The strategic relevance of business relationships: a preliminary assessment

The ubiquitous contention within the Industrial Networks literature - that business relationships are one of the firm´s most important resources - has not been, in our viewpoint, thoroughly explored. Hence we argue that the ‘Resource-based View of the Firm’ (‘RBV’) may complement the network-based reasoning on the strategic relevance of business relationships. A theoretical framework is proposed – a competence-based view of the firm – which solves RBV´s terminological and inconsistency problems and, more importantly, assures compatibility with the network perspective´s assumptions. The possibility of cross-fertilizing the Industrial Networks and RBV theories seems not only real, but also conceptually profitable for both theoretical fields.Business Relationships, Industrial Networks, Resource-Based View of the Firm, Competence-Based View of the Firm

Of the significance of business relationships

The Industrial Network Theory aims to describe and explain the business relationships and networks in which the focal firm is deeply embedded. One of its major propositions is that business relationships somehow influence, to different extents and over time, the focal firm’s survival. This pertains to the diverse and time-varying significance of business relationships for the focal firm. It has often been implicitly sustained that such significance is strongly related to the role played by business relationships and consequently the relationship outcomes accruing to the focal firm. The logic underlying the relationship significance proposition is outwardly oriented, somewhat overlooking the focal firm’s inside and in particular the conspicuous influence of business relationships on what the focal firm does competently both within and across its vertical boundaries. Arguably, the (predominantly ‘functional’) network-based arguments currently advanced represent a necessary but not sufficient condition for relationship significance. This conceptual paper tentatively suggests that there may be missing a supplementary (essentially internal) explanation supported by Competence-based Theories of the Firm.Industrial Network Theory; relationship significance proposition

Relationship significance: is it sufficiently explained?

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

How is the relationship significance brought about? A critical realist approach

The markets-as-networks theorists contend, at least tacitly, the significance of business relationships for the focal firm – that is, business relationships contribute somewhat to the focal firm’s survival and growth. We do not deny the existence of significant business relationships but sustain, in contrast to the consensus within the Markets-as-Networks Theory, that relationship significance should not be a self-evident assumption. Significance cannot be a taken-for-granted property of each and every one of the focal firm’s business relationships. We adopt explicitly a critical realist position in this conceptual paper and claim that the relationship significance is an event of the business world, whose causes remain yet largely unidentified. Where the powers and liabilities of business relationships (i.e., their functions and dysfunctions) are put to work, inevitably under certain contingencies (namely the surrounding networks and markets), effects result for the focal firm (often benefits in excess of sacrifices, i.e., relationship value) and as a result the relationship significance is likely to be brought about. In addition, the relationship significance can result from the dual influence that business relationships have on a great part of the structure and powers and liabilities of the focal firm, i.e., its nature and scope respectively.Markets-as-Networks Theory, relationship significance, business relationships, focal firm, resources, competences, activities

Are American and European companies returning back from China?

China has been the destination country for many international companies investments. Economy keeps very competitive and many investments are coming yet to China, where production costs are low. Chinese economic power and its capability to penetrate in international markets made China a very consistent and influent economic country. However, many companies are coming back from China because they consider that the reduced costs (principally wages) are not anymore as attractive as before. An analysis of this new international scenario is made in this paper as much as a perspective for the future and the implications for companies

Anti-commons, regulation and tourism: How to avoid the economic destruction of value

Anti-commons theory has been used recently as a framework which allows the study of tourism sector in terms of coordination of agents or in terms of bureaucracy. This kind of study allows to observe the implications for the tourism economy and to understand the problems resulting from decisions involving too many deciders. The situation of tourism legislation and bureaucracy for the segment of local rental in Algarve region in Portugal is studied in order to identify how too much regulation or too many administrative procedures can induce a loss of value for economic agents. Local rental, particularly the short term rental, is an important topic to analyse the problem of anticommons in the tourism sector in Algarve region (Portugal). It is also seen in this chapter the particular case of a project that has failed as a result not just because activities were deficiently coordinated, but also as a result of being the project badly structured and deficiently dimensioned. The combination of theoretical tools allowing, at different levels, decision makers to enhance projects profitability or the welfare standards for communities or high levels of sustainable development in tourism structures is always welcome. This theory has a set of virtuosities, being easily used and allowing to understand the way a project may be implemented, being studied on this context with the consequent analysis of the regional implications.info:eu-repo/semantics/submittedVersio

Epidemics and Pandemics: Covid-19 and the “Drop of Honey Effect”

Purpose: The aim of this paper is the use of the “drop of honey effect” to explain the spread of Covid-19. Approach/Methodology/Design: After Covid-19 appearance in Wuhan, in the Chinese province of Hubei, by December, 2019, it spread all over the world. The World Health Organization declared it as pandemic in March 11, 2020. The infection is highly contagious and made thousands of deaths around the world. Timely decisions are key for the control of the dissemination. The “drop of honey effect” results as an important framework to explain the Covid-19 spread. Findings: An opportune decision in a very initial moment could have made all the difference in the virus spread. Practical Implications: The study will contribute positively to the understanding of the importance of well-timed decisions for governments, world organizations, academia, companies and people, each one on a different dimension’s level. Consequences in the public health, and in the social, economic and financial dimensions were tremendous worldwide. Originality/Value: This study presents the “drop of honey effect” as an original and very suitable framework to explain the way how the virus spread all over the world after the virus in Wuhan began to infect people.info:eu-repo/semantics/publishedVersio

Commons management: a reflection over the current crisis

Capitalism prevails as economic system. But often inside the system - or even emerging and going out – there are many emerging crises and there is much discussion around the system itself. Nowadays, new processes are coming to force a new vision to the economic practices. The present study presents a new vision for business and new promising ways of commitment to alternative structures but sometimes being essentially a complementary organization of society to the current standard