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Relationship significance: is it sufficiently explained?

Author

Listed:
  • Filipe J. Sousa

    () (Instituto Superior de Administração e Línguas (ISAL))

  • Luís M. de Castro

    () (Faculdade de Economia, Universidade do Porto)

Abstract

The Industrial Networks Theory (cf. Axelsson and Easton, 1992, Hakansson and Snehota, 1995) sets out to describe and explain the business relationships and markets in which the focal firm is deeply embedded. One of its major propositions pertains to the (time-varying) significance of business relationships for the focal firm (Gadde et al., 2003), i.e., business relationships influence to some extent the focal firm’s survival. Such significance seems strongly related to the role played by business relationships and consequently the relationship outcomes accruing to the focal firm. The theoretical justification underlying this proposition is outwardly oriented, somewhat overlooking the inside of the focal firm - in particular the influence of business relationships on what the focal firm does competently within and across its boundaries. Arguably, the creation and appropriation of relationship value by the focal firm is a necessary but not sufficient condition for relationship significance. A supplementary (internal) explanation supported by Knowledge-based Theories of the Firm (e.g., see Kogut and Zander, 1992), we suggest, may be missing. Our aim here has been to intuitively pinpoint a theoretical flaw, further suggesting a feasible path for its solution.

Suggested Citation

  • Filipe J. Sousa & Luís M. de Castro, 2005. "Relationship significance: is it sufficiently explained?," FEP Working Papers 183, Universidade do Porto, Faculdade de Economia do Porto.
  • Handle: RePEc:por:fepwps:183
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    References listed on IDEAS

    as
    1. Filipe J. Sousa & Luis M. de Castro, 2004. "The strategic relevance of business relationships: a preliminary assessment," FEP Working Papers 163, Universidade do Porto, Faculdade de Economia do Porto.
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    Keywords

    Industrial Networks Theory; relationship significance proposition; relationship functions; dysfunctions; benefits; sacrifices; and value;

    JEL classification:

    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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