European Journal of MarketingRelationship value and relationship quality: Broadening the nomological network ofbusiness-to-business relationshipsWolfgang Ulaga Andreas Eggert

Article information:To cite this document:Wolfgang Ulaga Andreas Eggert, (2006),"Relationship value and relationship quality", European Journal ofMarketing, Vol. 40 Iss 3/4 pp. 311 - 327Permanent link to this document:http://dx.doi.org/10.1108/03090560610648075

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Users who downloaded this article also downloaded:Annika Ravald, Christian Grönroos, (1996),"The value concept and relationship marketing", EuropeanJournal of Marketing, Vol. 30 Iss 2 pp. 19-30 http://dx.doi.org/10.1108/03090569610106626Ruben Chumpitaz Caceres, Nicholas G. Paparoidamis, (2007),"Service quality, relationship satisfaction,trust, commitment and business-to-business loyalty", European Journal of Marketing, Vol. 41 Iss 7/8 pp.836-867 http://dx.doi.org/10.1108/03090560710752429Andreas Eggert, Wolfgang Ulaga, (2002),"Customer perceived value: a substitute for satisfaction inbusiness markets?", Journal of Business & Industrial Marketing, Vol. 17 Iss 2/3 pp. 107-118 http://dx.doi.org/10.1108/08858620210419754

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Relationship value andrelationship quality

Broadening the nomological network ofbusiness-to-business relationships

Wolfgang UlagaESCP-EAP European School of Management, Paris, France, and

Andreas EggertUniversity of Paderborn, Paderborn, Germany

AbstractPurpose – Established models of buyer-seller relationships do not reflect managerial emphasis onsupplier performance evaluation when modelling business relationships. Proposes that relationshipvalue should be included as a key constituent in such models. Aims to explore the construct’s linkswith key constituents of relationship quality, i.e. commitment, satisfaction, and trust.

Design/methodology/approach – A two-stage research design was used. First, depth-interviewswere conducted with ten senior-level purchasing managers in US manufacturing companies. Second,data were gathered in a nation-wide mail survey among 400 purchasing professionals.

Findings – The findings suggest that relationship value is an antecedent to relationship quality andbehavioural outcomes in the nomological network of relationship marketing. Value displays a strongerimpact on satisfaction than on commitment and trust. Value also directly impacts a customer’sintention to expand business with a supplier. In turn, its impact on the propensity to leave arelationship is mediated by relationship quality. Contrary to previous research, trust does not appearin this study as an antecedent of behavioural outcomes, but as a mediator of thesatisfaction-commitment link.

Research limitations/implications – Confirms the role of value as a key relationshipbuilding-block. Researchers should integrate this cognitive performance-based construct in modelsof business relationships. Limitations and research directions refer to the sampling procedure, the needto include the supplier’s value perceptions, the possibility of conducting longitudinal research, and theopportunity to assess additional moderating variables.

Practical implications – When the goal is to increase business with an existing customer,managers should focus on relationship value. In turn, when managers are concerned with the risk ofcustomers leaving a relationship, they should focus on relationship quality. Trust appears as animportant ingredient in stabilising existing business relationships.

Originality/value – Stresses the pivotal role of relationship value in marketing. Contributes to abetter fit between relationship marketing models and managerial practice in business markets.

Keywords Relationship marketing, Buyer-seller relationships, Customer satisfaction, Trust

Paper type Research paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0309-0566.htm

This research was conducted while the first author was a Visiting Associate Professor at theUniversity of Notre Dame’s Mendoza College of Business. The authors would like to thankJoe Guiltinan and the Department of Marketing at Notre Dame for their support in this project. Inaddition, the authors would like to thank the Institute for the Study of Business Markets atPennsylvania State University for providing financial support for this study. Finally, the authorswould like to acknowledge the technical assistance provided by the Institute for SupplyManagement in collecting the data for this research.

Relationshipvalue and quality

311

Received January 2004Revised June 2004

Accepted December 2004

European Journal of MarketingVol. 40 No. 3/4, 2006

pp. 311-327q Emerald Group Publishing Limited

0309-0566DOI 10.1108/03090560610648075

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IntroductionOver the last few decades, business-to-business relationships have emerged as asignificant area of managerial practice and academic inquiry. From a managerialperspective, manufacturers in many business markets witness a strong trend towardscloser relationships with selected key suppliers. In many industries, customers havesignificantly reduced their supply base recently. Especially for key components, solesupplier or dual supplier relationships have become the norm rather than an exception.Along with this trend, customers have invested in supplier performance evaluationtools and supplier development programs. Indeed, customers need to understand howto build and manage a portfolio of supplier relationships to increase overall return onrelationships (Gummesson, 2002; Johnson and Selnes, 2004).

