concept of an integrated value model of business relationship tibor mandjÁk ph.d. the research is...

Concept of an Integrated Value Model of Business Relationship

Tibor MANDJÁK

Ph.D.

The research is sponsored by the Hungarian Research Found OTKA 48560

Agenda

Why this research Business relationship Research process (done) Definition The Integrated Value Model Some characteristics How does it help Research process (going on)

An Integrated Value Model in Marketingwith Special Emphasis on Business-to-Business Market Mandják 2007

ISBM/CBIM Academic Workshop, February 13-14, 2003 in Orlando, Florida

Two managers from Hungary:

“The most important in a relationship for me are the revenues…. (this) is the most important, and then follow those we like to work with and we are having a good relationship with, and with whom we even have consultative conversations”.

"I deem the personal relationship for very important for me this is the most important. Some say that friendship does not exist in business; I say this is not true, friendship does exist in business and it is very good when it works out. It helps to solve the problem and is important on both sides.”

Two quite divergent opinions about the same issue

MEMORIES


Integrated Value Model Why?



Business relationship "value is a problematic concept which cannot be ignored" (Wilson and Jantrania 1996 p.63).

The authors conclude their research that examines the value of business relationships with these not very encouraging words.

What are the reasons for such uncertainty and why is value important?

Utility (economics) → maximisation Why?

2nd International Value Conference, June 7-8, 2004 Budapest

Actions orientation point (sociology) → symbolic and historic

Social integration (social psychology) → emotional motivation for action

How?

What?

Integrated Value Model Value has many faces


Value is a complex phenomenon made up of economic and social components, that is in all cases perceived and therefore subjective.

However, value always depends on the given social and economic situation, and in this coherence it is socially constructed and interiorised by the individual.

At different social levels, individual, group, or society, value has different meanings and appears in different ways.

2nd International Value Conference, June 7-8, 2004 Budapest


Integrated Value Model Value has many faces


To understand what the value of business relationship does mean for the actors

Why the value of business relationship is important if it is so?


* Interactive exchange between two organizations

* Organizational and managerial FORMS ofConnections between two organisationsConnectedness with other relationships, actors, organizations

* Three different levelsExchange episodes RelationalNetwork

build trust, create routinesframework and system of single episodesconnectedness


Integrated Value Model Business relationship

Business relationships represent the market for the organizations!

* EmbeddedEpisodes into the relationship Relationship into the business networkBusiness network into the market


Integrated Value Model Business relationship

Buyer’s transactional or relationship orientation (Jackson 1985)

Different buyers’ orientations need different market offerings (Anderson and Narus 1999)

Tunnel vision of commodity markets (Anderson and Narus 1999)

Complexity of business relationship


Complexity of business relationship Depends on

Type of the object of transaction (exchange episodes)

Type of the customer purchasing orienation Previous researches on commodity markets

(chemical row materials, electricity): Different types of supplier – buyer relationships Different types of customer orientations

For model validation make a research in a commodity industry


Complexity of the value of business relationshipmulti methods approach

STEPS:

* Marketing, logistics and strategy literature review

* Summarized in a Meta Model of Business Relationship Value

* Meta Model enriched with economics, sociology, social psychology value apprehension


Integrated Value Model Research process (done)

STEPS:

* Theoretical framework (model) of business relationship valuewith value indicators

* Three qualitative researches for the first validation of the theoretical framework

- deep interviews with managers- interactive group interview- international academic interviews

* External triangulation results- definition of business relationship value- integrated model of business relationship value


Integrated Value Model Research process (done)

The value of business relationships is a concept that expresses usefulnessusefulness and motivationmotivation recognised in, or assigned to, a business

relationship.

Usefulness and motivation are value typesvalue types that determine the value of business relationships.


Integrated Value Model Definition (first part)


Integrated Value Model Definition (second part)

Economic value is the expression of incomes and expenses within the business relationships

Social value is the expression of motivation for social interactions related to business relationship (motivation value)

The two value types are in close, dialectic interaction with each other. Economic values can be determining through this close interaction.

* value constituents



* value constituents Network level




* value constituents Relationship level




* value constituents Exchange episode

level

Social value(Motivation)

Economic value(Utility)



Value typesValue types

The SUPPLIER’s perceptionThe BUYER’s perception The prevalent

field of value




* value constituents Network level




* value constituents Relationship level




* value constituents Exchange episode

level





Value typesValue types

The SUPPLIER’s perceptionThe BUYER’s perception The prevalent

field of value


Integrated Value Model The model

Business relationship value

* Exists and changes in time

* Different in different levels

* Value components

* Value structure

* Individual and collective perceptions


Integrated Value Model Some characteristics

Value level Value types

Economic value (utility) Social value (motivation)

Exchange episode

recognition of the product importance of the product to the supplier suitability of the financial conditions

personal relationships satisfaction with the product security of supply of the product

Relationship profitability of the relationship decreasing the transactional costs supply potential of the relationship

smoothness of the relationship (routines) security of the relationship competence of the supplier

Network own portfolio management network potential related effects

emanation of the relationship the supplier’s position in his own industry non-market strategy of the supplier


Integrated Value Model The buyer’s perception

Value level Value types

Economic value (utility) Social value (motivation)

Exchange episode

possibility of manufacturing the product importance of the product to the buyer suitability of the financial conditions

personal relationships the buyer’s satisfaction with the product security of product sales

Relationship profitability of the relationship decreasing the transactional expenses income potential of the relationship

smoothness of the relationship (routines) security of the relationship competence of the buyer

Network own portfolio management network potential related effects

emanation of the relationship the buyer’s position in his own industry non-market strategy of the buyer


Integrated Value Model The supplier’s perception


Integrated Value Model How is it integrated

* different sciences value knowledge

Integrates

* value perception of the vendor and the customer

* economic and social value

* economic and social value constituents

* North American and European research approaches

Possibility of a new cognitive model

Tool of the competitiveness

Help for decision making

Research for measurement

2nd International Value Conference, June 7-8, 2004 BudapestIntegrated Value Model

How does it help?


* Help decision making about- business relationship itself- resources allocation- portfolio of business relationships- strategic management


Integrated Value Model How does it help?

* Decompose the business relationship value elements- better understanding- measure- estimate- manage (as well separately)

* Increase of company’s efficiency


Integrated Value Model How does it help?

What is the connection/relationship between the three levels?

Is it hierarchical, or is it parallel?

Could it be defined as a value chain?

What is the connection between the two value types: the usefulness and motivation types?

How do value constituents influence the perceived value of a relationship?


Integrated Value Model Some research questions

ISBM/CBIM Academic Workshop, February 13-14, 2003 in Orlando, Florida

How the perception of the same business relationship’s value could be different for the vendor and the customer?

Value perception

Episode value Relational value Network value

VENDOR

CUSTUMER

High or medium or low







Integrated Value Model Some research questions

Our initial assumptions imply that there is a causal structure among the value types.

Value types (economic and social) and value constituents are our latent variables.

Value constituents’ indicators are our observed variables.

Observed variables are measured with multi-item scales.

Variables:


Integrated Value Model Research process (going on)

The integrated model’s test process

3.Model’s structure validity

Three steps:

2.Substantive validity of the two sub-models (buyer’s and supplier’s perception) separately

1.Substantive validity assessment of constituents and scales


Integrated Value Model Research process (going on)

concept of an integrated value model of business relationship tibor mandjÁk ph.d. the research is...

Documents

integrated value model

business relationship

business market mandjk

special emphasis

faces slide

good relationship

personal relationship

hungarian research