Creating and appropriating value in collaborative relationships

Creating and appropriating value in collaborative relationships

Journal of Business Research 63 (2010) 840–848 Contents lists available at ScienceDirect Journal of Business Research Creating and appropriating va...

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Journal of Business Research 63 (2010) 840–848

Contents lists available at ScienceDirect

Journal of Business Research

Creating and appropriating value in collaborative relationships Stephan M. Wagner a,⁎, Andreas Eggert b, Eckhard Lindemann a a b

Chair of Logistics Management, Department of Management, Technology, and Economics, Swiss Federal Institute of Technology Zurich, Scheuchzerstrasse 7, 8092 Zurich, Switzerland Marketing Department, University of Paderborn, Warburger Strasse 100, 33098 Paderborn, Germany

a r t i c l e

i n f o

Article history: Accepted 1 July 2009 Keywords: Customer–supplier relationships Value creation Value appropriation Survey Structural equation modeling

a b s t r a c t Business relationships provide means for creating and appropriating superior value in the marketplace. To date, research pertains almost exclusively to the value after relationship creation and sharing among exchange partners. Consequently, the interaction between value creation and value appropriation remains relatively unknown in collaborative relationships. Drawing on equity theory, this study proposes a conceptual model that positions value creation and value appropriation as focal variables within the nomological net of business relationships. Data collected from industrial customer–supplier projects reveal that value appropriation is the strongest driver of project satisfaction. Customer firms perceive value creation as positive only if they appropriate a larger slice of the bigger value pie. Information exchange moderates customer firms' evaluations of value creation and appropriation efforts. In contrast to the highly competitive nature at the project level, embedding the supplier project in an ongoing sourcing relationship reveals cooperative elements in the customer–supplier interaction. Greater relational satisfaction favors less aggressive value appropriation efforts. These insights help bridge the gap between managerial metrics that focus on successful value appropriation and academic models that attend to variables that capture the quality of ongoing relationships. © 2010 Elsevier Inc. All rights reserved.

1. Introduction Over the past two decades, relationship marketing became the dominant perspective in academic marketing literature (Palmatier, 2008). Scholars advance understanding of the drivers, mediators, and performance outcomes of business relationships on the basis of both conceptual and empirical perspectives. In particular, widespread research attention centers on relationship quality as a key mediating variable (Kumar et al., 1995; Morgan and Hunt, 1994; Palmatier et al., 2006). As a composite concept, relationship quality summarizes “the diverse interaction characteristics required to create a high-caliber relational bond” (Palmatier, 2008, p. 22) by encompassing variables such as satisfaction, trust, and commitment. As a mediating variable, relationship quality provides a means to an end. Companies do not build strong bonds with their customers and suppliers for their own sake. Rather, they adopt exchange designs that offer the best performance prospects (Carson et al., 1999). Companies prefer relational exchanges to arm's-length interactions when those exchanges help create and appropriate more business value in marketplaces (Ghosh and John, 1999).

⁎ Corresponding author. Tel.: +41 44 632 3259; fax: +41 44 632 1526. E-mail addresses: [email protected] (S.M. Wagner), [email protected] (A. Eggert), [email protected] (E. Lindemann). 0148-2963/$ – see front matter © 2010 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2010.01.004

For example, North American car manufacturers historically relied on an arm's-length model of supplier management, characterized by minimal commitment or dependence and the exploitation of bargaining power. The focus was clearly on value appropriation, frequently at the expense of the suppliers. Competitive pressure from Japanese auto manufacturers forced U.S. firms to reconsider this practice and adopt a partnership model, as firms like Toyota, Honda, or Nissan practiced in Japan and their North American transplants. Chrysler took the lead in adopting collaborative relationships with suppliers, which prompted suppliers to expend more relationship-specific investments, share knowledge more openly, and better coordinate independent product development and manufacturing tasks. In 1998 alone, Chrysler and its suppliers removed more than $2 billion in costs from the supply chain (Hartley et al., 2002) through the SCORE program, which relies on collaborative relationships. Chrysler and its suppliers shared the benefits (Dyer, 1996). The Chrysler example illustrates that collaborative relationships can help create and appropriate superior value in business markets. With such a background, empirical research provided little insight into the interaction between value creation and value appropriation in collaborative relationships though. A growing body of literature demonstrates the value creation potential of collaborative relationships (Möller and Törrönen, 2003; Walter et al., 2003), yet the shared “value pie” remains underresearched (Jap, 2001). Empirical researchers virtually ignore the interplay between value creation and value appropriation at the individual business relationship level (Fang et al., 2008). Because “value creation and value sharing are the raison d'être

