accepted for publication, or
The critical sources of innovation, thus, often reside somewhere in a company’s presently be under consideration for publication with any other journal. Submissions
surrounding business network (Björk and Magnusson, 2009). Through co-operation should be approximately 6,000-8,000 words in length. Submissions to the Journal of
in innovating, firms can access complementary knowledge and share the costs and Business & Industrial Marketing must be made using the ScholarOne
risks of innovative activities. Innovation networks can therefore be considered as an ManuscriptCentral system. For more details, please visit:
alternative form of organization in knowledge production. www.emeraldinsight.com/jbim.htm and consult the author guidelines. Suitable
articles will be subjected to a double-blind review. Hence authors should not identify
In these inter-organizational networks, several business actors have a valuable themselves in the body of the paper. Submission deadline: 30 November 2012.
impact on the knowledge and innovation creation process (Rampersad et al., 2010).
Accordingly, innovation tends to result from various interactions among different The best papers from the 28th IMP Conference – Special Track Combining the
organizations (Häkansson et al., 2009), often very heterogeneous (Cantù et al., Social and Technological Aspects of Innovation: Relationships and Networks –
2011; Mason, 2011) in terms of different industries, goals, organizational structures, will also be selected and invited for submission to this special issue.
views of the surrounding network, roles, and other characteristics. Actors –
Special issue Editors
such as companies, intermediaries, research centers, governmental institutions,
trade unions, universities, laboratories, technology centers, development Daniela Corsaro
organizations, local and international associations – join together to achieve Università Cattolica del Sacro Cuore
mutually defined goals (Child and Faulkner, 1998). However, their goals can be E-mail: daniela.corsaro@unicatt.it
very diverse and, furthermore, the same actor may try to achieve different goals Chiara Cantù
(Corsaro and Snehota, 2011) in the context of different interaction and innovation Università Cattolica del Sacro Cuore
processes. E-mail: chiara.cantu@unicatt.it
Our Call for papers is aimed at exploring how the features of business actors impact Annalisa Tunisini
on the innovations generated in interactions in networks. The topic of how such Università Cattolica del Sacro Cuore
different actors confront their goals and how this impacts on the process of E-mail: annalisa.tunisini@unicatt.it
generation, adoption and diffusion of an innovation is of particular interest.
The following are some specific, but not exclusive, research questions:
References
Ahuja, G. (2000), ‘‘Collaboration networks, structural holes, and innovation:
1. How do different business actors’ goals impact on innovations generated in
a longitudinal study’’, Administrative Science Quarterly, Vol. 45 No. 3, pp. 425-55.
networks?
2. How do these goals combine and co-exist in the development, adoption and Björk, J. and Magnusson, M. (2009), ‘‘Where do good innovation ideas come from?
diffusion of innovation? How do they address innovation-related processes? Exploring the influence of network connectivity on innovation idea quality’’, Journal
of Product Innovation Management, Vol. 26 No. 6, pp. 662-70.
3. Does the interaction among actors with heterogeneous goals lead to certain
resource interfaces developing more than others?

Call for papers
Calia, R.C., Guerrini, F.M. and Moura, G.L. (2007), ‘‘Innovation networks: Mason, K. (2011), ‘‘A commentary on ‘The role of actors in combining resources into
from technological development to business model reconfiguration’’, Technovation, complex solutions’’’, Journal of Business Research (in press).
Vol. 27 No. 8, pp. 426-32.
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Call for papers
Journal of