Many suppliers, in turn, face a growing trend towards commoditisation of products(Rangan and Bowman, 1992) and search for new ways of differentiating themselvesthrough improved customer interactions (Vandenbosch and Dawar, 2002). As aconsequence, suppliers also need to understand how they can create and deliver valuein business-to-business relationships beyond merely selling products. Given the strongoverall trend towards reduced supply bases, the challenge of moving into a mainsupplier position – and to defend this top position against alternative suppliers –becomes a question of utmost relevance to industrial vendors.

From an academic perspective, there is a rich and growing body of researchfocusing on buyer-supplier relationships in business markets (Ulaga, 2001).Researchers have provided many insights into the nature and mechanisms ofbuyer-supplier relationships and developed conceptual frameworks and integratedmodels of business-to-business interactions (Dwyer et al., 1987; Wilson, 1995).Scholars have also investigated a wide variety of relationship-relevant characteristics(Cannon and Perreault, 1999; Hewett et al., 2002). Across multiple studies,commitment and trust are consistently identified as focal constructs of relationshipmarketing (Anderson and Weitz, 1992; Doney and Cannon, 1997; Moorman et al.,1993; Morgan and Hunt, 1994). More broadly, researchers have coined the term“relationship quality” to describe business relationships. Although definitions varyslightly across study contexts, relationship quality is typically assessed throughsome combination of commitment, satisfaction and trust (Crosby et al., 1990; Dorschet al., 1998; Hewett et al., 2002).

A comparison of standard business practices and relationship marketingframeworks suggests that established models of buyer-seller relationships mightinsufficiently reflect managerial emphasis on supplier performance evaluation.Indeed, business customers monitor supplier relationships periodically to tracksupplier performance over time. Supplier performance evaluation tools are welldiscussed in the business marketing literature (see, for example, Hutt and Speh, 2001)and the purchasing and supply chain literature (Monczka et al., 2002). Typically,these widely used tools trade-off the benefits and costs incurred in a purchasingrelationship. In other words, they attempt to measure the customer-perceived value ofthe relationship.

Relationship marketing models, however, predominantly focus on the “soft” factorsof buyer-seller relationships to the detriment of performance-based measures. Forexample, Morgan and Hunt (1994) identify commitment and trust as key mediatingvariables of relationship marketing. In their model, the authors include only a single

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performance-based measure, i.e. “relationship benefits”, and hypothesise a positiverelationship between “relationship benefits” and “relationship commitment”. However,their empirical study did not support a significant relationship between bothconstructs, and “relationship benefits” were not found to be a key driver of successfulbusiness relationships.

Similarly, in their research on the nature of trust in buyer-seller relationships, Doneyand Cannon (1997) found that, contrary to their predictions, trust was not related tosupplier choice. As a potential explanation, the authors suggested that professionalbuyers focus on the superiority of the supplier’s offering, rather than on subjectiveassessments of trust, and called for further research in this area.

Furthermore, satisfaction is widely accepted among researchers as a strongpredictor for behavioural outcomes such as repurchase intentions, word-of-mouth, orloyalty (Liljander and Strandvik, 1995; Ravald and Gronroos, 1996). However, scholarshave repeatedly witnessed conflicting survey results of high satisfaction scorescorrelating with declining market shares (see, for example, Gale, 1994; Jones andSasser, 1995) and some researchers have called for a replacement of the satisfactionconstruct by the value construct as a better predictor of outcome variables inbusiness-to-business studies (Gross, 1997).

In the present research, we suggest that the above-mentioned ambiguities andcontradictory results in previous studies may partly be explained by the fact thatresearchers need to add performance-based constructs to the affective and conativevariables in existing relationship marketing models. To close this gap, our researchsuggests that “relationship value” should be included as a key constituent whenmodelling business relationships. Indeed, “value creation and value sharing can beregarded as the raison d’etre of collaborative customer-supplier relationships”(Anderson, 1995, p. 349).