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of collaborative customer–supplier relationships” (Anderson, 1995, p. 348), this omission represents a major gap in the relationship marketing research agenda. From a conceptual perspective, value creation and value appropriation represent two sides of the same coin. Value creation entails the total net value (i.e., total outcomes minus total inputs) created in a collaborative effort among exchange partners. Value appropriation depicts the net value that a focal firm claims successfully. Value creation is a win–win scenario; value appropriation means that a larger value slice for one party diminishes the remaining slice for the other partner. Previous relationship marketing scholars researched perceived value only after its creation and sharing among exchange partners (Lindgreen and Wynstra, 2005; Menon et al., 2005; Ulaga and Eggert, 2006), but this research perspective cannot reveal the underlying sources of value perceptions. That is, a focal firm might achieve superior value because of superior value creation among the exchange partners, superior appropriation of the value pie, or a combination thereof. Understanding how business relationships facilitate value is important to marketing managers and academicians alike. From a practitioner's point of view, value creation and value appropriation enable the profitable management of business relationships. For example, many industrial suppliers now provide value-added services to customers, yet many fail to extract their fair share of the augmented value pie (Reinartz and Ulaga, 2008). From an academic perspective, research into value creation and appropriation represents an essential step toward crafting a value-based perspective of relationship marketing. If value creation and value appropriation represent the raison d'être of collaborative customer–supplier relationships, then a thorough understanding of the interaction between these value constituents is critical. To shed light on the creation and appropriation of value in collaborative relationships, this study takes the following steps: The next section introduces equity theory as a framework for understanding the interaction between value creation and value appropriation in collaborative relationships. Against this theoretical background, the authors offer a conceptual model and discuss the hypotheses. After the description of the empirical study, the results and findings appear. Finally, the article concludes with some limitations of the study and further research opportunities. 2. Theoretical background Equity theory (Adams, 1963; Homans, 1961; Walster et al., 1978) provides a suitable framework for researching the creation and appropriation of value in collaborative relationships. With roots in social psychology, equity theory explains the distribution of outcomes in interpersonal and interorganizational relationships. Equity theory receives empirical support from diverse research fields (e.g., Austin and Walster, 1975; Carrell and Dittrich, 1978; Greenberg, 1982; Ring and Van de Ven, 1994). Recently, it increasingly appears in relationship marketing settings (e.g., Fang et al., 2008; Homburg et al., 2007; Homburg et al., 2002; Jap, 2001; Scheer et al., 2003; Swan and Oliver, 1991). In line with traditional economic thinking, equity theory assumes utility-maximizing actors (Walster et al., 1978) and thus extends traditional economic theory by postulating that exchange partners not only assess their own utility but compare what they take from an exchange (outcomes) to what they bring into the exchange (inputs) (Homburg et al., 2007). Equity theory also assumes the presence of relative justice in the exchange process (Huppertz et al., 1978), such that the absence of relative justice (i.e., inequity) produces negative sentiments and behavioral responses (e.g., dissatisfaction and leaving intentions) among relationship partners (Adams, 1965). With an explicitly subjective perspective, equity theory regards inputs and outputs as perceived rather than objective, and relative justice is also a subjective concept that exists “in the eye of the beholder” (Donnerstein and Hatfield, 1982, p. 310). For the research context of this study, equity theory provides the means to develop hypotheses about the interaction between value

