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How functional, psychological, and socialrelationship benefits influence individual and

firm commitment to the relationship Jillian C. Sweeney and David A. Webb

UWA Business School, University of Western Australia, Crawley, Australia

AbstractPurpose – This paper aims to extend previous research investigating the effect of relationship benefits on firm outcomes by developing a model thatincludes the effect on individual employees in the buyer firm. The model also aims to address benefits beyond the functional in business-to business(B2B) settings by including psychological and social benefits.Design/methodology/approach – The study is based on a survey of 275 B2B buyers in Australian manufacturing firms.Findings – The findings reveal that functional benefits enhance firm-level commitment to the relationship, whereas psychological and social benefitsaffect individual commitment to the relationship directly and firm-level commitment indirectly, thereby emphasizing the importance of considering theindividual as distinct from the firm. Given that the relationship is a process over time, and in recognition of the non-static nature of relationship benefits,the paper also explores the changes in benefits over relationship stages, including their impact on commitment. In contrast to expectations results showthat while all three types of benefits increase, there is no change in the impact of all three benefit types on commitment across relationship stages.

Practical implications – The study recognizes that the individual in the firm also benefits from B2B relationships and offers a measure of both firmand individual relationship benefits for use in future studies. The measure may also be used as a point of discussion about relationship management.Originality/value – The study is framed within social exchange theory and, is the first to simultaneously examine three types of relationship benefitsand their interaction with both the individual and firm viewpoint. The study is also one of the first to empirically examine changes in relationships overthe relationship stages.

Keywords Buyer-seller relationship, Benefits, Social benefits

Paper type Research paper

An executive summary for managers and executive

readers can be found at the end of this article.

Conceptual background

The growing recognition of the importance of buyer-supplier

relationships has focused research attention predominantly on

the positive outcomes that can be accrued by both buyer and

supplier firms (e.g., Crosby et al., 1990; Kalwani and

Narayandas, 1995). Extant literature recognizes the firm as

a social network in which individuals are the basis of the firm.

However, the existence and importance of relationship

outcomes accrued by those individuals in the buyer firm

(e.g., satisfaction with or commitment to relationship, job or

supplier) have been largely ignored in empirical research,

despite Ojasalo (2001) emphasizing the conceptual

distinction between firm and individual levels of benefits.

This notable omission from the business-to-business (B2B)literature makes it worthy of research attention.

Furthermore, previous studies have focused largely on the

functional (e.g., economic and strategic) benefits of interfirm

relationships, such as reduced costs, contract predictability,

purchasing efficiency, and quality (e.g., Cannon and

Homburg, 2001; Ghosh et al ., 1 99 7; K alwani and

Narayandas, 1995; Lyons et al., 1 99 0) . A lthoughnoneconomic aspects of a relationship, such as its social

elements, are recognized as important for understanding

relationship behavior (e.g., Anderson et al., 1 99 3;

Cu nningham and Tur nb ull, 1982; Wilson and

Mummalaneni, 1986), researchers have only recently sought

to understand the impact of interpersonal relationships

through empirical research (e.g., Bolton e t a l., 2003;

Haytko, 2004; Nicholson et al., 2001) by highlighting the

positive effect of social bonding in business relationships.

However, few studies directly compare both social and

functional aspects of the relationship (e.g., Bolton et al., 2003;

Murry and Heide, 1998; Wathne et al., 2001). Given the

importance of relationship marketing and because

relationships pertain to individuals, we believe that furtherresearch is warranted to understand the social aspects of

interfirm relationships.

Moreover, consistent with Gwinner et al. (1998), our

research identifies a distinct category of benefits, namely

psychological benefits that, though similar to trust, is

conceptually more inclusive and addresses perceptions of

reliability, empathy, support, understanding between parties,

and psychological assurance in a business relationship

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

www.emeraldinsight.com/0885-8624.htm

Journal of Business & Industrial Marketing

22/7 (2007) 474–488

q Emerald Group Publishing Limited [ISSN 0885-8624]

[DOI 10.1108/08858620710828854]

The authors are grateful to the UWA Business School for a series of smallgrants to assist in data collection.

474



context. In addition, this broader psychological concept is

consistent with customer-perceived value components, such

as solidarity, trust, reliability, and responsiveness, as identified

in a B2B context by Lapierre (2000), and also concurs with

the concept of psychological contracts originally introduced

by Rousseau (1990).

In summary, we seek to identify relationship benefits that

extend beyond the economic and non-economic descriptorsthat are too often adopted in the literature. In taking this

approach we demonstrate agreement with MacMillan et al.

(2005) that adopting a social exchange theory perspective

leads to the identification of a wider range of benefits beyond

the functional. Consistent with prior studies in both the B2B

and business-to-consumer (B2C) domains, we argue for the

need to recognize three distinct benefit categories: functional,

social, and psychological. We also extend research on benefits

by assessing their effect on commitment to the relationship. In

particular, we examine how they influence the relationship

commitment of an individual buyer involved in the

relationship and of the buyer firm. Such research enhances

our understanding of how commitment develops among

buyers, who are the customers in a B2B relationship.

Furthermore, as relationship marketing researchers have

become interested in the varying salience of attributes or

dimensions over time (e.g. Ring and Van de Ven, 1994), we

add a time dimension to our study by examining relationship

durational effects.

More specifically, the objectives of our study are as follows:. to examine the differential effects of functional, social, and

psychological relationship benefits on both firm- and

individual-level relationship commitment in a B2B

context;. to explore the effect of the duration of the relationship on

the level of relationship benefits; and. to investigate the relationship between benefits and

commitment across the duration of the relationship.

To address these objectives, we surveyed 275 employees

involved in a business relationship with a supplier firm. The

paper is laid out as follows: using the conceptual model that

we discuss following our overview of the relevant literature,

we formulate our hypotheses. We present the study’s results

and then turn our discussion to the main implications of our

findings for business firms. Finally, we conclude by identifying

some limitations and suggestions for further research.

Relationship benefits (B2B)

Many studies have identified the benefits of relationships in a

B2B context, most of which have been almost exclusively

based in economics, such as improved overall quality,

operating efficiencies, reduced transaction costs (e.g., Lyons

et al., 1990), stronger competitive position (e.g., Sheth and

Sharma, 1997), and business continuity (Han et al., 1993).

We view these benefits as broadly “functional” because they

reflect a particular firm’s distinctive functional competencies

(e.g., Sharma and Fisher, 1997). Thus, we define functional

benefits as the economic and strategic advantages derived

through an interaction with another firm that enhance firm

competitiveness and drive its financial position.

