Value Enhancement through Value-creating Relational Investments in Inter-firm Relationships: The Moderating Role of Leverage Potential and Relational Polygamy

Authors

  • Muhammad Zafar Yaqub

    Corresponding author
    1. Department of Business Administration, King Abdulaziz University, Jeddah
    • Center for Business Studies, University of Vienna, Vienna, Austria
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Correspondence to: Center for Business Studies, University of Vienna, Bruenner Strasse 72, A-1210 Vienna, Austria. E-mail: muhammad.zafar.yaqub@univie.ac.at

Abstract

This study integrates and extends insights from transaction cost economics, value-exchange model, relationship quality model and dependence perspective to discuss the efficacy of value-creating relational investments in affecting certain revenue-enhancing (relational) behaviours in different contexts of supplier–intermediate buyer dyadic relationships. Specifically, it extends the literature by examining the moderating role of leverage potential and the extent of relational polygamy. On the basis of a data set of 284 dyadic relationships, it has been found that value-creating relational investments made by the focal suppliers in their (intermediate) buyers enhance relationship quality, which ultimately translates into an enhancement of revenues of the focal supplier firm(s) because the (intermediate) buyers exhibit certain revenue-enhancing behaviours such as prolonging their relationships, increasing their business share and generating positive word-of-mouth about the focal supplier(s). It has also been found that the effect of value-creating relational investments is partially mediated through the relationship quality. In addition, tests of moderating effects reveal that efficacy of the value-creating relational investments varies across different levels of leverage potential and/or the extent of relational polygamy exhibited by the intermediate buyers in their respective supplier portfolios. Copyright © 2013 John Wiley & Sons, Ltd.

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