How functional, psychological, and social relationship benets inuence individual and rm commitment to the relationship

Jillian C. Sweeney and David A. Webb

UWA Business School, University of Western Australia, Crawley, Australia
Abstract Purpose This paper aims to extend previous research investigating the effect of relationship benets on rm outcomes by developing a model that includes the effect on individual employees in the buyer rm. The model also aims to address benets beyond the functional in business-to business (B2B) settings by including psychological and social benets. Design/methodology/approach The study is based on a survey of 275 B2B buyers in Australian manufacturing rms. Findings The ndings reveal that functional benets enhance rm-level commitment to the relationship, whereas psychological and social benets affect individual commitment to the relationship directly and rm-level commitment indirectly, thereby emphasizing the importance of considering the individual as distinct from the rm. Given that the relationship is a process over time, and in recognition of the non-static nature of relationship benets, the paper also explores the changes in benets over relationship stages, including their impact on commitment. In contrast to expectations results show that while all three types of benets increase, there is no change in the impact of all three benet types on commitment across relationship stages. Practical implications The study recognizes that the individual in the rm also benets from B2B relationships and offers a measure of both rm and individual relationship benets for use in future studies. The measure may also be used as a point of discussion about relationship management. Originality/value The study is framed within social exchange theory and, is the rst to simultaneously examine three types of relationship benets and their interaction with both the individual and rm viewpoint. The study is also one of the rst to empirically examine changes in relationships over the relationship stages. Keywords Buyer-seller relationship, Benets, Social benets Paper type Research paper

An executive summary for managers and executive readers can be found at the end of this article.

Conceptual background
The growing recognition of the importance of buyer-supplier relationships has focused research attention predominantly on the positive outcomes that can be accrued by both buyer and supplier rms (e.g., Crosby et al., 1990; Kalwani and Narayandas, 1995). Extant literature recognizes the rm as a social network in which individuals are the basis of the rm. However, the existence and importance of relationship outcomes accrued by those individuals in the buyer rm (e.g., satisfaction with or commitment to relationship, job or supplier) have been largely ignored in empirical research, despite Ojasalo (2001) emphasizing the conceptual distinction between rm and individual levels of benets. This notable omission from the business-to-business (B2B) literature makes it worthy of research attention. Furthermore, previous studies have focused largely on the functional (e.g., economic and strategic) benets of interrm
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relationships, such as reduced costs, contract predictability, purchasing efciency, and quality (e.g., Cannon and Homburg, 2001; Ghosh et al., 1997; Kalwani and Narayandas, 1995; Lyons et al., 1990). Although noneconomic aspects of a relationship, such as its social elements, are recognized as important for understanding relationship behavior (e.g., Anderson et al., 1993; Cunningham and Turnbull, 1982; Wilson and Mummalaneni, 1986), researchers have only recently sought to understand the impact of interpersonal relationships through empirical research (e.g., Bolton et al., 2003; Haytko, 2004; Nicholson et al., 2001) by highlighting the positive effect of social bonding in business relationships. However, few studies directly compare both social and functional aspects of the relationship (e.g., Bolton et al., 2003; Murry and Heide, 1998; Wathne et al., 2001). Given the importance of relationship marketing and because relationships pertain to individuals, we believe that further research is warranted to understand the social aspects of interrm relationships. Moreover, consistent with Gwinner et al. (1998), our research identies a distinct category of benets, namely psychological benets that, though similar to trust, is conceptually more inclusive and addresses perceptions of reliability, empathy, support, understanding between parties, and psychological assurance in a business relationship
The authors are grateful to the UWA Business School for a series of small grants to assist in data collection.

Journal of Business & Industrial Marketing 22/7 (2007) 474 488 q Emerald Group Publishing Limited [ISSN 0885-8624] [DOI 10.1108/08858620710828854]

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Functional, psychological, and social relationship benets Jillian C. Sweeney and David A. Webb