In contrast, the economic sociology literature takes a

somewhat unique stance toward benefits, positing that

economic transactions transpire within interpersonal

relationships, such that economic goals are inseparable from

non-economic goals such as status and sociability

(Granovetter, 1992). Granovetter (1992) contends that

people do not simply seek non-economic goals indirectly

through economic goals (e.g., status as the result of an

accumulation of economic resources) but rather, that non-

economic goals are central human motivations and therefore

inherent in economic transactions. Offering a similar view,

Frenzen and Davis (1990) and likewise Gummesson (2002)maintain that relationships cannot be viewed in isolation from

social relationships or from life itself. Corroborating this

stance, several researchers have argued that B2B relationships

may be motivated by both non- and economic motives

(Dwyer et al., 1987; Geyskens et al., 1999; Ghosh et al., 1997;

Ojasalo, 2001; Weitz and Jap, 1995; Wilson and Jantrania,

1995). In particular, the Industrial Marketing and Purchasing

(IMP) group has long recognized the existence and

importance of the social content of interaction in business

relationships, emphasizing that interaction is a social

performance through which participants get the opportunity

to develop social relationships which lead to trust,

commitment and relationship power (e.g., Cunningham and

Turnbull, 1982; Ford, 1997; Hakansson and Snehota, 2000;Turnbull et al., 1996; Wilson and Jantrania, 1995). Wilson

and Jantrania (1995), for example, emphasize that firms must

build both social and structural bonds to develop and protect

profitable customer relationships. Building such bonds with

key customers and segments, they argue, binds important

partners to the relationship, which creates not only a barrier

to competition but also a strategic advantage in the

marketplace. Understanding that which is valued in the

relationship is paramount for achieving this end.

Murry and Heide (1998), Price and Arnould (1999),

Nicholson et al. (2001), Wathne et al. (2001), and Haytko

(2004) all lend credence to the idea that interpersonal

relationships in B2B settings are crucial. Most recently,

through a series of in-depth interviews with account managers

in advertising agencies, Haytko (2004) finds that the

relationships that develop between managers and clients can

become highly personal over time as a deeper understanding

develops between them. Such relationships facilitate

operational and longer-term outcomes for both the

individual and the firm, though with a clear distinction

between business and truly personal relationships. Price and

Arnould (1999) report a similar finding in service provider-

client relationships.

Although several studies have addressed interpersonal

relationships in a B2B context, only two that we know of

have investigated the effect of both interpersonal relationships

and the economic aspects of relationships – such as price,

switching costs, and incentive premiums – on firm outcomes.

Both of these studies reveal that economic aspects are morecritical to outcomes (Murry and Heide, 1998; Wathne et al.,

2001), which seems to contradict the focus on interpersonal

relationships in the conceptual relationship marketing

literature and challenges the concept that a firm should

enhance its social relationships rather than its economic or

technical bonds, such as price incentives. However, Bolton

et al. (2003), in examining the effect of both social and

economic resources offered by a large telecommunications

company, to business customers, find that each affects buyer

satisfaction outcomes differentially. Namely, social resources

primarily influence satisfaction with an individual provider in

Functional, psychological, and social relationship benefits

Jillian C. Sweeney and David A. Webb


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the supplier firm, whereas economic resources largely affect

satisfaction with the supplier firm overall.

From the preceding, we can deduce that action is socially

embedded and thus cannot be explained by functional

motives alone. To the marketer, this conclusion may appear

unsurprising; the concept of exchange, which has been central

to the development of marketing knowledge for the past 30

years (e.g., Bagozzi, 1975, 1977; Ferrell and Zay-Ferrell,1977; Kotler, 1972), has long been differentiated along

economic and social lines.

With regard to the relationship marketing literature

specifically, several authors have discussed social exchange

(e.g., Anderson and Narus, 1990; Dwyer et al., 1987; Morgan

and Hunt, 1994). Dwyer et al. (1987, p. 12), for example,

posit that “relational exchange participants can be expected to

derive complex, personal, non-economic satisfactions and

engage in social exchange”. More recently, Arnett et al.

(2003) cite various studies (e.g., Anderson and Narus, 1990;

Dwyer et al., 1987; Lusch and Brown, 1996; Morgan and

Hunt, 1994; Smith and Barclay, 1997) in their argument that

social exchange theory is often used as a theoretical

foundation for commitment and trust in relationship

marketing. The authors further assert that “because

organizations often rely heavily on the promise of social

benefits from their products, it is important that they acquire

a better understanding of the factors that affect relationships

that involve primarily social exchange” (Arnett et al., 2003,

p. 91).

Bagozzi (1975, p. 36) was perhaps among the first to

distinguish the “social” from “psychological” factors, noting

that it is “the social and psychological significance of the

experience, feelings and meanings of the parties” that

underlies the exchange. More recently, researchers such as

Juttner and Wehrli (1995, p. 230) have identified psychosocial

factors as the “grease” in a relationship, in that the “focal

points for facilitating and maintaining relationships are the

psychological and social factors of the individual actors andtheir interacting.” Thus we propose that psychological

benefits, forms a third component of benefits in the B2B

context. Psychological aspects of the relationship have been

noted in the relationship literature (e.g. Geyskens et al.,

1999). A specific example is the concept of psychological

contracts which concern an individual’s belief that there is a

mutual obligation between the two parties (Kingshott, 2002,

2004). However, no study in the B2B literature has examined

psychological relationship benefits specifically.

The work of Gwinner et al. (1998) in a consumer service

context, offers support for these three levels of benefits,

including confidence, social, and special treatment benefits as

well as economic benefits. Confidence benefits, which

encompass trust, confidence, and reduced anxiety aspects,

emerge as the most important benefits for customers,

followed hierarchically by social and special treatment

benefits.

Providing a working base for our study, we define social

benefits as perceptions of affinity, friendship, and sharing with

another party. We define psychological benefits as feelings of

trust or confidence in the other party that result in greater

peace of mind.

We acknowledge that progress has been made in previous

research in terms of recognizing relationship benefits in B2B

contexts. However, several avenues, corresponding with our

objectives, still need to be pursued. First, we intend to explore

psychological as well as functional and social benefits.

Second, we are interested in understanding the role of such

benefits in developing commitment within the buyer firm.

Third, we examine such commitment at two levels, both the

individual and the firm. Specifically, we argue that

understanding the non-economic benefits inherent in

relationships, particularly those in the B2B context

represents a strategically important yet under researchedarea of study.

Relationship commitment

Commitment is central to the foundation of relationships and

successful relationship marketing (Berry and Parasuraman,

1991; Morgan and Hunt, 1994) and has often been explored

as a channel outcome (Geyskens et al., 1999). However, given

current interest in the individual in social exchange processes

(e.g., Ojasalo, 2001), we examine both individual- and firm-

level commitment to the relationship with the supplier.

Although benefits are an outcome of the relationship, we

argue that commitment is subsequent to benefits, because it

pertains to a behavioral intention to maintain the relationship

(e.g., Garbarino and Johnson, 1999; Morgan and Hunt,

1994). This ordering is supported by previous research that

has investigated the impact of relationship benefits on

commitment (e.g., Hennig-Thurau et al., 2002; Morgan and

Hunt, 1994).

Ojasalo (2001) argues that both the individual and the firm

benefit from B2B relationships. Recognizing that the

individual is the firm’s representative in a relationship

(Zeithaml et al. 2006), we agree that relationship benefits

will have a positive impact on both the individual and the

firm. We suggest that not only are relationship benefits likely

to vary in their impact on commitment, but also that the

impact will vary across individual (employee) and firmcommitment, as we discuss further when we develop our

hypotheses.

