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Revisiting the norm concept in relational governance
Industrial Marketing Management 38 (2009) 577–583
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Industrial Marketing Management
Revisiting the norm concept in relational governance Christoph M. Ott ⁎, Björn Sven Ivens Faculty of Business and Economics, University of Lausanne, Switzerland
a r t i c l e
i n f o
Article history: Received 20 November 2008 Received in revised form 15 February 2009 Accepted 2 April 2009 Available online 12 July 2009 Keywords: Norms Norm definition Norm classification Norm typology Norm taxonomy
a b s t r a c t In this paper two of the fundamental issues concerning the norm concept, its definition and its classification, are explored. First, in the field of marketing, norms have been defined as expectations developed by actors concerning other actors' behavior in a given context [Jap, S., & Ganesan, S. (2000). Control mechanisms and the relationship life cycle: Implications for safeguarding specific investments and developing commitment. Journal of Marketing Research, 37, 227–245; Heide, J. B., & John, G. (1992). Do norms matter in marketing relationships? Journal of Marketing, 56, 32–44]. An analysis of to what extent this definition is in line with the definitions made in other disciplines will be carried out. Secondly, an identification of typologies of norms, which allows classifying different norms, will be set forth. © 2009 Elsevier Inc. All rights reserved.
1. Introduction In the literature on inter-organizational relationships, governance concepts have received considerable attention (Heide,1994; Williamson, 1975). It appears that for managers, the design of effective governance structures is a complex issue. The challenge lies in the large number of alternative control mechanisms available (Bradach & Eccles, 1989). Contributions in the field of business marketing oftentimes focus on the role of governance mechanisms such as formal contracts (Cannon, Achrol, & Gundlach, 2000; Lusch & Brown, 1996; Stinchcombe, 1985), relational norms (Dant & Schul, 1992; Heide & John, 1992; Pilling, Crosby, & Jackson, 1994) and specific investments (Gundlach, Archol, & Mentzer, 1995; Jap & Ganesan, 2000). Every one of these governance mechanisms represents a complex concept in itself and a broad stream of literature exists for each. This paper focuses on understanding the foundations of the concept of relational norms. The norm concept has often served as a reference for empirical studies in marketing, such as the study of the influence of norms on performance (Heide & John, 1992; Ganesan, 1994; Gassenheimer, Catalone, & Scully, 1995) or the examination of which antecedents influence the presence or strength of certain norms (Dant & Schul, 1992; Kaufmann & Dant, 1992; Heide, 1994). However, in their endeavor to increase our knowledge about the role that norms play in business relationships, marketing scholars have paid little attention to some fundamental issues related to the norm concept. For example, there is no
⁎ Corresponding author. Université de Lausanne, Quartier UNIL, Dorigny, Bâtiment Internef, 1015 Lausanne, Switzerland. E-mail addresses: [email protected] (C.M. Ott), [email protected] (B.S. Ivens). 0019-8501/$ – see front matter © 2009 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2009.04.004
discussion about the way in which norms are or should be defined in marketing research (Ivens & Blois, 2004; Blois & Ivens, 2006). Furthermore, there is no discussion about if the norm definitions used in our research are in line with those used by scholars in other fields using this concept, such as sociology, political sciences or anthropology. Moreover, in the business marketing literature there is only a limited body of work concerning taxonomies of norms. Yet, if different types of norms exist it may be important to identify them and to understand their heterogeneous roles in business relationships. Other disciplines may constitute a source to draw from in this respect. Against this background, the purpose of this paper is two-fold. First, we aim at clarifying the norm concept by comparing the conceptualization used in marketing with the ones used in other disciplines. This comparison will allow us to see whether marketing may improve its conceptualization of norms by drawing upon work in other disciplines. By doing so we intend to advance the literature where, so far, most authors have directly used the concept without taking a deeper look at its definitional foundations. Second, we intend to build a framework of analysis for future research on norms by extending this foundation to including a norm taxonomy based on disciplines outside the field of business marketing, as shown in Fig. 1. 2. Towards a common definition of a norm Exchange is a fundamental characteristic of societies (Bagozzi, 1975; Macneil, 1980b) and exchange is based upon interactions. Actors get involved in exchange interactions only if they believe that such behavior will create value for them (Blois, 2004; Ulaga & Eggert, 2005). Value creation is potentially threatened by opportunistic behaviors of one or both actors (Rindfleisch & Heide, 1997), therefore
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Fig. 1. From norm definition to norm classification.
the risk of opportunistic behavior creates uncertainty and cooperation is essential for successful interactions. “In most animal societies, cooperation is either orders of magnitude less developed compared with humans, or it is based on substantial genetic relatedness” (Fehr & Fischbacher, 2004, p. 187; Bourdieu, 1985). In economic interactions between human beings, genetic relatedness is not the dominant bond between actors. Hence, they attempt to reduce this risk by designing and implementing governance mechanisms. Several disciplines argue that we can and need to distinguish between formal and informal governance mechanisms and norms are an informal governance mechanism that can be used to reduce uncertainty (e.g. Macaulay, 1963; Vaaland & Håkansson, 2002). Norms enable cooperation among individuals. Macneil (1980b) interprets them as principles of right action with a binding character for the members of a group, e.g. a buyer and a seller in a dyadic interorganizational business relationship. In this perspective, a norm's function is to guide and control human behavior (Macneil, 1980a). The existence of relational norms in a dyad is seen as an indicator of the harmony of both parties' interests which, in turn, reduces the risk of opportunistic behavior (Ouchi, 1980; Nohria & Ghoshal, 1990). It is therefore understandable that norms have been playing an increasing role in many different scientific areas, which study not only economic, but all types of exchange. This diversity of disciplines and approaches in analyzing norms and norm-based behavior provides a very broad and rich literature (e.g. Opp, 1979; Feldman, 1984; Schotter, 1981; Morris, 1956; Elster, 1989; Heide & John, 1992; Thibaut & Kelley, 1969; Axelrod, 1986; Bendor & Mookherjee, 1990). The issue associated with such a diversity of approaches is the potential lack of a common definition and classification of norm types. A definition provided by Newcomb (1958) illustrates the vagueness of the norm concept: “The term ‘norm’, unfortunately, has several meanings. We shall use it, however, only in the sense of ‘more or less fixed frame of reference,’ whether of quantitative or qualitative nature” (p. 266). Furthermore, as Table 1 illustrates, different disciplines have made a different use of the concept. This overview of norm usage shows that differences exist between norm definitions. However, we argue that the apparent lack of consensus about the concept can be avoided through the use of two underlying dimensions introduced by Opp (2001). These two factors permit differentiating between two types of definitions applicable, from the vantage point of Opp, to all disciplines: • The expectation definition: “how a person [moral or legal], or a group of people, is expected to behave in a given circumstance” (adapted from Homans, 1974, p. 96). • The sanctioning definition: “a norm exists only if there is some probability that non-conformity is sanctioned” (Opp, 2001, p. 103). The concept of expectation in the first definition does not refer to the prediction of a behavior, but to a demand in the sense of ‘should’ or ‘ought to’ behave in a certain way. The second definition augments the first by introducing the concept of sanctions in case of nonobservance of expectations and implies a behavioral regularity that can serve as a predictor for the actions. When considering the concept of norms in general and sanctioning in particular, a distinction introduced by Tuomela (1995) and Tuomela & Bonnevier-Tuomela (1992, 1995) between r-norms tied to r-sanctions – rule-based norms/sanctions – and s-norms tied to s-sanctions – social norms/sanctions – needs to be considered. R- and s-norms are sub-divisions of a more general category that Tuomela calls social norms. Social norms are opposed to personal
