It Takes Two To Tango Buyer-Supplier Relationship Building

Abstract

The purpose of this case is to demonstrate how industrial norms influence the relationship between exchange parties. Deeply entrenched industrial norms serve as guidelines for behavior within permissible limits for exchange parties in a given industry. They form a common ground for action and constitute an implicit understanding upon which a cooperative relationship can be built. Industrial norms therefore play an important role in reducing conflict in the early stages of the interfirm relationship as they help exchange parties develop successful relationships. In the absence of industrial norms, exchange parties at the initial stages of a relationship may be faced with conflict. Even a detailed contract is usually not sufficient to prevent conflict. However, a contract does help exchange parties pursue the relationship and this continuity will foster the development of relational norms. Relational norms tend to govern long-term relationships and they are unique to the specific relationship, as opposed to industrial norms, which hold for an entire industry. The contribution of this article is as follows: (1) It offers a more extensive discussion of the interfirm relation in a macro social context than has previously been explored in inter-organization research literature, and (2) presents a useful premise for understanding interfirm relationships. This case can be used in conjunction with discussion on marketing topics such as the design of marketing channels (Chapter 6, Designing the Marketing Channel, Marketing Channels: A Management View, 7th Edition by Bert Rosenbloom, South-Western College Pub, 2003) for senior level marketing seminar.