Variation in benefits over time

Given the developing nature of relationships, the various

stages that relationships pass through over time and the

different needs of buyer and suppliers at each stage (e.g.

Dwyer et al., 1987; Ford, 1980) it is likely that the nature and

role of relationship constructs will change over time. A review

of the literature shows that temporal aspects have become an

increasing focus of relationship marketing researchers (e.g.,

Bolton, 1998; Bolton et al., 2003; Doney and Cannon, 1997;

Jap and Ganesan, 2000; Lusch and Brown, 1996; Verhoef,2003). An understanding of relationship benefits at different

stages of the consumption process would assist in developing

a dynamic model of relationship benefits and outcomes.

Nonetheless, little empirical research has addressed either

the variation in the level of relationship constructs or the

change in the impact of relational constructs on outcomes

over time. Furthermore, the results of the few empirical

studies tackling these issues have been mixed. Given the

variety of benefits suggested by the literature, we aim to

examine the relationship among various relationship benefits

and commitment across time.




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Hypotheses development

Relationship benefits

We posit individual and firm-level commitment to the

relationship to be distinct. Specifically, though the

individual remains within and represents the firm, the

individual also is able to distinguish between reporting his

or her firm-level perceptions and those perceptions held at the

personal level. This claim is consistent with role theory, which

posits that an individual represents a collection of social roles;

that a role or socially defined position has a key impact on

behaviors; and that actors can choose, to some extent, the role

they play depending on the context (Arnett et al., 2003;

Montgomery, 1998; Solomon et al., 1985). Thus, an

individual might view him- or herself as an individual

working in a firm or as the collective entity of the firm itself,

because that individual is part of the firm. This approach is

consistent with that of Homburg e t a l. (2002), who

distinguish between a service orientation held at the

individual employee level (i.e. an individual characteristic)

and one held at the firm level (i.e. representative of the firm

view, culture, or strategy). It is also consistent with

Cunningham and Turnbull’s (1982) discussion of howinteraction within relationships serves clear personal and

organizational objectives.

Ojasalo (2001, p. 207) in support asserts that “a person

representing his or her company can be assumed to have the

best interests of the company in mind and, at the same time,

he or she also, as an individual, has his/her own personal

interests at heart”. Holmlund (1996) further argues that the

firm view can be represented by the person holding the power

about the continuation of the relationship, which is the

sample element for the present study. We concur and hence

argue that while the individual (employee) view is different to

the firm view, that both can be satisfactorily represented by

the key individual in the relationship in the buyer firm.

From our discussion of embeddedness, the concept that

relationships emanate from individuals, and the idea that

individuals together represent the firm (Ojasalo, 2001;

Zeithaml et al., 2006), we propose that:

H1. T he greater the individual com mitm ent to the

relationship, the greater the firm commitment to the

relationship will be.

Previous research has indicated that relationship benefits have

a direct impact on the buyer firm’s commitment to the

relationship (Morgan and Hunt, 1994), as well as on

customer commitment to the relationship in the consumer

context (Hennig-Thurau et al., 2002). We evaluate the effect

of relationship benefits on both individual employee and firm

commitment.

Specifically, we argue that though a relationship, in

principle, may be between two firms, psychological and

social benefits are generated through individual, one-to-one

relationships and that the overall relationship is developed

through personal associations, such as between the

salesperson and the representative of the buyer firm (e.g.,

Dwyer et al., 1987; Wilson and Jantrania, 1995). As Dwyer

et al. (1987) suggest, the individual is the primary recipient of

psychological and social benefits, not the firm. This dyadic

view of relationship exchange is consistent with social

exchange theory and serves as the basis f or m any

relationship marketing studies (e.g., Anderson and Narus,

1984; Selnes and Sallis, 2003; Sweeney and Webb, 2002).

Such benefits are therefore most likely to generate individual

commitment to the relationship, as evidenced by B2C studies

(e.g., Hennig-Thurau et al., 2002; Reynolds and Beatty,

1999). These benefits derived by the individual are also

realized at the firm level because of the embedded nature of

economic actions within interpersonal relationships

(Granovetter, 1992). Therefore, we argue that psychological

and social benefits indirectly lead to firm commitment to therelationship, as the effect of such benefits is filtered through

an individual or series of individuals involved in the

relationship. Bolton e t a l. (2003) similarly posit that

enhancing social capital drives interpersonal rather than

firm-level evaluations of a supplier firm. Hence:

H2. The greater the social benefits, the greater the

individual commitment to the relationship will be.

H3. The greater the psychological benefits, the greater the

individual commitment to the relationship will be.

We expect that functional benefits affect firm commitment

rather than individual commitment to the relationship,

because ultimately relationships are driven by profit goals

(Hastings, 2003). Previous research has found that economic

investments primarily affect organizational- rather thanpersonal-level evaluations (Bolton et al., 2003). Finally,

substantial previous research supports the importance of

functional benefits, including the monetary and strategic

benefits achieved by the firm (e.g., Ghosh et al., 1997; Han

et al., 1993; Lyons et al., 1990; Sheth and Sharma, 1997).

Thus:

H4 . The greater the functional benefits, the greater the firm

commitment to the relationship will be.

Levels of benefits over relationship stages and time

To date, conventional relationship marketing has focused on

long-term, committed, and affect-laden partnerships that

evolve over a period of time (e.g., Dwyer et al., 1987).

However, research must consider the length of therelationship and/or stages of the relationship because

exchange partners must build a base of successful exchange

before they will commit to deep relationships. The

exploration phase, for example, involves search and trial,

during which the partners explore the obligations, benefits,

and costs of the relationship (Dwyer et al., 1987; Holmes,

1991). Psychological and social processes underlie these early

proceedings and negotiations.

The next stage, expansion, reflects an increase in the

interdependence and realization of benefits (Dwyer et al.,

1987; Jap and Ganesan, 2000). Socialization processes infuse

transactions and interactions with relationship norms and

values, which enhances the likelihood that the relationship

will continue. In turn, the relationship becomes increasingly

socially embedded. Trust and satisfaction become well

established at this stage as the partners deliver on the terms

of their written contracts, as well as on their psychological

contracts (Ring and Van de Ven, 1994).

Finally, in the commitment phase of the relationship,

partners have pledged to continue the relationship, and both

firms experience fully developed benefits that preclude

consideration of replacement partnerships (Dwyer et al.,

1987; Jap and Ganesan, 2000). Because of repeated

interactions over time, the relationship becomes socially

embedded through a continual socialization process

(McGrath, 1984; Ring and Van de Ven, 1994). The length




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of the relationship, whether measured in years or stages,

represents the time invested in the relationship by both

parties, during which problems may have been addressed and

an increased understanding of the other party achieved

(Doney and Cannon, 1997; Naryandas and Rangan, 2004).

Similar propositions have been put forward in the consumer

context (Gwinner et al., 1998; Reynolds and Beatty, 1999).

