Unconnected Firms Research Articles

Managing business relationships and positions in industrial networks

This article is about managing business relationships and positions in industrial networks. In industrial networks, the notion of pure competition with faceless, unconnected firms is rejected. Instead, business transactions are conducted within the framework of enduring business relationship, characterized by mutual cooperation and adaptation. The industrial network structures therefore exhibit a remarkable degree of stability and continuity. Entrenched business relationships between industrial buyers and sellers are epitomized by the positions occupied by these firms in the network. As structural metaphors, network positions described how firms relate to the other firms in the network. These positions capture the connections, complexity, and dynamicity of these relationships. They are the achievement of an ongoing historical process and are effective only if there are paired reciprocal relationships between the network partners, resulting in favorable access to the network resources and activities. Managing these positions means managing business relationships with a host of partners, developing strong relationships with some and not with others. All this requires a choice of partners and the development of appropriate resources and activities' ties, particularly in networks that are evolving.