Interaction and Actor Bond Development. Chris Medlin Adelaide University, Adelaide, Australia

Transcription

1 Interaction and Actor Bond Development Chris Medlin Adelaide University, Adelaide, Australia Abstract Empirical work by the IMP Group suggests that actor bonds are formed by trust and identity, yet no theoretical grounds have been offered for these conclusions. This paper proposes a specific definition of actor and actor bonds within contexts defined by time variance with regard to the object of interaction and the commanding capability of the actor. This perspective allows psychological and sociological theory to explain actor bond development. Introduction The Actor, Resource and Activity (ARA) model of business-to-business markets (Håkansson and Snehota 995) was developed based on many years of empirical research by the Industrial Marketing and Purchasing (IMP) Group (cf Ford 990; Håkansson 982; Håkansson and Snehota 995). In this model, three analytical levels (firms, relationships, network) interact, with the firms resources, activities and actors and their analogues at the relationship (resource ties, activity links, actor bonds) and network (resource constellation, activity pattern, actor web) levels conditioning each other. While considerable work has been completed in theory development and empirical research on interaction in a network environment (cf Ford 990; Håkansson 982; Håkansson and Snehota 995) and on resource and activity issues (Ford 2002; Håkansson and Snehota 995), the concept of actor bonds has not yet been adequately embedded in theory. Furthermore, there remain considerable problems in elaborating the complexity of actor and actor bond involvement in coordinating industrial networks, for social and industrial structures are embedded in each other. One reason for lack of clarity regarding actor bonds is the amorphous nature of the actor, with different researchers applying the concept to individuals, business units or firms, so that the nature of interaction is necessarily qualitatively different. Another related explanation is the complexity of separating these different levels of actor, for each is embedded in another. However, apart from these issues, the actor remains an important element of the ARA model: responsible for synchronizing all, although often within the constraints imposed by more durable resource ties and activity links (Håkansson and Snehota 995). To date, actors are credited with intentions and capability, while actor bonds are created through time as firms interact and learn about each other s identity in the network (Håkansson and Snehota 995). Furthermore, each firm may only enact a limited number of actor bonds, with each providing important clues to the firm s identity and strategy (Håkansson and Snehota 995).

2 This paper develops the concepts of actor and actor bond further by defining the actor as an individual who commands some resources and activities of a firm. This definition removes the firm from being an actor and instead places the firm as a resource: it also means that actor bonds are held individually, even though they are socially created by actors to explain the nature of inter-firm interaction. However, two steps are necessary to elaborate this perspective of actors and actor bonds. The first involves separating adaptive and inter-firm interaction and the second requires an elaboration of actor bonds by relying jointly upon psychological and sociological theory. Following these two steps it is possible to explain the processes of actor bond development against the context of ongoing adaptations to resource ties and activity links in a business relationship. The remainder of this paper is structured in the following manner. First, interaction is defined and its elements are shown to exist differently in time and space; consequently social and industrial structures are differentiated, but linked. Second, the way actors and their actor bonds underwrite resource ties and activity links is elaborated. This allows the linkages between actor and actor bonds over time to be elaborated and provides an explanation of the actor bond development process. Finally, some comments are made regarding directions for future research. Interaction in Time Interaction is the essential analytical concept (cf Ford 990; Håkansson 982; Håkansson and Snehota 995) that links firms, relationships and networks (cf Håkansson and Snehota 995). At the relationship level of analysis, Hallen, et al. (99) defined interaction as a process where two participants carry out activities directed toward one and another and exchange valuable resources. This definition indicates at least two streams of interaction in time and space; those directed towards present exchange and others directed towards future exchange. In the first instance resources and activities are directed towards achieving continuing exchange in the on going present (see Medlin, Forthcoming, for time definitions). That is, each firm structures resources and activities in time and space (cf Medlin Forthcoming) and so a relationship builds resource ties and activity links (Håkansson and Snehota 995). Together the firm s resource and activity structure along with the relationship s resource ties and activity links allows each firm to pursue it s self and collective interest outcomes (cf Medlin et al. Forthcoming; Skinner et al. 992; Young and Wilkinson 997). However, to create ties and links requires that individuals meet at irregular intervals to adapt and coordinate resources and activities. Thus, a second class of interaction, between individual actors, underwrites the structuring of resource ties and activity links. This form of interaction, intended to adapt resource ties and activity links, occurs in the present but is directed towards changes in the future according to jointly arranged time-lines. Furthermore, adaptive interaction relies upon individuals who control some of a firm s resources and/or activities and these individuals clearly have varying capabilities to make and met promises regarding future resource and activity structuration. The distinction with interaction directed at present exchange is that resource ties and activity links follow upon past adaptive interaction, industry norms and historical precedence and individuals either enact activities or act as resources according to prescribed coordination plans. 2