However, the results of studies examining the increase in

benefits over the relationship duration have been mixed;

Doney and Cannon (1997) find no support for trust

development over time, whereas Reynolds and Beatty

(1999) investigating social and functional benefits find

support for an increase in the former but not the latter over

time. We therefore seek to examine the change in the three

types of benefits addressed in this study. Based on the

preceding argument, we hypothesize that:

H5 . The later the stage of the relationship, the greater the

level of a) psychological benefits; b) social benefits; and

c) functional benefits.

Effects of benefits on commitment over time

While we expect that benefits and commitment increase over

the duration of the relationship, we also believe that the

effectiveness of the benefits on the development of

commitment varies over the length of the relationship.

Hence, although we indicated in H5 that psychological and

social benefits would be lowest in the early period of the

relationship, we also propose that they play a more critical role

in increasing commitment in earlier rather than later periods.

The repetitive exchanges inherent in an embedded

relationship involve social interactions that lead to the

development of norms and values that facilitate economic

exchange (Ring and Van de Ven, 1994). Thus, commitmentbecomes “institutionalized through repetitive executions of

acts by the successors of the parties who come to share that

these acts are simply ‘the way things are done’” (Ring and Van

de Ven, 1994, p. 106). Bolton et al. (2003) argue that

customers with longstanding relationships require fewer

supplier resources to maintain their relationship satisfaction.

In essence, time promotes continuity, such that relationship

commitment becomes established and less dependent on

perceptions of psychological and social benefits. Wilson and

Jantrania (1995) similarly posit that psychological and social

aspects of relationships, such as satisfaction, trust, and social

bonds, are salient early in the relationship but become latent

in later stages. As functional benefits are the key reason forentering a relationship (Hastings, 2003), we also expect that

the impact of economic benefits on commitment does not

increase or decrease over the duration of the relationship.

Thus we propose that:

H6. The effects of a) psychological benefits and b) social

benefits on the individual’s commitment to the

relationship decrease over the duration of the

relationship.

H7 . The effect of functional benefits on firm commitment

to the relationship remains constant over the duration

of the relationship.

Method

Data collection

The target population for this study was the individual

employee who had prime responsibility for a relationship with

a supplier firm, with at least six months experience in this

role. We drew a random sample of firms from a database of

Australian manufacturing industries, to include 152 four-digitstandard industrial classification codes. Many authors have

used similar methods to assess B2B relationships (e.g.,

Anderson and Narus, 1984; Heide and John, 1990), and even

given the exploratory nature of the study, the sample frame

represents a reasonably broad variety of buyer-seller

relationships. Because the database does not provide

information about persons within the firm, we conducted

our data collection in two stages, as recommended by

Anderson and Narus (1990). First, we sent a letter by mail to

the managing director, in which we asked him or her to

provide us with contact details for up to four people in the

firm who dealt with various suppliers, along with the name of

each supplier firm. We included a postage-paid reply envelope

with this pre-survey request, and the approach enabled us toidentify almost 1,000 buyer-supplier dyads. Second, we

selected a contact at random from each of the 548 firm-level

responses and asked those contacts to respond to the survey

with respect to their relationship with the named supplier.

Subsequently, we sent a personalized letter, questionnaire,

and postage-paid reply envelope to each of the contacts. In all,

we received 275 questionnaires, representing a response rate

of almost 50 percent among the named contacts.

We tested non-response using the extrapolation method of

Armstong and Overton (1977), which is based on the

assumption that late responders are comparable to non-

respondents. A series of randomly selected items across the

questionnaire reveal no significant differences beyond that

which might have occurred by chance (5 percent of cases). Wetherefore conclude that non-response bias is not an issue.

Measures

We developed a draft of the questionnaire and tested it on

several businesspeople who were buyers in a B2B relationship.

Using a verbal report-back protocol, we identified several

points of confusion in the question wording or response

format. We then used this information to revise the scales and

the questionnaire for the main data collection phase.

Following standard construct scale development procedures

(Churchill, 1979; DeVellis, 2003), we developed multiple-

item scales to tap the psychological, social, and functional

benefits on the basis of a series of 20 in-depth interviews with

buyers. This way, we achieved a set of 29 items to representthe three relationship benefit themes.

The measure of firm-level commitment to the relationship

included three items representing the attitudinal, temporal,

and instrumental components of commitment, taken from

Morgan and Hunt’s (1994) relationship commitment scale.

For comparability, we measured individual-level commitment

to the relationship using equivalent items, distinguished by

the use of phrases such as “Something I am . . ./the firm is very

committed to . . . ” We obtained the relationship stages and

corresponding descriptions from Dwyer et al. (1987); we

provide details of the measures in Tables I and II.




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Results

Measurement model

The item set was reduced using an iterative process of

reliability analysis using item-to-total correlations (Churchill,

1979) together with exploratory factor analysis. Following this

stage, 14 items remained. Confirmatory factor analysis, using

structural equation modeling (LISREL 8.30 (Joreskog and

Sorbom, 1999)), strongly supports the three-factor structure

of relationship benefits (x 2 ¼ 401:96df ¼74, normed fit index

ðNFIÞ ¼ 0:95, confirmatory fit index ðCFIÞ ¼ 0:96, root

mean residual ðRMR Þ ¼ 0:06) (Table II). Although the

chi-square is significant, the other measures of goodness of fitare well above the recommended minimums (Bentler and

Bonett, 1980). The model is superior to a two-factor model,

in which we combined the psychological and social factors

(x 2 ¼ 677:81df ¼76, NFI ¼ 0:92, CFI ¼ 0:93, RMR ¼ 0:09),

and a one-factor model, in which we considered all benefits as

a single dimension (x 2 ¼ 884:61df ¼77, NFI ¼ 0:89,

CFI ¼ 0:90, RMR ¼ 0:09). The reliability of the three

dimensions and the commitment scales for the firm and the

individual are 0.86 or above in all cases (Table III).

We find support for distinction between all pairs of

constructs, including the three types of benefits and two

Table I Details of scales used to represent constructs

Scale

No. of

items Source of measure Sample items

Relationship benefits

Psychological 5 Developed for the study As per Table 2

Functional 5

Social 4

Individual/firm commitment to

the relationship

3 Morgan and Hunt (1994) Something that I am (the firm is) very committed to

Something I (the firm) intend(s) to maintain indefinitely

Something I (the firm) will expend every effort to maintain

Relationship stage 1 Measure based on Dwyer et al.’s

(1987) descriptions

Respondents asked to select from the following:

Exploration: potential exchange partners consider costs and benefits of the

relationship. Expectations of behavior and ground rules of future exchange

are developed

Expansion: benefits of the relationship become more apparent, and the firms

become increasingly interdependent. The relationship expands because of

the each party’s satisfaction with the other’s role performance and associated

benefits

Commitment: a pledge of continuity between exchange partners. A level of

satisfaction is reached, such that the buyer is not actively considering

replacing the exchange partner with an alternative that offers similar benefits

Dissolution: the relationship has been dissolved or terminated

Length of relationship Developed for the study How long have you personally (has your firm) been dealing with xyz? (up to

six months . . . more than ten years)

