Assessing the strategic fit between business strategies and business relationships in knowledge-intensive business services

Abstract

Drawing on the configuration theoretic approach, we posit that firms can improve both relationship performance and their overall firm performance through leveraging the structure of their business relationships, i.e. by accurately aligning their relationship structure with their specific business strategy. In the context of this research, we focus on the structural element of the relationship portfolio of a focal firm vis-à-vis its most important partners. We empirically test our argument within a sample of 254 knowledge-intensive business service firms and confirm the existence of an optimum relational configuration for each business strategy type. A fit as profile deviation analysis reveals that the more similar the configurations of relationship portfolio characteristics are to those of the top performing companies for their given business strategy type, the higher is both their relationship performance and their firm's performance. Several robustness tests lend additional support to this finding. Furthermore, we also conceptualize fit as covariation and find that relationship structure and business strategy co-vary, and that their coalignment significantly contributes to performance outcomes. We thus suggest that fit as covariation should be considered as a complementary approach to fit as profile deviation.