3 Thus, two types of interaction create two structures in time and space: an industrial network, composed of resources and activities, directed at ensuring exchange in the present and an actor web that operates to shape future exchange. It is important to note that adaptive interaction is not simply communication flows; rather it is twosided interpretation of meaning by two actors (cf Håkansson and Snehota 995) with regard to their individual and collective intentions, resource and activity structuring and strategies. This distinction is important for it separates the constrained interaction of individuals whose main role is as a resource or activity enabler from actors responsible for adaptive interaction. Thus, with constrained interaction the individual is partially controlled by a commanding actor to follow a prescribed coordination plan. Presently, no strict rule can be provided to determine when an individual is a resource, or activity enabler; but the matter is likely to rest upon decisions concerning context boundaries and environment. With constrained interaction the possibility for emergence of new resource and activity structuring, or new interpretations, is limited to the capabilities of the other party. Examples of constrained interaction abound and two types can be identified based upon the distinction between actor and resource or activity. The first is where an individual has limited capability to interact, as defined by their role statement and their position in a hierarchical command system (ie they are a resource): while the second type occurs wherever an individual interacts with a resource that takes on the role of actor. For example, where a purchasing firm places on order with pre-programmed E-commerce website. In both of these cases emergence is controlled and constrained by the commanding actor responsible for the resource and, if it is to occur at all, is reliant upon the capability of only the other party in the first instance. Constrained interaction is essential to the definition of resources, resource ties, activities and activity links and so structuring of the industrial network. In fact, without constraining interaction firms cannot survive for unbounded interaction leads to chaos. Rather commanding actors limit the nature of interaction by an individual, a resource or an activity so as to be able to work with a greater number of actor bonds. Clearly, well-resourced firms engage in considerable constrained interaction as a means of managing portfolios of actors and firms. With these definitions in mind a business relationship can be viewed as chains and combinations of the two classes of interaction that operate to achieve exchange (see figure ). Figure : Interaction Chains in a Business Relationship Commandin g Actor FIRM A Resource Activity Structure 3 FIRM B Resource Activity Structure Commandin g Actor 2 Number key: 3 = exchange, 2 = adaptive interaction, = constrained interaction Line Key: Dark = present only, Light = present interaction, with regard to future (for distinction between present and future see Medlin, Forthcoming) 3

4 Given these categories, the definition of inter-firm interaction is coordinated exchange between two firms whose actors understand their intentions and capabilities with regard to structuring resources and activities in time and space. Thus, two structures are apparent and differentiated in time and space: first, an industrial structure composed of resources and activities and secondly an commanding actors in a web who underwrite the industrial interaction processes by providing expectations, intentions, decisions and monitoring of outcomes. The definition, above, immediately suggests at least three dimensions that influence the nature of interaction between commanding actors. The first is the coordination context (ie norms) available to the human actor to deal with the overwhelming complexity brought about by the time bound nature of interaction (Medlin Forthcoming). This complexity means that the interaction must be informed by norms (Håkansson and Snehota 995) that operate in market, hierarchy or relationship contexts (Alajoutsijärvi et al. 999). The second dimension relates to the capability and power that the commanding actors have over their firms resources and activities and those of other parties they can access. While it is apparent that relationships and networks constrain and enhance the ability of an actor to change resources and activities (Håkansson and Snehota 995), it is also clear that actors have different ability to command the structure of their firm s and other firm s resources and activities in time and space. The third dimension is the strength of actor bonds upon which actors rely when making resource and activity decisions. The next section considers the theoretical nature of the actor bond concept and provides an elaboration of their development. Actors, Bonds and Actor Bond Development According to Håkansson and Snehota (995) actor bonds are composed of trust and identity, with identity affecting the character of the firm. When actors are defined as commanding individuals the definition of actor bonds is necessarily based upon psychological theory. This places the trust and commitment variables of actor bonds (Håkansson and Snehota 995) as individually held constructs, which underwrite the resource and activity structuration of the firms in time and space. Thus, trust arises as a response to the uncertainty of future resource and activity commitments, made during adaptive interaction, simply because in the end there is no other way for the actors cognitive processes to deal with insecurity (Dwyer et al. 987; Luhmann 979). Or to say it in another way, individuals commit the firm s resources and activities to achieve a future exchange and must finally rely to some degree upon personally held trust that the partner firm will meet their commitment as the future unfolds. While trust is required to explain resource and activity disposition in time and space, it is not the firm that trusts; rather trust resides in the minds of commanding actors and underwrites resource and activity decisions. 4

