General Relationship Analysis

1
General Relationship Analysis

• Week 2

2
How do you describe a business relationship?

• Write down all the words you would use to
  describe a relationship

3
Relationship Theories

• Agency Theory
• Transaction Cost Economics (TCE)
• Resource Based View dependency
• Social exchange theory
• Interaction Model
• Actor-Resource-Activity Model
• Each has their own strengths and weaknesses

4
Agency Theory

• Risk Power conflict
• Actors trade off between the dyad
• Self interest opportunism actor implement
  system to ensure this doesnt happen
• High formality in the relationship
• Control security important
• Analyse the relationship based on these
  principals

5
Transaction Cost Economics

• Unit of analysis is the single transaction
• Cost involved with everything even puts a cost
  factor on trust control mechanisms important
• Opportunism important - cost of control
  mechanisms versus risk of opportunism
• Intentions are rational thinking
• Where unique assets (high asset specificity) are
  involved then costs of relationships should be
  high

6
Resource Dependency

• Requirement for resources drives relationships
• Control over partners through governance
• Formal and Informal governance
• Conflict/ Power
• Dont become dependent (switching costs) arose
  the idea of always having at least two suppliers
• Dont invest in relations on which you are
  dependent

7
Social Exchange Theory

• Actors inter-dependent and reciprocity important
• Co-operation and expectations on future
  co-operation important
• Relational contracting governance mechanisms
  based on trust
• Social bonds between individuals come into play
• Relations exist at the individual and
  organisational levels

8
Interaction Approach

• See handout of the interaction model
• Detailed description of variables involved in the
  interaction process
• Developed from social exchange theory
• Atmosphere
• Interaction Process
• Exchange Episodes
• Dynamics Adaptations
• Each of these variables changes for different
  situations

9
ARA Model

• Relationship substance
• Actor bonds - mutual understanding trust
  communication conflict creating the identity
  of the partner which whom you are conducting the
  exchange
• Activity Links doing joint planning
  operations NPD logistical planning etc
• Resource Ties social, informational, economic,
  technological etc
• Each affects the other not independent

10
Relationship Concepts

• See handout 2
• Others include commitment continuity social
  bonds understanding learning cooperation
• formality/informality symmetry complexity
  cultural distance
• Overall, research has shown that high performing
  relationships tend to be
• Long term
• High trust
• Mutual benefits

11
Why are relationships important?

• Relationship solve problems communication
  allows problems to emerge and solutions to be
  found
• Learning and knowledge transfer occurs
• Also allows actors to influence the solution that
  emerges (in their favour!)
• Relationship is an asset resources stability

12
Who Manages Relationships

• Which people within your organisation are
  involved in relationship management practices?

13
Relationship Audit

• Analyse existing relationships
• Understand nuances of relationships
• Importance of ensuring relationships are managed
  correctly
• Network paradox do you manage or are you
  managed?