norms1 and are tied to sanctions. Thus, they define the behavior at the group level and are created by a formally or informally agreed-upon authority or by group-membership and connected with formal or informal sanctions in case of nonobservance. R- and s-norms can be explained as follows: • R-norms (rule norms) are called into existence by an authority structure based on agreement making. R-norms can be formal or informal and are tied to r-sanctions, non-social sanctions such as legal or economical laws and regulations. These sanctions may be either formal or informal and are created and applied by an authority or group of agents authorized to represent the group (Tuomela, 1995b, p. 1). • S-norms (social norms) are centered on mutual belief, such as acceptable dress or table manners. S-sanctions are either social or group-specific conventions and are expressed through approval or disapproval by peers. They may result in s-sanctions by others, such as disapproval or the expulsion from the social group. (Tuomela & Bonnevier-Tuomela, 1992). The focus of research in the area of legal theory has been chiefly on classical contracting where all aspects of a transaction are defined in a formal written document and nonconformity to these conditions gets sanctioned. Several scholars have challenged this classical view and have suggested a different interpretation of contracts. The development of a relational approach to contract law has been significantly affected by a study conducted by Macaulay (1963). In his exploratory research on the contractual governance of long-term business relationships he arrived at the conclusion that, contrary to the assumption of the dominant legal opinion, contracts have neither a complete nor a binding character. Among other reasons, the loss of time through formal legal disputes, as well as the often-inevitable dissolution of relationships as a consequence of a party's recourse to legal sanctions explains this phenomenon. As Macneil (1974) argues, the fundamental reason for the difference between the “purity and simplicity of the traditional tenet” (p. 693) and empirical observations lies in the assumption that one transaction can be seen separately from the one preceding it and the one succeeding it. Against this assumption he opposes the “prevalence of relation in the post-industrial socioeconomic world” (1974, p. 694). By doing so he implicitly points to the possibility of the existence of ssanctions in addition to r-sanctions. However, he does not mention it explicitly and, hence, it remains open whether he interprets norms in the sense of the expectation definition or the sanctioning definition. He does discuss expectations and he may have thought of sanctions. For Macneil, contracts have four roots: society, specialization of labor and exchange, awareness of the future, and choice. The existence of these four roots makes a contract more than a simple promise. In relational exchange theory, a contract is considered to be constituted by the future relations among individuals who participate in exchange transactions (Macneil, 1980a, p. 4). The introduction of another key concept, promise, allows a distinction to be made between different forms of exchange. Promise is defined as the “present communication of a commitment to engage in a reciprocal measured exchange” (Macneil, 1980b, p. 7) as would be written in a contract. Relational exchange theory postulates that promissory exchange is but one case, and empirically rather the exception than the rule. A great range of “non-promissory exchange-projectors” such as custom, status or habit may be found. In addition, mutual promises are generally not perfectly identical which often leads to gaps in their interpretation. Reducing the gap when it appears also necessitates non-promissory mechanisms 1 Personal norms, in contrast with social norms, are widely obeyed, but are not based on social responsiveness, as they relate to the interpretation by the individual of his or her value system. Furthermore, Tuomela sub-divides personal norms into m-norms (moral norms such as the precept that ‘one shall not steal’), obeyed because of one’s conscience, and p-norms (prudential-norms such as the precept that ‘one ought to act so as not to seriously endanger one's life’), obeyed because it is the rational thing to do (in the sense of the instrumental rationality proposition).
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Table 1 Overview of the use of the norm concept. Discipline
Use of norm concept
Example of a definition
Sociology
Norms play an important role in understanding how societies work. (Opp, 1979)
“A norm is an abstract pattern, held in the mind, that sets certain limits for behavior. An ‘operative’ norm is one that is not merely entertained in the mind but is considered worthy of following in actual behavior; thus one feels that one ought to conform to it”. (Johnson, 1960)
Political science
Civil rights and civil liberties are as much protected by informal norms of what is acceptable as they are by the powers of the formal legal system. (Axelrod, 1986)
“A norm exists in a given social setting to the extent that individuals usually act in a certain way and are often punished when seen not to be acting in this way”. (Axelrod, 1986, p. 1097)
Anthropology
Norms offer a firm framework to describe practices and values of different people such as in the case of feuding. (Black-Michaud, 1975)
“Norms are generally accepted, sanctioned prescriptions for, or prohibitions against, others' behavior, belief, or feeling, i.e. what others ought to do, believe, feel or else …. Norms always include sanctions”. (Morris, 1956, p. 610)
Psychology
Norms can help explain how people influence one another, become socialized and establish behavioral norms in their group. (Feldman, 1984)
“Norms regularize group member's behavior”. (Feldman, 1984, p. 47)
Economics
Economists have come to realize that markets involve a great deal of behavior based on standards that no one individual can determine alone. (Schotter, 1981)
“Norms (…) are understood as prescriptive rules regarding behavior that are shared among a group of people and are partly sustained by the approval and disapproval of others”. (Elster, 1989, p. 113)
Legal theory
Agreements between parties comprise explicit (written) as well as implicit (expectations) aspects. (Macneil, 1980b)
“A norm is a principle of right action bringing upon of a group and serving to guide control or regulate proper and acceptable behavior”. (Macneil, 1980b, p. 14)
Marketing
According to Macneil's (1974) relational exchange theory, exchange acts can be classified along a continuum with on one hand discrete exchanges and on the other relational exchanges.
“Norms are expectations about behavior that are at least partially shared by a group of decision makers“. (Heide & John, 1992, p. 34).
(Macneil, 1980a). In this vein, Macneil introduced a distinction between two types of transactions: • Discrete transactions are based exclusively or predominantly upon promissory projection of exchange into the future. • Relational transactions are based upon non-promissory projection of exchange into the future. The former type of transaction is illustrated by a one-time transaction such as a spot sale and the latter can be seen as an intertwined relation such as long-term commercial relations between several parties (Macneil, 1974). Long-term business relationships between buyers and sellers are thus based on relational transactions. Relational exchange theory posits that contracts between buyers and vendors are agreements intentionally left incomplete in order to preserve the actors' flexibility to adapt to changes in environmental conditions (Macneil, 1978). Rather than establishing comprehensive plans for joint action (complete contracts) actors prefer to formulate common goals, such as umbrella contracts (e.g. Mouzas & Furmston, 2008). However, these relationship goals are equally formulated in a rather rough and open manner in order to permit an easy and quick adaptation to changing circumstances (Milgrom & Roberts, 1992). Also promissory and non-promissory exchanges are actually intertwined. Against this background, Macneil postulates the over-whelming importance of norms as governance mechanisms in long-term business relationships and he deploys considerable effort to develop the norm concept (Macneil, 1980b, 1981, 1983). He formulates a comprehensive set of common norms (such as flexibility, reciprocity or solidarity) for the governance of exchange processes whose function is to guide and control human behavior (Macneil, 1980a), possibly implying the existence of s-sanctions. The benefit of linking Opp's (2001) framework with Macneil's view of norms is that it attempts to provide a more differentiated view of norms than the one formulated in relational exchange theory. Opp's definition allows a more focused discussion and permits eliminating some of the vague areas that exist in Macneil's norm framework as much as in definitions of the norm concept formulated in other disciplines. Opp (2001) thus opens new avenues of research based upon the two dimensions of expectations and of sanctions. Based upon these observations we can establish a link between marketing and the two norm dimensions. Both expectation and sanctioning
norm definitions may be used in marketing relationships depending on the type of exchange considered. Neither norm definition can be fully excluded from discrete or relational exchanges, but the predominance of each norm definition for either relationship type can be argued. Relational exchange transactions may be based upon expectation norms or sanction norms. An open question for research is under what conditions actors involved in exchange opt for one, the other or some combination of the two dimensions. In this context, it is important to identify whether both norm definitions are mutually exclusive or whether sanction norms are an extension of expectation norms. Expectations develop and grow as both parties interact repeatedly with each other and therefore build up a strong social capital.2 Thus, the behavioral expectation of one another, such as in a long-term business relationship, plays a predominant role in the strength and stability of the relationship. Nonconformity to this expectation will first result in a decrease of this social capital, in other words a weakening of the relationship, and eventually in its disintegration. The direct result of a breakup is the unavoidable loss of committed resources. These losses do not correspond to sanctions per se but to opportunity costs.3 Sanctions nevertheless do play a role in relational exchange transactions: s-sanctions can signal the deterioration of the relationship to the wrongdoer and r-sanctions play a role after the disintegration of relationships through e.g. payment of penalty fees through contractual obligations. Discrete exchange transactions on the other hand are chiefly based on the sanctioning norm definition as both parties have little or no social capital invested into the relationship. In an ‘over-the-counter’ type of sale, there is a very limited behavioral expectation beyond that specific transaction. Thus, sanctioning (r- and/or s-sanctions) is the main element to express one's discontent or disapproval of the exchange transaction or at least it is predominant. S-sanctions could work through damaging the reputation of the other actor. 2 The term social capital was first defined by Bourdieu (1985, p. 248) as “the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance or recognition”. 3 Opportunity costs are defined according to the Merriam-Webster Collegiate Dictionary (2004) as “the added cost of using resources (as for production or speculative investment) that is the difference between the actual value resulting from such use and that of an alternative (as another use of the same resources or an investment of equal risk but greater return)” and do not include sanctioning.