Special issue on
Entrepreneurship and service innovation
Editor: Nelson Oly Ndubisi, Griffith Business School, Griffith University, Gold Coast, Australia
Business marketing reflects a broader concept that includes emergence and greater . Servitization
attention given to services (Malhotra et al., 2008). Services contribute significantly to . Resources, capabilities and performance of service firms
the growth of every economic system. In today’s increasingly dynamic, complex and . Service quality, service failure and service recovery
unpredictable business environment, service organizations try to renew themselves . Innovation in not-for-profit organizations
and add value through entrepreneurial activities and innovation. Innovation is the . Environmental marketing innovation
adoption of an idea or behaviour new to the adopting organization, which involves all
dimensions of organizational activities, such as a new product or service, a new
. Mindfulness, service quality and reliability.
production process technology, a new structure or administrative system, and a new
plan or programme within the organization (Damanpour, 1991). Entrepreneurship is Submission Information
an organizational culture of enhancing wealth through innovation and exploitation of The deadline for submission of manuscripts is 30 November 2012. Full papers must
opportunities (Nasution et al., 2010). Both concepts have been cited as the primary be formatted according to the guidelines of the journal (available at:
sources of competitive advantage and growth in organizations. Yet, despite the www.emeraldinsight.com/products/journals/author_guidelines.htm?id=
rapid growth of the service sector and increasing servitization of the manufacturing jbim) and submitted to the relevant ‘‘special issue’’ section via the online
sector, past investigations of the role of entrepreneurship and innovation in submission system. All papers will be reviewed by the Guest Editors for suitability
organizations have mostly centred on manufacturing firms or physical products, with for the special issue, and thereafter subjected to a double blind peer review process.
little attention to services.
Submissions to Journal of Business & Industrial Marketing are made using
This special issue aims to bring together cutting edge research of an international ScholarOne Manuscripts, the online submission and peer review system.
standard on how service organizations add value, increase performance and create Registration and access are available at: http://mc.manuscriptcentral.com/jbim
competitive advantage through entrepreneurship and/or innovation. The special Full information and guidance on using ScholarOne Manuscripts are available at the
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business marketing theory and research (Sheth and Sharma, 2006), and its foci on msc.emeraldinsight.com
business-to-business marketing and sales. Business-to-business marketing and
Questions pertaining to the special issue should be sent to the special issue Editor
sales refers to one company marketing and selling its products and services to
at: n.ndubisi@griffith.edu.au
another organization, such as a commercial enterprise, government or not-for-profit
organization. Manuscripts offering new insights into entrepreneurship and service
References
innovation in a business-to-business context, which may be in the form of
conceptual, case-based or empirical papers that consider (but are not limited to) the Damanpour, F. (1991), ‘‘Organizational innovation: a meta-analysis of effects of
following topics, are of interest: determinants and moderators’’, Academy of Management Journal, Vol. 34 No. 3,
. Entrepreneurship, entrepreneurial orientation and firm performance pp. 555-90.
. Service innovation and value creation Malhotra, N.K., Uslay, C. and Ndubisi, N.O. (2008), ‘‘The essence of business
. Measurement of innovation marketing theory, research and tactics: contributions by the Journal of Business-to-
. Entrepreneurial marketing for services Business Marketing, by Lichtenthal, Mummalaneni and Wilson: a paradigm shift and
. Innovation in services management
prospection through expanded roles of buyers and sellers’’, Journal of Business-to-
. Innovation characteristics and diffusion of services
Business Marketing, Vol. 15 No. 2, pp. 204-17.
. Service organizations and competitive advantage Nasution, H.N., Mavondo, F.T, Matanda, M.J. and Ndubisi, N.O. (2010),
. Corporate entrepreneurship, innovation and performance ‘‘Entrepreneurship: Its relationship with market orientation and learning orientation
. Innovation in healthcare marketing
and as antecedents to innovation and customer value’’, Industrial Marketing
Management, Vol. 40 No. 3, pp. 336-45.
. Innovation in sports marketing and sponsorship
. Innovation in higher education marketing Sheth, J.N. and Sharma, A. (2006), ‘‘The surpluses and shortages in business-to-
. Outsourcing, offshoring and franchising
business marketing theory and research’’, Journal of Business & Industrial
. Service-dominant logic and value co-creation
Marketing, Vol. 21 No. 7, pp. 422-7.

Return On Relationships Conceptual Understanding and Measurement of Mutual Gains From Relational Business Engagements

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qxd 19/07/2012 08:59 Page 1

Business & Industrial

9th Relationship Marketing/AMA Conference

This journal is a member of and subscribes to the

How to access this journal electronically Additional complementary services available

Reference linking Emerald Customer Support

Journal of Business & Industrial Marketing

Paper type Conceptual paper

Introduction customers of relationship marketing exist, in spite of this

Figure 2 The mutual value creation model

Figure 3 The logic of the return-on-relationship assessment process

CVS Step 2 Putting the figures together for joint productivity

A. Change in customer’s use value

Table III and customer-side antecedents for successful practice

Notes Axelsson, B. and Wynstra, F. (2002), Buying Business Services,

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Paper type Research paper

The complexity perspective

Table I Summary of described multiple conflict management behaviours

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Paper type Research paper

1. Introduction definition of customer intimacy and refine and validate it in

2. Perspectives on intimacy Drawing on social exchange theory and transaction cost

2.2 Intimacy in interpersonal relations 3. Customer intimacy: analytical framework and

Figure 1 Analytical framework

Table I Exemplary statements and thematic categories

Table II Construct assessment results I

Table IV Construct assessment III: discriminant validity

Table V Results of the PLS path analysis – hypothesis assessment

References DeWulf, K., Odekerken-Schröder, G. and Iacobucci, D.

Table AI 5 Overview of construct items

Trusta (items 1-6) , Supplier . keeps promises it makes to our firm.

Table AII 6 Definitions of customer intimacy dimensions

About the authors Research, Journal of International Entrepreneurship, International

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Paper type Research paper

Introduction trade show performance for exhibitors is defined as

Trade show information acquisition process Use of trade show information

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Paper type Research paper

1. Introduction theoretically and empirically starting with Marshall (1920)

This study is part of www.clusterinnovation.com Research Network on

3.3 Sample characteristics We narrowed down the 88 respondents to 42, which

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Paper type Research paper

1. Introduction Similarly, the concept of “value” is continuously evolving in

Figure 1 Creation of episodal value

Figure 2 Emergence of relationship value

Figure 3 Total relationship value

miningweekly.com/article/bp-castrol-adopts-service-offer About the authors

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Paper type Research paper

1. Introduction based judgement, and individual’s relationship orientations

2. Literature review researchers have used SET to model the relationship

References influence perspective”, Journal of Marketing, Vol. 54,

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Business & Industrial Marketing

www.emeraldinsight.com/jbim.htm Research you can use

References Rice, M.P., Leifer, R. and Colarelli-O’Connor, G. (2002), ‘‘Commercialising

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Business & Industrial Marketing

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