Table II Scale items used for the measures

Construct No. of items Measurement Items Loadinga

Psychological benefits 5 We have peace of mind in dealing with them 0.89

We trust them 0.90

We know what to expect of/from them 0.79

If they give us their word, we know that whatever it is, it will be done 0.87

There’s a real sense of understanding between us 0.79Functional benefits 5 Having a relationship with them enables us to compete in the market 0.82

We are able to capitalize on the value they offer 0.81

As a result of the relationship, we are able to maximize financial outcomes 0.85

We complement each other in terms of expertise 0.82

Our relationship sets up proactive opportunities 0.84

Social benefits 4 We have more than a formal business relationship with them 0.72

We have a real friendship with them 0.86

We work on things together 0.78

We share information 0.83

Note: a Loading based on confirmatory factor analysis results. Results for three-factor scale: x 2¼401:96, df ¼ 74, RMR ¼ 0:06, NFI ¼ 0:95, CFI ¼ 0:96




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types of commitment, using the discriminant validity tests

recommended by Anderson and Gerbing (1988) and Garver

and Mentzer (1999). First, the chi-square difference test

compares a model in which the correlation between a pair of

constructs is set to 1 with a model in which the correlation is

allowed to vary. This tests whether in fact the constructs are

the same (null hypothesis). The chi-square values in the upper

triangle in Table III demonstrate significant differences

between all pairs of constructs. Second, the correlation

confidence interval test uses the correlation plus or minus two

standard errors to identify whether the correlation between

the pairs is significantly different than 1 (again testing whether

the constructs are the same). The values of the correlations

and standard errors in the lower triangle in Table III also

support discriminant validity between all pairs of constructs.

Structural model

We derived the full structural model from our hypotheses and

present the model results in Table IV. In testing H6 and H7 ,we split the sample in two to represent shorter- and longer-

term relationships, which reduced the effective sample to just

over 200. At this stage, we turned to a partial disaggregation

approach to reduce the number of parameters to be tested,

based on the recommended ratio of observations to

parameters (Bagozzi and Heatherton, 1994; Kline, 1998), as

we discuss in the Appendix. Table IV and Figure 1 provide the

results of the hypothesized structural model, which represents

the interrelationships among the constructs.

The overall fit was good (x 2 ¼ 98:55df ¼28, NFI ¼ 0:98,

CFI ¼ 0:98, RMR ¼ 0:02). Specifically, our research model

differentiates between individual and firm commitment to the

relationship. The results that appear in Table IV support H1,

which proposes that firm commitment increases with

individual employee commitment to the relationship

(standardized loading b ¼ 0:41, t ¼ 6:59).

The proposed model results also show that the key driver of

individual commitment to the relationship is the social

interaction between the buyer and seller (b ¼ 0:68, t ¼ 7:68),

including a sense of sharing, working together, and friendship.

Psychological benefits derived from a sense of understanding,

peace of mind, trust, and confidence in the other partner also

play a significant, though lesser, role in developing individual

commitment to the relationship (b ¼ 0:19, t ¼ 2:37). Thus,

we find support for H2 and H3. H4 , which predicts that

increases in functional benefits lead to increases in firm

commitment, also is supported (b ¼ 0:50, t ¼ 7:85). The

perception of the economic and strategic advantages of

conducting business with the supplier, in terms of the value it

offers, the financial outcomes, and the ability to leverage the

relationship to derive strategic advantages, increases firm

commitment to the relationship.

Modification indices do not suggest allowing any further

paths be inserted to improve the model; for example,psychological and social benefits do not directly influence

firm commitment to the relationship in the model, nor do the

functional benefits realized by the firm enhance individual-

level commitment to the relationship. According to the total

effects of benefits on commitment, social benefits are clearly

the most influential overall on individual commitment,

whereas functional benefits are important in enhancing

firm-level commitment. However, social benefits also play a

clear role in developing firm-level commitment through the

fulfillment of individual commitment (Table V).

Alternative model

The need to investigate a plausible rival model to test the

robustness and validity of the proposed model has been well

Table III Measurement information, correlation matrix, and discriminant validity

Constructs Mean Standard deviation Reliability Average variance extracted 1 2 3 4 5

1 Psychological benefits 4.53 1.08 0.91 0.72 41.20 38.52 35.12 34.87

2 Social benefits 4.27 1.60 0.86 0.65 0.72 35.46 26.08 33.55

(0.03)

3 Functional benefits 4.62 1.44 0.90 0.67 0.73 0.83 33.02 19.35

(0.03) (0.03)4 Individual commitment 4.85 1.53 0.90 0.80 0.69 0.83 0.74 19.31

(0.04) (0.03) (0.03)

5 Firm commitment 5.20 1.56 0.94 0.87 0.68 0.72 0.82 0.81

(0.04) (0.03) (0.02) (0.02)

Notes: Correlations (and standards errors) are below the diagonal. The chi-square differences between constrained and unconstrained correlations betweenpairs of constructs (Anderson and Gerbing, 1988) are above the diagonal

Table IV Standardized path estimates for proposed models

Proposed model

Paths Loading t -value

H1: Individual commitment to the relationship ! firm commitment 0.41 6.59

H2 : Social benefits ! individual commitment 0.68 7.68

H3 : Psychological benefits ! individual commitment 0.19 2.37

H4 : Functional benefits ! firm commitment 0.50 7.85

Notes: Model fit: Chi square ¼ 98:55; df ¼ 28; RMR ¼ 0:02; NFI ¼ 0:98; CFI ¼ 0:98; goodness of fit index ðGFIÞ ¼ 0:94




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established (e.g., Kelloway, 1998). In our alternative model,

we consider functional benefits as central to the relationship

and hypothesize that both psychological and social benefits

enhance these central functional benefits. The rival model

provides a poorer fit in terms of the chi-square value

(203:54df ¼30) comp are d with the proposed model

(98:55df ¼28), and the RMR is higher (0.07 versus 0.02).

The other fit statistics are similarly less impressive for the rival

model. Overall, we conclude that on both measurement and

conceptual grounds, the proposed model is superior.

Difference in benefits over relationship stages

Our results support H5 ; that is, relationship benefits increase

over the stages of the relationship. The analysis revealssignificant variation in benefits according to the different

stages (Table VI). Whereas psychological benefits increase

over the stages of the relationship, social benefits are greatest

during the expansion stage, and functional benefits are great

during both the expansion and commitment stages of the

relationship.

Difference in effect of relationship benefits on

commitment over the relationship

To test the differences in the relationship between the three

types of benefits and relationship commitment across the

relationship duration (H6 and H7 ), we operationalized the

moderating role of time in three alternative ways: relationship

stages, the length of the relationship of the buyer firm with the

supplier firm in years, and the length of the relationship of the

individual respondent in the buyer firm with the supplier firm

in years. While we do not view the years of the relationship to

be the same as the stage, since some relationships develop

faster than others, identifying similar trends over time would

add validity to the findings. We used two groups in each case:

Figure 1 Proposed model results

Table V Total effects on endogenous constructs

Effect of !