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As the sanctioning definition is an extension of the expectation definition, it is clear that sanctions cannot be considered without expectations. Even in a single exchange transaction, there are some expectations about what is being exchanged and sanctions will be applied if these expectations are not met. An example of the interplay between expectation and sanction in discrete exchange transactions can be found in consumer behavior where many customers become emotionally loyal to specific brands (Fournier, 1998; Aggarwal, 2004) and might participate in social grouping around them creating brand communities (Muniz & O'guinn, 2001; Schouten & McAlexander, 1995). In the mind of the customers and brand community participant, brands become the equivalent of a member of society and build the basis of a particular social group. Brands and members of a brand community will be evaluated by the same social rules and can therefore be subject to social sanctions in case of nonconformity to the expected behavior. In an industrial marketing context, a similar constellation arises, for example, when the key account manager of a supplier firm is often present in the offices of a customer firm. On this level of analysis the same rules apply as above, as from the vantage point of the contact person(s) on the customer side, the key account manager may become part of the closer social community. This socialization process is comparable to the role brands or members of a brand community play, as the customer contract person will start evaluating the key account according to the standards of the social group he has been included in. From a theoretical as well as from a managerial perspective, a key question is what precisely takes place in relationships that are not situated at the extreme ends of the discrete-relational continuum. In summary, the area of marketing concentrates predominantly on either of the two norm definitions depending on the type of relation that is being considered. Relational exchanges mostly focus on expectation norms due to the repeated interaction between the parties and discrete exchanges on the sanctioning definition due to limited expectation and exchange transaction between both parties. Nevertheless this classification of exchange acts is a continuum at the end of which neither norm definition can be fully excluded. These conclusions coincide with the premises of relational exchange theory that state that the “economic man [homo economicus] is necessarily in society at all times” (Macneil, 1982, p. 961). In other words, Macneil assumes that (1) exchanges go beyond economic transactions and encompass all forms of social interactions (Ivens, 2002) and (2) these exchanges need to be considered from the perspective of the economic man within social boundaries. The objective of this section was to clarify the norm concept in order to refine the Macneil's framework, which has been predominating in research on long-term business relationships to date. As shown in Fig. 2, in the next section we extend our discussion of the norm concept by discussing norm typologies. 3. Toward a common classification of norms Various norm typologies have been identified by researchers within the social sciences. First attempts to classify the concept date
Fig. 2. From norm definition to norm classification.
back to the beginning of the 20th century (Sumner, 1906), followed later on by further works by Morris (1956), Gibbs (1965) and more recently by Tuomela (1995). Most of these typologies suffer either from a lack of a proper norm definition, too strong a focus on a specific field to be generalisable, or missing clarity for exhaustiveness. The common denominator of all these classifications is the deductive approach taken towards building norm taxonomies. The scheme by Elster (1989), on the other hand, is inductive, as he does not classify norm types, but norm-oriented behaviors. In Elster's (1989) paper “Social norms and economic theory”, he tries to bridge the gap between Adam Smith's homo economicus and Emil Durkheim's homo sociologicus. In this vein, he defines two normoriented behaviors in accordance with each perspective: • Norm-oriented action of the homo economicus: “the behavior of the homo economicus is guided by instrumental rationality” (1989, p. 99). • Norm-oriented action of the homo sociologicus: “the behavior of the homo sociologicus is dictated by social [conventions]4” (1989, p. 99). The homo economicus is driven by maximizing his returns. Instrumental rationality prescribes him to attain a goal by “the best (most efficient, most cost-effective, etc) means to whatever end he values the most in a given situation” (Mann, 1999, p. 1). In other words, the economic man modifies his behavior depending on the situation he encounters, constantly seeking for improvements to maximize returns. The homo sociologicus, or social man, acts within the boundaries of social conventions. The social man behaves according to a socially accepted code of conduct even if better options might be available to reach his goals. As Gambetta (1987) puts it, the rationale behind the homo economicus' actions is that he feels “pulled” by the prospects of future rewards, whereas the homo sociologicus is “pushed” from behind by quasi-inertial forces (cited in Elster, 1989, p.99). In other words, the economic man can be parodied as a “self-contained, asocial atom”, and the social man as “the mindless plaything of social forces” (Elster, 1989, p.99). The following diagram illustrates the proposed connection between the norm definition and the norm classification scheme (Fig. 3). To understand a relationship between the definition and the classification, one needs to look into the reason why norms are accepted and how they form the basis of norm-oriented behavior. The connection of the economic man's behavior and the ‘expectation definition’ raises two issues: • Is instrumental rationality the basis of expected behavior? • Does the economic man perceive sanctions, as he might behave in a non-permissible way while pursuing his goals? Instrumental rationality is programmed into our value systems, as everyone needs to ‘look out for himself’ first or, in other words, the survival of the fittest prevails. Thus, rational actions can be regarded as an expected behavior in a given situation. The economic man sees the world as a milieu in which to accomplish his goals and only includes opportunity costs, as opposed to sanctions, in his calculations of more or less optimal way of reaching his aim. If the optimal way to attain his targets prescribes him acting in an illegal or socially unacceptable 4 Elster (1989) actually uses the term ‘social norm’ and not ‘social convention’ for the actions of the homo sociologicus. His definition of the concept of norm for the homo sociologicus is solely based on its opposition to the rational actions of the homo economicus. He completes his explanation by suggesting that norms “are sustained by the feeling of embarrassment, anxiety, guilt and shame that a person suffers at the prospect of violating them” (Elster, 1989, p. 100). This definition is not satisfactory, as it does not express clearly what a norm is in other than in terms of a rational action framework. To avoid confusion between his use of the term “norm” and the definition used in the previous section, the expression “social convention” has been used in Elster's classification scheme; thus, the behavior of the homo sociologicus is dictated by social conventions.
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Although sanctions are part of the critical path analysis of the economic man, he cannot be dissociated from the social structure he interacts with. Therefore sanctions do play a role even if secondary. The role of theses sanctions within the relationship could be: • S-sanctions to prevent further deterioration of the relationship • R-sanctions to seek revenge or to minimize losses due to a breakup through the collection of e.g. penalty fees. Fig. 3. Norm definition and classification frameworks.
manner, the resulting sanctions are simply part of his critical path analysis. In the case of the social man, the reason for the ‘push’ from behind comes from the effect of rules-based or social sanctions in the event of nonconformity. The motivation to act within social convention, the ‘quasi-inertial forces’, is the fear of sanctions by the same forces, corresponding to a ‘sanctioning definition’ wherein the existence of a norm is directly linked with sanctions in case of nonobservance. The above arguments illustrate Macneil's view of the economic man necessarily interacting within society at all times or in other words: “Man is both an entirely selfish creature and an entirely social creature, in that man puts the interests of his fellows ahead of his own interests at the same time that he puts his interest first” (Macneil, 1983, p. 348) and is never either entirely. The issue at hand is that both Adam Smith's and Emil Durkheim's model of man are mutually exclusive. One cannot analyze human behavior in society with a model of man portrayed as a “self-contained, asocial atom” (Elster,1989, p.99) or, vice versa, considering man from the perspective of “the mindless plaything of social forces” (Elster, 1989, p.99) without taking into account his desire for his own well-being. Thus, a more differentiated view of both models needs to be used when dealing with norms. 4. Implications for marketing theory Marketing theory further reinforces the connection between the norm definition and the norm classification frameworks. Macneil's relational exchange theory analyzes the continuum of exchange actions through the perspective of ten key norms. These norms have been used to explain the strength, weakness or disintegration of exchange relationships. Norms in a relational exchange transaction are primarily expectation norms. This view corroborates the connection between the economic man's perspective of the world as containing more or less optimal ways to attain his goals where potential r- or s-sanctions are embedded in the evaluation of his options. If he concludes through his evaluation of these various alternatives that the most efficient way to attain his goals may include sanctions, he will follow this course of action.
