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How is the relationship significance brought about? A critical realist approach

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  • Filipe J. Sousa

    ()
    (Departamento de Gestão e Economia (DGE), Universidade da Madeira (UMa))

  • Luís M. de Castro

    ()
    (Faculdade de Economia do Porto (FEP))

Abstract

The markets-as-networks theorists contend, at least tacitly, the significance of business relationships for the focal firm – that is, business relationships contribute somewhat to the focal firm’s survival and growth. We do not deny the existence of significant business relationships but sustain, in contrast to the consensus within the Markets-as-Networks Theory, that relationship significance should not be a self-evident assumption. Significance cannot be a taken-for-granted property of each and every one of the focal firm’s business relationships. We adopt explicitly a critical realist position in this conceptual paper and claim that the relationship significance is an event of the business world, whose causes remain yet largely unidentified. Where the powers and liabilities of business relationships (i.e., their functions and dysfunctions) are put to work, inevitably under certain contingencies (namely the surrounding networks and markets), effects result for the focal firm (often benefits in excess of sacrifices, i.e., relationship value) and as a result the relationship significance is likely to be brought about. In addition, the relationship significance can result from the dual influence that business relationships have on a great part of the structure and powers and liabilities of the focal firm, i.e., its nature and scope respectively.

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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 282.

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Length: 49
Date of creation: Jul 2008
Date of revision:
Handle: RePEc:por:fepwps:282

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Keywords: Markets-as-Networks Theory; relationship significance; business relationships; focal firm; resources; competences; activities;

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