Understanding Interactive Network Branding in SME Firms

Jan-Åke Törnroos, Nikolina Koporcic

• Publisher: Emerald Publishing Limited
• Year: 2019
• ISBN:
  9781789739794
• Topic: Negocios y empresa
• Subtopic: Marketing
• Index: Marketing

Introducing the innovative concept of Interactive Network Branding (INB), this book offers academics and professionals a theoretical framework, alongside practical examples, to develop INB in the context of small and medium-sized enterprises (SMEs).
Combining a business network approach with contemporary corporate branding research, a variety of topics are explored, including:

• strategizing in SME networks,
• market management,
• corporate identity,
• corporate reputation,
• human-to-human (H2H) interactions.

This broad range of perspectives, from business networks to corporate branding, highlights the latest trends in both business marketing and organizational research whilst emphasizing the influential role of human actors in SMEs.
Looking at successful cases of INB and analysing cases where branding has gone wrong, Understanding Interactive Network Branding in SME Firms offers guidelines for researchers in marketing theory and practitioners working in SME firms to develop their branding models and processes in fast changing business environments.

Part I: Business Networks

Chapter 1

Background of the Interaction and Network Approach

Abstract

Industrial Marketing and Purchasing (IMP) is a leading school of thought in the field of business marketing. This approach diverts from a classical, single-firm-centric approach and the managerial-based marketing mix idea. Instead, IMP focuses on interaction, relationships, and networks by offering relevant frameworks for firms acting in business markets. In this chapter of the book, we present vital constituents of the IMP approach. This gives the first conceptual background for looking at corporate branding of small and medium-sized enterprises, which presents a novel and currently evolving perspective, aligned with the IMP approach.

Keywords: Business marketing; interaction; business relationships; networks; corporate branding; small and medium-sized enterprises

1.1 Business Interaction – The IMP Approach

The business interaction approach started to be developed in the late 1970s with a large-scale European-based study that was dealing with business-to-business (B2B) firms from five European countries (Håkansson, 1982). This project was conducted and published by the Industrial Marketing and Purchasing (IMP) Group. ¹ How business firms in industrial markets were managed by using traditional marketing programs, were criticized. The viewpoint introduced was that B2B firms are not acting as single entities, selling their offerings through discrete transactions, and fighting for market share in competitive markets with many rivals, instead, they are collaborating (Håkansson, Ford, Gadde, Snehota, & Waluszewski, 2009; Koporčić, Tolušić, & Tolušić, 2015). As such, the results presented a new interactive perspective on business markets.

The critical perspective of IMP research pinpointed the mutual interactive process between firms characterizing long-term business relationships instead of short-time transactions. The following quote states the perspective taken: “Industrial markets are characterized by stability instead of change, long-lasting relationships instead of short business transactions and closeness instead of distance” (Håkansson, 1982, p. 14). At this early point, the research concentrated mainly on how business was conducted between buyers and sellers, i.e., business dyads in industrial markets. The findings in these empirical studies of the IMP Group could not find the strong rivalry between firms in business markets, but rather a quite distinct collaboration that resulted in long-term relationships. Thus, business entities, in their selling and buying activities were actually cooperating with each other more than competing. The interactive relationships were the key to their success.

The first IMP research project and the empirical findings from the European study presented these ideas into what was labeled as the interaction approach. The interaction perspective offers a fundamental springboard to contemporary research in business marketing (Koporčić et al., 2015; Möller & Halinen, 2018). Interaction is a process that is taking place between firms that changes or transforms needed resources and activities of both interacting companies (Håkansson et al., 2009). Thus, interaction deals with a mutual process that has a bearing for both parties of the business dyad. The interaction concept contains social as well as economic and technological elements between business actors. Finally, the interaction approach is modeled as an interactive business process consisting of four key dimensions: the interaction parties, the interaction process, the interaction atmosphere, and the environment surrounding interaction (Håkansson, 1982). Next, we tackle these four parts of the interaction model in more depth.