5 However, while actor bonds are a psychological construct upon which the firm s decision makers rely to commit resources and activities to a future exchange interaction, it is important to indicate the social nature of their formation. That is a joint psychological and sociological perspective is required to explain development of actor bonds. Thus, each adaptation is jointly planned and relies upon socially created interpretations of future general expectations and firm intentions by the commanding actors. In addition, commanding actors fall back upon socially generated norms and recognition of capability in shaping their expectations and intention. Later when adaptive changes in resource and activity structure come to pass the actors note and give meaning (Håkansson and Snehota 995) within the context of past and future expectations and intentions, as well as changed environment. Furthermore, while a form of social consensus between actors generates a belief in trust, each actor will hold varying views on how the firm has trusted the counterpart. Accordingly, the social perspective is important in development of trust, for each round of adaptation leads to a process of social confirmation and a greater willingness to rely upon trust. Over time higher levels of trust lead to a structuration of resources and activities which is clearly reliant upon a complementary by the partner firm. This deployment of resources and activities becomes increasingly obvious to other observers (cf Geser 992), so that the identity of the firm is shaped with reference to other firms (Håkansson and Snehota 995). In conclusion, it is important to note that none of the above acknowledges the need for an equivalent perspective on actor bonds within a relationship. For example, complementary structuration may be inferred to result from a calculative form of commitment, or a limited form of trust, rather than a generalised trust. That each party necessarily holds different attributions of actor bonds means that the nature of a business relationship will always tend towards some asymmetry and change. Future Research Consideration of commanding individuals as the actors responsible for adaptations to resource ties and activity links, in pursuit of exchange at a future time, leads to a more complex view of the ARA model and one which is likely to open new research fields. Future research must examine the different categories of interaction (adaptive and constrained) elaborated in this paper. In particular, the distinctions between commanding actors, actors as activity enablers, actors as resources and resources as actors must be clarified. These distinctions are likely to become increasingly important as technology is used to constrain and enhance interaction processes. 5

6 Two other areas of research are the way time contains and shapes interaction (cf Medlin Forthcoming for comments on this) and the way coordination contexts shape interaction (Alajoutsijärvi et al. 999). Each of these deserves continuing research, given the way that these factors shape the interpretation and so interaction of commanding actors. Finally, while the individual psychological nature of actor bonds seems evident, the processes of social formation and justification for action based on individually held inter-firm trust require considerable future research. Here the question of actor capability and interpretation of capability remain major issues in shaping interaction expectations and intentions. 6

7 References Alajoutsijärvi, Kimmo, Kristian Möller, and Carl-Johan Rosenbröijer (999), "Relevance of Focal Nets in Understanding the Dynamics of Business Relationships," Journal of Business-to-Business Marketing, 6 (3), Dwyer, Robert F., Paul H. Schurr, and Sejo Oh (987), "Developing Buyer-Seller Relationships," Journal of Marketing, 5 (April 987), -27. Ford, D. Ed. (990), Understanding Business Markets: Interaction, Relationships and Networks. London: Academic Press. Ford, David Ed. (2002), Understanding Business Marketing and Purchasing (3rd ed.): Thompson Learning. Geser, Hans (992), "Towards an Interaction Theory of Organizational Actors," Organization Studies, 3 (3), Håkansson, Håkan Ed. (982), International Marketing and Purchasing of Industrial Goods. Chichester: Wiley. Håkansson, Håkan and Ivan Snehota Eds. (995), Developing Relationships in Business Networks. London: International Thomson Business Press. Hallen, Lars, Jan Johanson, and Nazeem Seyed-Mohamed (99), "Interfirm Adaptation in Business Relationships," Journal of Marketing, 55 (April 99), Luhmann, Niklas (979), Trust and Power. New York: John Wiley. Medlin, C.J. (Forthcoming), "Time and Interaction or Time is what you make it!," in Culture and Collaboration in Distribution Networks, P.J. Batt and H. Hakansson and N. Parining (Eds.). Bali. Medlin, Christopher J., Jacques-Marie Aurifeille, and Pascale G. Quester (Forthcoming), "A Collaborative Interest Model of Relational Coordination and Empirical Results," Journal of Business Research (Special Issue on Business-to-Business Relationship Architecture and Networks Among Australian, New Zealand and Asian Firms). Skinner, Steven J., Julie B. Gassenheimer, and Scott W. Kelley (992), "Cooperation in Supplier- Dealer Relations," Journal of Retailing, 68 (4, 992), Young, Louise C. and Ian F. Wilkinson (997), "The Space Between: Towards a Typology of Interfirm Relations," Journal of Business-to-Business Marketing, 4 (2, 997),