Building on the established literature on customer value in the marketing discipline(Anderson and Narus, 2004; Gale, 1994; Woodruff and Gardial, 1996; Zeithaml, 1988),scholars have advanced our understanding of relationship value in recent years – bothconceptually and empirically (Eggert and Ulaga, 2002; Hogan, 2001; Moller andTorronen, 2003; Ulaga, 2003; Walter et al., 2003; Wilson and Jantrania, 1995). However,a careful review of the emerging body of research on relationship value reveals that anumber of research issues still remain unresolved. In particular, it still is unclear howvalue interacts with other key variables in the broader nomological network ofrelationship marketing. Is relationship value an antecedent of relationship quality? Towhat extend does relationship value drive behavioural outcomes, such as a customer’spropensity to maintain a relationship or intention to expand purchasing volumes witha supplier?

To address the above-mentioned challenges, the present research is structured asfollows: we first contrast relationship value with commitment, satisfaction and trust, asall three concepts have emerged from the literature as key constituents of relationshipquality. Next, we describe our research methodology. A nationwide survey amongsenior purchasing managers in US manufacturing industries was conducted toinvestigate how relationship value interacts with relationship quality and behaviouraloutcome variables. In the next section, we discuss major findings of our research formodelling business relationships as well as their managerial and theoreticalimplications. We conclude by providing directions for further research.

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Relationship valueAlthough it did not attract much explicit attention until it became a watchword in the1990s, value has always been “the fundamental basis for all marketing activity”(Holbrook, 1994, p. 22). The exchange view of marketing is based on the concept ofvalue (Bagozzi, 1975; Hunt, 1991). Though it did not remain unchallenged (e.g.Parvatiyar and Sheth, 1994), the exchange view of marketing has a long tradition ofacceptance among leading marketing scholars (e.g. Alderson, 1957; Kotler, 1972).Market exchanges take place because all parties involved expect to be better off afterthe exchange. The higher the net-value expected or received, the stronger themotivation to commence and to sustain an exchange process respectively.

Value has been conceptualised under different assumptions. Some authors researchvalue from a network perspective (e.g. Walter et al., 2003). Others focus on its dyadicfunction (e.g. Blois, 2002). In this paper, we adopt the latter perspective. While theliterature contains a variety of definitions stressing different aspects of the valueconcept, four recurring characteristics can be identified:

(1) Value is a subjective concept.

(2) It is conceptualised as a trade-off between benefits and sacrifices.

(3) Benefits and sacrifices can be multi-faceted.

(4) Value perceptions are relative to competition.

Value is a subjectively perceived construct (Kortge and Okonkwo, 1993). Differentcustomer segments perceive different values within the same product. In addition, thevarious members in the customer organisation involved in the purchasing process canhave different perceptions of a supplier’s value delivery (Perkins, 1993). This is ofparticular importance in business markets where the buying centre consists of severalpersons sharing different roles and responsibilities (Robinson et al., 1967; Webster andWind, 1972).

Most definitions present customer-perceived value as a trade-off between benefitsand sacrifices perceived by the customer in a supplier’s offering (Zeithaml, 1988;Monroe, 1990). Among other conceptualisations, benefits are conceived as acombination of economic, technical, service, and social benefits (Anderson et al.,1993) or economic, strategic, and behavioural benefits (Wilson and Jantrania, 1995).Sacrifices are sometimes described in monetary terms (Anderson et al., 1993). Otherdefinitions describe sacrifices more broadly as a combination of price and relationshiprelated costs (Gronroos, 1997).

Finally, value is relative to competition. The value of a market offering is alwaysassessed in relation to a competing offer. This resembles the notion of the comparisonlevel (CL Alt) that is fundamental to social exchange theory (Thibault and Kelley,1959). On a high level of abstraction, customer-perceived value is defined as thetrade-off between the benefits (“what you get”) and the sacrifices (“what you give”) in amarket exchange (Zeithaml, 1988, p. 14).

Relationship qualityAlthough the indicators vary depending on each study’s specific context, researcherstypically conceptualise relationship quality as a higher-order construct composed ofcommitment, satisfaction, and trust. For example, Dorsch et al. (1998) conceptualise

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relationship quality as being indicated by trust, commitment, and satisfaction on thepart of the buyers. Similarly, Crosby et al. (1990) identify satisfaction and trust as keyconstituents of relationship quality. Finally, more recently, relationship quality hasbeen described as a higher-order construct with trust and commitment as first-orderconstructs (Hewett et al., 2002; Hibbard et al., 2001). In line with these previous studies,our present research focuses on trust, commitment, and satisfaction as keycharacteristics of relationship quality.

