Social relationship cycle for managing small intermediary businesses: Evidences from India

Abstract

Small businesses in emerging markets face several challenges that are difficult for individual firms to meet on their own, and thus require creative collaboration with other businesses. Using in-depth interview-based exploratory study and the premise of social exchange and dynamic capabilities, we theorize that small businesses engage in a cyclical process with the manufacturer firm. It involves allowing products to be dumped (i.e., ‘Dumping’) in certain situations, while on other occasions providing a cooling-off period (i.e., ‘Releasing’). Based on behavioral learning, we further argue that this Dumping-Releasing cycle is a perpetuating managerial action, which managers alter across size and location of the small firm, resulting in overall superior performance for the manufacturer as well as the small firms. The hypotheses of this model were tested using 34,434 purchase instances over a 92-week period gathered from 2167 small businesses in India. How the study contributes to theory and practice, and potential research opportunities is discussed.