Blurring Tactics in Interfirm Relationships

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Blurring Tactics in Inter-firm Relationships

• Otto Andersen Ellen K. Nyhus
• University of Agder University of Agder

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Characteristics of successful inter-firm
relationships

• Relationship investments
• Activities to maintain or improve the
  relationship
• Open communication
• Communication presumed the most important
• element to a successful inter-firm relationship
  (cf. Bleeke and Ernst, 1993)

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Communication What and how?

• Communication involves the transfer of knowledge
  representations between the exchange partners
• Such knowledge representations can be classified
  into general, particular and interpretive
  knowledge (Boland et al., 2001)
• We focus on knowledge representation as a set of
  ontological commitments, meaning that we are
  making a set of decisions about how and what to
  see in the world (Davis et al., 1993 19)

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Motivation

• An important assumption underlying the literature
  on inter-firm knowledge transfer is that that the
  transferred knowledge is correct.
• This assumption may be unrealistic since it
• neglects the possibilities that one or both
  actors may wish to attain a larger share of the
  value created by the knowledge transfer
• (not just a win-win situation but also a
  win-lose situation)
• neglects that firms may be unwilling to transfer
  truly and completely sensitive knowledge
• - neglects limits in human judgmental capacity
  and the possibility of these being exploited.
• Failing to recognize attempts to influence
  judgments and decisions in the knowledge
  transfer, may be costly for the firm.

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Blurring tactics

• The purpose of blurring tactics is to
• obtain congruence with what and how the exchange
  partner perceives and interpret the relationship,
  with what we wish her/him to perceive
• obscure the total value created for the exchange
  partner
• transfer knowledge in a vague/indistinct way so
  that the recipient firm cannot completely absorb
  and utilize the knowledge

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What is blurring?
Figure 1 Blurring in the knowledge transfer
process
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Examples of blurring

• Anchoring the reference point
• Framing
• Emphasising sunk cost
• Interacting socially

The value function (Kahneman Tversky, 1979)
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Theoretical perspectives

• (1) Transaction cost analysis (TCA)
• (2) Resource-dependence theory (RDT)
• (1) Assumptions TCA
• Bounded rationality
• Opportunism (failure to honor a contract cf.
  
• Williamson, 1975)

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Theoretical perspectives (cont.)

• (1) Main dimensions TCA
• Asset specificity (idiosyncratic investments
  made
• by one (or both) of the exchange partners)
• Behavioral uncertainty (difficulties one
  exchange
• partner may have in evaluating and
  monitoring
• the other exchange partners performance)
• Environmental uncertainty (unanticipated
  changes in
• circumstances surrounding the exchange)

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Theoretical perspectives (cont.)

• (2) Resource-dependence theory (RDT)
• Assumptions Organizations require resources
  from the environment, and thus become
  interdependent of actors that can provide such
  resources
• Building blocks of RDT Power and dependence
  (cf. Emerson, 1962)

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Theoretical perspectives (cont.)

• (2) Resource-dependence theory (RDT)
• Dependence An actor A is dependent upon actor
  B (i) in proportion to As need for resources
  that B can provide, and (ii) in inverse
  proportion to the availability of alternative
  actors providing the same resources.
• High degree of power dependence for actor A
  represents a form of vulnerability

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Theoretical perspectives (cont.)

• In addition to the theoretical perspectives
  above, we include culture as an independent
  variable to predict the use of blurring tactics.
• Culture distance (between the seller and buyer)
  can be measured as a composite index, containing
  the dimensions of individualism, uncertainty
  avoidance, power distance, and masculinity
  (Hofstede, 1980)

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When are blurring tactics most likely to be used?
Figure 2 Conceptual Framework
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Discussion and Conclusions

• Decisions about if, and with which firms to form
  or continue long-term relationships, are often
  complex and characterised by a high degree of
  uncertainty
• Opponents or partners with knowledge of the
  cognitive mechanisms at play when someone makes
  judgments and decisions, may use them tactically
  in formal and informal communication.
• Unless managers are aware of such blurring
  tactics they may fall into judgment and decision
  traps that may be costly for their firm.

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Discussion and Conclusions (cont.)

• Research implications
• Conceptualization and measurement of blurring
  tactics
• Managerial implications
• Identify from who, what, and when knowledge
  transferred is likely to be blurred