Journal of Business & Industrial Marketing Volume 22 Number 7 2007 474 488

context. In addition, this broader psychological concept is consistent with customer-perceived value components, such as solidarity, trust, reliability, and responsiveness, as identied in a B2B context by Lapierre (2000), and also concurs with the concept of psychological contracts originally introduced by Rousseau (1990). In summary, we seek to identify relationship benets that extend beyond the economic and non-economic descriptors that are too often adopted in the literature. In taking this approach we demonstrate agreement with MacMillan et al. (2005) that adopting a social exchange theory perspective leads to the identication of a wider range of benets beyond the functional. Consistent with prior studies in both the B2B and business-to-consumer (B2C) domains, we argue for the need to recognize three distinct benet categories: functional, social, and psychological. We also extend research on benets by assessing their effect on commitment to the relationship. In particular, we examine how they inuence the relationship commitment of an individual buyer involved in the relationship and of the buyer rm. Such research enhances our understanding of how commitment develops among buyers, who are the customers in a B2B relationship. Furthermore, as relationship marketing researchers have become interested in the varying salience of attributes or dimensions over time (e.g. Ring and Van de Ven, 1994), we add a time dimension to our study by examining relationship durational effects. More specically, the objectives of our study are as follows: . to examine the differential effects of functional, social, and psychological relationship benets on both rm- and individual-level relationship commitment in a B2B context; . to explore the effect of the duration of the relationship on the level of relationship benets; and . to investigate the relationship between benets and commitment across the duration of the relationship. To address these objectives, we surveyed 275 employees involved in a business relationship with a supplier rm. The paper is laid out as follows: using the conceptual model that we discuss following our overview of the relevant literature, we formulate our hypotheses. We present the studys results and then turn our discussion to the main implications of our ndings for business rms. Finally, we conclude by identifying some limitations and suggestions for further research. Relationship benets (B2B) Many studies have identied the benets of relationships in a B2B context, most of which have been almost exclusively based in economics, such as improved overall quality, operating efciencies, reduced transaction costs (e.g., Lyons et al., 1990), stronger competitive position (e.g., Sheth and Sharma, 1997), and business continuity (Han et al., 1993). We view these benets as broadly functional because they reect a particular rms distinctive functional competencies (e.g., Sharma and Fisher, 1997). Thus, we dene functional benets as the economic and strategic advantages derived through an interaction with another rm that enhance rm competitiveness and drive its nancial position. In contrast, the economic sociology literature takes a somewhat unique stance toward benets, positing that economic transactions transpire within interpersonal relationships, such that economic goals are inseparable from 475

non-economic goals such as status and sociability (Granovetter, 1992). Granovetter (1992) contends that people do not simply seek non-economic goals indirectly through economic goals (e.g., status as the result of an accumulation of economic resources) but rather, that noneconomic goals are central human motivations and therefore inherent in economic transactions. Offering a similar view, Frenzen and Davis (1990) and likewise Gummesson (2002) maintain that relationships cannot be viewed in isolation from social relationships or from life itself. Corroborating this stance, several researchers have argued that B2B relationships may be motivated by both non- and economic motives (Dwyer et al., 1987; Geyskens et al., 1999; Ghosh et al., 1997; Ojasalo, 2001; Weitz and Jap, 1995; Wilson and Jantrania, 1995). In particular, the Industrial Marketing and Purchasing (IMP) group has long recognized the existence and importance of the social content of interaction in business relationships, emphasizing that interaction is a social performance through which participants get the opportunity to develop social relationships which lead to trust, commitment and relationship power (e.g., Cunningham and Turnbull, 1982; Ford, 1997; Hakansson and Snehota, 2000; Turnbull et al., 1996; Wilson and Jantrania, 1995). Wilson and Jantrania (1995), for example, emphasize that rms must build both social and structural bonds to develop and protect protable customer relationships. Building such bonds with key customers and segments, they argue, binds important partners to the relationship, which creates not only a barrier to competition but also a strategic advantage in the marketplace. Understanding that which is valued in the relationship is paramount for achieving this end. Murry and Heide (1998), Price and Arnould (1999), Nicholson et al. (2001), Wathne et al. (2001), and Haytko (2004) all lend credence to the idea that interpersonal relationships in B2B settings are crucial. Most recently, through a series of in-depth interviews with account managers in advertising agencies, Haytko (2004) nds that the relationships that develop between managers and clients can become highly personal over time as a deeper understanding develops between them. Such relationships facilitate operational and longer-term outcomes for both the individual and the rm, though with a clear distinction between business and truly personal relationships. Price and Arnould (1999) report a similar nding in service providerclient relationships. Although several studies have addressed interpersonal relationships in a B2B context, only two that we know of have investigated the effect of both interpersonal relationships and the economic aspects of relationships such as price, switching costs, and incentive premiums on rm outcomes. Both of these studies reveal that economic aspects are more critical to outcomes (Murry and Heide, 1998; Wathne et al., 2001), which seems to contradict the focus on interpersonal relationships in the conceptual relationship marketing literature and challenges the concept that a rm should enhance its social relationships rather than its economic or technical bonds, such as price incentives. However, Bolton et al. (2003), in examining the effect of both social and economic resources offered by a large telecommunications company, to business customers, nd that each affects buyer satisfaction outcomes differentially. Namely, social resources primarily inuence satisfaction with an individual provider in