Norms in a discrete exchange transaction tend to be sanctioning norms further strengthening the connection between the actions of the social man and sanctioning norms. The goal of the social man is to remain within the formal or informal boundaries ‘created by an authority or body of agents authorized to represent the group’ (Tuomela, 1995b, p. 1) and to preserve and/or enhance his social capital. R-sanctions are exercised when he violates the limits of society, whereas s-sanctions are applied by peers due to nonconformity to social or group specific conventions. Both r- and s-sanctions decrease this social capital and therefore the social man will avoid socially unacceptable behaviors. One would suspect that in the vast majority of situations in longterm business relationships, the economic man and the social man are indistinguishable. Exchange is almost always located between the extremes of discrete and relational transactions. Hence, businessmen must reconcile their ‘two souls’, i.e. they need to define appropriate combinations of promissory and non-promissory exchange. The idea that the governance of a relationship does usually not rely upon a single mechanism has been discussed from a different perspective in the channel management and in the industrial marketing literature. Authors refer to such constellations as plural form governance (Gundlach et al., 1995). Nevertheless, the understanding of the combined use of several mechanisms, such as r- and s-sanctions, remains superficial. Future research could attempt to gain a deeper understanding of the way in which actors move from a predominance of one type of sanction to the predominance of another type, for example as their exchanges become more relational. It is unclear whether the move would be linear or follow a different pattern. Another important question is what impact different types of sanctions could have on relationships, as they could be important outcome variables. One could also imagine that the personality and culture of the individuals as well as the organizations involved in a relationship play a role in the choice of sanction mechanisms for governance purposes. Summarizing, there seems to be a strong potential for future research in this area. The goal of this section was to further clarify the concept of norms through the addition and the discussion of a norm classification scheme to Opp's (2001) norm definition. The combination of the selected typology and the two norm dimensions builds a solid basis for using norms across disciplines offering a common ground for further research around this concept.
Fig. 4. Overview of role of norm definition and classifications for marketing theory.
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5. Summary and conclusions As seen in Table 1, a vast array of uses of the norm concept scattered among different disciplines has been identified. The vagueness of this notion has lead to a compartmentalized approach to research on the subject, where not only individual disciplines, but also individual researchers have a different understanding of norms and norm types. The two definition types identified by Opp (2001) provide a solid basis to understand how norms can be used across various scientific disciplines: an ‘expectation definition’, encompassing the concept of behavioral expectation and a ‘sanctioning definition’, an augmentation of the first definition introducing the concept of sanctions in case of nonobservance of expectations. Two appropriate norm classification schemes were then identified: the norm-oriented action of the economic man, dictated by instrumental rationality or the desire to maximize ones returns, and the norm-oriented actions of social man, guided by social conventions. The connection between these perspectives is that ‘expectation’ norms explain the actions of the economic man and instrumental rationality, whereas ‘sanctioning’ norms explain the actions of the social man and behavioral regularities. The definition and classification framework set forth in this paper has implications for marketing theory. As summarized in the diagram below, depending on where one is located on the exchange continuum, the focus of the norm definition and classification varies (Fig. 4). Although there is a strong predominance of either norm type, neither one can be fully excluded on either side of the spectrum of the diagram. Implications of such a framework leads to the reinterpretation of the economic man, as put forth by Macneil (1969): We (…) think of economic exchange as being extremely individualistic and selfish, rather than co-operative, [it] is the fact that exchange represents a species of human co-operation. (…) Exchange involves a mutual goal of the parties, namely the reciprocal transfer of values. And this is true however strongly the ‘economic man’ – the ‘as-much-as-possible-for-as-little-as-possiblein-return-man’ – may dominate the motivations of both parties to an exchange (p. 405). In other words, the economic man cannot be considered as a ‘lone wolf’, entirely disregarding the interests of others, he is always part of a larger social fabric, where both parties of the exchange transactions have a role to play. On the other side of the spectrum of Fig. 4, the social man is not a “mindless plaything of social forces” as Gambetta (cited in Elster, 1989, p.99) parodies him to be. While staying within acceptable social boundaries, he will pursue his best interest and ‘look out for himself’. This means that he will not necessarily flock with the herd but always stay within the fenced area. In conclusion, a man or an organization will always be torn between self-interest and wider social stakes and, thus, attempt the fine balancing act within the exchange transaction continuum. The goal of this paper was to clarify the widely used concept of norms by giving this notion a systematic foundation, first by defining it and then by identifying a classification of norm types. In this vein, we did not aim to explain what the ‘mechanisms that determine behavior’ are, but we aimed to lay a foundation on which social science scholars can build their understanding of these mechanisms, if they choose to use the concept of norms to do so. The challenge with this objective lies in finding a common denominator within the diversity of disciplines, definitions and typologies used. Analogous to the broadness of the usage of the norm concept, broadness in the approach of clarification needs to be accepted to reach this objective. Therefore, the results of this paper are purposely general and build a broad foundation of the norm construct.
This framework hopefully gives researchers a common base from which they can then elaborate new and more particular research agendas around this construct such as: • Considering the role of conforming to the expected behavior (legitimacy) in different settings; • Testing possible new typologies with the existing norm definition and norm classification framework; • Analyzing the shift from behavioral expectation to sanction within different relationship types; • Understanding the context dependence of operationalizations of norms in connection with the expectation and sanctioning dimensions; • Extending this framework to understanding the origin of norms and their evolution. The dangers of the approach taken lies in losing oneself among the many usages of norms across a multitude of disciplines and not focusing on the main target of clarification. It is the aspiration of the authors that this trap was avoided. References Aggarwal, P. (2004). The effects of brand relationship norms on consumer attitudes and behavior. Journal of Consumer Research, 31, 87−101. Axelrod, R. (1986). An evolutionary approach to norms. American Political Science Review, 80(4), 1095−1111. Bagozzi, R. P. (1975). Marketing as exchange. Journal of Marketing, 39, 32−39. Bendor, J., & Mookherjee, D. (1990, Spring). Norms, third-party sanctions, and cooperation. Journal of Law, Economics, and Organization, 6, 33−63. Black-Michaud, J. (1975). Cohesive force: Feud in the Mediterranean and the Middle East. Oxford: Basil Blackwell. Blois, K. (2004). Analyzing exchange through the use of value equations. Journal of Business & Industrial Marketing, 19(4), 250−257. Blois, K., & Ivens, B. (2006). Measuring relational norms: Some methodological issues. European Journal of Marketing, 40(3/4), 352−365. Bourdieu, P. (1985). The forms of capital. New York: Greenwood. Bradach, J., & Eccles, R. (1989). Price, authority, and trust. Annual Review of Sociology, 15, 97−118. Cannon, J., Achrol, R., & Gundlach, G. (2000). Contracts, norms, and plural form governance. Journal of the Academy of Marketing Science, 28, 180−194. Dant, R., & Schul, P. (1992). Conflict resolution processes in contractual channels of distribution. Journal of Marketing, 56, 38−54. Elster, J. (1989). Social norms and economic theory. Journal of Economic Perspectives, 3(4), 99−117. Fehr, E., & Fischbacher, U. (2004). Social norms and human cooperation. Trends in Cognitive Sciences, 8(4), 185−190. Feldman, D. (1984). The development and enforcement of group norms. The Academic Management Review, 9, 47. Fournier, S. (1998). Consumer and their brands: Developing relationship theory in consumer research. Journal of Consumer Research, 24, 343−373. Gambetta, D. (1987). Did they jump or where they pushed? Cambridge: Cambridge University Press. Ganesan, S. (1994, April). Determinants of long-term orientation in buyer–seller relationships. Journal of Marketing, 58, 1−19. Gassenheimer, J. B., Catalone, R. J., & Scully, J. I. (1995, Spring). Supplier involvement and dealer satisfaction: Implications for enhancing channel relationships. Journal of Business & Industrial Marketing, 10, 7−19. Gibbs, J. (1965). Norms: the problem of definition and classification. The American Journal of Sociology, 70(5), 586−594. Gundlach, G., Archol, R., & Mentzer, J. (1995). The structure of commitment in exchange. Journal of Marketing, 59, 78−92. Heide, J. B. (1994). Interorganizational governance in marketing channels. Journal of Marketing, 58, 71−85. Heide, J. B., & John, G. (1992). Do norms matter in marketing relationships? Journal of Marketing, 56, 32−44. Homans, G. C. (1974). Social behavior. Its elementary forms. New York: Harcourt. Ivens, B. (2002). Governance norms in relational exchange: What we do know and what we do not know. 18th Annual IMP Conference. Ivens, B., & Blois, K. (2004). Relational exchange norms in marketing: A critical review of Macneil's contribution. Marketing Theory, 4(3), 239−263. Jap, S., & Ganesan, S. (2000). Control mechanisms and the relationship life cycle: Implications for safeguarding specific investments and developing commitment. Journal of Marketing Research, 37, 227−245. Johnson, H. M. (1960). Sociology. New York: Harcourt, Brace & Co. Kaufmann, P., & Dant, R. (1992). The dimensions of commercial exchange. Marketing Letters: A Journal of Research in Marketing, 3(2), 171−185. Lusch, R., & Brown, J. (1996). Interdependency, contracting, and relational behavior in marketing channels. Journal of Marketing, 60, 19−38. Macaulay, S. (1963). Non-contractual relations in business: A preliminary study. American Sociological Review, 28(1), 55−67. Macneil, I. R. (1969). Whither contracts? Journal of Legal Education, 21, 403−418.
