The Seeds of Dissolution: Discrepancy and Incoherence in Buyer-Supplier Exchange

Marketing Science, Forthcoming

37 Pages Posted: 9 May 2010 Last revised: 14 Jun 2011

See all articles by Qiong Wang

Qiong Wang

University of Oklahoma - Division of Marketing

U. Kayande

Pennsylvania State University - Institute for the Study of Business Markets

Sandy D. Jap

Emory University - Department of Marketing

Date Written: April 5, 2010

Abstract

In this research, we examine a novel mechanism of interorganizational relationship dissolution: incoherence in a partner’s behavior. We propose that the discrepancy between an exchange partner’s opportunistic behavior and the focal firm’s expectations may create a state of incoherence and uncertainty, and that this effect can be damaging to the exchange even when the partner’s behavior is better than expected. Using nearly 500 longitudinal, confidential reports of industrial buyers and sellers, we find supportive evidence that: (1) the net effect of the discrepancy is initially positive when behavior is better than expected, but becomes rapidly negative thereafter, and (2) the net effect of the discrepancy is always negative when behavior is worse than expected. Thus, these effects will generally damage the exchange even as the partner tries to improve the relationship. This gives insight into why exchange relationships that hit a downward spiral can be difficult, if not impossible, to salvage. We also show that the dysfunctional consequences of discrepancy are mitigated through exchange structures such as the magnitude of dependence on an organizational partner, the development phase of the relationship, and the presence of bilateral idiosyncratic investments. Implications for theory and the management of interorganizational relationships are developed.

Keywords: Interorganizational Relationship Management and Performance, Belief Discrepancy, Incoherence, Organizational Sensemaking, Opportunism, Dependence, Relationship Phase, Bilateral Investments

JEL Classification: M00, M31, M32

Suggested Citation

Wang, Qiong and Kayande, Ujwal and Jap, Sandy D., The Seeds of Dissolution: Discrepancy and Incoherence in Buyer-Supplier Exchange (April 5, 2010). Marketing Science, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1603260

Qiong Wang (Contact Author)

University of Oklahoma - Division of Marketing ( email )

307 West Brooks
Price College of Business
Norman, OK OK 73019
United States
405-325-2668 (Phone)

Ujwal Kayande

Pennsylvania State University - Institute for the Study of Business Markets ( email )

University Park, PA 16802-3306
United States

Sandy D. Jap

Emory University - Department of Marketing ( email )

Goizueta Business School
1300 Clifton Road
Atlanta, GA 30322
United States

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