Challenges of Change in Business-to-Business Markets

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Abstract

This dissertation is structured around three original studies that offer unique insights into the challenges of change in business-to-business markets. All three studies share as an important starting point that firms rely on other firms to achieve strategic flexibility in volatile business environments. This means that firms source critical resources from business relationships in order to reduce long-term investments in times of change. From this perspective, firms’ competitive advantages cross the boundaries of the firm and are embedded in their business partner networks. Thus, firms’ business relationships and networks have become an important locus of organizational change in order to respond to turbulence in firms’ business environments. Study one of this dissertation recognizes the importance of supplier relationships as a mechanism to react to changing business environments. The article focuses on the dynamic capabilities that enable firms to structurally reconfigure their supplier portfolios or supply networks in order to access necessary resources. The framework of relationship management capabilities introduced, is structured around three important sub-dimensions: relationship initiation, development, and ending capabilities, which collectively enable a firm to manage the reconfiguration of resource portfolios accessed via supplier relationships. The key implication for management relates to thinking beyond firms’ established supply chains in times of change. While to a certain degree change can be absorbed within firms’ existing supply chains, there might be a need to be ‘agile’, i.e. search for other suppliers who are better suited to more efficiently and effectively address such changes affecting firm competitiveness in the long run.While study one highlights the importance of firms’ agility in adapting their supply chains in response to changes in their business environment, study two of this dissertation, although with a focus on the demand side of the business model, addresses the managerial challenges associated with such an agile adaptation process. Study two conceptualizes a framework for business model change and provides managers guidance to approach business model redesign. In particular, study two focuses on service business models and introduces the concepts of service infusion and defusion as important processes of business model redesign. The service infusion and defusion framework provides a pragmatic and systematic approach to understanding the nature of the business model change that companies have to manage, as well as linking these changes with knowledge creation and transfer processes. These are shown to be key for successfully managing such a business model redesign. While studies one and two assume strategy and its implementation to be key to a successful response to changes in firms’ business environment, study three draws attention to the difficulties of arriving at such an appropriate or fitting response strategy in the first place, given the available information. In particular, this study examines the link between sensing changes in firms’ business environments and managerial decision making in the form of strategy choice. Thereby, the study shows that strategy change causes disruptions, which eventually affect firm performance. This effect is compounded with increasing sensitivity to change as well as increasing number of factors that trigger change, and thus impairs the long term benefits of such strategy change. Thus, the effectiveness of strategy or business model changes and their implementation is inevitably contingent on distinguishing key signals from noise that disturb or misguide firms’ strategic decisions.

Keyword(s)

Business Relationships; Service Business Models; Service Defusion; Service Infusion; Strategy Volatility; Supplier Relationship Management; Turbulence

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