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Interorganisational relationships and the implications for leadership and organization development. Professor Paul Humphreys and Dr Ronan McIvor
Introduction
Traditionally, only markets and hierarchies have been considered in economic science as guidelines for allocating resources and coordinating economic activities ([8] Coase, 1937). During the last decades, both industry and researchers have concentrated more and more on co-operative forms combining markets (or arm's-length relationships) and hierarchical allocation structures (or vertical integration) (e.g. [43] Thorelli, 1986; [48] Webster, 1992). These intermediate governance structures are usually called hybrids ([50] Williamson, 1991) or collaborative/partnering relations ([31] Macbeth, 1994). If transactional and collaborative approaches are compared to each other, a number of salient differences are easily pointed out ([31] Macbeth, 1994; [38] Patterson et al. , 1999). Collaborative relations are characterized by the buyer working with a limited number of suppliers over an extended time-scale. Contrary to arm's-length relationships, collaborative relations involve higher levels of communication, relation-specific investments, interdependence and commitment. In the case of the transactional approach, the purchased products are usually non-strategic and standardized, and the selection of the supplier is based on competitive bidding. The amount of interaction is minimized and only a few people are involved in the management of the relationship.
A number of studies exist relating to the nature of inter-organizational relationships and the advantages or disadvantages of different relationship types (e.g. [14] Dyer et al. , 1998; [3] Bensaou, 1999; [37] O'Toole and Donaldson, 2000). For example, collaborative relations are often divided into operational and strategic partnering ([34] Mentzer et al. , 2000; [10] Cousins, 2002). Operational partnering refers to working with few suppliers and focusing mainly on the certainty element of the relationship and process elements. The relationship between organizations is strategic when a firm perceives that it needs the relationship in order to be competitive in the industry and that if the partner goes out of business, the firm would have to change its competitive strategy ([26] Johnson, 1999).
However, the literature on the subject is still deficient some important ways. When looking at the studies carried out to add to the knowledge of how to effectively operate in business markets and manage relationships, there is one sector that lacks attention. This is business services (e.g. [4] Bryntse, 1996; [41] Sheth and...