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Rindfleisch, A., & Heide, J. B. (1997). Transaction cost analysis: Past, present, and future applications. Journal of Marketing, 61(4), 30−55. Schotter, A. (1981). Economic theory of social institutions. Cambridge: Cambridge University Press. Schouten, J., & Mcalexander, J. (1995). Subcultures of consumption: An ethnography of the new bikers. Journal of Consumer Research, 22, 43−61. Stinchcombe, A. L. (1985). Contracts as hierarchical documents. Oslo: Norwegian University Press. Sumner, W. G. (Ed.). (1906). Folkways. Boston: Ginn & Co. Thibaut, J. W., & Kelley, H. H. (1969). The handbook of social psychology. New York: John Wiley & Sons. Tuomela, R. (1995). The importance of us: A philosophical study of basic social norms. Berlin: Springer. Tuomela, R., & Bonnevier-Tuomela, M. (1992). Social norms, tasks, and roles. In U. O. Helsinki (Ed.), Reports from the Department of Philosophy. Helsinki: University of Helsinki. Tuomela, R., & Bonnevier-Tuomela, M. (1995). Norms and agreement. European Journal of Law, Philosophy and Computer Science, 5, 41−46. Ulaga, W., & Eggert, A. (2005). Relationship value in business markets: The construct and its dimensions. Journal of Business-to-Business Marketing, 12(1), 73−99. Vaaland, T., & Håkansson, H. (2002). Exploring interorganizational conflict in complex projects. Industrial Marketing Management, 32(2), 127−138. Williamson, O. E. (1975). Markets and hierarchies: Analysis and antitrust implications. New York: Free Press. Christoph Ott is a PhD candidate at the University of Lausanne under the stewardship of Professor Ivens. His current research interest lies in the role of norms during the early stages of long-term business relationship. Prior to his PhD studies, he completed an industrial engineering master's degree at the Federal Institute of Technology Zurich (ETHZ). Björn Ivens is a professor of marketing at the University of Lausanne. His main research interests are relationship marketing, key account management, pricing decisions, and international marketing. His recent work has been published in Industrial Marketing Management, the Journal of Business Research, Marketing Theory, the Journal of Relationship Marketing, and the Journal of Business and Industrial Marketing.
Contents lists available at ScienceDirect
Industrial Marketing Management
Revisiting the norm concept in relational governance Christoph M. Ott ⁎, Björn Sven Ivens Faculty of Business and Economics, University of Lausanne, Switzerland
a r t i c l e
i n f o
Article history: Received 20 November 2008 Received in revised form 15 February 2009 Accepted 2 April 2009 Available online 12 July 2009 Keywords: Norms Norm definition Norm classification Norm typology Norm taxonomy
a b s t r a c t In this paper two of the fundamental issues concerning the norm concept, its definition and its classification, are explored. First, in the field of marketing, norms have been defined as expectations developed by actors concerning other actors' behavior in a given context [Jap, S., & Ganesan, S. (2000). Control mechanisms and the relationship life cycle: Implications for safeguarding specific investments and developing commitment. Journal of Marketing Research, 37, 227–245; Heide, J. B., & John, G. (1992). Do norms matter in marketing relationships? Journal of Marketing, 56, 32–44]. An analysis of to what extent this definition is in line with the definitions made in other disciplines will be carried out. Secondly, an identification of typologies of norms, which allows classifying different norms, will be set forth. © 2009 Elsevier Inc. All rights reserved.
1. Introduction In the literature on inter-organizational relationships, governance concepts have received considerable attention (Heide,1994; Williamson, 1975). It appears that for managers, the design of effective governance structures is a complex issue. The challenge lies in the large number of alternative control mechanisms available (Bradach & Eccles, 1989). Contributions in the field of business marketing oftentimes focus on the role of governance mechanisms such as formal contracts (Cannon, Achrol, & Gundlach, 2000; Lusch & Brown, 1996; Stinchcombe, 1985), relational norms (Dant & Schul, 1992; Heide & John, 1992; Pilling, Crosby, & Jackson, 1994) and specific investments (Gundlach, Archol, & Mentzer, 1995; Jap & Ganesan, 2000). Every one of these governance mechanisms represents a complex concept in itself and a broad stream of literature exists for each. This paper focuses on understanding the foundations of the concept of relational norms. The norm concept has often served as a reference for empirical studies in marketing, such as the study of the influence of norms on performance (Heide & John, 1992; Ganesan, 1994; Gassenheimer, Catalone, & Scully, 1995) or the examination of which antecedents influence the presence or strength of certain norms (Dant & Schul, 1992; Kaufmann & Dant, 1992; Heide, 1994). However, in their endeavor to increase our knowledge about the role that norms play in business relationships, marketing scholars have paid little attention to some fundamental issues related to the norm concept. For example, there is no
⁎ Corresponding author. Université de Lausanne, Quartier UNIL, Dorigny, Bâtiment Internef, 1015 Lausanne, Switzerland. E-mail addresses: [email protected] (C.M. Ott), [email protected] (B.S. Ivens). 0019-8501/$ – see front matter © 2009 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2009.04.004
discussion about the way in which norms are or should be defined in marketing research (Ivens & Blois, 2004; Blois & Ivens, 2006). Furthermore, there is no discussion about if the norm definitions used in our research are in line with those used by scholars in other fields using this concept, such as sociology, political sciences or anthropology. Moreover, in the business marketing literature there is only a limited body of work concerning taxonomies of norms. Yet, if different types of norms exist it may be important to identify them and to understand their heterogeneous roles in business relationships. Other disciplines may constitute a source to draw from in this respect. Against this background, the purpose of this paper is two-fold. First, we aim at clarifying the norm concept by comparing the conceptualization used in marketing with the ones used in other disciplines. This comparison will allow us to see whether marketing may improve its conceptualization of norms by drawing upon work in other disciplines. By doing so we intend to advance the literature where, so far, most authors have directly used the concept without taking a deeper look at its definitional foundations. Second, we intend to build a framework of analysis for future research on norms by extending this foundation to including a norm taxonomy based on disciplines outside the field of business marketing, as shown in Fig. 1. 2. Towards a common definition of a norm Exchange is a fundamental characteristic of societies (Bagozzi, 1975; Macneil, 1980b) and exchange is based upon interactions. Actors get involved in exchange interactions only if they believe that such behavior will create value for them (Blois, 2004; Ulaga & Eggert, 2005). Value creation is potentially threatened by opportunistic behaviors of one or both actors (Rindfleisch & Heide, 1997), therefore
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Fig. 1. From norm definition to norm classification.