TrustTrust is one of the most widely examined and accepted concepts in relationshipmarketing (e.g. Dwyer et al., 1987; Ganesan, 1994; Mohr and Spekman, 1994).According to Wilson (1995, p. 337) “trust is a fundamental relationship model buildingblock and as such is included in most relationship models”. In their commitment-trusttheory of relationship marketing, Morgan and Hunt (1994) establish trust as akey-mediating variable that is central to relational exchanges. The inherent belief thattrust transforms a business relationship into a successful endeavour is bestsummarised by Sullivan and Peterson (1982):

When the parties have trust in one another, then there will be ways by which the two partiescan work out difficulties such as power conflict, low profitability, and so forth.

The literature on marketing channels has provided numerous definitions of trust. Mostdefinitions involve a belief that the exchange partner will act in the best interest of theother partner. For example, Anderson and Weitz (1992) define trust as “one party’sbelief that its needs will be fulfilled in the future by actions taken by the other party.”According to Moorman et al. (1993, p. 82), trust is “a willingness to rely on an exchangepartner in whom it has confidence.” Finally, Morgan and Hunt (1994, p. 23)conceptualise trust as existing “when one party has confidence in an exchangepartner’s reliability and integrity.”

In an industrial buying context, Doney and Cannon (1997) define trust as theperceived credibility and benevolence of a target of trust. The first dimension of trustfocuses on the objective credibility of an exchange partner, an expectancy that thepartner’s word or written statement can be relied on (Lindskold, 1978). The seconddimension of trust, benevolence, represents the extent to which one partner isgenuinely interested in the other partner’s welfare and motivated to seek joint gains.This definition of trust is relevant in an industrial buying context. In abusiness-to-business relationship, the customer will attempt to reduce its perceivedrisk by selecting a supplier seen as capable of performing reliably (credibility) anddemonstrate its interest in the buyer’s well being (benevolence).

CommitmentIn addition to trust, Morgan and Hunt (1994) identified commitment as anotherkey-mediating variable of relationship marketing. The importance of the commitmentconstruct has been widely acknowledged in the relationship marketing literature. Forexample, in a service marketing context, Berry and Parasuraman (1991, p. 139) statethat “relationships are built on the foundation of mutual commitment.”

Commitment has been defined “as an enduring desire to maintain a valuedrelationship” (Moorman et al., 1993, p. 316). It is based on the belief that a relationship

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is worth the effort to be maintained. Committed relationship partners are unlikely toswitch even if a competing supplier outperforms the incumbent’s value offer.Consequently, a high level of commitment helps to stabilise the relationship. Morganand Hunt (1994, p. 23) summarise their literature review on the commitment constructas follows:

A common theme emerges from the various literatures on relationships: parties identifycommitment among exchange partners as key to achieving valuable outcomes forthemselves, and they endeavour to develop and maintain this precious attribute in theirrelationships.

SatisfactionCustomer satisfaction is widely accepted among researchers as a strong predictor forbehavioural variables such as repurchase intentions, word-of-mouth, or loyalty(Ravald and Gronroos, 1996; Liljander and Strandvik, 1995). Satisfaction research ismainly influenced by the disconfirmation paradigm (Parasuraman et al., 1988). Thisparadigm states that the customer’s feeling of satisfaction is a result of a comparisonprocess between perceived performance and one or more comparison standards, suchas expectations. The customer is satisfied when he/she feels that the product’sperformance is equal to what was expected (confirming). If the product’s performanceexceeds expectations, the customer is very satisfied (positively disconfirming), if itremains below expectations, the customer will be dissatisfied (negativelydisconfirming).

Though most scholars agree on the disconfirmation paradigm, the nature ofsatisfaction remains ambiguous. On the one hand, satisfaction clearly arises from acognitive process comparing perceived performance against some comparisonstandards. On the other hand, the feeling of satisfaction essentially represents anaffective state of mind. Consequently some satisfaction scales tap the cognitivedimension of satisfaction, while others capture its affective nature. The extent to whicha satisfaction scale focuses on the cognitive or the affective dimension, however, shouldhave an impact in terms of both the antecedents that affect satisfaction and theconsequences fostered by satisfaction.

