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Received 2 December 1996
Final revision received 26 October 1998
Key words: value; commitment; network; relationship
A structural model of business relationship development in a business network context is formulated and tested on data from the European International Marketing and Purchasing (IMP) project. The empirical analysis demonstrates a causal chain from business network connection through mutual commitment and mutual dependence to value creation in the relationship. The results show that mutuality in business network relationships is critical in developing interfirm systems of workflow interdependence that promote the creation of value. This also implies that, through their interaction in business network relationships, firms in business markets organize and share an unbounded structure of interdependent activities, enabling them to achieve greater value than would be the case if they did not engage in relationship development. Copyright (C) 1999 John Wiley & Sons, Ltd.
The relationship between Ericsson Radio Systems and Tokyo Digital Phone
In the beginning of May 1992, when a contract was signed between Tokyo Digital Phone (TDP) and the Swedish company Ericsson Radio Systems (ERA), TDP's CEO commented: 'We are now in the same boat.' According to the contract, Ericsson should develop, supply and install exchanges and radio base stations for a new digital system with a 160,000 line capacity in the Tokyo area worth US $100 million. Although the event can be regarded as the outcome of a long and complex negotiation process or the beginning of a long contract fulfilment process, it can also be considered to be just one in a series of events that gradually committed the two companies to a close and valuable business relationship. When the process started, the companies were no more interdependent than other firms in the market. Ericsson's top managers had strong doubts about entering the opaque Japanese market and about the digital standards there. TDP had not yet been established when Ericsson introduced its parent Japan Telecom (JT) to the new digital mobile technology in early 1990. In 1991, JT gained a mobile telephone license for the whole of Japan and established a Digital Phone (DP) group with the regional companies Tokyo Digital Phone (TDP), Kansai Digital Phone and Tokai Digital Phone.
After much deliberation, Ericsson determined to send technical support and...