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Relational Strategies and Firm Performance: Insights From an Orienting Conceptual Framework

Authors:
Amydee M Fawcett at Weber State University
Amydee M Fawcett
Adriana Rossiter Hofer at University of Arkansas
Adriana Rossiter Hofer
Stanley E. Fawcett at Weber State University
Stanley E. Fawcett
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Relational Strategies and Firm Performance: Insights From an
Orienting Conceptual Framework
Amydee M. Fawcett
1
, Adriana R. Hofer
2
, and Stanley E. Fawcett
1
1
Weber State University
2
University of Arkansas
Managing relationships to create distinctive value is the essence
of supply chain management. Thus, relational strategies have
been widely—if not deeply—studied over the past 20 years.
Meta-analyses evaluating the link between supply chain integra-
tion/collaboration and firm performance have recently appeared.
Although a typically positive link is demonstrated, these meta-
analyses reveal that we have yet to fully understand relational
strategies’nuanced mechanics. Mackelprang et al. (2014) note
the following:
1. Supply chain relational strategies are important, complex, and
multifaceted.
2. Inconsistent empirical findings are pervasive, leaving vital
questions unanswered.
3. Relational strategies should not be universally viewed as
improving performance—fully 26% of integration-perfor-
mance links are not significant. Some are negative.
4. The integration-performance link is context dependent. Two
in three examined X?Y relationships are subject to unknown
moderating factors.
Mackelprang et al. argue that more clearly defined constructs
and rigorously developed measures are needed. We present an
orienting conceptual framework to extend this dialogue, contex-
tualize relational strategies, and guide the development of more
refined and robust constructs. Our goal: Help researchers provide
deep insight into the dynamics of relational strategies.
AN ORIENTING CONCEPTUAL FRAMEWORK
By helping interpret the interplay among theoretical views on
supply chain relationships—or as anthropologists would say,
between the etic and the emic—an orienting conceptual frame-
work encourages deeper sense making and new perspective about
essential why and how questions that underlie relational strate-
gies (see Figure 1). Orienting conceptual frameworks contrast
decision-making traditions, deriving concepts and constructs from
theoretical lenses. That is, management practice develops from
and into distinct traditions. Explanatory paradigms emerge, lend-
ing credibility to potentially divergent theories. Transaction cost
economics (TCE) and resource-based view (RBV), for instance,
are focal theories used to explain the whys and how-to of supply
chain governance and outcomes. TCE explicates value appropria-
tion. RBV delineates value cocreation. Moving toward more
granularity, concepts emerge from theories; for example, oppor-
tunism and relation-specific assets from TCE and distinctive
(valuable, rare, inimitable, and nonsubstitutable [VRIN)])
resources from RBV. Such concepts guide the conceptualization
and operationalization of research constructs.
VALUE APPROPRIATION
The value appropriation perspective—supported by TCE,
resource dependency, and social dilemma theories—maintains
that firms work closely to: (1) assure access to scarce resources,
(2) minimize transaction costs, and (3) reduce the risks of oppor-
tunistic behavior. Without tightly coupled relationships, resource
access and organizational performance are jeopardized. Decision
makers must, however, safeguard against power asymmetries and
opportunistic behavior. Relational strategies driven by value-
appropriation goals are defensive; that is, firms seek tightly
coupled relationships to avoid being disadvantaged.
Within this perspective, the determinants of relationship inten-
sity are: required asset specificity, frequency of interaction, envi-
ronmental uncertainty, bounded rationality, and opportunistic
behavior. The safeguarding posture emphasizes contractual
governance. As such, information sharing, teaming, and other
relational investments are made to the extent that close relation-
ships convey resource access and mitigate problems like parts
shortages, late delivery, or defective quality. Information sharing,
for instance, is selective, focusing on near-term and operational-
planning issues. Although seeking efficiencies, decision makers
carefully hold on to sensitive information that might transfer
power.