Social

benefits Psychological benefits

Functional

benefits

on # n t value n t value n t value SMCa for structural equations

Individual commitment to the relationship 0.68 7.68 0.19 2.37 0.69

Firm commitment to the relationship 0.28 5.15 0.08 2.23 0.50 7.85 0.71

Note: a SMC ¼ squared multiple correlation

Table VI Means of level of perceived benefits received according tostage of relationship

Dimension

Exploration

(n 5 26)

Expansion

(n 5 59)

Commitment

(n 5 178)

Psychological benefits 4.17 5.44 5.66 *

Social benefits 2.92 4.63 4.42 *

Functional benefits 3.41 4.79 4.79 *

Notes: Results for multivariate test (all three benefits simultaneously):Test ¼ Wilks’ Lambda; Value ¼ 0:850; F value ¼ 7:282* significantdifferences were generally found between benefits at the exploration andexpansion stages, the exploration and commitment stages, and the

commitment and dissolution stages;*

p , 0:

01




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relationships in the exploration/expansion stages compared

with the commitment stage, relationships of up to five years in

duration com pared w ith m ore than ten years, and

relationships with the supplier experienced by the individual

respondent in the buyer firm of up to three years compared

with more than five years. We provide our rationale for the

sample split in the latter two cases in our discussion of the

partial disaggregation approach in the Appendix. To assessthe difference in parameters for the benefit-commitment

paths across the early and more established relationship

groups, we compared two models using multi-group

modeling. The first model constrained all parameters

(except error variances) to be equal across groups; in the

second, the benefit– commitment path was freed (Bollen,

1989). According to the results, the effect of social benefits on

individual commitment seems greater in the early exploration/

expansion stage of the relationship (0.71) than in the

commitment phase (0.68) (Table VII). We found similar

results for the lengths of the firm and individual relationships

with the supplier firm (Tables VIII and IX), although the chi-

square difference tests were non-significant in all three cases.

We obtained similar results for psychological commitment,which means H6a and H6b are not supported. However, as

we expected, the impact of functional benefits on firm

commitment did not significantly change across the

relationship, in support of H7 .

Finally, we further assessed the strength of our model by

evaluating the appropriateness of individual commitment to

the relationship as a mediator of the relationship between

psychological and social benefits and the firm-level

commitment. That is, we questioned whether individual

commitment accounts for the majority of the effect of the

psychological and social benefits on firm commitment. To this

end, we employed the test procedure recommended by Baron

and Kenny (1986). As the second and third columns of Table

X show, both psychological and social benefits influenced the

individual commitment mediator variable, as well as the

dependent variable, firm commitment. However, when we

take both benefits and individual commitment into account inmodeling the dependent variable, firm commitment, we find

that the effect of psychological and social benefits on firm

commitment reduces to insignificance, in support of the

mediating role of individual commitment. This supports the

validity of modeling commitment in the way we have (i.e. as

individual commitment increases, so does firm commitment).

Discussion

Theoretical implications

This research represents the first empirical examination of the

effect of relationship benefits on both firm and individual

commitment to the relationship. Furthermore, this study

empirically investigates the effect of three primary types of benefits – functional, psychological, and social – on

relationship outcomes in a business setting. In this way, our

research reinforces the claim that firms must consider

relationship benefits at distinct levels. Furthermore, the

importance of social and psychological benefits supports the

inclusion of social exchange mechanisms in marketing (e.g.,

Bagozzi, 1975). Although similar studies have been

conducted in a consumer setting (e.g., Gwinner et al., 1998;

Hennig-Thurau et al., 2002), to our knowledge, only the

Table VIII Tests of moderating effect of time on impact of relationship benefits to commitment – length of supplier relationship with firm

Parameters invariant Free SB to IC Free PB to IC Free FB to FCacross two groupsa #5yrs >10 yrs #5yrs >10 yrs #5yrs >10 yrs

PB to IC 0.33 0.44 0.28

SB to IC 0.59 0.63 0.56

FB to FC 0.39 0.33 0.41

IC to FC 0.37

x 2 147.76 147.28 146.08 146.71

df 73 72 72 72

Notes: PB ¼ psychological, SB ¼ social, FB ¼ functional benefits, IC ¼ individual, and FC ¼ firm commitment to the relationship. Nonstandardized valuesshown to ensure parameters same for fixed paths across models. a except for error variances of items, unique to each item and allowed to vary (Bollen, 1989)

Table VII Tests of moderating effect of time on impact of relationship benefits to commitment – relationship stages

Parameters invariant Free SB to IC Free PB to IC Free FB to FC

across two groups

a

Stages 1-2

b

Stage 3 Stages 1-2

a

Stage 3 Stages 1-2

a

Stage 3PB to IC 0.16 0.21 0.14

SB to IC 0.68 0.71 0.68

FB to FC 0.35 0.41 0.33

IC to FC 0.46

x 2 148.67 148.58 148.36 147.14

df 73 72 72 72

Notes: PB ¼ psychological, SB ¼ social, FB ¼ functional benefits, IC ¼ individual, and FC ¼ firm commitment to the relationship. Nonstandardized valuesshown to ensure parameters same for fixed paths across models; a except for error variances of items, unique to each item and allowed to vary (Bollen, 1989);b stages 1 and 2 refer to exploration and expansion and stage 3 to commitment stage, as suggested by Dwyer et al. (1987)




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effects of economic and social relationship aspects on

outcomes have been studied in the B2B context (e.g.,

Bolton et al., 2003; Murry and Heide, 1998; Wathne et al.,

2001).

The functional benefits we identified include economic

value and strategic advantages, such as competitive

positioning and operational factors, which are consistent

with a variety of previous research studies (Barringer, 1997;

Lyons et al., 1990; Sheth and Sharma, 1997). However, our

research broadens the meaning of social benefits identified in

previous research (e.g., Wathne et al., 2001) to include the

concepts of working together and sharing. This extended

meaning concurs with the findings of Haytko (2004) and

Ganesan (1994) who identify a partnership aspect of

relationships. Our research also identifies the distinct

category of psychological benefits that, though similar to

trust, is more inclusive and addresses perceptions of

reliability, empathy, support, understanding between parties,

and psychological assurance. The dimensions we use are

similar to those found in the consumer setting by Gwinner

et al. (1998) but are more specific to the B2B context. The

broader psychological component also is consistent with

certain customer-perceived value components identified in a

B2B context by Lapierre (2000).

Previous research by Murry and Heide (1998) and Wathne

e t al . (2001) demonstrates that B2B customers view

interpersonal relationships as of minimal importance

compared with incentive premiums, switching costs, and the

market variables of price and product assortment when they

consider customer outcomes such as participation in a

promotional campaign or switching. We similarly find that

economic/strategic benefits are most important in developing

firm commitment. Our findings, however, show that both

psychological and social benefits enhance individual

commitment. This result has some correspondence with

research by Bolton et al. (2003), who find that economic and

social resources provided by the supplier differentially affect

satisfaction with the supplier representative and the supplier

firm itself.