1.1.1 The Interaction Parties

Selling and buying firms that interact with each other are forming the two parties in a business dyad. The characteristics of the parties relate to their technology, structure, size, organization, and strategy. These issues give both a general characteristic of the interaction process but also offer a specific business situation. Interaction parties act through their personnel, as well as through their specific knowledge and position on the market as, e.g., a buyer or a seller. These issues have a substantial impact on the mutual relationships and interaction between the parties.

1.1.2 The Interaction Process between Firms

The interaction process consists of exchange in the form of interactive episodes. These episodes are built of different exchanges between the actors, in terms of (1) product or service exchange, (2) information exchange, (3) financial exchange, and (4) social exchange.

(1)The most crucial type of exchange relates to product and service exchange, which is closely related to the demands and specific wishes of the buyer. The needed resources possessed by the buyer and transformed to the seller are to be handled through interactive exchange episodes (Håkansson, 1982).

(2)Information exchange is seen as critical in order to fulfill the needs of both interacting parties. The information that is exchanged can be either formal or informal through interpersonal communication between the parties. In addition, technical information and market information are of relevance for both firms in these settings. The information concerning the parties themselves and their strategies is also of importance, as well as the level of formalism in the mutual information exchange that develops and becomes routinized between companies over time.

(3)The financial exchange is also a central issue of business interaction. The relative amount and the regularity of money that is being exchanged between the actors denote the share of the total business between firms while giving them financial weight. In business markets, usually, quite a few customers can account for most of the turnover for suppliers.

(4)Finally, the social exchange through personal contacts is important in reducing uncertainties and building trust and commitment between interacting firms. The human exchange is crucial when, e.g., firms are developing international relationships and overcoming cultural distance. In the process of long-term relationship building, the role of social exchange is also relevant to consider. This is the case because much of agreements between companies are not overly formal. In these cases, personal contacts are needed in handling business relationships. The social exchange also deals closely with how well the three other exchange elements are been handled (Håkansson, 1982).

1.1.3 The Relationship Atmosphere

The relationships between firms are based on their characteristics, strategies, and the products and services included in exchanges between them. This means that relationships are dynamic and undergoing continuous change. However, there is also a need for some stability and order to create routines and regular business processes. The interaction model emphasizes the importance of the following four elements of the relationship atmosphere (Håkansson, 1982):

• Power and dependence between the partners;
• The amount of conflict and cooperation between actors;
• Closeness and distance;
• Mutual expectations.

A company can try to deliberately impact its relationships in specific ways, according to their perceived position toward a counterpart. This can be done through one or more of these “atmospheric” and social means. An issue to note is that these four atmosphere dimensions always relate to both parties and their mutual relations as the atmosphere resides in the relation, not within a single firm.

The atmosphere is, at a certain point in time, the result of interactive processes, such as power, dependence, conflicts, cooperation, and closeness between the counterparts. Over time these atmospheric elements create stability and openness between the parties, especially when the business creates mutual value. In other situations, the atmosphere can become imbalanced and characterized by unbalanced power relationships and distant relations. This can happen when, e.g., large companies exert a stronghold of small suppliers. In SMEs, these atmosphere dimensions play a crucial role in their interactive processes. The reason for this is the smallness of the managerial structure and the role of the CEO who is responsible for the development of business relationships.

1.1.4 The Environment Surrounding the Interaction

The business environment surrounding the interaction is presented to have specific characteristics where the interactive processes are embedded between interacting parties. The market structure relates to how this business context is organized and how it functions on the market where a company is acting. It also contains information about how concentrated the market is and how this affects the buying and selling firms. Dynamism shows how the relationships between actors and their mutual activities are undergoing change over time and how frequent these change processes are. The degree of internationalization shows how international activities are handled in the company, and how internationalization affects the interaction activities. Channel position of the parties shows where the actors are situated in the value system, e.g., as a key supplier and the main producer of industrial products. Finally, the social system reflects how a business relationship is embedded in the broader social environment where interaction takes place (Håkansson, 1982).