VALUE COCREATION
The value cocreation perspective—supported by the RBV,
resource advantage theory, and the relational view—posits that
cooperative relationships enable comingling of resources to deli-
ver a distinctive value proposition. Because the resources and
routines needed to create unique value reside across organiza-
tional boundaries, value cocreation strategies require proactive
scanning to find partners that possess not only complementary
competencies but also a disposition and ability to work together
for mutual benefit. Decision makers must develop refined partner
identification, evaluation, and governance mechanisms. The goal
Corresponding author:
Amydee M. Fawcett, Business Administration, Weber State Univer-
sity, Ogden, UT 84408, USA; E-mail: amydeefawcett@weber.edu
Journal of Business Logistics, 2014, 35(2): 151–152
© Council of Supply Chain Management Professionals
is to uniquely mesh resources to create a VRIN capability that
changes customer expectations and competitive rules within an
industry.
Within this perspective, desired relationship intensity depends
on the value cocreation potential of specific initiatives and the
types of resources (e.g., information, capacity, expertise, inven-
tory, technology) being shared. Being proactive and focusing on
building breakthrough capabilities, success relies on relational
commitment and trust rather than on a contract’s safeguarding
power. Relationship agility—the ability to quickly reconfigure
resources in response to market changes—is critical and requires
high levels of trust, refined resource-sharing routines, and
advanced absorptive capacity. Investments target process, prod-
uct, and partner-capability development. Environmental shifts
may obsolete a relationship; however, the belief and behavior is
that companies will work together as long-term partners in profit.
FUTURE RESEARCH
Although not exhaustive, the comparisons/contrasts posited by
our orienting conceptual framework: (1) encourage a refined con-
ceptualization of relational research and (2) point to robust mea-
sures needed to improve decision-making insight. To illustrate,
extant research recognizes that not all relationships are created
equal. This point, however, is often overlooked in research on
relational strategies. Specifically, extant research:
1. Fails to discern the why (or intent) driving collaboration/inte-
gration. Appropriation versus cocreation matters! Moreover,
the fact that cocreation strategies comingle complementary
competencies to distinctively create value suggests that within
the cocreation tradition, various types of relational strategy
could be pursued. As a doctor prescribes distinct antibiotics
for different infections, decision makers must pursue the right
type of relational strategy for the circumstance (i.e., goal, con-
text, constraints).
2. Does not account for relational intensity. Radical relational
strategies call for more intense comingling of resources,
engendering greater risk than incremental strategies. Inten-
sity’sinfluence on commitment and outcomes should be eval-
uated. Instead, research has relied on relationship duration—a
poor surrogate for intensity—as a control variable.
3. Largely ignores the dynamics of relational strategies. For
instance, alignment is seldom assessed; yet, alignment among
when, type, and intensity affects outcomes. Further, commit-
ment, governance, and degree of changed behavior required—by
each party to the initiative—will influence relational outcomes.
4. Fails to adequately elaborate the architecture needed to sup-
port different types/intensities of relational strategies. Which
systems are established and how they are combined will affect
outcomes.
Meta-analyses reveal that extant research has only begun to
delimit relational strategies and their performance impact. Dee-
per diagnosis and truer prescriptions demand more attention to
detail and nuance—and perhaps more embedded research. The
potential payoff invites a more refined, robust, and rigorous
approach.
Value Appropriation
Theories
• TCE
• Resource Dependence
• Social Dilemma
Concepts
Relationships are defensive,
contractual, and rely on
safeguarded investments
Value Cocreation vs.
Tradition
Close relationships uniquely
integrate competencies to create
distinctive value
Theories
• RBV
• Resource Advantage
• Relational View
Concepts
Proactive relationships governed by
trust cocreate distinctive value and
deliver relational rents
Conceptualization/Dimensions
Intent Intensity
• Mitigate disadvantages • Nature of commitment
• Access scarce resources • Nature of governance
• Minimize costs & risks • What/how resources shared
Tradition
Close relationships assure access to
scarce resources and mitigate costs/
risks
Operationalization/Measures
Traditional
• Information Exchange • Aligned Measures
• Trust/Trustworthiness • Joint Planning
• Teaming • Contact Frequency
• Joint Decision Making • Stability
Conceptualization/Dimensions
Intent Intensity
• Value Cocreation • Nature of commitment
• Distinctiveness • Nature of governance
• Change market rules • What/how resources shared
Operationalization/Measures
Traditional Nontraditional
• Information Exchange • Value Cocreation Potential
• Trust/Trustworthiness • Collaborative Capability
• Shared Resources • Idea Generation
• Shared risks/rewards • Invest in Partner Capabilities
Figure 1: Orienting conceptual framework for relational strategies.
152 A. M. Fawcett et al.
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