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creation and value appropriation and its impact on attitudinal and behavioral variables. Specifically, this study argues that an exchange partner's satisfaction and future collaboration intentions are functions of both the size of the total value pie created and the value slice appropriated. The next section outlines the conceptual model, details the hypotheses, and identifies an appropriate unit of analysis for the empirical study. 3. Conceptual model By their very nature, collaborative interorganizational relationships are ongoing, which is a major challenge for investigating the creation and appropriation of value, because empirical research requires a clearly defined unit of analysis. This study therefore focuses on supplier projects, which share certain characteristics, including (1) a clearly defined beginning and end, (2) specified expectations and objectives, (3) specified participants, and (4) dedicated resources. In business practice, supplier projects serve a wide range of objectives, including joint cost reduction (e.g., Cannon and Homburg, 2001), quality improvements (e.g., Ulaga and Eggert, 2006), and collaborative innovation (e.g., Hoegl and Wagner, 2005). Although clearly defined units of analysis, supplier projects also remain embedded in sourcing relationships. They depend on relationship history and likely influence partners' future collaborative behavior (Dwyer et al., 1987). The proposed conceptual model (Fig. 1) depicts the embeddedness of the supplier project in an ongoing sourcing relationship: Relational satisfaction and relational trust are exogenous variables in the proposed model. Prior research (Crosby et al., 1990; Doney and Cannon, 1997) underlines the importance of satisfaction and trust as cumulative variables that characterize the quality of an ongoing relationship. These variables are not independent. Relational satisfaction represents the company's feeling toward the overall relationship with the partner (Crosby et al., 1990), and a satisfactory relationship enhances relational trust, or the “confidence in an exchange partner's reliability and integrity” (Morgan and Hunt, 1994, p. 23). H1. Relational satisfaction has a positive impact on relational trust. A high quality customer–supplier relationship motivates exchange partners to strive for relationship continuity and to collaborate on future projects (Palmatier et al., 2006). Therefore, both facets of relationship quality — relational satisfaction and relational trust — should increase the future collaboration intentions of relationship partners. H2a. Relational satisfaction has a positive impact on the company's future collaboration intent. H2b. Relational trust has a positive impact on the company's future collaboration intent. Interorganizational collaboration aims to create and appropriate superior value (Carson et al. 1999), yet what do companies create (value pie), and what do companies claim (value slices)? Jap (1999, p. 461) introduces the value pie metaphor and defines the expansion of the pie as the “collaborative process of creating mutually beneficial strategic outcomes,” which allows for sharing this “pie of benefits” (Jap, 2001). Greater relational trust leads to positive strategic outcomes and helps create value in ways that a transactional relationship could not effectively create or share among partners (Palmatier et al., 2006). Therefore, H3a. Relational trust has a positive impact on value creation. H3b. Relational trust has a positive impact on value appropriation. According to equity theory, a negative link occurs between relational satisfaction and the value slice appropriated by the focal relationship

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Fig. 1. Value creation and value appropriation as focal variables.

partner. Because relational satisfaction subsumes the confirmation or disconfirmation of expectations over the history of the relationship (Oliver, 1980), satisfaction means the partner consistently fulfills expectations. Therefore, the focal relationship partner reduces value appropriation efforts during the current collaboration to restore relational equity (i.e., reduce own positive inequity): H4. Relational satisfaction has a negative impact on value appropriation. Value creation can have both direct and indirect effects on relationship partners' satisfaction with the collaboration. The indirect impact is straightforward: Value creation enhances relationship partners' value appropriation. The more successful the collaboration in terms of value creation and the bigger the value pie, the more value each company can claim (win–win situation). Value appropriation then has a positive impact on the firm's satisfaction. The more value the firm can claim from a collaborative relationship, the more likely the perceived outcomes meet or even exceed prior expectations and the lower the availability of better investment alternatives in the marketplace, which results in more satisfaction with the current collaboration. In aggregate,

the firm's equity perception (i.e., increases negative inequity). If negative inequity reduces the company's level of project satisfaction, H5c. Given H5a and H5b, value creation has a negative direct impact on the focal partner's level of project satisfaction. The theory also features the expectation that the intensity of information exchange between relationship partners during a collaboration moderates the negative effect. Frequent and open communication, which may explain the reasons one partner receives a relatively smaller value share, should make the underlying value-sharing process clearer and help both partners accept perceptions of negative inequity: H6. Information exchange positively moderates the direct link between value creation and project satisfaction. Finally, the company's satisfaction with a collaboration influences the future of the relationship. Because current experiences should recur in future collaborations, companies continue collaborations only if their current project experiences meet their expectations. H7. Project satisfaction has a positive impact on future collaboration intentions.

H5a. Value creation has a positive impact on value appropriation. H5b. Value appropriation has a positive impact on the focal partner's level of project satisfaction.

4. Method

The basic hypotheses of equity theory suggest the direct effect of value creation on project satisfaction. Companies not only evaluate the size of their own value slice but also consider the total size of the value pie and their relationship partner's value slice. Companies prefer an equitable outcome for invested inputs, but when the absolute size of the company's value slice remains constant, value pie expansion increases the share for the partner (win–lose situation) and consequently reduces

The test of the hypotheses employs a survey of industrial firms in Germany and Switzerland, with purchasing managers as the key informants. The units of analysis focused on recently completed (within the past 12 months) supplier projects embedded in ongoing sourcing relationships. The initial set of manufacturing companies and their managers with purchasing responsibilities came from a commercial list provider (n = 1846). The researchers sent personalized e-mails

4.1. Research setting and data

S.M. Wagner et al. / Journal of Business Research 63 (2010) 840–848 Table 1 Sample breakdown by industry. Industrial machinery Electronics and optics Automotive and transport equipment Metals and metal working Chemicals and pharmaceuticals Construction Food and consumer goods Rubber and plastic products Textiles and clothing Other Total

