There are five main schools of thought that offer different perspectives on relationships between customers and suppliers. Although some schools are quite similar, they generally describe relationships in different terms and have different implications for relationship management.
The major schools of thought are:
The Industrial Marketing and Purchasing (IMP) School,
The Nordic School,
The Anglo-Australian School,
The North American School and
The Asian (Guanxi) School.
Each is briefly reviewed in the following sections. Concepts and themes from these schools have been incorporated into the preceding discussion.
The Industrial Marketing and Purchasing School
The Industrial Marketing and Purchasing (IMP) school has a dedicated focus on B2B relationships.
The IMP school first emerged in the late 1970s when a number of European researchers began investigating B2B relationships with the simple goal of describing them accurately. Some of the major contributors to the IMP school are:
Malcolm Cunningham,
David Ford,
Lars-Erik Gadde,
Hakan Hakansson,
Ivan Snehota,
Peter Naude and
Peter Turnbull.
The IMP school argues that B2B transactions occur within the context of broader, long-term relationships, which are, in turn, situated within a broader network of relationships.
Any single B2B relationship between supplier and customer is composed of activity links, actor bonds and resources ties.
IMP researchers were among the first to challenge the view that transaction costs determined which supplier would be chosen by a customer. IMP researchers identified the importance of the impact of relationship history on supplier selection.
The characteristics of B2B relationships, from an IMP perspective, are as follows:
Buyers and sellers are both active participants in transactions, pursuing solutions to their own problems rather than simply reacting to the other party’s influence.
Relationships between buyers and sellers are frequently long term, are close in nature and involve a complex pattern of interaction between and within each company.
Buyer-seller links often become institutionalized into a set of roles that each party expects the other to perform, and expectations that adaptations will be made on an ongoing basis.
Interactions occur within the context of the relationship’s history and the broader set of relationships each firm has with other firms – the firm’s network of relationships.
Firms choose which firms they interact with and how. The relationships that firms participate in can be many and diverse, carried out for different purposes, with different partners and have different levels of importance. These relationships are conducted within a context of a much broader network of relationships.
Relationships are composed of actor bonds, activity links and resources ties, as now described.
Actor bonds are defined as follows:
Actor bonds are interpersonal contacts between actors in partner firms that result in trust, commitment and adaptation between actors.
IMP researchers have focused on two major streams of activity-related research: the structure and cost-effectiveness of activity links, and the behavioral characteristics that enable relationships to survive.
The reduction of transaction costs is an important consideration when customers form links with suppliers.
Dyer argues that search costs, contracting costs, monitoring costs and enforcement costs (the four major types of transaction cost) can all be reduced through closer B2B relationships.
Resources are defined as follows:
Resources are the human, financial, legal, physical, managerial, intellectual and other strengths or weaknesses of an organization.
Resources ties are formed when these resources are deployed in the performance of the activities that link supplier and customer.
Resources that are deployed in one B2B relationship may strengthen and deepen that relationship. However, there may be an opportunity cost. Once resources (for example, people or money) are committed to one relationship they might not be available to another relationship.
The Nordic School
The Nordic school emphasizes the role of service in supplier-customer relationships. The main proponents of the Nordic school are Christian Grönroos and Evert Gummersson. Their work became influential in the development of the field of relationship marketing, which presents a challenge to the transactional view of marketing that has been dominant for so long.
The Nordic school emerged from research into services marketing that began in the late 1970s particularly in Scandinavia.
The key idea advocated by the Nordic school is that service is a significant component of transactions between suppliers and their customers.
The Nordic school’s approach has application in both B2B and B2C environments. Grönroos has defined relationship marketing as follows:
Relationship marketing is the process of identifying and establishing, maintaining, enhancing, and, when necessary, terminating relationships with customers and other stakeholders, at a profit, so that the objectives of all parties involved are met, where this is done by a mutual giving and fulfillment of promise.
Gummesson goes further, redefining marketing as follows:
Marketing can be defined as ‘interactions, relationships, and networks’.
The Nordic school identifies three major characteristics of commercial relationships — interaction, dialogue and value — known collectively as the Triplet of Relationship Marketing, and described further below.
Interaction. Like the IMP school, the Nordic school suggests that inter-firm exchanges occur in a broader context of ongoing interactions. This is a significant departure from traditional notions of marketing where inter-firm exchanges are conceptualized as discrete, unrelated events, almost as if there is no history.
From the Nordic school’s perspective, interactions are service-dominant. As customers and suppliers interact, each performs services for the other. Customers supply information; suppliers supply solutions.
Dialogue. Suppliers and customers are in dialogue with each other. Indeed, communication between partners is essential to the functioning of the relationshipOpens in new window. Traditional marketing thinking has imagined communication to be one-way, from company to customer, but the Nordic school emphasizes the fact that communication is bilateral.
Value. The concepts of value, value creation and value creation systems have become more important to managers over the past 20 years. The Nordic school stresses the mutual nature of value.
To generate value from customers, companies need to generate customer-perceived value; that is, create and deliver something that is perceived to be of value to customers.
Value creation therefore requires contributions from both buyer and seller. From the Nordic school’s perspective, service performance is a key contributor to customer-perceived value.
The Nordic school is closely aligned with Service-Dominant Logic (SDL). SDL’s main proponents are Robert Lusch and Stephen Vargo. SDL claims that all firms are service firms, even manufacturing firms.