A clear decision on the fundamental nature of the satisfaction construct is needed. Inaccordance with the majority of research being done on the satisfaction construct, weopt for the latter view and define a purchasing manager’s satisfaction with a supplieras an affective state of mind resulting from the appraisal of all relevant aspects of thebusiness relationship (Geyskens et al., 1999, p. 223).

Relationship value and relationship qualityDespite a widespread consensus that value represents the raison d’etre ofcustomer-supplier relationships (Anderson, 1995), its position within the nomologicalnetwork of relationship marketing is still unclear. Morgan and Hunt (1994)conceptualise relationship benefits as an antecedent to commitment in theirKMV-model of relationship marketing. Contrary to their expectation, however, theycould not find a significant link between both constructs. Morgan and Hunt (1994)point to measurement problems as a possible explanation for their counter-intuitive

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finding. A more compelling explanation may be that relationship benefits only formpart of the overall value construct.

In their theory of reasoned action, Fishbein and Ajzen (1975) suggest that cognitivevariables are mediated by affective constructs to result in conative outcomes. For thepurpose of our research, this would suggest that the cognitive, performance-basedconstruct “relationship value” should be considered as an antecedent to commitment,satisfaction and trust in business relationships.

Despite the general agreement on the importance of relationship quality constructs,there does not seem to be consensus on the way in which these constructs relate to eachother (Hewett et al., 2002). For example, in some studies, trust is conceptualised asdirectly influencing commitment (Gabarino and Johnson, 1999; Morgan and Hunt,1994; Siguaw et al., 1998), while some researchers describe commitment as a precursorto trust in exchange relationships (Gundlach et al., 1995). Finally, trust andcommitment are sometimes described as essentially equal components without acausal relationship between them (Baker et al., 1999; Crosby et al., 1990; Dorsch et al.,1998; Lewin and Johnston, 1997).

In their study on the nature of trust in buyer-seller relationships, Doney and Cannon(1997) found that supplier selection was not influenced by trust. In discussing theirfindings, the authors suggest that in an industrial buying context, the key criteria forsupplier selection are delivery performance and relative price/cost. In light of our ownresearch, these cognitive elements may be considered as constituents of therelationship value construct. In their study, however, Doney and Cannon (1997) foundthat trust increased the likelihood that buyers anticipate doing business with thesupplier firm in the future, a conative outcome from the perspective of Fishbein andAjzen’s (1975) theory of reasoned action.

In summary, it may be hypothesised that value represents an antecedent ofcommitment, satisfaction and trust in buyer-seller relationships. Given thecontradictory results of previous studies, our empirical research is investigatinghow value relates to relationship quality and behavioural outcomes such as anticipatedexpansion or intention to leave a business relationship. The following section describesthe design of our empirical study among purchasing professionals in USmanufacturing companies.

MethodologySampling procedureSeveral steps were taken in developing our survey instrument. In a first step,depth-interviews were conducted with ten senior-level purchasing managers in ninemanufacturing companies in the Midwest of the US over a period of three months. Theinterviews explored collaborative manufacturer-supplier relationships and served as abasis for exploring the meaning and interrelationships among each of the focalconstructs in our study.

In a second step, construct definitions and a list of items tapping each constructs’underlying dimensions were developed based on the analysis of previous interviewsand a review of existing literature. Both definitions and items were then submitted to agroup of 27 purchasing managers during a workshop in order to gather managerialfeed-back. Subsequently, definitions and items were submitted to 14 experts in an

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item-sorting exercise, a procedure recommended by Anderson and Gerbing (1991,p. 734) to further enhance content validity of our measures.

In a third step, a questionnaire prototype was developed. The surveyinstrument was composed of three parts. In the first part, participants wereasked to select and describe a specific product they sourced from at least twosuppliers. The second part contained our final list of items tapping therelationship constructs. All items used seven-point rating-scales (1 ¼ “stronglydisagree”; 7 ¼ “strongly agree”). In the third part, participants were invited torespond to a set of questions describing themselves, their company, and thesupplier relationship. Finally, the prototype was submitted to six purchasingprofessionals to ensure that respondents correctly understood the directions andquestions provided in the survey instrument.