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the supplier rm, whereas economic resources largely affect satisfaction with the supplier rm overall. From the preceding, we can deduce that action is socially embedded and thus cannot be explained by functional motives alone. To the marketer, this conclusion may appear unsurprising; the concept of exchange, which has been central to the development of marketing knowledge for the past 30 years (e.g., Bagozzi, 1975, 1977; Ferrell and Zay-Ferrell, 1977; Kotler, 1972), has long been differentiated along economic and social lines. With regard to the relationship marketing literature specically, several authors have discussed social exchange (e.g., Anderson and Narus, 1990; Dwyer et al., 1987; Morgan and Hunt, 1994). Dwyer et al. (1987, p. 12), for example, posit that relational exchange participants can be expected to derive complex, personal, non-economic satisfactions and engage in social exchange. More recently, Arnett et al. (2003) cite various studies (e.g., Anderson and Narus, 1990; Dwyer et al., 1987; Lusch and Brown, 1996; Morgan and Hunt, 1994; Smith and Barclay, 1997) in their argument that social exchange theory is often used as a theoretical foundation for commitment and trust in relationship marketing. The authors further assert that because organizations often rely heavily on the promise of social benets from their products, it is important that they acquire a better understanding of the factors that affect relationships that involve primarily social exchange (Arnett et al., 2003, p. 91). Bagozzi (1975, p. 36) was perhaps among the rst to distinguish the social from psychological factors, noting that it is the social and psychological signicance of the experience, feelings and meanings of the parties that underlies the exchange. More recently, researchers such as Juttner and Wehrli (1995, p. 230) have identied psychosocial factors as the grease in a relationship, in that the focal points for facilitating and maintaining relationships are the psychological and social factors of the individual actors and their interacting. Thus we propose that psychological benets, forms a third component of benets in the B2B context. Psychological aspects of the relationship have been noted in the relationship literature (e.g. Geyskens et al., 1999). A specic example is the concept of psychological contracts which concern an individuals belief that there is a mutual obligation between the two parties (Kingshott, 2002, 2004). However, no study in the B2B literature has examined psychological relationship benets specically. The work of Gwinner et al. (1998) in a consumer service context, offers support for these three levels of benets, including condence, social, and special treatment benets as well as economic benets. Condence benets, which encompass trust, condence, and reduced anxiety aspects, emerge as the most important benets for customers, followed hierarchically by social and special treatment benets. Providing a working base for our study, we dene social benets as perceptions of afnity, friendship, and sharing with another party. We dene psychological benets as feelings of trust or condence in the other party that result in greater peace of mind. We acknowledge that progress has been made in previous research in terms of recognizing relationship benets in B2B contexts. However, several avenues, corresponding with our objectives, still need to be pursued. First, we intend to explore 476

psychological as well as functional and social benets. Second, we are interested in understanding the role of such benets in developing commitment within the buyer rm. Third, we examine such commitment at two levels, both the individual and the rm. Specically, we argue that understanding the non-economic benets inherent in relationships, particularly those in the B2B context represents a strategically important yet under researched area of study.

Relationship commitment Commitment is central to the foundation of relationships and successful relationship marketing (Berry and Parasuraman, 1991; Morgan and Hunt, 1994) and has often been explored as a channel outcome (Geyskens et al., 1999). However, given current interest in the individual in social exchange processes (e.g., Ojasalo, 2001), we examine both individual- and rmlevel commitment to the relationship with the supplier. Although benets are an outcome of the relationship, we argue that commitment is subsequent to benets, because it pertains to a behavioral intention to maintain the relationship (e.g., Garbarino and Johnson, 1999; Morgan and Hunt, 1994). This ordering is supported by previous research that has investigated the impact of relationship benets on commitment (e.g., Hennig-Thurau et al., 2002; Morgan and Hunt, 1994). Ojasalo (2001) argues that both the individual and the rm benet from B2B relationships. Recognizing that the individual is the rms representative in a relationship (Zeithaml et al. 2006), we agree that relationship benets will have a positive impact on both the individual and the rm. We suggest that not only are relationship benets likely to vary in their impact on commitment, but also that the impact will vary across individual (employee) and rm commitment, as we discuss further when we develop our hypotheses.

Variation in benets over time Given the developing nature of relationships, the various stages that relationships pass through over time and the different needs of buyer and suppliers at each stage (e.g. Dwyer et al., 1987; Ford, 1980) it is likely that the nature and role of relationship constructs will change over time. A review of the literature shows that temporal aspects have become an increasing focus of relationship marketing researchers (e.g., Bolton, 1998; Bolton et al., 2003; Doney and Cannon, 1997; Jap and Ganesan, 2000; Lusch and Brown, 1996; Verhoef, 2003). An understanding of relationship benets at different stages of the consumption process would assist in developing a dynamic model of relationship benets and outcomes. Nonetheless, little empirical research has addressed either the variation in the level of relationship constructs or the change in the impact of relational constructs on outcomes over time. Furthermore, the results of the few empirical studies tackling these issues have been mixed. Given the variety of benets suggested by the literature, we aim to examine the relationship among various relationship benets and commitment across time.

Functional, psychological, and social relationship benets Jillian C. Sweeney and David A. Webb

