The impact of horizontal and vertical connections on relationships' commitment and trust

Abstract

PurposeWhile an ever‐increasing body of research on business networks has commented on vertically connected relationships, this study embeds the horizontally connected relationships. Constructed on business network theories the paper aims to add more knowledge on business networks by developing a connection model including both vertical and horizontal connections. The model aims to explore the impact of connections on focal business relationships. It differentiates connected relationships on the basis of their vertical and horizontal natures. The purpose is to grasp the impact of these different connected relationships on the focal business relationship. The focal relationship elements are defined by commitment and trust, which capture their properties from the dyadic interaction and the two types of connected relationships.Design/methodology/approachThe paper tests the theoretical construction empirically. The empirical study is based on the IMP2 survey, utilizing information from extensive interviews with 138 firms regarding their relationships with important foreign customers.FindingsThe statistical findings in the form of a LISREL‐model clearly expose the impact of the horizontal connections and verify the validity of the theoretical model. It depicts that trust increase by vertical connections leading to increased commitment, thus strengthening the relationship while horizontal connection, on the contrary, weakens it. The facts also demonstrate how the horizontal connections impose effects on technological long‐term investments.Originality/valueMarketing researchers advocating certain theoretical views are thereby required to observe respect for the market realities with which managers are confronted.

Network view of MNCs' socio-political behavior

“…The attempts of the earlier researchers, along the same lines as this study, can in a broad sense be grouped into two categories; hierarchical or interaction views on MNEs and political actors (Hadjikhani and Thilenius, 2005). In the first group, researchers like Ahmed et al (2002) and Miller (1992) elaborate thoughts on hierarchical power of the political institutions and firms' adaptive action concerning political risk which then turns to risk management (Keillor, Wilkinson and Owens, 2005;Keillor and Hult, 2004).…”

“…Some studies, such as those of Welch and Wilkinson (2004) and Jacobson et al (1993) highlight the failure to incorporate socio-political issues into the business network marketing texts. In the absence of much research in this area, this study attempts to offer an answer to the inquiry of researchers like Welch and Wilkinson (2004), Hadjikhani and Thilenius (2005), and Ghauri and Holstius (1996). This paper simply raises the question of how firms manage their relationship with socio-political organizations in international market and why there is heterogeneity in their behaviors.…”

“…While the growing interest of researchers in business networks focuses on inter-firm relationships, the issue of businessgovernment relationship in international market attracts less attention (Boddewyn, 1988;Hadjikhani and Thilenius, 2005;Ring et al, 1990;Welch and Wilkinson, 2004). Some studies, such as those of Welch and Wilkinson (2004) and Jacobson et al (1993) highlight the failure to incorporate socio-political issues into the business network marketing texts.…”

Industrial relationships and the effects of different types of connections

“…Studies like Bengtsson and Kock (1999) and Hadjikhani and Lee (2006) scrutinize how the connection to nonbusiness units impacts on a firm's competitive position. For the relationship with ancillaries and competitors, studies like Gnyawali and Madhavan (2001) and Hadjikhani and Thilenius (2005) explain how the actions from these connected actors impact on focal firms' trust and commitment. When studying connection to competitors, Bengtsson et al (2005) propose the two elements of competition/ conflict and cooperation/harmony and their impact on the relationship elements of trust and commitment.…”

Regions as Networks: Towards a Conceptual Framework of Territorial Dynamics

“…The importance of the external analysis results from the connectivity of relationships. Relationships are connected since changes in any given relationship are likely to cause some kind of network effects [101,102]. Any changes in the way the activities are coordinated and resources are used show up on a larger scale [64].…”