Our results highlight the importance of the role of the

individual employee in contributing to overall firm-level

commitment to the relationship, as well as the indirect role of

the “softer” psychological and social benefits for firm

outcomes. The significant though indirect effect of

psychological and social benefits on firm-level commitment

is consistent with the concept of embeddedness; namely,

economic action is embedded in social relationships

(Granovetter, 1992).

Turning our attention to the duration of the relationship,

we find that relationship benefits generally increase over the

stages of the relationship, as previously conceptualized by

Dwyer et al. (1987). Increasing levels of benefits might be

Table IX Tests of moderating effect of time on impact of relationship benefits to commitment – length of supplier relationship with respondent inbuyer firm

Parameters invariant Free SB to IC Free PB to IC Free FB to FC

across two groupsa #3yrs >5 yrs #3yrs >5 yrs #3yrs >5 yrs

PB to IC 0.29 0.46 0.24

SB to IC 0.64 0.73 0.61

FB to FC 0.34 0.38 0.33IC to FC 0.47

x 2 156.56 153.94 154.18 156.28

df 73 72 72 72

Notes: PB ¼ psychological, SB ¼ social, FB ¼ functional benefits, IC ¼ individual, and FC ¼ firm commitment to the relationship. Nonstandardized valuesshown to ensure parameters same for fixed paths across models. a except for error variances of items, unique to each item and allowed to vary (Bollen, 1989)

Table X Mediation tests for individual commitment to relationship

Equation 1 Equation 2 Equation 3

Mediator: Individual

commitment5

f ðindependentÞ

Dependent: Firm

commitment5

f ðindependentÞ

Dependent: Firm commitment 5

f (independent and mediator)Coefficients for the

independent

variables

Coefficients for the

independent

variables


independent

variables


mediator variable

Independent variable n t value n t value n t value n t value

Psychological benefits 0.18 2.14 0.29 3.47 0.12 1.57 0.16 1.34

Social benefits 0.70 7.32 0.49 5.46 0.16 1.34 0.71 7.30

Individual commitment !

Firm commitment n/a n/a 0.55 5.30

SMC individual commitment 0.70 0.70

SMC firm commitment n/a 0.53 0.62

Note: SMC ¼ squared multiple correlation for structural equations




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explained through social exchange theory, in that the

developing relationship becomes more socially embedded,

and due to repeated interactions, benefits become increasingly

realized. However, the increase is not uniform, suggesting a

need for further investigation of why this may be the case.

While the effect of functional benefits on firm commitment to

the relationship remains constant over the duration of the

relationship, as hypothesized, the impact of social andpsychological benefits does not decrease, as we had

expected. Thus these benefits not only appear to increase,

but also continue to boost individual commitment to the

relationship over the relationship duration. Thus it would

seem that buyers are mindful of psychosocial aspects of the

relationship throughout and that the institutionalization of

activities and opinions, discussed by Ring and Van de Ven

(1994) does not apply in this case. Further research should

investigate this phenomenon in more detail.

Managerial implications

By understanding the variety of benefits involved in a

relationship, both buyers and suppliers can address with

greater holism the factors that are important in B2B

relationships. This is not to suggest that firms have

previously ignored these factors, rather, we merely point out

that a more open and integrated stance needs to be adopted in

terms of recognizing the full spectrum of benefits. In fact, we

suggest that there is place for “social” and “psychological”

factors on the strategic agenda as well as for “functional”. As a

broad starting point, managers of supplier firms might

consider for each of their “key” relationships how they are

faring against the content of each of the items included in our

survey battery (Table II). We suggest that suppliers are best

positioned to determine what more they could do to add extra

value to these “key” relationship dimensions. We also suggest

that managers might benefit from opening a dialog around

these issues with relationship partners. The scale can also be

used by suppliers as a measure of buyers’ relationship benefitsbased on buyer feedback, or even expected buyer feedback.

More specifically, because employees exist within the firm

and are together viewed as the firm (Zeithaml et al., 2006),

suppliers should focus their attention on enhancing buyers’

realization of social benefits in particular, as well as

psychological benefits and, of course, functional benefits in

order to cultivate buyer commitment. Developing social

benefits clearly takes time, as evidenced in the present study,

which means that perseverance, educating the buyer,

encouraging cooperation, sharing information, and gestures

of friendship are necessary to achieve such benefits.

Psychological benefits also have an indirect impact on the

firm through the individual, and the supplier firm might use

several strategies and tactics to increase them, such as setting

clear targets and expectations of what the supplier can do for

the buyer, promptly rectifying problems, and being reliable.

Finally, regular communication of expectations and goals, a

focus on distinct competencies, and the modification of

process and production to promote greater interfirm

compatibility enhance functional benefits. Both buyers and

suppliers in B2B relationships must focus on such functional

considerations, because these factors ultimately underlie

relationship development (Hastings, 2003). However, clearly

the relative importance of such benefits may vary from

customer to customer, and it is important that suppliers

identify the unique needs of each buyer firm.

Limitations and future research suggestions

We note some limitations of our research. First, our study is

cross-sectional, and therefore the inference of causality or the

directionality of the relationships is tenuous and highly

dependent on the correct specification of the model. The

validity of the model would be strengthened if it were tested

using longitudinal data. Nonetheless, our model is no

different than many other cross-sectional models tested(e.g., Garbarino and Johnson, 1999; Wathne et al., 2001)

and furthermore tests the proposed model against an alternate

model, which partially allays such concerns. Second, our

model, though parsimonious, is selective in the constructs

used. Relationship components such as service factors,

product and price factors, supplier firm and salesperson

characteristics are all known to be important factors in

relationship formation (Barringer, 1997; Doney and Cannon,

1997; Ghosh et al., 1997; Lyons et al., 1990; Wathne et al.,

2001) and are likely to act as antecedents to the relationship

benefits considered in the present study. Thus future research

may integrate these aspects, offering insights as to what

contributes specifically to each benefit type. Similarly,

relationship structure, such as the number of peopleinvolved in the relationship in supplier and buyer firms,

interdependence or power asymmetry and the norms

established in the relationship may also be usefully

examined in terms of their impact on relationship benefits

(Barringer, 1997; Geyskens et al., 1996; Robicheaux and

Coleman, 1994). Considering the outcomes, the effect of

benefits on other outcomes beyond commitment, such as job

satisfaction and firm performance is also a useful research

direction. T hird, our results represent buyers in

m anuf acturing firm s; even though w e included no

restriction on the type of industry the suppliers represented,

the generalizability of the findings may be limited. We

restricted our study to control extraneous sources of variation,

a common practice in many studies (e.g., Doney and Cannon,

1997; Morgan and Hunt, 1994), but further studies should be

conducted across different sectors. For example, given the

focus on internal and interactive marketing in service contexts

(Zeithaml et al., 2006), a useful extension to this study might

address whether psychological and social relationship

benefits, received by the service employee from interactions

with their own firm or interactions with their customers play a

significant role in developing employee commitment to

customer relationships and the service quality delivered.

Finally, given relationships are of course two-way, and only

one side of the dyad is evaluated in the present study, future

research can examine relationship benefits experienced by

both parties and the cross-implications of this.