Journal of Business & Industrial Marketing Volume 22 Number 7 2007 474 488

Hypotheses development
Relationship benets We posit individual and rm-level commitment to the relationship to be distinct. Specically, though the individual remains within and represents the rm, the individual also is able to distinguish between reporting his or her rm-level perceptions and those perceptions held at the personal level. This claim is consistent with role theory, which posits that an individual represents a collection of social roles; that a role or socially dened position has a key impact on behaviors; and that actors can choose, to some extent, the role they play depending on the context (Arnett et al., 2003; Montgomery, 1998; Solomon et al., 1985). Thus, an individual might view him- or herself as an individual working in a rm or as the collective entity of the rm itself, because that individual is part of the rm. This approach is consistent with that of Homburg et al. (2002), who distinguish between a service orientation held at the individual employee level (i.e. an individual characteristic) and one held at the rm level (i.e. representative of the rm view, culture, or strategy). It is also consistent with Cunningham and Turnbulls (1982) discussion of how interaction within relationships serves clear personal and organizational objectives. Ojasalo (2001, p. 207) in support asserts that a person representing his or her company can be assumed to have the best interests of the company in mind and, at the same time, he or she also, as an individual, has his/her own personal interests at heart. Holmlund (1996) further argues that the rm view can be represented by the person holding the power about the continuation of the relationship, which is the sample element for the present study. We concur and hence argue that while the individual (employee) view is different to the rm view, that both can be satisfactorily represented by the key individual in the relationship in the buyer rm. From our discussion of embeddedness, the concept that relationships emanate from individuals, and the idea that individuals together represent the rm (Ojasalo, 2001; Zeithaml et al., 2006), we propose that: H1. The greater the individual commitment to the relationship, the greater the rm commitment to the relationship will be. Previous research has indicated that relationship benets have a direct impact on the buyer rms commitment to the relationship (Morgan and Hunt, 1994), as well as on customer commitment to the relationship in the consumer context (Hennig-Thurau et al., 2002). We evaluate the effect of relationship benets on both individual employee and rm commitment. Specically, we argue that though a relationship, in principle, may be between two rms, psychological and social benets are generated through individual, one-to-one relationships and that the overall relationship is developed through personal associations, such as between the salesperson and the representative of the buyer rm (e.g., Dwyer et al., 1987; Wilson and Jantrania, 1995). As Dwyer et al. (1987) suggest, the individual is the primary recipient of psychological and social benets, not the rm. This dyadic view of relationship exchange is consistent with social exchange theory and serves as the basis for many relationship marketing studies (e.g., Anderson and Narus, 1984; Selnes and Sallis, 2003; Sweeney and Webb, 2002). 477

Such benets are therefore most likely to generate individual commitment to the relationship, as evidenced by B2C studies (e.g., Hennig-Thurau et al., 2002; Reynolds and Beatty, 1999). These benets derived by the individual are also realized at the rm level because of the embedded nature of economic actions within interpersonal relationships (Granovetter, 1992). Therefore, we argue that psychological and social benets indirectly lead to rm commitment to the relationship, as the effect of such benets is ltered through an individual or series of individuals involved in the relationship. Bolton et al. (2003) similarly posit that enhancing social capital drives interpersonal rather than rm-level evaluations of a supplier rm. Hence: H2. The greater the social benets, the greater the individual commitment to the relationship will be. H3. The greater the psychological benets, the greater the individual commitment to the relationship will be. We expect that functional benets affect rm commitment rather than individual commitment to the relationship, because ultimately relationships are driven by prot goals (Hastings, 2003). Previous research has found that economic investments primarily affect organizational- rather than personal-level evaluations (Bolton et al., 2003). Finally, substantial previous research supports the importance of functional benets, including the monetary and strategic benets achieved by the rm (e.g., Ghosh et al., 1997; Han et al., 1993; Lyons et al., 1990; Sheth and Sharma, 1997). Thus: H4. The greater the functional benets, the greater the rm commitment to the relationship will be. Levels of benets over relationship stages and time To date, conventional relationship marketing has focused on long-term, committed, and affect-laden partnerships that evolve over a period of time (e.g., Dwyer et al., 1987). However, research must consider the length of the relationship and/or stages of the relationship because exchange partners must build a base of successful exchange before they will commit to deep relationships. The exploration phase, for example, involves search and trial, during which the partners explore the obligations, benets, and costs of the relationship (Dwyer et al., 1987; Holmes, 1991). Psychological and social processes underlie these early proceedings and negotiations. The next stage, expansion, reects an increase in the interdependence and realization of benets (Dwyer et al., 1987; Jap and Ganesan, 2000). Socialization processes infuse transactions and interactions with relationship norms and values, which enhances the likelihood that the relationship will continue. In turn, the relationship becomes increasingly socially embedded. Trust and satisfaction become well established at this stage as the partners deliver on the terms of their written contracts, as well as on their psychological contracts (Ring and Van de Ven, 1994). Finally, in the commitment phase of the relationship, partners have pledged to continue the relationship, and both rms experience fully developed benets that preclude consideration of replacement partnerships (Dwyer et al., 1987; Jap and Ganesan, 2000). Because of repeated interactions over time, the relationship becomes socially embedded through a continual socialization process (McGrath, 1984; Ring and Van de Ven, 1994). The length

Functional, psychological, and social relationship benets Jillian C. Sweeney and David A. Webb

Journal of Business & Industrial Marketing Volume 22 Number 7 2007 474 488

of the relationship, whether measured in years or stages, represents the time invested in the relationship by both parties, during which problems may have been addressed and an increased understanding of the other party achieved (Doney and Cannon, 1997; Naryandas and Rangan, 2004). Similar propositions have been put forward in the consumer context (Gwinner et al., 1998; Reynolds and Beatty, 1999). However, the results of studies examining the increase in benets over the relationship duration have been mixed; Doney and Cannon (1997) nd no support for trust development over time, whereas Reynolds and Beatty (1999) investigating social and functional benets nd support for an increase in the former but not the latter over time. We therefore seek to examine the change in the three types of benets addressed in this study. Based on the preceding argument, we hypothesize that: H5. The later the stage of the relationship, the greater the level of a) psychological benets; b) social benets; and c) functional benets.