37 35 24 17 14 6 5 4 3 38 183

20.2% 19.1% 13.1% 9.3% 7.7% 3.3% 2.7% 2.2% 1.6% 20.8% 100.0%

containing a link to an online questionnaire, as well as the offer of a summary of the results and a practitioners' purchasing book in return for their participation. Three follow-up e-mail and telephone contacts yielded 186 completed questionnaires. According to telephone interviews of 100 randomly selected nonrespondents, 45% had not conducted a supplier project within the previous 12 months. The participating companies earned 2006 annual sales volumes ranging from $6.6 million to $138.4 billion, with an average annual sales volume of $3.09 billion. On average, these companies employed 7350 persons (from 16 to 324,900 employees). A sample breakdown by industry appears in Table 1. The average sourcing relationship tenure was 10.48 years at the beginning of the selected supplier project. Respondents held senior positions in their firms. Most of the key informants were purchasing executives, who should have overarching, boundary-spanning views of their companies' supply chains and supplier activities. The majority of the informants held titles such as head of purchasing or chief purchasing officer (45.9%), purchasing manager (17.5%), or chief executive officer, owner, or plant manager (11.5%). Others cited their positions as heads of logistics, supply chain, or operations (8.7%), heads of supplier management/development (2.7%), and other managers (6.0%). The respondents averaged 7.8 years in their current position and 11.4 years with their current firm. The survey included two questions to assess the informants' ability to answer the questionnaire (Kumar et al., 1993). These questions measured (on five-point Likert scales, anchored at 1 = fully disagree; 5 = fully agree) managers' degree of knowledge about (1) the specific project and (2) the ongoing relationship with the respective supplier. Most informants rated their knowledge about the project and the relationship as 4 or 5 (92% and 96%, respectively). Three informants with ratings of 3 were dropped from the sample. The remaining respondents indicated a high average degree of knowledge about the project (4.4) and the relationship (4.6). In summary, these results suggest knowledgeable informants. Comparisons of the responses of early (initial e-mail) and late (second and third reminders) informants on all model items showed no statistically significant mean differences (p > .05) (Armstrong and Overton, 1977). The sample of informants also was not significantly different from the 100 randomly selected nonrespondent companies in terms of sales or employees (drawn from an independent industry database) (p > .05). In aggregate, these tests indicate that nonresponse bias is not a concern. 4.2. Survey instrument and measures The development of the survey instrument and measures proceeded through several stages and followed standard techniques (Churchill, 1979; Dillman, 2007). First, the preliminary draft questionnaire derives from existing literature and the findings of eight case study interviews with purchasing managers in industrial companies. Second, several academics with diverse research backgrounds and a few practitioners commented on the items in the questionnaire. Third, the pretest of the survey instrument consisted of interviews with purchasing executives

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from several firms. To ensure clarity, half of these informants provided their comments while answering the questionnaire, and the other half offered responses after they completed the questionnaire. The relevant comments entered the final version of the survey instrument. Existing scales serve to measure the constructs, with some slight adaptations to the research context. One person translated the original English questionnaire into German, and then a second person back translated the items into English. Any differences were reconciled (Brislin, 1970). The measure of relational satisfaction used items developed by Crosby et al. (1990). Relational trust used Doney and Cannon's (1997) measure. The insights gained from the pretest suggested recoding one of the reverse-coded items. The information exchange measure included four items from Heide and John (1992). The items developed by Jap (2001) serve to measure project satisfaction and future collaboration intentions. Relationship tenure is the duration of the sourcing relationship in years. The assessment of the economic situation of the customer relied on four items representing the current market situation and customer's financial performance in comparison with the company's main competitor in terms of sales growth, market share, profit margin, and profit margin growth (see the Appendix for item formulations). To capture the perceived size of the value pie and the appropriated slice of the customer firm, this study used the global measure of equity (Walster et al., 1978), which appears in several studies and research settings (e.g., Corsten and Kumar 2005; Scheer et al., 2003) and operationalizes diverse measures (e.g., outcome-input ratio, degree of equity, and equality). In accordance with Fang et al.'s (2008, p. 307) claim that suppliers can contribute “more tangible or intangible resources” to customer projects, this study further distinguished between tangible (e.g., financial and personnel) and intangible (e.g., know-how and patents) inputs and outcomes of the project collaboration. The resulting 12 items constitute two reflective measures for the perceived size of the value pie and the slice appropriated by the customer firm: ½Value creation: VALUE1 = ðOutcome Customer  Input Customer Þ + ðOutcome Supplier  Input SupplierÞ; and VALUE2 = ðTangible Outcome Customer  Tangible Input Customer Þ + ðTangible Outcome Supplier  Tangible Input Supplier Þ + ðIntangible Outcome Customer  Intangible Input CustomerÞ + ðIntangible Outcome Supplier  Intangible Input SupplierÞ: ½Value appropriation: VALUE–CUST1 = ðOutcome Customer  Input CustomerÞ; and VALUE–CUST2 = ðTangible Outcome Customer  Tangible Input Customer Þ + ðIntangible Outcome Customer  Intangible Input CustomerÞ: Tables 2 and 3 indicate the convergent and discriminant validity of the scales. The investigation of interrater reliability for future collaboration intentions and information exchange relied on 32 dyadic data sets. The within-group interrater reliability, rWG (James et al., 1984), is the most frequently applied index for interrater agreement on Likert-type scales and among the most acknowledged measures (LeBreton and Senter, 2008). The index derives from a comparison of actually observed variability in multiple informants' ratings and the theoretical variance of ratings that might be expected in the case of no agreement. Brown and Hauenstein (2005) propose that rWG values of .80 or more indicate strong agreement, values between .70 and .80 indicate moderate agreement, values between .60 and .70 show weak agreement, and values less than .60 represent unacceptable levels of agreement. For future collaboration intentions, 30 of the 32 dyads

