Academic journal article Journal of Business and Entrepreneurship

A Relational Approach to Matching Interfirm Exchanges between Sme Executives and Corporate Business Executives

Academic journal article Journal of Business and Entrepreneurship

A Relational Approach to Matching Interfirm Exchanges between Sme Executives and Corporate Business Executives

Article excerpt

INTRODUCTION

Interfirm economic exchanges, transactions and alliances are found to be critical to SME growth (Barringer & Greening 1998). Research on these exchanges has increasingly focused on social networks and governance mechanisms. Researchers have suggested that various exchange relations-from short-term, routine transactions to long-term, complex alliances-require different types of controls to curb opportunistic behavior (Williamson, 1985, 1991). These mechanisms are typically identified as either formal contracts that are legally enforced, or informal relations that involve shared social norms, trust, and reciprocity (Poppo & Zenger, 2002; Zhou, Poppo, & Yang, 2008). Within the context of governance mechanism selection, it is believed that the stronger the ties two individuals or firms have to each other, the greater the chance SMEs have to develop interfirm alliances (BarNir & Smith, 2002) and the more likely that firms will not pursue opportunistic behaviors (Hoetker & Mellewigt, 2009).

Rather than viewing economic exchanges according to network ties, trust and ways in which opportunistic behavior may be held in check, a cultural approach to economic exchanges that emphasizes relational work can identify how shared meanings of interpersonal relationships shape inter organizational transactions (Zelizer, 2012). A relational work perspective provides us a framework by which we can understand how interfirm relationships develop, why different types of interfirm exchanges take place between different kinds of firms, and how certain exchange media are appropriately selected to facilitate those exchanges.

In order to contribute to the literature on SMEs and interfirm exchanges, this study reports on interviews with executives from SMEs and large corporations in the chemical industry who regularly engage in a variety of interorganizational exchanges. These relationships and transactions are analyzed using the concept "good matches," developed by economic sociologist Viviana Zelizer. In this model, individuals negotiate different kinds of relationships with appropriate types and forms of economic exchanges to define and reinforce affiliations. Originally developed to explain a variety of interpersonal relationships, this study extends Zelizer's model to account for the different patterns of communication within and between executives at transacting partner firms. The data suggests that intra- and inter-firm patterns of communication are critical components to understanding relationship formation and exchange decisions. This study puts forth an interfirm model of exchange that accounts for the complexity of relational work in interfirm transactions and provides a framework for assessing the appropriate economic transactions that may improve the likelihood of successful exchange outcomes.

The research reported here identifies how the close relationships SME owners and managers form with executives of large business (hereafter referred to as "corporate" businesses) uniquely influence economic exchanges. Three implications are developed from the findings. First, interfirm relationships between SME business executives and corporate executives are enabled by industry events and encouraged by SMEs themselves. More specifically, the exposure and regular contact between SME executives' and corporate executives' families fosters sentiment and relational trust. Second, corporate executives look to SME business executives to develop time-sensitive, nonroutine, short-term transactions and long-term strategic alliances. These complex transactions are enabled by: 1. corporate executives' access to SME executives, and 2. informal and rapid SME organizational decision-making. The third implication is that SMEs can take advantage of the desire corporate executives have to form relationships between executives' families, resulting in relations with high levels of sentiment. SME executives' commitment of time and resources to fostering strong emotionally laden relationship with corporate executives can provide SMEs with a competitive advantage when pursuing interfirm business deals with corporate executives. …

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