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The Seeds of Dissolution: Discrepancy and Incoherence in Buyer-Supplier Exchange

Listed author(s):
  • Qiong Wang


    (Smeal College of Business, Pennsylvania State University, University Park, Pennsylvania 16802)

  • Ujwal Kayande


    (Research School of Business, Australian National University, Acton, Australian Capital Territory 0200, Australia)

  • Sandy Jap


    (Goizueta Business School, Emory University, Atlanta, Georgia 30322)

Registered author(s):

    In this research, we examine a novel mechanism of interorganizational relationship dissolution: incoherence in a partner's behavior. We propose that the discrepancy between an exchange partner's opportunistic behavior and the focal firm's expectations may create a state of incoherence and uncertainty and that this effect can be damaging to the exchange even when the partner's behavior is better than expected. Using nearly 500 longitudinal, confidential reports of industrial buyers and sellers, we find supportive evidence that (1) the net effect of the discrepancy is initially positive when behavior is better than expected but becomes rapidly negative thereafter, and (2) the net effect of the discrepancy is always negative when behavior is worse than expected. Thus, these effects will generally damage the exchange even as the partner tries to improve the relationship. This gives insight into why exchange relationships that hit a downward spiral can be difficult, if not impossible, to salvage. We also show that the dysfunctional consequences of discrepancy are mitigated through exchange structures such as the magnitude of dependence on an organizational partner, the development phase of the relationship, and the presence of bilateral idiosyncratic investments. Implications for theory and the management of interorganizational relationships are developed.

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    Article provided by INFORMS in its journal Marketing Science.

    Volume (Year): 29 (2010)
    Issue (Month): 6 (11-12)
    Pages: 1109-1124

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    Handle: RePEc:inm:ormksc:v:29:y:2010:i:6:p:1109-1124
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    1. Artz, Kendall W. & Brush, Thomas H., 2000. "Asset specificity, uncertainty and relational norms: an examination of coordination costs in collaborative strategic alliances," Journal of Economic Behavior & Organization, Elsevier, vol. 41(4), pages 337-362, April.
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    3. Ujwal Kayande & John H. Roberts & Gary L. Lilien & Duncan K. H. Fong, 2007. "Mapping the Bounds of Incoherence: How Far Can You Go and How Does It Affect Your Brand?," Marketing Science, INFORMS, vol. 26(4), pages 504-513, 07-08.
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    5. Joachim Vosgerau & Erin Anderson & William T. Ross, Jr., 2008. "Can Inaccurate Perceptions in Business-to-Business (B2B) Relationships Be Beneficial?," Marketing Science, INFORMS, vol. 27(2), pages 205-224, 03-04.
    6. Joskow, Paul L, 1987. "Contract Duration and Relationship-Specific Investments: Empirical Evidence from Coal Markets," American Economic Review, American Economic Association, vol. 77(1), pages 168-185, March.
    7. Meyers-Levy, Joan & Tybout, Alice M, 1989. " Schema Congruity as a Basis for Product Evaluation," Journal of Consumer Research, Oxford University Press, vol. 16(1), pages 39-54, June.
    8. Bruce G. S. Hardie & Eric J. Johnson & Peter S. Fader, 1993. "Modeling Loss Aversion and Reference Dependence Effects on Brand Choice," Marketing Science, INFORMS, vol. 12(4), pages 378-394.
    9. Dick, Alan & Chakravarti, Dipankar & Biehal, Gabriel, 1990. " Memory-Based Inferences during Consumer Choice," Journal of Consumer Research, Oxford University Press, vol. 17(1), pages 82-93, June.
    10. Sandy D. Jap & Erin Anderson, 2003. "Safeguarding Interorganizational Performance and Continuity Under Ex Post Opportunism," Management Science, INFORMS, vol. 49(12), pages 1684-1701, December.
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