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Table 2 Convergent validity. Construct name/items

Factor loading

Relational satisfaction SATISF1 SATISF2 SATISF3 Relational trust TRUST1 TRUST2 TRUST3 TRUST4 TRUST5 TRUST6 TRUST7 TRUST8 Future collaboration FUTURE1 FUTURE2 FUTURE3 Information exchange INFEX1 INFEX2 INFEX3 INFEX4 Project satisfaction PRO_SATIS1 PRO_SATIS2 PRO_SATIS3 Economic situation SITUATION1 SITUATION2 SITUATION3 SITUATION4 Value creation VALUE1 VALUE2 Value appropriation VALUE_CUST1 VALUE_CUST2

t-value

.88 .87 .82

37.60 29.14 19.45

.75 .82 .83 .77 .77 .72 .84 .67

16.64 24.94 28.29 22.28 23.75 15.05 33.66 11.04

.96 .97 .96

88.49 129.19 57.03

.84 .85 .80 .80

24.07 32.14 18.77 12.30

.93 .85 .93

63.97 26.62 73.46

.82 .54 .85 .93

5.34 3.07 7.41 8.27

.84 .89

22.32 32.18

.87 .89

33.79 44.31

reveal rWG values of .80 or greater, such that 94% of the dyads show strong agreement. The probability of a match in the customer's and the supplier's collaboration intention therefore is high. The average mean rWG of .90 also suggests strong agreement. In addition, 91% of the informants are in strong agreement (greater than .80) with regard to information exchange; the average rWG is also high (.88). 5. Results A partial least squares (PLS) analysis tests the hypotheses. As a nonparametric estimation procedure (Wold, 1982), PLS provides an iterative combination of principal components analysis that relates measures to constructs and path analysis that captures the structural model of constructs. The structural model represents the direct and

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Composite reliability

.73

.89

.60

.92

.93

.98

.67

.89

.82

.93

.64

.87

.75

.86

.77

.87

indirect unobservational relationships among constructs. The measurement model represents the epistemic relationships between observed variables and constructs. The bootstrap procedure in the SmartPLS 2.0 software (Ringle et al., 2005) enables the calculation of the standard deviation and an approximation of the t-statistic, which overcomes the nonparametric methods' lack of formal significance tests for estimated parameters (Chin, 1998). Furthermore, PLS fits the research setting well because it can model conceptually and assess empirically the latent interaction variables (see Lohmöller, 1989). In contrast, LISREL estimation approaches assume uncorrelated error terms among indicators, which cannot hold true by definition for latent interaction variables that derive through multiplication. Therefore, “the error terms for the product indicators are partially correlated with the error terms for the indicators of the other

Table 3 Discriminant validity.

1 2 3 4 5 6 7 8 9

Relational satisfaction Relational trust Future collaboration Information exchange Project satisfaction Relationship tenure Economic situation Value creation Value appropriation

Mean

SD

1

2

3

4

5

6

7

8

9

3.62 4.00 4.21 4.20 3.82 10.48 3.41 1.23 1.26

0.82 0.68 0.91 0.65 0.86 9.92 0.74 2.20 1.58

.86 .67 .53 .35 .45 .03 .12 .11 .10

.77 .65 .47 .48 –.02 .04 .15 .23

.96 .44 .69 –.01 .11 .13 .23

.82 .27 .01 –.02 .02 –.04

.90 –.04 .23 .11 .22

1.00 .06 .00 .04

.80 .17 .09

.87 .79

.88

Note: Bold numbers on the diagonal indicate the square root of the average variance extracted, numbers below the diagonal represent construct correlations.