1.2 The Role of Business Relationships

The interaction perspective is a crucial concept for contemporary industrial marketing research. This chapter has thus far presented a dyadic interactive notion concerning business marketing. Now, we are moving into the world of business relationships, as the basic building block of the interaction and network approach.

Holmlund and Törnroos (1997, p. 304) define a relationship as: “…an interdependent process of continuous interaction and exchange between at least two actors in a business network context.” This definition corresponds well with definitions of relationships of the interaction and network approach. The interaction process between firms is unfolding over time between business actors, expressing the dynamic dimension of the IMP approach (Håkansson, 1982; Håkansson et al., 2009). Ford (1980) presents a stepwise process of the development and potential decay of business relationships. His model contains the prerelationship stage, the early stage, the development stage, the long-term stage, and the final stage of business relationship development.

Another model by Holmlund and Törnroos (1997) proposes four specific and overlapping dimensions of business relationships from a processual angle (see Fig. 1.1). This point of departure gives a dynamic understanding of what characterizes a business relationship between companies. It is a many-sided issue, but some clear parts need to be detected:

(1)A degree of mutuality denotes that at least two parties are involved and have interests in the relationship. An issue concerning mutuality is how balanced the relationship is between the partners. How both parties rely on mutual resources and how power dependencies between them are formed and how they change over time are issues to note when dealing with mutuality in business relationships.

(2)The long-term character that often exists in business markets relates to a win-win situation where social bonds and resource ties have been established over time. Relationships can be characterized as “marriages” compared with short-lived “affairs” that denote transactions without any mutual obligations (Holmlund & Törnroos, 1997, p. 305).

(3)Process nature shows the changing dynamics unfolding over time in the business context that takes place between partners. The actors need to find ways to deal with and adapt to each other in a turbulent business environment in order to keep the business relationship alive.

(4)Context dependence again notes the specific relationship character, i.e., the resources that are exchanged, the specific offerings that are dealt with, as well as the social and technological aspects of the business in question. Also, the outer relationship context concerning competition within the industry and sociotechnological processes that have a bearing on the particular business between partners are noted here.

Fig. 1.1.The Main Constituents of Business Relationships.Source: Adapted from Holmlund and Törnroos (1997).

Thus, B2B relationships deal in essence with relatively complex and multifunctional exchanges embedded in a broader web of connected business entities. Despite the fact that relationships differ, due to factors in specific business fields and types of products and services offered, some commonalities can be found.

…the general view of relationships …is that these develop over time, as a chain of interactions taking place between counterparts, as a sequence of acts and counteracts (Holmlund & Törnroos, 1997, p. 304).

This processual character has inspired many IMP researchers to look at relationships between firms as a constant change unfolding over time (Halinen, Medlin, & Törnroos, 2012). This contrasts with stepwise modeling of business relationship development (Ford, 1980), by unfolding in an irregular manner over time. In addition, it includes surprises and critical happenstances that have an effect on business partners (Halinen et al., 2012). This means, consequently, that relationships can be studied to understand many specific issues in business market development. As the reader might have noted, the IMP approach is many-sided and looks at the world quite differently than most other marketing streams of literature.

The specific perspective of this book deals with business network processes of SME firms and their connected relationships that have an influence on corporate branding. Next, we present the main tenets of the IMP network approach that gives the conceptual background to Interactive Network Branding (INB).

1.3 The Network Approach

The network approach is developed during the 1980s when the dyadic interaction perspective was extended to include more than two parties acting through bundles of connected companies (Blankenburg & Johanson, 1992; Ford & Håkansson, 2002). In this manner, business firms and relationship dyads became connected to extended and diverse types of business relationships. ...

Table of contents

• Cover
• Title
• Copyright
• Table of Contents
• List of Figures, Images and Tables
• List of Abbreviations
• Introduction
• Part I: Business Networks
• Part II: Corporate Branding
• Part III: Interactive Network Branding
• Part IV: Examining Interactive Network Branding in Business Markets
• Part V: Case Examples of Interactive Network Branding
• Conclusions
• References
• Index