The Impact of Internet Use on Inter-Firm Relationships in Service Industries

Abstract

Internet marketing and relationship marketing are becoming prevalent in Australian firms. The advent of the internet has created numerous opportunities for marketing professionals to enhance current marketing practices, including relationship marketing. However, the investigation of marketing relationships in an internet environment is scant. Further, there appears to be no investigation of this phenomenon within the context of Australian service industries. Thus this research attempts to bridge the gap that exists between academia and practitioners by investigating internet-facilitated relationship marketing. Given these gaps in the literature, the research problem investigated in this research is: How does B2B internet use affect inter-firm relationships in service industries? The literature does not investigate this research problem in any depth. However, a framework about internet-facilitated marketing relationship in the extant literature was integrated and synthesised with literature about internet marketing and relationship marketing to arrive at three research issues: RI 1: How does level of internet use affect structural and social bonds in an inter-firm relationship? RI 2: How do structural bonds interact with social bonds in an internet environment? RI 3: How do structural and social bonds determine relationship outcomes in an internet environment? To investigate these three research issues, a combination of qualitative and quantitative two-stage methodological approach was used. The first stage was eleven convergent interviews to build on the extant literature and to further confirm and refine the theoretical framework. In the second stage, a survey methodology was used to test the model about internet-facilitated inter-firm relationships in Australian business internet banking users. Data was analysed and the hypotheses specified in the main model were tested using structural equation modelling techniques. Thus this research involved both theory building and theory testing. The findings of this research have implications for the three research issues. The results for the first research issue showed that the internet has little negative impact on relational bonding in the B2B context. That is, technology-mediated transactions in financial services may not be detrimental to established relationships because trade efficiencies are more of a concern for businesses rather than the social aspects. Information technology-enabled connectivity can facilitate trade efficiency, therefore the relationship. Moreover, the impact of internet use on relational bonds of trust and dependence is moderated by the length of B2B internet use. That is, a longer period of dealing with an exchange partner on the internet facilitates relational bonding. The findings for the second research issue were that most interrelationships between structural and social bonds in an internet environment are in line with the generic literature. The findings for the third research issue are related to the relational outcome as a result of bonding. Although the internet has little direct impact on commitment and intention to stay, it contributes indirectly to the relational outcomes through structural and social bonding. In addition, the findings of this research highlight some important issues in relationship marketing research. That is, inter-relationships of the relational constructs depend on the context in which the relationship exists. The main contribution of this theory building research is the development and confirmation of a final theoretical framework about internet-facilitated inter-firm relationships. That framework is a contribution because it is the first rigorously researched step towards understanding the important confluence of two new and powerful streams of business activity of internet marketing and relationship marketing. This thesis has both theoretical and practical implications in the area of internet marketing and relationship marketing. The framework was built from theory and empirical research to represent this process and provides a foundation for further research.