Method
Data collection The target population for this study was the individual employee who had prime responsibility for a relationship with a supplier rm, with at least six months experience in this role. We drew a random sample of rms from a database of Australian manufacturing industries, to include 152 four-digit standard industrial classication codes. Many authors have used similar methods to assess B2B relationships (e.g., Anderson and Narus, 1984; Heide and John, 1990), and even given the exploratory nature of the study, the sample frame represents a reasonably broad variety of buyer-seller relationships. Because the database does not provide information about persons within the rm, we conducted our data collection in two stages, as recommended by Anderson and Narus (1990). First, we sent a letter by mail to the managing director, in which we asked him or her to provide us with contact details for up to four people in the rm who dealt with various suppliers, along with the name of each supplier rm. We included a postage-paid reply envelope with this pre-survey request, and the approach enabled us to identify almost 1,000 buyer-supplier dyads. Second, we selected a contact at random from each of the 548 rm-level responses and asked those contacts to respond to the survey with respect to their relationship with the named supplier. Subsequently, we sent a personalized letter, questionnaire, and postage-paid reply envelope to each of the contacts. In all, we received 275 questionnaires, representing a response rate of almost 50 percent among the named contacts. We tested non-response using the extrapolation method of Armstong and Overton (1977), which is based on the assumption that late responders are comparable to nonrespondents. A series of randomly selected items across the questionnaire reveal no signicant differences beyond that which might have occurred by chance (5 percent of cases). We therefore conclude that non-response bias is not an issue. Measures We developed a draft of the questionnaire and tested it on several businesspeople who were buyers in a B2B relationship. Using a verbal report-back protocol, we identied several points of confusion in the question wording or response format. We then used this information to revise the scales and the questionnaire for the main data collection phase. Following standard construct scale development procedures (Churchill, 1979; DeVellis, 2003), we developed multipleitem scales to tap the psychological, social, and functional benets on the basis of a series of 20 in-depth interviews with buyers. This way, we achieved a set of 29 items to represent the three relationship benet themes. The measure of rm-level commitment to the relationship included three items representing the attitudinal, temporal, and instrumental components of commitment, taken from Morgan and Hunts (1994) relationship commitment scale. For comparability, we measured individual-level commitment to the relationship using equivalent items, distinguished by the use of phrases such as Something I am . . ./the rm is very committed to . . . We obtained the relationship stages and corresponding descriptions from Dwyer et al. (1987); we provide details of the measures in Tables I and II. 478

Effects of benets on commitment over time While we expect that benets and commitment increase over the duration of the relationship, we also believe that the effectiveness of the benets on the development of commitment varies over the length of the relationship. Hence, although we indicated in H5 that psychological and social benets would be lowest in the early period of the relationship, we also propose that they play a more critical role in increasing commitment in earlier rather than later periods. The repetitive exchanges inherent in an embedded relationship involve social interactions that lead to the development of norms and values that facilitate economic exchange (Ring and Van de Ven, 1994). Thus, commitment becomes institutionalized through repetitive executions of acts by the successors of the parties who come to share that these acts are simply the way things are done (Ring and Van de Ven, 1994, p. 106). Bolton et al. (2003) argue that customers with longstanding relationships require fewer supplier resources to maintain their relationship satisfaction. In essence, time promotes continuity, such that relationship commitment becomes established and less dependent on perceptions of psychological and social benets. Wilson and Jantrania (1995) similarly posit that psychological and social aspects of relationships, such as satisfaction, trust, and social bonds, are salient early in the relationship but become latent in later stages. As functional benets are the key reason for entering a relationship (Hastings, 2003), we also expect that the impact of economic benets on commitment does not increase or decrease over the duration of the relationship. Thus we propose that: H6. The effects of a) psychological benets and b) social benets on the individuals commitment to the relationship decrease over the duration of the relationship. H7. The effect of functional benets on rm commitment to the relationship remains constant over the duration of the relationship.