the risk of opportunistic behavior creates uncertainty and cooperation is essential for successful interactions. “In most animal societies, cooperation is either orders of magnitude less developed compared with humans, or it is based on substantial genetic relatedness” (Fehr & Fischbacher, 2004, p. 187; Bourdieu, 1985). In economic interactions between human beings, genetic relatedness is not the dominant bond between actors. Hence, they attempt to reduce this risk by designing and implementing governance mechanisms. Several disciplines argue that we can and need to distinguish between formal and informal governance mechanisms and norms are an informal governance mechanism that can be used to reduce uncertainty (e.g. Macaulay, 1963; Vaaland & Håkansson, 2002). Norms enable cooperation among individuals. Macneil (1980b) interprets them as principles of right action with a binding character for the members of a group, e.g. a buyer and a seller in a dyadic interorganizational business relationship. In this perspective, a norm's function is to guide and control human behavior (Macneil, 1980a). The existence of relational norms in a dyad is seen as an indicator of the harmony of both parties' interests which, in turn, reduces the risk of opportunistic behavior (Ouchi, 1980; Nohria & Ghoshal, 1990). It is therefore understandable that norms have been playing an increasing role in many different scientific areas, which study not only economic, but all types of exchange. This diversity of disciplines and approaches in analyzing norms and norm-based behavior provides a very broad and rich literature (e.g. Opp, 1979; Feldman, 1984; Schotter, 1981; Morris, 1956; Elster, 1989; Heide & John, 1992; Thibaut & Kelley, 1969; Axelrod, 1986; Bendor & Mookherjee, 1990). The issue associated with such a diversity of approaches is the potential lack of a common definition and classification of norm types. A definition provided by Newcomb (1958) illustrates the vagueness of the norm concept: “The term ‘norm’, unfortunately, has several meanings. We shall use it, however, only in the sense of ‘more or less fixed frame of reference,’ whether of quantitative or qualitative nature” (p. 266). Furthermore, as Table 1 illustrates, different disciplines have made a different use of the concept. This overview of norm usage shows that differences exist between norm definitions. However, we argue that the apparent lack of consensus about the concept can be avoided through the use of two underlying dimensions introduced by Opp (2001). These two factors permit differentiating between two types of definitions applicable, from the vantage point of Opp, to all disciplines: • The expectation definition: “how a person [moral or legal], or a group of people, is expected to behave in a given circumstance” (adapted from Homans, 1974, p. 96). • The sanctioning definition: “a norm exists only if there is some probability that non-conformity is sanctioned” (Opp, 2001, p. 103). The concept of expectation in the first definition does not refer to the prediction of a behavior, but to a demand in the sense of ‘should’ or ‘ought to’ behave in a certain way. The second definition augments the first by introducing the concept of sanctions in case of nonobservance of expectations and implies a behavioral regularity that can serve as a predictor for the actions. When considering the concept of norms in general and sanctioning in particular, a distinction introduced by Tuomela (1995) and Tuomela & Bonnevier-Tuomela (1992, 1995) between r-norms tied to r-sanctions – rule-based norms/sanctions – and s-norms tied to s-sanctions – social norms/sanctions – needs to be considered. R- and s-norms are sub-divisions of a more general category that Tuomela calls social norms. Social norms are opposed to personal
norms1 and are tied to sanctions. Thus, they define the behavior at the group level and are created by a formally or informally agreed-upon authority or by group-membership and connected with formal or informal sanctions in case of nonobservance. R- and s-norms can be explained as follows: • R-norms (rule norms) are called into existence by an authority structure based on agreement making. R-norms can be formal or informal and are tied to r-sanctions, non-social sanctions such as legal or economical laws and regulations. These sanctions may be either formal or informal and are created and applied by an authority or group of agents authorized to represent the group (Tuomela, 1995b, p. 1). • S-norms (social norms) are centered on mutual belief, such as acceptable dress or table manners. S-sanctions are either social or group-specific conventions and are expressed through approval or disapproval by peers. They may result in s-sanctions by others, such as disapproval or the expulsion from the social group. (Tuomela & Bonnevier-Tuomela, 1992). The focus of research in the area of legal theory has been chiefly on classical contracting where all aspects of a transaction are defined in a formal written document and nonconformity to these conditions gets sanctioned. Several scholars have challenged this classical view and have suggested a different interpretation of contracts. The development of a relational approach to contract law has been significantly affected by a study conducted by Macaulay (1963). In his exploratory research on the contractual governance of long-term business relationships he arrived at the conclusion that, contrary to the assumption of the dominant legal opinion, contracts have neither a complete nor a binding character. Among other reasons, the loss of time through formal legal disputes, as well as the often-inevitable dissolution of relationships as a consequence of a party's recourse to legal sanctions explains this phenomenon. As Macneil (1974) argues, the fundamental reason for the difference between the “purity and simplicity of the traditional tenet” (p. 693) and empirical observations lies in the assumption that one transaction can be seen separately from the one preceding it and the one succeeding it. Against this assumption he opposes the “prevalence of relation in the post-industrial socioeconomic world” (1974, p. 694). By doing so he implicitly points to the possibility of the existence of ssanctions in addition to r-sanctions. However, he does not mention it explicitly and, hence, it remains open whether he interprets norms in the sense of the expectation definition or the sanctioning definition. He does discuss expectations and he may have thought of sanctions. For Macneil, contracts have four roots: society, specialization of labor and exchange, awareness of the future, and choice. The existence of these four roots makes a contract more than a simple promise. In relational exchange theory, a contract is considered to be constituted by the future relations among individuals who participate in exchange transactions (Macneil, 1980a, p. 4). The introduction of another key concept, promise, allows a distinction to be made between different forms of exchange. Promise is defined as the “present communication of a commitment to engage in a reciprocal measured exchange” (Macneil, 1980b, p. 7) as would be written in a contract. Relational exchange theory postulates that promissory exchange is but one case, and empirically rather the exception than the rule. A great range of “non-promissory exchange-projectors” such as custom, status or habit may be found. In addition, mutual promises are generally not perfectly identical which often leads to gaps in their interpretation. Reducing the gap when it appears also necessitates non-promissory mechanisms 1 Personal norms, in contrast with social norms, are widely obeyed, but are not based on social responsiveness, as they relate to the interpretation by the individual of his or her value system. Furthermore, Tuomela sub-divides personal norms into m-norms (moral norms such as the precept that ‘one shall not steal’), obeyed because of one’s conscience, and p-norms (prudential-norms such as the precept that ‘one ought to act so as not to seriously endanger one's life’), obeyed because it is the rational thing to do (in the sense of the instrumental rationality proposition).
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Table 1 Overview of the use of the norm concept. Discipline
Use of norm concept
Example of a definition
Sociology
Norms play an important role in understanding how societies work. (Opp, 1979)
“A norm is an abstract pattern, held in the mind, that sets certain limits for behavior. An ‘operative’ norm is one that is not merely entertained in the mind but is considered worthy of following in actual behavior; thus one feels that one ought to conform to it”. (Johnson, 1960)
Political science
Civil rights and civil liberties are as much protected by informal norms of what is acceptable as they are by the powers of the formal legal system. (Axelrod, 1986)
“A norm exists in a given social setting to the extent that individuals usually act in a certain way and are often punished when seen not to be acting in this way”. (Axelrod, 1986, p. 1097)
Anthropology
Norms offer a firm framework to describe practices and values of different people such as in the case of feuding. (Black-Michaud, 1975)
“Norms are generally accepted, sanctioned prescriptions for, or prohibitions against, others' behavior, belief, or feeling, i.e. what others ought to do, believe, feel or else …. Norms always include sanctions”. (Morris, 1956, p. 610)
Psychology
Norms can help explain how people influence one another, become socialized and establish behavioral norms in their group. (Feldman, 1984)
“Norms regularize group member's behavior”. (Feldman, 1984, p. 47)
Economics
Economists have come to realize that markets involve a great deal of behavior based on standards that no one individual can determine alone. (Schotter, 1981)
“Norms (…) are understood as prescriptive rules regarding behavior that are shared among a group of people and are partly sustained by the approval and disapproval of others”. (Elster, 1989, p. 113)
Legal theory
Agreements between parties comprise explicit (written) as well as implicit (expectations) aspects. (Macneil, 1980b)
“A norm is a principle of right action bringing upon of a group and serving to guide control or regulate proper and acceptable behavior”. (Macneil, 1980b, p. 14)
Marketing
According to Macneil's (1974) relational exchange theory, exchange acts can be classified along a continuum with on one hand discrete exchanges and on the other relational exchanges.
“Norms are expectations about behavior that are at least partially shared by a group of decision makers“. (Heide & John, 1992, p. 34).
