Framing business relationships : the role of business models.

Mason, Katy J. and Mouzas, Stefanos (2007) Framing business relationships : the role of business models. In: 23rd IMP Conference.

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Abstract

Companies face difficult decisions regarding their management of business relationships; how much resource should they commit, when and with whom? The decisions managers make about these issues provide a ‘frame’ for their business relationships and thus a structure for their surrounding business network. Research has shown that the way problems are framed, affects the decisions managers and executives make (Bazerman 1984; Fiss and Zajac 2006; Tversky and Kahneman 1981). Similarly, the way business relationships are framed affects both the decisions and actions that companies take. Companies usually frame their business relationships by developing business models. In this way they conceptualize their relationships with other firms and aim to achieve higher levels of performance in the market place. This article describes role of business models in framing business relationships. We consider a business model as a ‘frame’ that includes structural elements, such as the selection and integration of a) network influence b) transactional relationships and c) corporate ownership, as well as procedural elements of how to ‘focus on the market’ such as a) customers, b) competitors and c) how to achieve inter-functional coordination of activities. We argue that companies select and integrate various configurations of these inter-related, and often overlapping, elements in response to end customers’ constantly evolving demands. This study examines real-world episodes using a cross-sectional investigation of a matched pairs sample of twenty high performing and twenty low performing UK firms. The study draws conclusions on the importance of scrutinizing business performance and the consequential re-adjustment of business models.