Functional, psychological, and social relationship benets Jillian C. Sweeney and David A. Webb

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Table I Details of scales used to represent constructs

Scale Relationship benets Psychological Functional Social Individual/rm commitment to the relationship Relationship stage No. of items Source of measure 5 5 4 3 Developed for the study Sample items As per Table 2

Morgan and Hunt (1994)

Measure based on Dwyer et al.s (1987) descriptions

Length of relationship

Developed for the study

Something that I am (the rm is) very committed to Something I (the rm) intend(s) to maintain indenitely Something I (the rm) will expend every effort to maintain Respondents asked to select from the following: Exploration: potential exchange partners consider costs and benets of the relationship. Expectations of behavior and ground rules of future exchange are developed Expansion: benets of the relationship become more apparent, and the rms become increasingly interdependent. The relationship expands because of the each partys satisfaction with the others role performance and associated benets Commitment: a pledge of continuity between exchange partners. A level of satisfaction is reached, such that the buyer is not actively considering replacing the exchange partner with an alternative that offers similar benets Dissolution: the relationship has been dissolved or terminated How long have you personally (has your rm) been dealing with xyz? (up to six months . . . more than ten years)

Table II Scale items used for the measures

Construct Psychological benets No. of items 5 Measurement Items We have peace of mind in dealing with them We trust them We know what to expect of/from them If they give us their word, we know that whatever it is, it will be done Theres a real sense of understanding between us Having a relationship with them enables us to compete in the market We are able to capitalize on the value they offer As a result of the relationship, we are able to maximize nancial outcomes We complement each other in terms of expertise Our relationship sets up proactive opportunities We have more than a formal business relationship with them We have a real friendship with them We work on things together We share information Loadinga 0.89 0.90 0.79 0.87 0.79 0.82 0.81 0.85 0.82 0.84 0.72 0.86 0.78 0.83

Functional benets

Social benets

Note: a Loading based on conrmatory factor analysis results. Results for three-factor scale: x2 401:96, df 74, RMR 0:06, NFI 0:95, CFI 0:96

Results
Measurement model The item set was reduced using an iterative process of reliability analysis using item-to-total correlations (Churchill, 1979) together with exploratory factor analysis. Following this stage, 14 items remained. Conrmatory factor analysis, using structural equation modeling (LISREL 8.30 (Joreskog and Sorbom, 1999)), strongly supports the three-factor structure of relationship benets (x2 401:96df 74 , normed t index NFI 0:95, conrmatory t index CFI 0:96, root mean residual RMR 0:06) (Table II). Although the 479

chi-square is signicant, the other measures of goodness of t are well above the recommended minimums (Bentler and Bonett, 1980). The model is superior to a two-factor model, in which we combined the psychological and social factors (x2 677:81df 76 , NFI 0:92, CFI 0:93, RMR 0:09), and a one-factor model, in which we considered all benets as a single dimension ( x2 884:61df 77 , NFI 0:89, CFI 0:90, RMR 0:09). The reliability of the three dimensions and the commitment scales for the rm and the individual are 0.86 or above in all cases (Table III). We nd support for distinction between all pairs of constructs, including the three types of benets and two

Functional, psychological, and social relationship benets Jillian C. Sweeney and David A. Webb

Journal of Business & Industrial Marketing Volume 22 Number 7 2007 474 488

Table III Measurement information, correlation matrix, and discriminant validity

Constructs 1 Psychological benets 2 Social benets 3 Functional benets 4 Individual commitment 5 Firm commitment Mean 4.53 4.27 4.62 4.85 5.20 Standard deviation 1.08 1.60 1.44 1.53 1.56 Reliability 0.91 0.86 0.90 0.90 0.94 Average variance extracted 0.72 0.65 0.67 0.80 0.87 1 0.72 (0.03) 0.73 (0.03) 0.69 (0.04) 0.68 (0.04) 2 41.20 3 38.52 35.46 4 35.12 26.08 33.02 0.74 (0.03) 0.82 (0.02) 5 34.87 33.55 19.35 19.31 0.81 (0.02)

0.83 (0.03) 0.83 (0.03) 0.72 (0.03)

Notes: Correlations (and standards errors) are below the diagonal. The chi-square differences between constrained and unconstrained correlations between pairs of constructs (Anderson and Gerbing, 1988) are above the diagonal

types of commitment, using the discriminant validity tests recommended by Anderson and Gerbing (1988) and Garver and Mentzer (1999). First, the chi-square difference test compares a model in which the correlation between a pair of constructs is set to 1 with a model in which the correlation is allowed to vary. This tests whether in fact the constructs are the same (null hypothesis). The chi-square values in the upper triangle in Table III demonstrate signicant differences between all pairs of constructs. Second, the correlation condence interval test uses the correlation plus or minus two standard errors to identify whether the correlation between the pairs is signicantly different than 1 (again testing whether the constructs are the same). The values of the correlations and standard errors in the lower triangle in Table III also support discriminant validity between all pairs of constructs. Structural model We derived the full structural model from our hypotheses and present the model results in Table IV. In testing H6 and H7, we split the sample in two to represent shorter- and longerterm relationships, which reduced the effective sample to just over 200. At this stage, we turned to a partial disaggregation approach to reduce the number of parameters to be tested, based on the recommended ratio of observations to parameters (Bagozzi and Heatherton, 1994; Kline, 1998), as we discuss in the Appendix. Table IV and Figure 1 provide the results of the hypothesized structural model, which represents the interrelationships among the constructs. The overall t was good (x2 98:55df 28 , NFI 0:98, CFI 0:98, RMR 0:02). Specically, our research model differentiates between individual and rm commitment to the relationship. The results that appear in Table IV support H1, which proposes that rm commitment increases with Table IV Standardized path estimates for proposed models

