Building Resilience in Turbulent Environments: The Role of Relationship Marketing
As firms’ environment become more turbulent, complex, and uncertain, managing relationships as strategic resources becomes increasingly vital. However, managing relationships in changing conditions poses significant challenges. Hence, understanding how businesses can manage relationships in particular ways to become more resilient is important. The findings from this research demonstrate that businesses working in turbulent environments require relationship management capabilities that foster their ability to build resilience. This research examines the role of relationships in turbulent environments by examining their dominant structure and dynamics of relationships and how they improve resilient capacities. The results show that firms manage relationship structure and dynamics to increase a relationship’s positive role in building the firm’s overall resilience.Drawing on the Resource-based Theory of the firm, Social Exchange Theory and Transaction Cost Economics, this research employs a case-based approach studying 33 firms operating in the turbulent region of the Middle East. The firms were chosen mainly from the manufacturing sector and had developed local and international business relationships. The data was collected through interviews with sales and purchase staff and with the general managers. It was also complemented by documents and observation. Relationships in turbulent environments are formed and maintained because of their direct and indirect roles in building resilience capacities. While the direct role of the relationship improves resilience features, such as flexibility, speed of action, and redundancies, their indirect role improves business intelligence, sense-making and management of other relationships. As turbulence increases, the indirect role of relationships becomes more imperative and continues to be even if the exchange of goods terminates. The findings suggest that firms working in turbulent environments perceive that they are highly interdependent to a diverse portfolio of relationships. Such perception is formed due to the high level of uncertainty about the availability of resources and the power dynamics in future. Moreover, firms perceive that the time for action is limited because of the constant change they face. Such perceptions are the drivers behind the rapid development of relationships and the firm’s efforts to keep the relationships alive at all times despite the disruptions that move the relationships to a de-activation phase. Relationships in turbulent environments need to develop fast, therefore, they are formed based on quick trust and by relying on heuristics, such as reputation, communication and connected trust. As soon as the exchange starts, a high levels of bilateral commitment support the highly risky interactions that facilitate the formation of social bonds. Commitment and social bonds remain important throughout the lifecycle of the relationships and support frequent quality communication and enable control until performance-trust is established. Both constructs prove to be important for relationships with interdependent partners as well as monopolies. Commitment and social bonds are particularly crucial during the de-activation phase which is critical to improve resilience capacities through no-exchange periods.Firms prefer to work with exchange partners who contribute to their overall resilience capacities. In choosing partners, firms in highly turbulent environments consider the reputation of the party in the market, their benevolence and their ethical orientation. In addition to such factors, they maintain a diverse portfolio which also includes geographically distant relationships since doing so provides them with a range of choices during difficult periods. While doing so, they prefer partners who work within similar environments since this facilitates understanding, negotiation and quick adaptation.Finally, firms in turbulent environments utilise their developed cognitive and behavioural capabilities to manage relationships mindfully. Irrespective of how developed the relationships are, they are managed with high levels of trust and doubt simultaneously. They are also accompanied by control behaviours, which ensure the identification of any negative signals of change in competence. Such mechanisms help firms to continuously adjust their exposure to exchange partners in an effort to reduce their vulnerabilities and sustainably utilise them to improve resilience.
Advisor: Biggemann, Sergio; Garry, Tony; Knight, John
Degree Name: Doctor of Philosophy
Degree Discipline: Marketing
Publisher: University of Otago
Keywords: Business-to-Business; Relationship Marketing; Turbulent Environments; Business Resilience
Research Type: Thesis