(Macneil, 1980a). In this vein, Macneil introduced a distinction between two types of transactions: • Discrete transactions are based exclusively or predominantly upon promissory projection of exchange into the future. • Relational transactions are based upon non-promissory projection of exchange into the future. The former type of transaction is illustrated by a one-time transaction such as a spot sale and the latter can be seen as an intertwined relation such as long-term commercial relations between several parties (Macneil, 1974). Long-term business relationships between buyers and sellers are thus based on relational transactions. Relational exchange theory posits that contracts between buyers and vendors are agreements intentionally left incomplete in order to preserve the actors' flexibility to adapt to changes in environmental conditions (Macneil, 1978). Rather than establishing comprehensive plans for joint action (complete contracts) actors prefer to formulate common goals, such as umbrella contracts (e.g. Mouzas & Furmston, 2008). However, these relationship goals are equally formulated in a rather rough and open manner in order to permit an easy and quick adaptation to changing circumstances (Milgrom & Roberts, 1992). Also promissory and non-promissory exchanges are actually intertwined. Against this background, Macneil postulates the over-whelming importance of norms as governance mechanisms in long-term business relationships and he deploys considerable effort to develop the norm concept (Macneil, 1980b, 1981, 1983). He formulates a comprehensive set of common norms (such as flexibility, reciprocity or solidarity) for the governance of exchange processes whose function is to guide and control human behavior (Macneil, 1980a), possibly implying the existence of s-sanctions. The benefit of linking Opp's (2001) framework with Macneil's view of norms is that it attempts to provide a more differentiated view of norms than the one formulated in relational exchange theory. Opp's definition allows a more focused discussion and permits eliminating some of the vague areas that exist in Macneil's norm framework as much as in definitions of the norm concept formulated in other disciplines. Opp (2001) thus opens new avenues of research based upon the two dimensions of expectations and of sanctions. Based upon these observations we can establish a link between marketing and the two norm dimensions. Both expectation and sanctioning
norm definitions may be used in marketing relationships depending on the type of exchange considered. Neither norm definition can be fully excluded from discrete or relational exchanges, but the predominance of each norm definition for either relationship type can be argued. Relational exchange transactions may be based upon expectation norms or sanction norms. An open question for research is under what conditions actors involved in exchange opt for one, the other or some combination of the two dimensions. In this context, it is important to identify whether both norm definitions are mutually exclusive or whether sanction norms are an extension of expectation norms. Expectations develop and grow as both parties interact repeatedly with each other and therefore build up a strong social capital.2 Thus, the behavioral expectation of one another, such as in a long-term business relationship, plays a predominant role in the strength and stability of the relationship. Nonconformity to this expectation will first result in a decrease of this social capital, in other words a weakening of the relationship, and eventually in its disintegration. The direct result of a breakup is the unavoidable loss of committed resources. These losses do not correspond to sanctions per se but to opportunity costs.3 Sanctions nevertheless do play a role in relational exchange transactions: s-sanctions can signal the deterioration of the relationship to the wrongdoer and r-sanctions play a role after the disintegration of relationships through e.g. payment of penalty fees through contractual obligations. Discrete exchange transactions on the other hand are chiefly based on the sanctioning norm definition as both parties have little or no social capital invested into the relationship. In an ‘over-the-counter’ type of sale, there is a very limited behavioral expectation beyond that specific transaction. Thus, sanctioning (r- and/or s-sanctions) is the main element to express one's discontent or disapproval of the exchange transaction or at least it is predominant. S-sanctions could work through damaging the reputation of the other actor. 2 The term social capital was first defined by Bourdieu (1985, p. 248) as “the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance or recognition”. 3 Opportunity costs are defined according to the Merriam-Webster Collegiate Dictionary (2004) as “the added cost of using resources (as for production or speculative investment) that is the difference between the actual value resulting from such use and that of an alternative (as another use of the same resources or an investment of equal risk but greater return)” and do not include sanctioning.
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As the sanctioning definition is an extension of the expectation definition, it is clear that sanctions cannot be considered without expectations. Even in a single exchange transaction, there are some expectations about what is being exchanged and sanctions will be applied if these expectations are not met. An example of the interplay between expectation and sanction in discrete exchange transactions can be found in consumer behavior where many customers become emotionally loyal to specific brands (Fournier, 1998; Aggarwal, 2004) and might participate in social grouping around them creating brand communities (Muniz & O'guinn, 2001; Schouten & McAlexander, 1995). In the mind of the customers and brand community participant, brands become the equivalent of a member of society and build the basis of a particular social group. Brands and members of a brand community will be evaluated by the same social rules and can therefore be subject to social sanctions in case of nonconformity to the expected behavior. In an industrial marketing context, a similar constellation arises, for example, when the key account manager of a supplier firm is often present in the offices of a customer firm. On this level of analysis the same rules apply as above, as from the vantage point of the contact person(s) on the customer side, the key account manager may become part of the closer social community. This socialization process is comparable to the role brands or members of a brand community play, as the customer contract person will start evaluating the key account according to the standards of the social group he has been included in. From a theoretical as well as from a managerial perspective, a key question is what precisely takes place in relationships that are not situated at the extreme ends of the discrete-relational continuum. In summary, the area of marketing concentrates predominantly on either of the two norm definitions depending on the type of relation that is being considered. Relational exchanges mostly focus on expectation norms due to the repeated interaction between the parties and discrete exchanges on the sanctioning definition due to limited expectation and exchange transaction between both parties. Nevertheless this classification of exchange acts is a continuum at the end of which neither norm definition can be fully excluded. These conclusions coincide with the premises of relational exchange theory that state that the “economic man [homo economicus] is necessarily in society at all times” (Macneil, 1982, p. 961). In other words, Macneil assumes that (1) exchanges go beyond economic transactions and encompass all forms of social interactions (Ivens, 2002) and (2) these exchanges need to be considered from the perspective of the economic man within social boundaries. The objective of this section was to clarify the norm concept in order to refine the Macneil's framework, which has been predominating in research on long-term business relationships to date. As shown in Fig. 2, in the next section we extend our discussion of the norm concept by discussing norm typologies. 3. Toward a common classification of norms Various norm typologies have been identified by researchers within the social sciences. First attempts to classify the concept date
Fig. 2. From norm definition to norm classification.
back to the beginning of the 20th century (Sumner, 1906), followed later on by further works by Morris (1956), Gibbs (1965) and more recently by Tuomela (1995). Most of these typologies suffer either from a lack of a proper norm definition, too strong a focus on a specific field to be generalisable, or missing clarity for exhaustiveness. The common denominator of all these classifications is the deductive approach taken towards building norm taxonomies. The scheme by Elster (1989), on the other hand, is inductive, as he does not classify norm types, but norm-oriented behaviors. In Elster's (1989) paper “Social norms and economic theory”, he tries to bridge the gap between Adam Smith's homo economicus and Emil Durkheim's homo sociologicus. In this vein, he defines two normoriented behaviors in accordance with each perspective: • Norm-oriented action of the homo economicus: “the behavior of the homo economicus is guided by instrumental rationality” (1989, p. 99). • Norm-oriented action of the homo sociologicus: “the behavior of the homo sociologicus is dictated by social [conventions]4” (1989, p. 99). The homo economicus is driven by maximizing his returns. Instrumental rationality prescribes him to attain a goal by “the best (most efficient, most cost-effective, etc) means to whatever end he values the most in a given situation” (Mann, 1999, p. 1). In other words, the economic man modifies his behavior depending on the situation he encounters, constantly seeking for improvements to maximize returns. The homo sociologicus, or social man, acts within the boundaries of social conventions. The social man behaves according to a socially accepted code of conduct even if better options might be available to reach his goals. As Gambetta (1987) puts it, the rationale behind the homo economicus' actions is that he feels “pulled” by the prospects of future rewards, whereas the homo sociologicus is “pushed” from behind by quasi-inertial forces (cited in Elster, 1989, p.99). In other words, the economic man can be parodied as a “self-contained, asocial atom”, and the social man as “the mindless plaything of social forces” (Elster, 1989, p.99). The following diagram illustrates the proposed connection between the norm definition and the norm classification scheme (Fig. 3). To understand a relationship between the definition and the classification, one needs to look into the reason why norms are accepted and how they form the basis of norm-oriented behavior. The connection of the economic man's behavior and the ‘expectation definition’ raises two issues: • Is instrumental rationality the basis of expected behavior? • Does the economic man perceive sanctions, as he might behave in a non-permissible way while pursuing his goals? Instrumental rationality is programmed into our value systems, as everyone needs to ‘look out for himself’ first or, in other words, the survival of the fittest prevails. Thus, rational actions can be regarded as an expected behavior in a given situation. The economic man sees the world as a milieu in which to accomplish his goals and only includes opportunity costs, as opposed to sanctions, in his calculations of more or less optimal way of reaching his aim. If the optimal way to attain his targets prescribes him acting in an illegal or socially unacceptable 4 Elster (1989) actually uses the term ‘social norm’ and not ‘social convention’ for the actions of the homo sociologicus. His definition of the concept of norm for the homo sociologicus is solely based on its opposition to the rational actions of the homo economicus. He completes his explanation by suggesting that norms “are sustained by the feeling of embarrassment, anxiety, guilt and shame that a person suffers at the prospect of violating them” (Elster, 1989, p. 100). This definition is not satisfactory, as it does not express clearly what a norm is in other than in terms of a rational action framework. To avoid confusion between his use of the term “norm” and the definition used in the previous section, the expression “social convention” has been used in Elster's classification scheme; thus, the behavior of the homo sociologicus is dictated by social conventions.