Empirical data were gathered in a cross-sectional survey among purchasingmanagers in manufacturing companies. The study was conducted in cooperation withthe Institute for Supply Management (ISM, formerly National Association ofPurchasing Managers – NAPM), the country’s national association of purchasingprofessionals. A total of 1,950 members of ISM were randomly selected from theassociation’s database. We selected only senior-level managers indicated by job titles,such as VP procurement, director of global sourcing, director of supply chainmanagement, purchasing manager, or senior buyer. In addition, only manufacturingcompanies (Standard Industrial Classification codes 28-30 and 33-39) were selected.

All managers received a cover letter, the survey instrument, and a business replyenvelope by mail. Subsequently a reminder letter was mailed two weeks after the firstcontact. Because the empirical study relied completely on the perceptions of keyinformants, it was important that respondents were competent to report on the supplierrelationship. Therefore, the survey contained a number of questions related to therespondent personal background, position, tenure with the company, as well as thelength of the relationship with the supplier. After completing the questionnaire,respondents were asked to respond to several questions related to their ability toportray the supplier relationship accurately. Specifically, they were asked to indicatehow confident they felt about answering the questionnaire, how involved with andknowledgeable they were about the supplier, and to which extent they could influencepurchasing decisions in the relationship with the main supplier.

Overall, 421 questionnaires were returned. A total of 21 were dropped due to lowrespondent competency or excessive missing data yielding a net response rate of 20.5per cent.

Sample characteristicsAlthough we limited our sample frame to manufacturers in chemical, mechanical, andelectrical industries (US Standard Industrial Classification codes 28, 30, 32-38),respondents purchased a broad variety of components for multiple applications.Customer organisations ranged from small enterprises to multi-billion dollarcompanies. On average, manufacturers had been buying from the main supplier for13 years, with a standard deviation of nine years.

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Respondent characteristicsRespondents held senior positions in their firms. They averaged 17 years of experiencein their area and had been with their companies 10.4 years, on average. Responsesregarding confidence about answering the survey and knowledge of the supplierrelationship were uniformly high, as suggested by mean ratings of 6.0 (confidence inanswering the survey), 6.01 (involvement in the supplier relationship), 6.15 (knowledgeabout the supplier), and 5.89 (influence of purchase decisions) on a seven-point scale.

Non-response biasWe assessed potential non-response bias using procedures recommended byArmstrong and Overton (1977). Companies were contacted in three waves ofmailings. Therefore, responses from the first mailing were compared with those fromthe second and third mailings by testing for mean differences on all variables includedin the study (see Hewett et al., 2002, for a similar procedure). Using multivariateanalysis of variance (MANOVA), each mailing wave was used as an independentvariable, and construct items were used as dependent variables. The p-values showedno statistically significant differences for these comparisons.

ResultsWe employed partial least square analysis (see Lohmoller, 1989, for a detaileddiscussion of the PLS algorithm) to explore the links between relationship value,relationship quality, and behavioural outcomes. Using the bootstrap procedurepackaged in the PLS-Graph software, one can calculate the standard deviation andgenerate an approximate t-statistic (Chin, 1998). This overcomes non-parametricmethods’ disadvantage of having no formal significance tests for the estimatedparameters.

Key properties of the measurement model are presented in Table I. Factor loadings,t-values, factor reliability, and average variance extracted confirm convergent validityof the scales. Discriminant validity was assessed using the Fornell and Larcker (1981)criterion (see Table II). The square root of the average variance extracted reached orexceeded the correlation between every pair of latent variables. This indicates asatisfactory level of discriminant validity.

Figure 1 shows the parameter estimates for the structural model. An overallgoodness-of-fit index cannot be reported because the objective of PLS is predictionversus fit. Our conceptual model has satisfactory predictive power. The varianceexplained (R 2) in endogenous constructs is 33 per cent for satisfaction, 76 per cent fortrust, 47 per cent for commitment, 63 per cent for expansion and 35 per cent forpropensity to leave, respectively.

