The dark side of effectuation in a key account management relationship

Abstract

Purpose The purpose of this paper is to consider the impact of effectuation when used by small suppliers within key account management (KAM) relationships. Design/methodology/approach An exploratory longitudinal case study approach was used to examine a single small supplier operating in the snack foods sector of the UK foods industry, as it entered into a new KAM relationship with a major retailer and undertook four new product development projects. Findings Findings suggest effectuation may positively moderate the ability of a small supplier to enter into a KAM relationship by enabling it to obtain resources and limit risk. However, once within the relationship, the use of effectuation may negatively impact success by increasing the potential for failure to co-create new product development, leading to sub-optimal products, impacting buyer confidence and trust. Furthermore, a failed KAM relationship may impact other customers through attempts to recover revenues by selling these products, which may promote short-term success but, in the long-term, lead to cascading sales failure. Research limitations/implications It cannot be claimed that the findings of just one case study represent all small suppliers or KAM relationships. Furthermore, the case presented specifically concerns buyer-supplier relationships within the food sector. Practical implications This study appears to suggest caution be exercised when applying effectuation to enter into a KAM relationship, as reliance on effectual means to garner required resources may lead to the production of sub-optimal products, which are rejected by the customer. Additionally, a large customer considering entering into a KAM relationship with a small supplier should take care to ensure their chosen partner has all resources needed to successfully deliver as required or be prepared to provide sufficient support to avoid the production of sub-optimal products. Originality/value Findings suggest the use of effectuation within a KAM relationship has the potential to develop a dark side within business-to-business buyer-supplier relationships through unintentional breaches of trust by the selling party.

Uncovering the effectual-causal resilience nexus in the era of Covid-19: A case of a food sector SME's resilience in the face of the global pandemic

“…Our study also contributes to expanding theory in SMEs' responses to disruptions (e.g. Guo, Zhang, & Gao, 2018 ; McGowan et al, 2020 ) by showing how a resource-constrained firm can, by the application of effectual logic, acquire the resources needed and configure them to respond to a disruption. Next, we review relevant literature in section 2.…”

“…Whilst extant literature often posits positive outcomes when effectual logic is applied ( Akinboye & Morrish, 2022 ; Hauser, Eggers and Güldenberg, 2020 ; McGowan, 2018 , McGowan, 2020 ; Nelson & Lima, 2020 ; Ortega et al, 2017 ; Roach, Ryman, & Makani, 2016 ; Sarasvathy, 2009 ; Wu, Liu, & Su, 2020 ), negative consequences may also result from inappropriate use ( McGowan et al, 2020 ; Wu et al, 2020 ). To date, two studies adopted effectuation perspectives to discuss how SMEs cope with Covid-19: Harms et al (2021) and Eggers (2020) – the latter not centrally, with further discourse relating to use in social enterprises ( Chandra & Paras, 2020 ) and community response ( Nelson & Lima, 2020 ).…”

“…While effectual and causal logics are complex and distinct, however, it is possible and even desirable for combinations to be applied as circumstances dictate ( Galkina & Lundgren-Henriksson, 2017 ; Sarasvathy, 2009 ; Smolka, Verheul, Burmeister-Lamp, & Heugens, 2018 ), the current pandemic being potentially one such situation. While recent studies confirm the desirability of combining logics ( Galkina & Lundgren-Henriksson, 2017 ; Laskovaia, Marino, Shirokova, & Wales, 2019 ; Smolka et al, 2018 ; Welter & Kim, 2018 ), little empirical work exists that considers how and when such a combination might positively impact outcomes ( McGowan et al, 2020 ).…”

“…Whereas effectual selling suggests that customer needs are responded to ( McGowan et al, 2020 ), Tomato Co. did not know what customer needs might be due to the extreme disruption. Accordingly, the above actions were taken to experiment, by launching multiple initiatives simultaneously, without the ability to foresee potential returns or success.…”

“…Effectuation is an approach that can build resilience in different contexts, including innovation in family firms ( Chrisman, Chua, & Steier, 2011 ), nascent entrepreneurship success ( Chadwick & Raver, 2020 ), and business takeover negotiations ( d'Andria, Gabarret, & Vedel, 2018 ). Effectuation has been found to impact buying decisions ( McGowan, 2018 ) and enable resource acquisition ( McGowan, Simms, Pickernell, & Zisakis, 2020 ). Studies have also linked effectuation to disruption ( Laine & Galkina, 2017 ), but insights remain limited.…”