individual employee commitment to the relationship (standardized loading b 0:41, t 6:59). The proposed model results also show that the key driver of individual commitment to the relationship is the social interaction between the buyer and seller (b 0:68, t 7:68), including a sense of sharing, working together, and friendship. Psychological benets derived from a sense of understanding, peace of mind, trust, and condence in the other partner also play a signicant, though lesser, role in developing individual commitment to the relationship (b 0:19, t 2:37). Thus, we nd support for H2 and H3. H4, which predicts that increases in functional benets lead to increases in rm commitment, also is supported (b 0:50, t 7:85). The perception of the economic and strategic advantages of conducting business with the supplier, in terms of the value it offers, the nancial outcomes, and the ability to leverage the relationship to derive strategic advantages, increases rm commitment to the relationship. Modication indices do not suggest allowing any further paths be inserted to improve the model; for example, psychological and social benets do not directly inuence rm commitment to the relationship in the model, nor do the functional benets realized by the rm enhance individuallevel commitment to the relationship. According to the total effects of benets on commitment, social benets are clearly the most inuential overall on individual commitment, whereas functional benets are important in enhancing rm-level commitment. However, social benets also play a clear role in developing rm-level commitment through the fulllment of individual commitment (Table V). Alternative model The need to investigate a plausible rival model to test the robustness and validity of the proposed model has been well

Proposed model Paths Loading 0.41 0.68 0.19 0.50

t-value
6.59 7.68 2.37 7.85

H1: Individual commitment to the relationship ! rm commitment H2: Social benets ! individual commitment H3: Psychological benets ! individual commitment H4: Functional benets ! rm commitment

Notes: Model t: Chi square 98:55; df 28; RMR 0:02; NFI 0:98; CFI 0:98; goodness of t index GFI 0:94

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Figure 1 Proposed model results

Table V Total effects on endogenous constructs

Effect of ! on # Individual commitment to the relationship Firm commitment to the relationship Note: a SMC squared multiple correlation Social benets n t value 0.68 0.28 7.68 5.15 Psychological benets n 0.19 0.08 Functional benets n t value 0.50 7.85

t value
2.37 2.23

SMCa for structural equations 0.69 0.71

established (e.g., Kelloway, 1998). In our alternative model, we consider functional benets as central to the relationship and hypothesize that both psychological and social benets enhance these central functional benets. The rival model provides a poorer t in terms of the chi-square value (203:54df 30 ) compared with the proposed model (98:55df 28 ), and the RMR is higher (0.07 versus 0.02). The other t statistics are similarly less impressive for the rival model. Overall, we conclude that on both measurement and conceptual grounds, the proposed model is superior. Difference in benets over relationship stages Our results support H5; that is, relationship benets increase over the stages of the relationship. The analysis reveals signicant variation in benets according to the different stages (Table VI). Whereas psychological benets increase over the stages of the relationship, social benets are greatest during the expansion stage, and functional benets are great during both the expansion and commitment stages of the relationship. Difference in effect of relationship benets on commitment over the relationship To test the differences in the relationship between the three types of benets and relationship commitment across the 481

Table VI Means of level of perceived benets received according to stage of relationship

Dimension Psychological benets Social benets Functional benets Exploration (n 5 26) 4.17 2.92 3.41 Expansion (n 5 59) 5.44 4.63 4.79 Commitment (n 5 178) 5.66 * 4.42 * 4.79 *

Notes: Results for multivariate test (all three benets simultaneously): Test Wilks Lambda; Value 0:850; F value 7:282* signicant differences were generally found between benets at the exploration and expansion stages, the exploration and commitment stages, and the commitment and dissolution stages; * p , 0:01

relationship duration (H6 and H7), we operationalized the moderating role of time in three alternative ways: relationship stages, the length of the relationship of the buyer rm with the supplier rm in years, and the length of the relationship of the individual respondent in the buyer rm with the supplier rm in years. While we do not view the years of the relationship to be the same as the stage, since some relationships develop faster than others, identifying similar trends over time would add validity to the ndings. We used two groups in each case:

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relationships in the exploration/expansion stages compared with the commitment stage, relationships of up to ve years in duration compared with more than ten years, and relationships with the supplier experienced by the individual respondent in the buyer rm of up to three years compared with more than ve years. We provide our rationale for the sample split in the latter two cases in our discussion of the partial disaggregation approach in the Appendix. To assess the difference in parameters for the benet-commitment paths across the early and more established relationship groups, we compared two models using multi-group modeling. The rst model constrained all parameters (except error variances) to be equal across groups; in the second, the benet commitment path was freed (Bollen, 1989). According to the results, the effect of social benets on individual commitment seems greater in the early exploration/ expansion stage of the relationship (0.71) than in the commitment phase (0.68) (Table VII). We found similar results for the lengths of the rm and individual relationships with the supplier rm (Tables VIII and IX), although the chisquare difference tests were non-signicant in all three cases. We obtained similar results for psychological commitment, which means H6a and H6b are not supported. However, as we expected, the impact of functional benets on rm commitment did not signicantly change across the relationship, in support of H7. Finally, we further assessed the strength of our model by evaluating the appropriateness of individual commitment to the relationship as a mediator of the relationship between psychological and social benets and the rm-level commitment. That is, we questioned whether individual