DiscussionThis paper explored how to integrate performance-based measures such asrelationship value into the nomological network of relationship marketing. Based ona quantitative study among purchasing managers in the manufacturing industry, ourresults show that relationship value is positively correlated with relationship quality.With a standardised path coefficient of 0.57, relationship value has the strongestimpact on satisfaction. Though significant, its direct impact on trust (standardised

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Item Item formulationFactorloading t-value

Constructreliability

Averagevarianceextracted

value1 Compared with the second supplier the mainsupplier adds more value to the relationshipoverall 0.93 83.76 0.95 0.82

value2 Compared with the second supplier we gainmore in our relationship with the main supplier 0.93 104.41

value3 Compared with the second supplier therelationship with the main supplier is morevaluable 0.83 34.51

value4 Compared with the second supplier the mainsupplier creates more value for us whencomparing all costs and benefits in therelationship 0.92 119.73

satisfaction1 Our firm regrets the decision to do businesswith the main supplier 20.83 45.32 0.94 0.76

satisfaction2 Our firm is very satisfied with our mainsupplier 0.92 101.83

satisfaction3 Our firm is very pleased with what the mainsupplier does for us 0.93 109.32

satisfaction4 Our firm is not completely happy with themain supplier 20.84 41.40

satisfaction5 Our firm would still choose to use the mainsupplier if we had to do it all over again 0.85 44.10

trust1 The main supplier keeps promises it makes toour firm 0.81 34.88 0.93 0.72

trust4 The main supplier is genuinely concerned thatour business succeeds 0.88 60.58

trust5 The main supplier considers our welfare aswell as its own when making importantdecisions 0.87 60.05

trust6 Our firm trusts that the main supplier keepsour best interests in mind 0.79 29.51

trust7 The main supplier is trustworthy 0.89 77.43commitment1 The relationship with our main supplier is

something to which we are very committed 0.87 81.20 0.92 0.66commitment2 The relationship with our main supplier is

very important to our business 0.80 32.43commitment4 The relationship with our main supplier is

something our business intends to maintainindefinitely 0.82 50.92

commitment5 The relationship with our main supplier isvery much like being family 0.76 29.42

commitment6 The relationship with our main supplier issomething our business really cares about 0.85 44.54

commitment7 The relationship with our main supplierdeserves our business’ maximum effort tomaintain 0.76 23.43

expansion1 Our firm expects to expand its business withthe main supplier 0.95 174.54 0.95 0.84

(continued )

Table I.Properties of themeasurement model

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path coefficient ¼ 0:06) and commitment (standardised path coefficient ¼ 0:15) arerather weak.

Satisfaction and commitment both have a direct impact on the researchedbehavioural intentions. Satisfaction increases the intention to expand business with theincumbent supplier (standardised path coefficient ¼ 0:40) and decreases thepropensity to leave (standardised path coefficient ¼ 20:43). Commitment alsopositively impacts the intention to expand business (standardised pathcoefficient ¼ 0:23) and reduces the propensity to leave (standardised pathcoefficient ¼ 20:26). Trust, however, does not directly impact either of theresearched behavioural intentions.

These findings confirm and extend previous studies. They confirm Morgan andHunt’s (1994) fundamental assumption that trust leads to commitment. Contrary totheir KMV model, however, trust appears not to be an antecedent of behaviouraloutcomes but a mediator of the satisfaction-commitment link. This hypothesis issupported by Doney and Cannon (1997) who found that trust was not related tosupplier choice. As a potential explanation, the authors suggest that professionalbuyers focus on the superiority of the supplier’s offering rather than on subjectiveassessments of trust (p. 46). Our study shows that relationship value has a directimpact on the intention to expand business with the incumbent supplier (standardised

Item Item formulationFactorloading t-value

Constructreliability

Averagevarianceextracted

expansion2 The main supplier will receive a larger shareof our business in the future 0.94 123.57

expansion3 The main supplier will be used more over thenext few years than it is now 0.93 118.86

expansion4 Our firm does not expect to increase itspurchases from the main supplier in the future 20.84 33.20

leave1 Chances of terminating the relationship withmain supplier within next six months 0.78 21.78 0.91 0.78

leave2 Chances of terminating the relationship withmain supplier within next year 0.95 83.17

leave3 Chances of terminating the relationship withmain supplier within next two years 0.92 114.69 Table I.

