Unravelling power asymmetry challenges for smaller enterprises that engage with larger players: a case of a small business brand and a much larger, international retailer

Paul Copley, Angela McLean

Research output: Contribution to conferencePaperpeer-review

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Abstract

Objectives:
This paper addresses issues of power, symbiosis, mutuality and control in business-to-business relationships. The paper aims to illustrate the challenges that SMEs face and the benefits sought when it comes to getting a brand on to a major player’s list. The paper offers insight into potential mitigation when negotiating such challenges.

Prior Work:
It is rarely, if at all, easy for SMEs to negotiate with larger players. The relationship the SME brand can have is seen as crucial to success. It is a common assumption that power asymmetry lies at the heart of the relationship between the SME and the larger player with concern for how the SME brand can be taken to a much wider and often international target market, a goal that might be seriously difficult if not impossible for many SMEs to achieve otherwise. This assumption, however, may be an erroneous one. The issue of power in business-to-business relationships from a customer relationship management (CRM) and relationship marketing (RM) perspective revolves around trust, (dyadic) symmetry and mutuality but other types of relationships can and do exist; a power-imbalanced relationship might be seen as just as important in understanding business exchange. An obvious example of this latter position can be seen in the food and drink sectors where power is in the hands of the large multiple retailers. Another way of viewing this position is through the use of transaction cost theory and the relationship between performance and (international) market entry mode, given the very different nature and modus operandi of small firms as opposed to large firms in terms of, for example, resources, assets and behavioural and environmental uncertainties. Power as a construct, however, lies at the heart of the RM paradigm, power being seen as alien to the effective working of exchange relationships where success stems from cooperation, trust and mutuality where power negates cooperation and power imbalances are detrimental to building and sustaining relationships and relationship quality. In this sense power is in opposition to trust and power is not used in the trust-commitment-loyalty RM models. An alternative way of seeing relationships is through opportunism that results in the achievement of sales and effective power imbalance management.

Approach:
The paper takes a theoretical approach to the use of CRM and RM, Transaction Cost and Research Dependency in the context of an SME wishing to enter into a relationship with a larger player in order to have international exposure for its brand. This is then applied in the context of an SME brand that had operated in the domestic (UK) market but now has the potential to ‘go international’ through the relationship developed with a global player in the women's and children's clothing market with 1400 stores in 74 different countries. The paper explores whether the relationship can be seen as a partnership where ‘fit’ is part of RM strategy within a CRM framework that is platform for further symbiosis between the two players or whether it is opportunism on one or both players’ part where the case might be better viewed through either a transaction cost or resource dependency lens.

Results:
The paper builds on the literature that suggests the types of challenges that SMEs face when entering into relationships with larger players such as agreement on returns by the customers, percentage level of margins, access to display areas, help with point of sale, web content, representation and staff training, sales staff incentives, advertising, merchandising and pricing. This then creates a situation whereby the SME has to deal with a number of different departments and personnel that have differing needs and requirements while the SME has the desire to have a single point of contact. The paper also highlights the usefulness of the success and heightened credibility of an SME brand that has a relationship with a large player that provides ‘strategic fit’ in what can be a symbiotic relationship but also the challenges an SME has in the face of resource dependency.

Implications:
The paper discusses the challenges faced and benefits gained by the SME that engages with the larger player and underlines the importance of CRM and RM and of the ability to develop a brand through association and engagement with a larger player. The paper therefore explores the notions of symbiosis and mutuality as opposed to resource dependency and coercion as well as opportunism and control.

Value:
The paper is of value to those involved with the running of SMEs that are contemplating entering into a relationship with a larger player in terms of challenges and benefits of such an enterprise. The paper will also be of value to those involved in a teaching and learning context in terms of this and also SME brand building and development.

Keywords: International market entry; CRM and RM; power asymmetry; mutuality and symbiosis; transaction cost; resource dependency; opportunism.

Original languageEnglish
Publication statusPublished - 26 Oct 2016
EventISBE 2016 - Paris, France
Duration: 28 Oct 2016 → …
http://www.isbe2016.com/

Conference

ConferenceISBE 2016
Period28/10/16 → …
Internet address

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