Dependency in Value Networks: The Safeguarding Effects of Electronic Collaboration and Relational Investments

Abstract

In order to remain competitive, firms' business boundaries are now opening up to their partners. To build value networks, firms are investing in both upstream and downstream relationships and relying more and more on collaborative activities. The development and the safeguarding of firms' business relationship portfolios are becoming strategic activities. However, the power structure in a value network is ever-present as dependency on business partners changes the dynamic of the business relationships. Conducted with 159 firms in the wireless communication sector, the objective of this empirical study is to investigate how relational investments and electronic collaboration within a value network may be carried out differently in various network-dependent contexts. The results indicate that dependent firms are more likely to invest in both upstream and downstream relationships than other firms. However, the results also suggest that e-collaboration is not a safeguarding mechanism against opportunism, but rather a general attitude of business partners within a value network.