Proposing an operational classification scheme for embryonic cooperative relationships

Successful buyer/seller relationships have become recognised as essential for firms to remain competitive in the marketplace. Today's business climate encourages firms to not just compete on product or service attributes, but also on their ability to differentiate themselves from other firms. Supply chains provide firms this point of differentiation ensuring firms better competitive positioning as a result of being able to leverage themselves on the strengths of the supply chain, not just on the individual strengths of the firm. However, to maintain an effective role as a participant in a supply chain, firms must be able to develop and maintain cooperative relationships with other firms. In order to develop these relationships, firms need to be able to distinguish between different levels of relationship and be able to understand which relationships are worth developing further and which ones are not. Whilst supply chain literature acknowledges firm progression from transactional to relational exchange, there is less agreement of the number of levels of both buyer/seller relationships in this theoretical continuum. This article proposes a theoretical continuum of relationship levels based on cross discipline literature and identifies objective classification criteria for relationship levels from both the buyer and the seller. Economic, behavioural and relational research is collectively used to explain the complexity of the ever evolving nature of inter-firm relationships. The article concludes by establishing a research model that proposes these levels of relationships are identifiable for both the buyer and the seller.