Besides qualities related to the product or service exchanged, the relationship itself, the outcomes of the relationship, the involved parties and their organizational policies, factors outside the relationship also seem to affect a firm's willingness to engage in close and long-term relationships. The speed of technological change varies among industries. Inindustries characterized by rapid changes, new actors with radically improved technology appear
their competitors. This can be related, in part, to their fear of being dependent as discussed previously. However, we will also argue that the rate of technological change within an industry is a distinct factor affecting the willingness to engage in partnering relationships.
Industries with a rapid technological change, like the IT industry, are often characterized by rapidly growing demand. Suppliers therefore have no strong incentives to partner in order to seIl their products. Also, some partnering arrangements require suppliers to keep stock for important customers in order serve them quickly, and this could result in a loss for the suppliers, leaving them with "old" merchandise they cannot sell. This argument is summarized as:
P6: In industries with rapid technological changes, large growth and many actors, companies will resist engaging in partnering relationships.
Discussion
During the past decade, more and more firms have been moving toward long-term relationships between suppliers and their customers, and vice versa (Anderson 1995; Sheth and Parvatiyar 1995). In spite of documented benefits in efficiency and effectiveness (e.g., Han, Wilson, and Dant 1993; Kalwani and Narayandas 1995; Noordevier, John, and Nevin 1990), it is still not clear why some companies do not want to engage in partnering relationships. Therefore, the main goal of our study isto enhance our understanding of some factors that may inhibit interfirm cooperation. As noted by other researchers, long-term relationships require that costs must be compared to possible gains derived from the relationship (Ganesan 1994; Hakonsson and Snehota 1995b; Kranton 1996; Telser 1980).
Generally, by drawing upon theories of interfirm cooperation it should be expected that companies will not engage in cooperative relationships if the costs are perceived to be too high, or the gains (or incentives) to be too low compared to alternative marketing arrangements.
Our study revealed five factors explaining why companies either would resist or not engage in partnering relationships, as outlined previously. Consider the factor "fear of dependency." Being unilaterally dependent on the supplier means that the buyer perceives difficulties in substituting the partnering supplier with another supplier. The consequences of
being dependent, as found in our study, are the risk of being exposed to opportunistic behavior from the supplier, the risk of losing controlover strategic issues, and the risk of losing flexibility in choice of supplier by being stuck with a partner that cannot provide sufficient supply or that may lag behind technologically. Opportunistic behavior from the supplier, for example by charging a "monopoly" price, redistributes the value creation in the relationship by increasing the costs for the buyer. As theory predicts, one way of controlling opportunistic behavior is by playing the market by increasing the number of alternatives and not engaging in relational cooperation (Emerson 1962; Heide and John 1988). Controlling strategic issues means controlling specialized functions that differentiate the company from other companies. By cooperating with external parties on strategic issues the company may run the risk of losing controlover those issues if the partner acts opportunistically.
Opportunistic behavior can be controlled by investing in monitoring practices (Bergen, Dutta, and Walker 1992; Williamson 1985), which increases costs, or by integrating the function within the company (Williamson 1975,1985). Suppliers can then be handled by arm's length relationships for standardized products and services. Our results indicate that some buyers rely on these kinds of arrangements. By engaging in a relationship some companies perceive that they might lose flexibility in choosing alternative partners, as well as sacrifice possible future gains from more attractive relationships that may come up, as also found by Han, Wilson, and Dant (1993). Put another way, transaction oriented behavior that provides the flexibility to chose alternative parties at short notice, is perceived to be more effective than the outcomes of a relationship. Relating this result to economics and game theory (Axelrod 1984; Telser 1980), the incentives for long-term cooperation are perceived smaller than the gains for using a transaction oriented solution.
With respect to the fear of dependency, we suggest, contrary to Håkansson and Snehota (1995b), that this can be felt as a cost (or a burden) even if the interpretations and intention of both the involved parties overlap. As our results indicate, in addition to intentional behavior within the relationship, unintentional problems arise when developing close relationships with a selected number of partners. Examples of the latter would be incidents like fire or strikes. Further, fear of dependence can be observed both at an individual and
face much stronger departmental control and cuts in both human and financial resources. At the organizational level, the fear of dependency is manifested by the loss in controlover some resources and activities, which also Håkansson and Snehota (1995b) suggest. From the above statements, we see that the fear of dependency factor can be measured at different levels, dividing between exercised and unexercised power sources that are intentionally or unintentionally present in a relationship.
Next we consider the effects of a lack of perceived added value and a lack of partner credibility. From a theoretical perspective, the lack of perceived added value from a relationship is an incentive problem. The perceived gains do not exceed the perceived costs of the partnering relationship, so the desired efficiency and effectiveness will be better achieved by simpler buyer-seller arrangements (Kranton 1996;Telser 1980). As stated in the interviews, companies do not cooperate just for the sake of cooperation. The obligations of a partnering relationship can be fulfilled only if both parties work towards partnering goals.
Choosing the right partner can be seen as an agency problem, as the company is contracting out tasks or functions necessary for the partner to fulfill its goals (Eisenhardt 1989). A lack of credibility may result from not having a special competence or being specially innovative, not being reliable, being small relative to demand, not being very important, and not being reputable. A potential partner's lack of credibility signals that it will not be an appropriate partner (Bergen, Dutta, and Walker 1992). Therefore, the company will be better served by selecting another partner. A number of authors have highlighted the importance of selecting the right partner (e.g. Biemans 1995; Bronder and Pritzl 1992; Evans and Laskin 1994;
Stump and Heide 1996). Quite obviously, many problems can be prevented by carefully
"-selecting future cooperative partners. Our study emphasizes the importance of determining whether a good fit exists both at an operational and strategic level. The partner's ability and willingness to commit resources into the relationship has equal importance to achieving the initially defined goals and strategies, as well as to the expected innovations and further development (Gundlach, Achrol, and Mentzer 1995). Lastly, the representatives we interviewed stated that when you have covered the business side of the relationship, it never hurts to have a nice partner - a criterion that often seems to be neglected in our rational decision-making models.
Lack of relational orientation within the company is an effect of the company's own orientation that inhibits it to engage in partnering relationships. As discussed previously, this orientation is basically an incentive problem as it relates to the belief in competition as a supply philosophy with the use of competitive bidding, short-term contracts and transaction oriented reward systems. As such, this orientation might relate to both the lack of perceived added value and of perceived dependency factors.
We have treated the external factor of rapid technological change as a separate factor that inhibits companies to engage in partnering relationships. As our results indicate, rapid technological changes often occur in combination with fast growing demand as in the IT-market. These markets are usually internally driven by technological developments rather than by customer needs. So the suppliers have little incentives to form partnerships in order to save costs or increase revenues, while the customers want flexibility in their choice of suppliers in order to get access to the latest technology. However, research on buying behavior in high-technology markets produces mixed results on this issue. The study of Heide and Weiss (1995) suggests that buying companies in high-technology markets usually engage in extensive and frequent search for alternative suppliers, but end up by choosing their existing ones.