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Table 4 Parameter estimates for the structural model. Hypothesis

Impact of

On

Path coefficient

t-value

Hypothesis supported

H1 H2a H2b H3a H3b H4 H5a H5b H5c H6 H7

Relational satisfaction Relational satisfaction Relational trust Relational trust Relational trust Relational satisfaction Value creation Value appropriation Value creation Value creation X Information exchange Project satisfaction

Relational trust Future collaboration Future collaboration Value creation Value appropriation Value appropriation Value appropriation Project satisfaction Project satisfaction Project satisfaction Future collaboration

.69 .06 .28 .16 .19 −.12 .78 .31 −.23 .09 .47

14.36⁎⁎⁎ 1.25 3.18⁎⁎⁎ 1.52⁎ 2.86⁎⁎⁎ 2.15⁎⁎ 17.46⁎⁎⁎ 2.28⁎⁎ 1.97⁎⁎ 2.29⁎⁎ 7.41⁎⁎⁎

Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes

⁎⁎⁎ Significant at the 1% level (one-sided test). ⁎⁎ Significant at the 5% level (one-sided test). ⁎ Significant at the 10% level (one-sided test).

exogenous constructs…. these correlations may actually help provide a more accurate estimation of the interaction effect when using PLS” (Chin et al., 2003, pp. 197f.). To ease of interpretation, the exogenous indicators can be standardized before the multiplication. Table 4 includes the path coefficients and t-values of the structural model estimation, as well as the listing of which hypotheses receive support. With one exception (H2a), the parameter estimates confirm the conceptual model. Relational satisfaction has a positive impact on relational trust (H1). Relational trust has a direct impact on future collaboration intentions (H2b). Although relational satisfaction and future collaboration intentions are highly correlated (Table 3), the direct link between both variables is insignificant, so this study must reject H2a. Other latent variables in the conceptual model perfectly mediate the impact of relational satisfaction on future collaboration intentions. The t-value of 1.52 indicates that the hypothesized impact of relational trust on the size of the value pie (H3a) is only significant at the 10% level. The hypothesized link between relational trust and the appropriated slice of the value pie (H3b) also receives support. Parameter estimates confirm the expected negative impact of relational satisfaction on value appropriation (H4). In the interplay between value creation and value appropriation, value creation has a positive impact on value appropriation (H5a). Value appropriation positively affects project satisfaction (H5b). As the background of equity theory implies, value creation has a negative impact on project satisfaction (H5c), assuming H5a and H5b. Information exchange positively moderates the strength of this link (H6). In

other words, in the absence of frequent and open communication, exchange partners react more negatively to an increasing value pie that they cannot appropriate successfully. Fig. 2 depicts the strength of the value creation–project satisfaction link as a function of information exchange. Finally, project satisfaction has a positive impact on future collaboration intentions (H7). Among the control variables, economic situation has a positive and significant correlation with project satisfaction. All other path coefficients from the control variables are insignificant. 6. Discussion and implications Value creation and value appropriation sit at the core of relationship marketing. Building and sustaining business relationships can create and appropriate value more effectively than can arm's-length interactions. Yet empirical research on the interaction between value creation and value appropriation remains scarce. This study contributes to a better understanding of the fundamental sources of value perceptions in business relationships. First, this study details the interaction between value creation and value appropriation at the supplier project level. This empirical study appears to be the first to capture both sources of value perceptions and link them to satisfaction as an attitudinal outcome variable. Because value creation and value sharing are the raison d'être of collaborative customer–supplier relationships, this investigation helps minimize a fundamental gap in relationship marketing research. Structural path

Fig. 2. Information exchange moderates the value creation–project satisfaction link.