We find that relationship benefits generally increase over the

different stages of the relationship but that these increases arenot uniform. We suggest further investigative research to

explore this finding more fully. We also suggest further

research into moderating factors other than time. For

example, a fruitful approach might examine the moderating

role of interimistic relationships (i.e. deliberately short-term,

as for a specific project, often both competitive and

collaborative) compared with enduring relationships (Lambe

et al., 2000). Such relationships have become increasingly

common (Wilson and Jantrania, 1995), and psychological and

social benefits may not play as significant a role in their

development.




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Based on Granovetter’s (1992) suggestion that attachments

to others may modify economic action and therefore that

social aspects may enhance positive or reduce negative aspects

of economic exchanges, psychological and social benefits may

act as moderators of the effect of functional benefits on firm

outcomes. Bolton et al. (2003) investigated the augmenting

role of social bonds on the effect of economic resources on

relationship evaluation, but found no direct support for such arelationship. Given the meager support for this concept in

previous research, we suggest that it represents a fruitful

future research direction.

The consistency in the benefits that each party seeks, as it

pertains to the principle-agent relationship, might provide an

interesting avenue for further research. For example, our

study has revealed that social benefits have the greatest effect

on the individual, whereas functional benefits have the

greatest effect on the firm. If the motivation with respect to

the benefits sought is inconsistent, the potential for principal-

agent problems may be greater. Building on work by

Vermillon et al. (2003), we suggest that research should

focus principal-agent relationships not solely at a teleological

level but at the deontological level as well. This expansion

would extend the work on principal-agent relationships,which makes it a topic worthy of investigation.

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Appendix

The partial disaggregation approach involves combining

variables into subgroups, thereby reducing the number of

parametersto be estimated (Bagozzi and Heatherton, 1994). In

our case, the approach ensures that when we assess the

moderating power of the length and stage of the relationship,

our number of observations wasat least fivetimesthe numberof

parameters to be estimated (Kline, 1998). We compared

specific hypothesized paths across two groups that represented

more recently and longer established relationships, which we

developed so that they were maximally different by excluding amiddle value in the scales. For example, the length of the

supplier relationships with the firm was either five years or less

(n ¼ 79) or more than ten years (n ¼ 122), so we excluded

relationships of five to ten years’ duration. We also considered

the need to balance sub-sample sizes. Because the total sample

size across the two groups was 201 for length of the firm-

supplier relationship, 229 for the length of the individual-

supplier relationship, and 243 for the exploration/expansion

versus commitment stages, we needed to reduce the number of

parameters to be estimated, using the partial disaggregation

approach, to 38, which is consistent with Kline’s (1998)

recommendation. This structure represents the case in which

one structural parameter is freed at a time, the procedure that

we adopted (see Tables VII-IX).

Corresponding author

Jillian C. Sweeney can be contacted at: jsweeney@

biz.uwa.edu.au

Executive summary and implications formanagers and executives

This summary has been provided to allow managers and executives

a rapid appreciation of the content of the article. Those with a

particular interest in the topic covered may then read the article in




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toto to take advantage of the more comprehensive description of the

research undertaken and its results to get the full benefit of the

material present.

How functional, psychological, and social relationship

benefits influence individual and firm commitment to

the relationshipPicture the scene. A group of employees spending rather more

time than an employer might think they should, hanging

round the coffee machine and chatting. “Stop hanging about,

and get on with your work” might be one employer’s reaction.

What the boss probably did not realize was that it was through

these informal conversations at relatively slack parts of the day

that some of the company’s most important work was being

done – employees sharing work experiences and together

figuring out how best to get the job done and satisfy the

customer.

Stopping the social interaction in the expectation that

employees could use their time doing some “real work” might

prove to be false economy. But it is not just social interaction

with colleagues which has benefits for companies. It is the

bonds and friendships which flourish within the marketplacebetween, for instance, supplier and buyer organizations.

Individual employees are far better and developing trust and

confidence in an organization that the organization as an

entity.

Anthropologists could fill a library with books on the

subject. So, too, could marketing academics. However, the

fact that many enlightened companies now accept that it is

people, not organizations, which get things done and that

people are the organization, does not mean to say they would

not benefit from a clearer understanding of how the

functional aspects of doing business fits in with social and

psychological factors.

J il lian C. S weeney and David A . Webb say: “By

understanding the variety of benefits involved in arelationship, both buyers and suppliers can address with

greater holism the factors that are important in B2B

relationships. This is not to suggest that firms have

previously ignored these factors, rather, we merely point out

that a more open and integrated stance needs to be adopted in

terms of recognizing the full spectrum of benefits. In fact, we

suggest that there is place for ‘social’ and ‘psychological’

factors on the strategic agenda as well as for ‘functional’.”

Functional benefits are the economic and strategic

advantages derived through an interaction with another firm

that enhance firm competitiveness and drive its financial

position. However, action is socially embedded and cannot be

explained by functional motives alone. The concept of

exchange, which has been central to the development of

marketing knowledge for the past 30 years, has long beendifferentiated along economic and social lines. The authors

propose that psychological benefits forms a third component

of benefits in the B2B context, defining social benefits as

perceptions of affinity, friendship, and sharing with another

party, and psychological benefits as feelings of trust or

confidence in the other party that result in greater peace of

mind.

In a study of employees of buyer firms, who had prime

responsibility for a relationship with a supplier firm, they

found support for their hypotheses that:.

T he greater the individual com mitm ent to therelationship, the greater the firm commitment to the

relationship will be.. The greater the social benefits, the greater the individual

commitment to the relationship will be.. The greater the psychological benefits, the greater the

individual commitment to the relationship will be.. The greater the functional benefits, the greater the firm

commitment to the relationship will be.

They were also supported in their view that, the later the stage

of the relationship, the greater the level of all three benefit

types.

The authors suggest that managers of supplier firms might

consider for each of their key relationships how they are faring

against the content of each of the items included in theirsurvey of buyers, which were:. Psychological benefits. We have peace of mind in dealing

with them. We trust them. We know what to expect of/

from them. If they give us their word, we know that

whatever it is, it will be done. There’s a real sense of

understanding between us.. Functional benefits. Having a relationship with them

enables us to compete in the market. We are able to

capitalize on the value they offer. As a result of the

relationship, we are able to maximize financial outcomes.

We complement each other in terms of expertise. Our

relationship sets up proactive opportunities.. Social benefits. We have more than a formal business

relationship with them. We have a real friendship withthem. We work on things together. We share information.

Sweeney and Webb suggest that suppliers are best positioned

to determine what more they could do to add extra value to

these “key” relationship dimensions and also suggest that

managers might benefit from opening a dialog around these

issues with relationship partners. The scale can also be used

by suppliers as a measure of buyers’ relationship benefits

based on buyer feedback, or even expected buyer feedback.

Suppliers should focus attention on enhancing buyers’

realization of social benefits in particular, as well as

psychological benefits and, of course, functional benefits in

order to cultivate buyer commitment.

(A precis of the article “How functional, psychological, and social relationship benefits influence individual and firm commitment to

the relationship”. Supplied by Marketing Consultants for

Emerald.)




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