1 2 3 4 5 6

1. Value 0.902. Satisfaction 0.57 0.873. Trust 0.54 0.85 0.854. Commitment 0.47 0.69 0.68 0.815. Expansion 0.59 0.74 0.69 0.65 0.926. Leave 20.37 20.56 20.48 20.52 20.55 0.88

Note: Numbers on the diagonal (in italics) show the square root of the AVE; numbers below thediagonal represent construct correlations

Table II.Discriminant validity

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path coefficient ¼ 0:22) as well as an indirect impact that is mediated by therelationship quality construct. Its impact on the propensity to leave is perfectlymediated by the latent variables forming the relationship quality construct.

ImplicationsFrom a managerial point-of-view, there are three major implications. First, our researchshows that relationship quality is crucial in managing the propensity to leave apurchasing relationship. Relationship value does not have a favourable impact unlessit translates into higher relationship quality that in turn reduces the propensity toleave. Offering superior value to the customer is a necessary but not sufficientcondition to stabilise purchasing relationships. With respect to the intention to expandbusiness with the supplier, however, relationship value appears to be a sufficientcondition. Relationship value has a positive impact even if it does not translate intorelationship quality. Finally, our research underlines the importance of trust buildingactivities within a relationship marketing approach. Satisfaction with the supplier willonly translate into commitment if the purchasing relationship is characterised by trust.Though it does not have a direct impact on either of the researched behaviouraloutcomes, trust is a pivotal constituent of relationship quality.

From a theoretical point-of-view, this study establishes the law like thegeneralisation that relationship value is an antecedent of relationship quality andbehavioural outcomes in the nomological network of relationship marketing. Law likegeneralisations enjoy a prominent position within Hunt’s (1991) conception of theorybuilding and testing. According to Hunt (1991, p. 164):

Figure 1.Structural model

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All purportedly theoretical constructions must contain law like generalisations because amajor purpose of theory is to explain phenomena, and all scientific explanations ofphenomena contain law like generalisations.

Law like generalisations are nomological statements with empirical content that areintegrated into a body of scientific knowledge. They serve an important role within thecontext of discovery and the process of theory building that is central to the furtherdevelopment of the marketing discipline (Deshpande, 1983).

Limitations and research directionsAs in any empirical research, the results of the present study cannot be interpretedwithout taking into account the study’s limitations. Furthermore, this researchgenerates a set of researchable questions that need to be addressed in future researchprojects.

First, the sample of purchasing managers of manufacturing companies selectedfrom the directory of an association of purchasing managers is not representative ofthe population of manufacturing companies. A randomised sample using other sourcessuch as large industry databases could be used. In addition, a replication of the studyin other countries would allow for a cross-border validation of our results.

Second, the primary objective of our study was to integrate relationship value intothe nomological network of relationship marketing. In doing so, we adopted a dyadicperspective that did not account for possible network effects. However, scholars havecalled for more research directed to the embedded context within which dyadicbusiness relationships take place. For example, Anderson et al. (1994, p. 2) suggested:

Network constructs that can be incorporated within dyadic business relationship models.

Hence, drawing on the value conceptualisation proposed by Walter et al. (2003), onecould replicate our study in a network setting.

Third, the present study assumes that Fishbein and Ajzen’s (1975) model can betransferred to our research context. We attempt to explain how purchasing manager’scognitive perceptions of value interact with their affective feelings of satisfaction, trust,and commitment to finally lead to their behavioural intentions to maintain andintensify a purchasing relationship. Fishbein’s framework provides theoreticalguidance with respect to the interplay between cognition, affection and behaviouralintentions. This is of particular importance because we cannot identify the direction ofcausal relationships based on cross sectional studies. Therefore, a longitudinal studyfocusing on the causal direction between value, satisfaction, trust, and commitmentrepresents a major research opportunity.

Finally, various variables may moderate the links between relationship value,relationship quality, and behavioural outcomes. Future studies may considermultiple-group-analysis to identify the impact of moderating variables on thenomological network.

We hope that this study stimulates further research that broadens the nomologicalnetwork of relationship marketing to include performance-based measure such asrelationship value. This may contribute to a better fit between relationship marketingmodels and managerial practice in business markets.

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About the authorsWolfgang Ulaga is Associate Professor of Marketing at ESCP-EAP European School ofManagement in Paris, France. His research interests focus on how firms create, deliver, andmeasure customer value in business markets. Wolfgang Ulaga is the corresponding author andcan be contacted at: wulaga@escp-eap.net

Andreas Eggert is Chaired Professor of Marketing at the University of Paderborn inGermany. His research interests focus on value creation and value claiming in businessrelationships.

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