The Quest for Stability : A Network Approach to Business Relationship Endurance in Professional Services

Abstract: Enduring business relationships have been frequently observed in the industrial setting. Models based on a network approach have explained why this could be a rationally efficient way to organise exchange between firms. In this study a network approach is applied where enduring exchange with clients is a goal rather than a phenomenon to be explained. A focal professional service provider, Mercuri International (MI) was assumed to be in a quest for stability relative to its clients where interaction is often interimistic rather than enduring. MI and eighty of its new business relationships were studied from 1995 to 1998. The relationships originated in two contexts: old markets, where MI is long established and, new markets, where MI has recently begun to operate. The overall business network was expected to differ so that the connectedness between relationships was assumed to be tighter in old markets. This was in its turn expected to influence the development of relationship substance and function. A model to capture the existence of relationship substance and function in professional services was adapted to the setting and its variables were linked to three main dimensions: actor bonds, structural interdependencies and influence by and upon third parties. Empirical data was collected by a multi-method design in three sub-studies converging to a single case study. The single case study showed that in MI’s old markets actor bonds were often more vulnerable as they were dependent on the single professional, whereas in new markets actor bonds were often firm-based, even as part of an international relationship between MI and the client. Structural interdependencies were stronger in old markets as there was more of a structural fit between the activities and resources of MI and client as well as more of adaptations and investments made to secure the desired outcomes. In old markets more firms and individuals were familiar with MI, but more alternative providers were also present. This context appeared as a more complex and more integrated business network. In new markets third parties influencing were often limited to the branch offices of MI or client. The study concluded that the effects of interaction could be estimated by analysing built-up relationship substance and function and that this analysis has implications for the promotion of enduring business relationships. The character of the overall business network seems to have a considerable influence on the type of actor bonds and structural interdependencies created as well as on the influence by and upon third parties in the network context of the relationship dyads.