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estimates reveal that value appropriation is the strongest driver of project satisfaction. The impact of value creation on project satisfaction mainly gets mediated by the value appropriation construct. That is, the perceived size of the value pie has little importance in satisfaction judgments unless the respective relationship partner claims it. This interesting and important finding underlines the competitive nature of supplier projects. Furthermore, the direct link between the perceived size of the value pie and project satisfaction is negative when this study controls for the indirect path (i.e., value creation → value appropriation → project satisfaction). This empirical evidence highlights the relevance of equity theory in collaborative customer–supplier relationships. The respondents appear to assess not only the size of the value pie they can claim but also take the other party's slice into account. From a buying firm's perspective, increasing the value pie is beneficial only if doing so translates into a bigger value slice for its appropriation. Without more value for the buying company, a bigger value pie increases only the perception of inequity and thus reduces satisfaction with the supplier project. Despite much discussion of cooperative sourcing strategies and joint value creation in the procurement department, charity still begins at home. Open and frequent exchange of information can ease the competitive nature of supplier projects. Information exchange positively moderates the direct link between value creation and project satisfaction (Fig. 2). If a supplier wants to capture a bigger share of the value pie, open and frequent communication is key for securing customer satisfaction and future collaboration intentions. This finding underlines the importance of communication in collaborative relationships. Marketing literature depicts communication as the “glue” that holds relationships together (Mohr and Nevin, 1990). Similarly, Bleeke and Ernst (1993, p. XVI) emphasize that even the “most carefully designed relationship will crumble without good, frequent communication.” This study offers a value-based perspective of the stabilizing effect of communication in collaborative relationships. As communication helps relationship partners develop a better understanding of the value-sharing process, they can better accept (temporary) inequity for the sake of ongoing value creation. Second, this study sheds light on the embeddedness of supplier projects in ongoing sourcing relationships. To explore the impact of relationship quality on the creation and appropriation of value in supplier projects, the proposed model includes relational satisfaction and relational trust as exogenous variables. As hypothesized, the link between relational trust and value creation is positive, though the path estimate is significant only at the 10% level. From a theoretical perspective, relational trust should have the potential to affect the size of the value pie through both improved benefits and reduced costs. Trust reduces the risk of opportunistic behavior and increases the chances for value creation. In addition, trust can substitute for costly control mechanisms and diminish transaction costs (Wathne and Heide, 2000). In this sample though, these effects produce only a weak level of significance. The high standard deviation of the value creation construct (Table 3) may provide a statistical explanation for this finding. Compared with the other constructs, the size of the value pie exhibits strong variation, which increases the difficulty of reaching acceptable levels of significance. The hypothesized link between relational trust and value appropriation may exist at a higher level of significance. In addition, parameter estimates support the expected negative impact of relational satisfaction on value appropriation. The higher the relational satisfaction of the buying firm, the more value it extracted from the sourcing relationship in the past. In line with the basic premise of equity theory, buying firms claim their share of the value pie less aggressively when they enjoy a high level of relational satisfaction. In contrast with the competition depicted in previous analyses, embedding a project in ongoing relationships leads to cooperative elements between suppliers and customer firms.

Third, the model explores how relationship- and project-level variables work together to produce future collaboration intentions as a behavioral outcome variable. Relational trust has a direct impact on future collaboration intentions, but the effect of satisfaction indicates perfect mediation by the other latent variables. The strongest driver of future collaboration intention is project satisfaction, which highlights the importance of managing the value creation and value appropriation processes effectively at the project level to achieve the stability and future development of ongoing sourcing relationships. In aggregate, sourcing relationships emerge as Janus-faced entities that combine both competitive and collaborative elements. Relationship marketing literature tends to focus on the cooperative nature of business relationships, but this analysis reveals that value creation prompts positive perceptions among purchasing managers only if they can claim their fair share of the augmented value pie (Carson et al., 1999; Ghosh and John, 1999). An effort to link the constituents of relationship quality to value creation and value appropriation could help align academic marketing research with business practice. Variables such as trust and commitment enjoy a dominant position in academic relationship models, yet they rarely appear in practice by managers. For example, purchasing managers regularly receive assessments based on — and therefore pay close attention to — value extracted in customer–supplier relationships. Relational mediators such as trust and commitment do not appear on purchasing managers' scorecards. To bridge the gap between managerial metrics and academic variables, the field requires a better understanding of how constituent elements of relationship quality drive the creation and appropriation of value in collaborative relationships. This study represents a first step in this important yet underdeveloped direction. 7. Methodological considerations and limitations Value creation and value appropriation represent two interrelated, distinct constructs. Using the background of equity theory, this study conceptualizes value creation and value appropriation in subjective terms. The size of the total value pie and the slice appropriated by a relationship partner exist in the eye of the beholder. Adopting input and outcome items from the global measure of equity, this investigation computed the perceived size and slice of the value pie that can be created and claimed in supplier projects. To improve the reliability and validity of the measurement models, the authors distinguished between tangible and intangible inputs and outcomes (Fang et al., 2008). Both value measurement models have acceptable psychometric properties. The psychometrically sound measurement models also enabled a distinction between the sources of value perceptions and their link to antecedent, mediator, moderator, and outcome variables. However, items capturing the customer's input and outcome appeared in the calculations of both value creation and value appropriation. To assess the validity of these findings, further research should develop new measurement models to assess the size and slice of the value pie with exclusive sets of items. Dyadic data show that the customer and supplier firms agreed about the degree of information exchange in the project and that their future collaboration intentions matched. The assessment of the first construct with dyadic data helped verify the true organizational response, and agreement on the latter construct indicated firms would collaborate in the future. From an equity theory perspective, dyadic data and aggregated measures are not ideal for the central constructs. The size and slice of the value pie depend on the eye of the beholder and thus differ from the customer's and supplier's perspectives. Additional research should extend this model, add relationship marketing constructs (see Palmatier et al., 2006), and include other theoretical perspectives (e.g., commitment–trust theory and social exchange theory). Such extensions would require dyadic approaches to assess whether various relationship marketing variables

