Reports

Working Consensus to Collaborate: A Field Study of Manufacturer-Supplier Dyads

Robert E. Spekman and Deborah Salmond, 1992, 92-134

This study is concerned with consensus and collaboration in an industrial marketing relationship and examines trading relationships between a manufacturer and 46 of its suppliers. Our goal was to understand when and why trade partners exhibit a working consensus to collaborate.

Background
Through their interactions, partners join capabilities to create value and to gain competitive advantage. Partners collaborate when both sides spend time getting to know each other's needs, share their knowledge and experience, work toward improved productivity on both sides, and jointly anticipate changes that could affect their relationship in the future. Through such interactions partners build a foundation for joint planning and the execution of tasks, for establishing means for resolving conflict, and for making mutually beneficial adjustments over time.

The problem is that trading partners often do not have the same view of their working relationship and are likely to respond differently to events and requests. Parties who truly collaborate share a common understanding that such interactions are the norm in their relationship. Investigating the circumstances in which collaboration is the norm helps us distinguish between promising and questionable business relationships.

We focus on two dimensions of interdependence; relationship-specific investments and barriers to exit. Whether partners collaborate depends on the meanings partners attribute to their own and each other's investments and exit barriers. We expect that partnerships exhibiting collaboration will be those in which both sides believe that they would face difficulties obtaining desired outcomes from alternative partners, and each believes that the other would face costly consequences if the relationship were terminated.

Findings
These findings suggest that firms engage in a number of different kinds of relationships, only some of which warrant close, collaborative partnerships. Collaboration seems most appropriate in contexts in which both firms recognize the strategic value of their relationship and work to preserve it. Collaboration seems to require a strategic fit in which both parties acknowledge that the resultant competitive gain cannot easily be replicated in another trading relationship. When collaboration is appropriate, buyer and seller must continually reaffirm their commitment to the relationship.

Implications
It is clear that relationship management skills are important, irrespective of the type of relationship between trading partners. Managers are advised to practice role taking to assess how their partners value their investment. Investments must be visible and valued. Marketing programs should be developed to enhance value by building on an understanding of the buyers' requirements. Being able to see things from the perspective of the customer is essential in effectively orchestrating the full range of value-adding activities. In contexts in which trading parties do not share a common view of each other's expectations or skill sets, mutually beneficial opportunities are probably sub-optimized.

Robert E. Spekman is Professor of Business Administration at the Colgate Darden Graduate School of Business Administration at the University of Virginia. Deborah Salmond is Assistant Professor of Marketing at the Merrick School of Business at the University of Baltimore.

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