An innovative SME managing its asymmetrical inter-organizational relationships - a time perspective

Innovation in small and medium-sized enterprises (SMEs) is important, because of its effects on their growth and the potential of the SME sector to act as catalyst of economic progress. SMEs can acquire the resources and capabilities that are necessary in their path from invention to innovation through partnerships. However, inter-organizational relationships (IORs) are difficult to initiate and sustain for SMEs due to the performance and relational risks involved. As the SME is often considered in a situation of dependence these risks are aggravated by the increasing asymmetry of relationships. Unfortunately the practical relevance of the existing research on this issue, so necessary for SME managers to enable them to overcome the barriers to successful innovation, is missing. The major part of the research is on the management of relationships from the perspective of the powerful partner at one static point in time, while studies on the organization of relationships from the perspective of the subordinate partner over time are needed. In response to a cry for guidance of an innovative SME looking for ways to handle the relationships with their powerful partners, in this thesis the tasks necessary to manage the asymmetrical relationships of a SME during their life-time are identified. For this purpose, the state-of-the-art literature in different areas was combined to develop a conceptual framework. The framework proposed that the SME’s asymmetrical relationships follow a sequence of formation, operation, and outcome along with respectively initiation, exchange, and outcome tasks unfold. In order to empirically explore the validity of the model a process research approach was adopted. Specifically, the model was tested by comparing the management tasks executed in six asymmetrical inter-organizational relationships of an innovative SME over a period of nine years in retrospective and six months in real time. The necessary data was acquired via a combination of semi-structured interviews, passive observations, and archival data. Thereafter, two data analysis strategies – visual mapping and temporal bracketing – were used to capture the gathered data in all its richness. The findings illustrate that many of the tasks used by large, established organizations are also used by the SME to manage their asymmetrical relationships. However, due its size and characteristics the SME is limited in the execution of some of these tasks. In particular, the identification of partners based on their reputation, developing the capability to learn from partners, and monitoring if the activities are carried out according to plan appear to be difficult. In addition, it was demonstrated that the development of the tasks to manage the SME’s asymmetrical relationships follows the development of the relationship itself. After the identification of the partner, the relationship developed along a iterative cycle of negotiation, agreement, and operation. Accordingly, the tasks executed develop from partner identification, to partner attraction and selection, to the formalization of agreements till the creation of informal communication mechanisms to manage and appropriate knowledge, conflict management and outcome, behavioral and social control. The drivers of the transition from one phase into the next were also considered. It was found that the perception of the performance and relational risks associated with the asymmetrical relationship were the main driver of change. During the relationship the risks should gradually drop to proceed to the next stage. During the operation phase, however, these risks may increase suddenly or the opportunity may arise to reduce them drastically. In this case, the partners have to rethink the terms of their relationship, and the relationship enters the negotiation phase again.