We can all appreciate that a patient visiting a doctor receives a service – medical advice. How can this also be true of manufacturing?
SDL argues that although a manufacturer may build printers, the manufacturer is providing a service to users when they use the printer to convert images on a computer screen into text on a page. The printer has no value until it is used. SDL takes a relational view of customer value.
Neo-classical economists generally suggest that value is created (or at least measured) at the point of exchange; this is known as value-in-exchange. SDL, however, proposes that value is created when customers use the goods or services; this is known as value-in-use.
It is customers who co-create value when they use or interact with products or services; firms do not create value in their factories and ship it to market.
This conceptualization of value is inherently grounded in productive supplier-customer relationships wherein the supplier (and its supply chainOpens in new window) helps the customer to extract this value-in-use by marketing goods and services that helps the customer experience more and better value than the goods and services of competitors.
The worldview of SDL involves reframing goods as services; they are merely the vessels through which service is delivered to customers, the embodiment of the know-how of the firm’s network of relationships (supply chain) in a format amenable to exchange. In such a worldview, every firm competes as part of a network, against other value networks, and relationships become critical.
The Anglo-Australian School
The Anglo-Australian school takes the view that companies not only form relationships with customers, but also with a wide range of other stakeholders including employees, shareholders, suppliers, buyers and governments.
The main proponents of this school are Martin Christopher, Adrian Payne, Helen Pack and David Ballantyne.
Stakeholder relationships vary in intensity, according to the level of relationship investment, commitment and longevity.
Unlike the IMP school that takes a descriptive approach, the Anglo-Australian school takes a more prescriptive approach. Its work sets out to help managers improve relationships with stakeholder groups.
The major conceptual contribution of this school is their Six-Markets Model that has been revised several times (Figure X-1).
Figure X-1. The Six-Markets Model
The school’s researchers have focused on a number of topics: customer retention, customer loyalty, customer satisfaction, customer relationship economics and value creation. One of their major findings is that customer satisfaction and customer retention are drivers of shareholder value.
The Six-Markets model suggest that firms must satisfy six major stakeholder markets:
internal markets (employees)
supplier/alliance markets (including major suppliers, joint venture partners and the like)
recruitment markets (labor markets)
referral markets (word-of-mouth advocates and cross-referral networks)
influence markets (these include governments, regulators, shareholders and the business press) and
customer markets (both intermediate and end-ursers).
The North American School
The North American school receives less emphasis as a separate school of relationship management than other schools. Significant contributors to this school are Jeffery Dyer, Sandy Jap, Shelby Hunt, Robert Dwyer, Jan Heide, Robert Morgan and Jagdish Sheth.
A major theme flowing through this school’s work is the connection between successful inter-firm relationships and excellent business performance. The school acknowledges that relationships reduce transaction costs, and that trustOpens in new window and commitment are two very important attributes of successful relationships.
Trust is underpinned by shared values, communication, non-opportunistic behavior, low functional conflict and cooperation.
Commitment, on the other hand, is associated not only with high relationship termination costs, but also with high relationship benefits.
The North American school tends to view relationships as tools that a well-run company can manipulate for competitive advantage. They also focus on dyadic relationships rather than networks, most commonly buyer-supplier dyads or strategic alliance/joint venture partnerships.
The Asian (guanxi ) School
Guanxi (pronounced Gwan-She) is, essentially, a philosophy for conducting business and other interpersonal relationships in the Chinese, and broader Asian, context. Therefore, its effects have a significant impact on how Asian societies and economies work.
Guanxi has been known to Western business people since at least 1978. This was the time when the Chinese market began to open up to the West. The foundations of guanxi are Buddhist and Confucian teachings regarding the conduct of interpersonal interactions.
Guanxi refers to the informal social bonds and reciprocal obligations between various actors that result from some common social context, for example families, friendships and clan memberships.
These are special types of relationship that impose reciprocal obligations to obtain resources through a continual cooperation and exchange of favors.
Guanxi has become a necessary aspect of Chinese and, indeed, Asian business due to the lack of codified, enforceable contracts such as those found in Western markets. Guanxi determines who can conduct business with whom and under what circumstances. Business is conducted within networks, and rules based on status are invoked. Network members can only extend invitations to others to become part of their network if the invite is a peer or a subordinate.
Singh, J. and Sirdeshmukh, D. (2000). Agency and trust mechanisms in consumer satisfaction and loyalty judgments. Journal of Marketing Science, 28(1), 255 – 71.
Morgan, R.M. and Hunt, S.D. (1994). The commitment-trust theory of relationship marketing. Journal of Marketing, 58(3), 20 – 38.
Wilson, D.T. and Mummalaneni, V. (1986). Bonding and commitment in supplier relationships: a preliminary conceptualization. Industrial Marketing and Purchasing, 1(3), 44 – 58.
Ang, L. and Buttle, F.A. (2002). ROI on CRM: a customer journey approach. Proceedings of the Inaugural Asia-Pacific IMP conference, Bali, December.
Ferron, J. (2000). The customer-centric organization in the automobile industry – focus for the 21st century. In S. Brown (ed.) Customer relationship management: a strategic imperative in the world of e-business. Toronto: John Wiley, pp. 189 – 211.
Figure X-1. The Six-Markets Model