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Although sanctions are part of the critical path analysis of the economic man, he cannot be dissociated from the social structure he interacts with. Therefore sanctions do play a role even if secondary. The role of theses sanctions within the relationship could be: • S-sanctions to prevent further deterioration of the relationship • R-sanctions to seek revenge or to minimize losses due to a breakup through the collection of e.g. penalty fees. Fig. 3. Norm definition and classification frameworks.
manner, the resulting sanctions are simply part of his critical path analysis. In the case of the social man, the reason for the ‘push’ from behind comes from the effect of rules-based or social sanctions in the event of nonconformity. The motivation to act within social convention, the ‘quasi-inertial forces’, is the fear of sanctions by the same forces, corresponding to a ‘sanctioning definition’ wherein the existence of a norm is directly linked with sanctions in case of nonobservance. The above arguments illustrate Macneil's view of the economic man necessarily interacting within society at all times or in other words: “Man is both an entirely selfish creature and an entirely social creature, in that man puts the interests of his fellows ahead of his own interests at the same time that he puts his interest first” (Macneil, 1983, p. 348) and is never either entirely. The issue at hand is that both Adam Smith's and Emil Durkheim's model of man are mutually exclusive. One cannot analyze human behavior in society with a model of man portrayed as a “self-contained, asocial atom” (Elster,1989, p.99) or, vice versa, considering man from the perspective of “the mindless plaything of social forces” (Elster, 1989, p.99) without taking into account his desire for his own well-being. Thus, a more differentiated view of both models needs to be used when dealing with norms. 4. Implications for marketing theory Marketing theory further reinforces the connection between the norm definition and the norm classification frameworks. Macneil's relational exchange theory analyzes the continuum of exchange actions through the perspective of ten key norms. These norms have been used to explain the strength, weakness or disintegration of exchange relationships. Norms in a relational exchange transaction are primarily expectation norms. This view corroborates the connection between the economic man's perspective of the world as containing more or less optimal ways to attain his goals where potential r- or s-sanctions are embedded in the evaluation of his options. If he concludes through his evaluation of these various alternatives that the most efficient way to attain his goals may include sanctions, he will follow this course of action.
Norms in a discrete exchange transaction tend to be sanctioning norms further strengthening the connection between the actions of the social man and sanctioning norms. The goal of the social man is to remain within the formal or informal boundaries ‘created by an authority or body of agents authorized to represent the group’ (Tuomela, 1995b, p. 1) and to preserve and/or enhance his social capital. R-sanctions are exercised when he violates the limits of society, whereas s-sanctions are applied by peers due to nonconformity to social or group specific conventions. Both r- and s-sanctions decrease this social capital and therefore the social man will avoid socially unacceptable behaviors. One would suspect that in the vast majority of situations in longterm business relationships, the economic man and the social man are indistinguishable. Exchange is almost always located between the extremes of discrete and relational transactions. Hence, businessmen must reconcile their ‘two souls’, i.e. they need to define appropriate combinations of promissory and non-promissory exchange. The idea that the governance of a relationship does usually not rely upon a single mechanism has been discussed from a different perspective in the channel management and in the industrial marketing literature. Authors refer to such constellations as plural form governance (Gundlach et al., 1995). Nevertheless, the understanding of the combined use of several mechanisms, such as r- and s-sanctions, remains superficial. Future research could attempt to gain a deeper understanding of the way in which actors move from a predominance of one type of sanction to the predominance of another type, for example as their exchanges become more relational. It is unclear whether the move would be linear or follow a different pattern. Another important question is what impact different types of sanctions could have on relationships, as they could be important outcome variables. One could also imagine that the personality and culture of the individuals as well as the organizations involved in a relationship play a role in the choice of sanction mechanisms for governance purposes. Summarizing, there seems to be a strong potential for future research in this area. The goal of this section was to further clarify the concept of norms through the addition and the discussion of a norm classification scheme to Opp's (2001) norm definition. The combination of the selected typology and the two norm dimensions builds a solid basis for using norms across disciplines offering a common ground for further research around this concept.
Fig. 4. Overview of role of norm definition and classifications for marketing theory.
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5. Summary and conclusions As seen in Table 1, a vast array of uses of the norm concept scattered among different disciplines has been identified. The vagueness of this notion has lead to a compartmentalized approach to research on the subject, where not only individual disciplines, but also individual researchers have a different understanding of norms and norm types. The two definition types identified by Opp (2001) provide a solid basis to understand how norms can be used across various scientific disciplines: an ‘expectation definition’, encompassing the concept of behavioral expectation and a ‘sanctioning definition’, an augmentation of the first definition introducing the concept of sanctions in case of nonobservance of expectations. Two appropriate norm classification schemes were then identified: the norm-oriented action of the economic man, dictated by instrumental rationality or the desire to maximize ones returns, and the norm-oriented actions of social man, guided by social conventions. The connection between these perspectives is that ‘expectation’ norms explain the actions of the economic man and instrumental rationality, whereas ‘sanctioning’ norms explain the actions of the social man and behavioral regularities. The definition and classification framework set forth in this paper has implications for marketing theory. As summarized in the diagram below, depending on where one is located on the exchange continuum, the focus of the norm definition and classification varies (Fig. 4). Although there is a strong predominance of either norm type, neither one can be fully excluded on either side of the spectrum of the diagram. Implications of such a framework leads to the reinterpretation of the economic man, as put forth by Macneil (1969): We (…) think of economic exchange as being extremely individualistic and selfish, rather than co-operative, [it] is the fact that exchange represents a species of human co-operation. (…) Exchange involves a mutual goal of the parties, namely the reciprocal transfer of values. And this is true however strongly the ‘economic man’ – the ‘as-much-as-possible-for-as-little-as-possiblein-return-man’ – may dominate the motivations of both parties to an exchange (p. 405). In other words, the economic man cannot be considered as a ‘lone wolf’, entirely disregarding the interests of others, he is always part of a larger social fabric, where both parties of the exchange transactions have a role to play. On the other side of the spectrum of Fig. 4, the social man is not a “mindless plaything of social forces” as Gambetta (cited in Elster, 1989, p.99) parodies him to be. While staying within acceptable social boundaries, he will pursue his best interest and ‘look out for himself’. This means that he will not necessarily flock with the herd but always stay within the fenced area. In conclusion, a man or an organization will always be torn between self-interest and wider social stakes and, thus, attempt the fine balancing act within the exchange transaction continuum. The goal of this paper was to clarify the widely used concept of norms by giving this notion a systematic foundation, first by defining it and then by identifying a classification of norm types. In this vein, we did not aim to explain what the ‘mechanisms that determine behavior’ are, but we aimed to lay a foundation on which social science scholars can build their understanding of these mechanisms, if they choose to use the concept of norms to do so. The challenge with this objective lies in finding a common denominator within the diversity of disciplines, definitions and typologies used. Analogous to the broadness of the usage of the norm concept, broadness in the approach of clarification needs to be accepted to reach this objective. Therefore, the results of this paper are purposely general and build a broad foundation of the norm construct.
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