RELATIONSHIP TRANSPARENCY IN BUSINESS MARKETS : A CONCEPTUALISATION AND EMPIRICAL INVESTIGATION

This paper introduces the notion of relationship transparency. It delineates this new construct from the IMP Group’s interaction model and the customer integration literature. Relationship transparency is conceptualized as a complex construct that consists of three dimensions: vendor transparency, customer transparency, and process transparency. Empirical data gathered in a cross sectional survey among 960 purchasing managers in Germany shows that vendor transparency contributes to the overall success of a relationship. In addition to the more conventional methods of delivering value to the customer, establishing superior transparency can become a new source of competitive advantage in business markets. 1. Relationship Transparency A New Source of Competitive Advantage? In today’s quickly changing markets, vendors are constantly looking for new sources of competitive advantage. As many products become almost identical, competing on product quality alone offers little chances for differentiation. Therefore, IMP literature has repeatedly emphasized that the nature of the exchange relationship makes a difference and becomes a deciding factor in business markets (IMP Group, 1982; Hallén/Sandström, 1991). Recently, relationship transparency has been suggested as a potential source of competitive advantage in business markets (Bliemel/Eggert, 1998). Within a transparent business relationship, customers feel well informed about the relevant characteristics of the exchange process and its actors. Relationship transparency is expected to deliver value to the customer and to contribute to satisfaction as it minimizes the perceived need to constantly search for information and to test the market for better alternatives. Consequently, vendors who have established superior relationship transparency may posses a competitive advantage. The antecedents and consequences of relationship transparency, however, have hardly been researched yet. Relationship transparency has neither been thoroughly conceptualized nor has 1 Corresponding author. Institutional address: Lehrstuhl für Marketing, Postfach 3049, 67653 Kaiserslautern, Germany. Tel. : ++49-631 2053116; fax ++49-631 2053394; e-mail: eggert@sozwi.uni-kl.de 2 Institutional address: Heinrich-Heine-Universität, Lehrstuhl für Marketing, Geb. 23.32, Universitätsstraße 1, 40225 Düsseldorf, Germany. Tel. : ++49-211 8111349; fax ++49-211 8115226; e-mail: sabrina.helm@uni-duesseldorf.de its role within a relationship marketing strategy been empirically investigated. This paper contributes to relationship marketing literature by focusing on this new concept. Specifically, it aims at three research questions: 1. How can relationship transparency be delineated from relationship marketing’s body of knowledge? 2. How can relationship transparency be conceptualised in a business-to-business setting? 3. Does transparency lead to favourable outcomes from an empirical point of view? In an attempt to answer these questions, the rest of the paper is organized as follows. Firstly, we show that the IMP Group’s interaction model and the concept of customer integration can both shed light on the concept of relationship transparency. Secondly, we provide a definition of relationship transparency and differentiate it from uncertainty and information. Next, we develop and empirically test a conceptual model that links one of the components of relationship transparency (i.e. vendor transparency) to behavioral outcomes such as repurchase intention, search for alternatives, and word-of-mouth. Finally, we discuss a number of theoretical and managerial implications. 2. Theoretical Insights into the Concept of Relationship Transparency Relationships in business networks involve a complex pattern of interaction between and within each company. The focus of this paper will be on interorganizational exchange, omitting intraorganizational (in)transparencies. Scrutinizing the IMP Group’s interaction approach (e.g. IMP Group, 1982; Håkansson/Snehota, 1995), the interaction model (e.g. IMP Group, 1982, pp. 15; IMP Group, 1997, p. 8) includes several elements that can be linked to the concept of relationship transparency. The variables describing the elements and the process of interaction as well as the relationship atmosphere can be used to explain the role of transparency in business relationships, meaning the degree of being informed about the important elements of a relationship. Concerning single episodes, four elements of exchange have been dealt with in the literature: product or service exchange, information, financial, and social exchange (IMP Group, 1982, p. 16). All these elements touch on aspects of transparency. Most important will be the consideration of the product or service that is being exchanged. As has often been stated, experience and credence goods that the customer cannot evaluate prior to purchase pose difficulties in the exchange process (e.g. Nelson, 1970; Darby/Karni, 1983). Its tangibility, complexity, in short: the nature of the product affects transparency. Furthermore, the degree of transparency clearly also depends on the buyer’s and the vendor’s know-how as well as on their exchange pattern. Most of all, information and social exchange seem to be the important elements of episodes (IMP Group, 1982, pp. 16) that are linked to the construct of transparency albeit it has to be noted that the term ”information exchange” might also include all the other three elements stated above. As aspects of the exchange process are not fully formalized, they are rather based on mutual trust than legal criteria (IMP Group, 1982, p. 17). Social exchange episodes can enforce a routinization in a relationship between buyer and vendor. Both parties bear clear expectations of the roles and responsibilities of either partner (IMP, 1997, S. 10). Routinization as well as trust can also enforce opportunism of one partner (Williamson, 1985, pp. 47) if control mechanisms in the relationship have not been established or remain unused. In such a case, the partner who is being treated opportunistically by the other one, knowingly or unknowingly lacks in transparency. Therefore, trust, routinization, and transparency counteract in a relationship. The other element in the interaction model that is relevant for the understanding of the transparency construct is interaction atmosphere (Hallén/Sandström, 1991; Sutton-Brady, 1997). It has been described as depending upon the distribution of power between the parties, the state of conflict or co-operation and overall closeness or distance in the relationship as well as the parties’ mutual expectations (IMP Group, 1997, p. 14; IMP Group, 1982). An operationalization of atmosphere is problematic as what seems to be the creator of a certain atmosphere (the actions of the parties) is also to be considered as being influenced by it (Sutton-Brady, 1997; Hallén/Sandström, 1991). All these aspects clearly call for a certain degree of transparency for both sides that will be dynamic and relationship-specific. Therefore, relationship transparency appears to be relevant for both, the vendor and the buyer. Whereas the problems of uncertainty connected with low transparency have often been dealt with from the customer’s viewpoint, the vendor’s uncertainty concerning an exchange is not frequently made a topic. But it has to be pointed out that intransparency on the vendor’s behalf can hinder efficient transactions because the vendor is misinterpreting or omitting certain relevant facts. For instance, a vendor might not consider delivering innovative products to a comparatively small company as the criteria of customer valuation that are applied only comprise potential turnover and omit aspects such as reputation, lead user potential, or reference value of the potential customer. The concept of customer integration can shed light on these problems in business relationships (Kleinaltenkamp/Jacob, 1997; Helm/Kuhl, 1997) implying that in an interaction both parties are not only confronting each other but share their resources. As a matter of fact, most transactions in business markets call for an interaction of both parties during the production and marketing process as e.g. in the development of an innovative paint robot for a car manufacturer, the production of a customized bottling plant, or in integrative business services such as business consultancy (Helm/Kuhl, 1997, p. 241). In order to reach high quality output, the customer’s input into production processes such as know-how, personnel, information etc. must conform to the vendor’s requirements. These external factors necessary for the exchange comprise resources that for a certain time are left to the disposal of the vendor by the buying firm and are integrated with the internal production factors of the vendor within one production process (Engelhardt et al., 1993, p. 401; Kleinaltenkamp/Jacob, 1997, p. 2). Meant are such resources the vendor needs for his own performance and cannot acquire via the market. They have to be obtained exclusively from an individual customer. Evidently, these are by no means singularly defined factors (e.g. “the customer” as a person) brought to the vendor but “bundles of factors” that represent sets of different objects such as goods, legal rights, persons, information etc. (Engelhardt et al., 1993, p. 401; Kleinaltenkamp/Jacob, 1997, p. 3). The “integrativity” that is the degree of the customer’s participation in the production of goods and services (Engelhardt et al., 1993, p. 406; Helm/Kuhl, 1997, p. 243) is closely linked to transparency. Integrativity of transactions causes uncertainty, for the vendor as well as for the buyer. First, the assessment of the production process poses problems because the buyer is unable to rate the vendor’s ability and willingness in respect of the production process and the quality of the final product itself (product uncertainty). When hiring a business consultan