Dissertation: More benefits from supplier relationships through “good cop – bad cop” tactic?

Managing and governing interorganizational relationships is challenging because companies are not in an authoritarian position that they could demand the other company to do or act in a way they need them to do. Therefore, interorganizational customer-supplier relationships are managed by the tactics of persuasion.

Persuasion means relational, hierarchical, and competitive interaction. Relational persuasive interaction is based on interaction that emphasizes solutions that are beneficial for both relationship parties and, for example, problem solving is conducted together. Hierarchical interaction highlights the legitimate of a customer to demand things to do in the way they want, but also the power of the customer to decrease and increase business with the supplier. Competitive interaction is based on the threat of alternative suppliers and the customer hinting of the price level in the markets. This dissertation suggests that people working in the boundary spanning position of a customer company (e.g. purchasers, R&D experts) can use all of these three persuasive interaction modes simultaneously. However, the results of the thesis indicate that this is rarely reality; only small portion of boundary spanners use all these three simultaneously. Moreover, the results show that some boundary spanners emphasize relational interaction, some simultaneously hierarchical and competitive interaction, while some were passive and did not actively use any of these.

The results of the thesis show that passive interaction in customer-supplier relationships might cause losses in advantages. Relational and hierarchical interaction positively effects on interorganizational learning, which again, positively effects on the performance of the company. The results show that interorganizational learning positively effects on a company’s market performance, innovation performance, operational performance, and relationship performance. Therefore, the means of managing interorganizational relationships should be considered when organizing the purchasing boundaries of a company and when creating purchasing strategies. Classifying supplier relationships into component suppliers and strategic suppliers gives a hint of the appropriate interaction type that could be used in managing relationships. Component suppliers are usually chosen by the price and investing to these relationships usually does not pay off in competitive advantages, while collaborating with strategic suppliers and learning from them might produce significant benefits for both relationship parties. Managing strategic supplier relationships might benefit from the use of the good cop – bad cop –tactic, which emphasizes relational and hierarchical interaction, which again may help getting the available benefits from the relationship into practice more efficiently.

Anni Rajala examines interorganizational interaction from the perspectives of interorganizational learning, persuasion, and coopetition in her dissertation. The results are based on both quantitative survey data and qualitative interview data that both have been mainly collected from Finnish manufacturing industry.

Further information

Anni Rajala, tel 029 449 8569, anni.rajala(at)uwasa.fi

Rajala, Anni (2018) Exploring interorganizational interaction in customer–supplier relationships: Learning, persuasion, and coopetition, Acta Wasaensia 395, väitöskirja, Vaasan yliopisto.

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