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are antecedents, moderators, or outcomes in extended value creation and appropriation models. The analysis of value creation and sharing in projects embedded in ongoing customer–supplier relationships indicated some initial conclusions on the project and interorganizational relationship level, but this research also suffers some restrictions. The history of past projects and potential future project collaborations, as well as the history of customer–supplier relationships independent of joint supplier projects, bear on value creation and value sharing (e.g., relationship-specific investments with multiple benefits). Researchers should attempt to capture value creation and value appropriation mechanisms in the context of multiple-project collaborations over time. Finally, previous research hints that equity and fairness perceptions in customer–supplier relationships depend on the cultural setting (Scheer et al., 2003). Therefore, extended studies should investigate North America and/or Asia. Such research could introduce the combined value creation and sharing approach to extant literature on supplier relationship management and compare North American with Asian approaches (e.g., Dyer et al., 1998). Acknowledgments The authors thank Lisa Scheer, Robert Palmatier, and Wolfgang Ulaga for their helpful comments on a previous version of this manuscript. They acknowledge the helpful comments of the participants at the 2008 AMA Summer Educators' Conference in San Diego, California, USA, and the participants at the 2008 European Marketing Academy Conference at University of Brighton, UK. Appendix A. Item formulations Inputs and outcomes Input customer Input supplier Outcome customer Outcome supplier

Our company's contributions to the project. Supplier X's contributions to the project. The outcomes we received from the project. The outcomes supplier X received from the project.

Tangible inputs and outcomes Tangible input customer Our company's tangible (financial and personnel) contributions to the project. Tangible input supplier Supplier X's tangible (financial and personnel) contributions to the project. Tangible outcome customer The tangible (financial) outcomes we received from the project. Tangible outcome supplier The tangible (financial) outcomes supplier X received from the project. Intangible inputs and outcomes Intangible input customer Our company's intangible (know-how and patents) contributions to the project. Intangible input supplier Supplier X's intangible (know-how and patents) contributions to the project. Intangible outcome customer The intangible (know-how and patents) outcomes we received from the project. Intangible outcome supplier The intangible (know-how and patents) outcomes supplier X received from the project. Note: All items measured on five-point Likert scales: 1 = low, 5 = high.

Relational satisfaction SATIS1 We were very satisfied with the relationship with supplier X. SATIS2 We were pleased to work with supplier X. SATIS3 The relationship with supplier X was very favorable for us. Relational trust TRUST1 Supplier X kept promises it made to our firm. TRUST2 Supplier X was always honest to us. TRUST3 We believed the information that supplier X provided us. TRUST4 Supplier X was genuinely concerned that our business succeeded.

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Appendix A (continued) Relational trust TRUST5 TRUST6 TRUST7 TRUST8

When making important decisions, supplier X considered our welfare as well as its own. We trusted supplier X keeps our best interests in mind. Supplier X was trustworthy. We found it necessary to be cautious with supplier X. (R)

Project satisfaction PRO_SATIS1 The project with supplier X has been a successful one. PRO_SATIS2 The project with supplier X has more than fulfilled our expectations. PRO_SATIS3 We were satisfied with the outcomes from this project. Future collaboration FUTURE1 We would welcome the possibility of collaboration with supplier X in additional projects in the future. FUTURE2 We would be willing to work with supplier X in projects in the future. FUTURE3 We would be willing to collaborate with supplier X in projects, should the opportunity arise. Information exchange INFEX1 During the project, it was expected that any information that might help the other party would be provided to them. INFEX2 Exchange of information during the project took place frequently and informally. INFEX3 It was expected that the parties would provide proprietary information during the project if it helped the other party. INFEX4 It was expected that we kept each other informed about events or changes that might affect the other party during the project. Note: All items measured on five-point Likert scales: 1 = strongly disagree, 5 = strongly agree.

Economic situation How would you consider the current situation of your company in comparison to your main competitor considering… SITUATION1 …sales growth? SITUATION2 …market share? SITUATION3 …profit margin? SITUATION4 …profit margin growth? Note: All items measured on five-point Likert scales: 1 = significantly worse, 5 = significantly better.

Relationship tenure For how many years had your company been working with supplier X at the beginning of the project (in full years)?

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