commitment accounts for the majority of the effect of the psychological and social benets on rm commitment. To this end, we employed the test procedure recommended by Baron and Kenny (1986). As the second and third columns of Table X show, both psychological and social benets inuenced the individual commitment mediator variable, as well as the dependent variable, rm commitment. However, when we take both benets and individual commitment into account in modeling the dependent variable, rm commitment, we nd that the effect of psychological and social benets on rm commitment reduces to insignicance, in support of the mediating role of individual commitment. This supports the validity of modeling commitment in the way we have (i.e. as individual commitment increases, so does rm commitment).

Discussion
Theoretical implications This research represents the rst empirical examination of the effect of relationship benets on both rm and individual commitment to the relationship. Furthermore, this study empirically investigates the effect of three primary types of benets functional, psychological, and social on relationship outcomes in a business setting. In this way, our research reinforces the claim that rms must consider relationship benets at distinct levels. Furthermore, the importance of social and psychological benets supports the inclusion of social exchange mechanisms in marketing (e.g., Bagozzi, 1975). Although similar studies have been conducted in a consumer setting (e.g., Gwinner et al., 1998; Hennig-Thurau et al., 2002), to our knowledge, only the

Table VII Tests of moderating effect of time on impact of relationship benets to commitment relationship stages
Parameters invariant across two groupsa PB to IC SB to IC FB to FC IC to FC x2 df 0.16 0.68 0.35 0.46 148.67 73 Free SB to IC Stages 1-2b Stage 3 0.71 0.68 0.41 148.58 72 148.36 72 147.14 72 0.33 Free PB to IC Stages 1-2a Stage 3 0.21 0.14 Free FB to FC Stages 1-2a Stage 3

Notes: PB psychological, SB social, FB functional benets, IC individual, and FC firm commitment to the relationship. Nonstandardized values shown to ensure parameters same for xed paths across models; a except for error variances of items, unique to each item and allowed to vary (Bollen, 1989); b stages 1 and 2 refer to exploration and expansion and stage 3 to commitment stage, as suggested by Dwyer et al. (1987)

Table VIII Tests of moderating effect of time on impact of relationship benets to commitment length of supplier relationship with rm
Parameters invariant across two groupsa PB to IC SB to IC FB to FC IC to FC x2 df 0.33 0.59 0.39 0.37 147.76 73 Free SB to IC #5yrs > 10 yrs 0.63 0.56 0.33 147.28 72 146.08 72 146.71 72 0.41 Free PB to IC #5yrs > 10 yrs 0.44 0.28 Free FB to FC # 5yrs >10 yrs

Notes: PB psychological, SB social, FB functional benets, IC individual, and FC firm commitment to the relationship. Nonstandardized values shown to ensure parameters same for xed paths across models. a except for error variances of items, unique to each item and allowed to vary (Bollen, 1989)

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Table IX Tests of moderating effect of time on impact of relationship benets to commitment length of supplier relationship with respondent in buyer rm
Parameters invariant across two groupsa PB to IC SB to IC FB to FC IC to FC x2 df 0.29 0.64 0.34 0.47 156.56 73 Free SB to IC #3yrs > 5 yrs 0.73 0.61 0.38 153.94 72 154.18 72 156.28 72 0.33 Free PB to IC # 3yrs > 5 yrs 0.46 0.24 Free FB to FC #3yrs >5 yrs

Notes: PB psychological, SB social, FB functional benets, IC individual, and FC firm commitment to the relationship. Nonstandardized values shown to ensure parameters same for xed paths across models. a except for error variances of items, unique to each item and allowed to vary (Bollen, 1989)

Table X Mediation tests for individual commitment to relationship

Equation 1 Mediator: Individual commitment 5 findependent Coefcients for the independent variables n t value 0.18 0.70 n/a 0.70 n/a 2.14 7.32 Equation 2 Dependent: Firm commitment 5 findependent Coefcients for the independent variables n t value 0.29 0.49 n/a 0.53 3.47 5.46 Equation 3 Dependent: Firm commitment 5 f(independent and mediator) Coefcients for the independent Coefcients for the variables mediator variable n t value n t value 0.12 0.16 0.55 0.70 0.62 1.57 1.34 5.30 0.16 0.71 1.34 7.30

Independent variable Psychological benets Social benets Individual commitment ! Firm commitment SMC individual commitment SMC rm commitment

Note: SMC squared multiple correlation for structural equations

effects of economic and social relationship aspects on outcomes have been studied in the B2B context (e.g., Bolton et al., 2003; Murry and Heide, 1998; Wathne et al., 2001). The functional benets we identied include economic value and strategic advantages, such as competitive positioning and operational factors, which are consistent with a variety of previous research studies (Barringer, 1997; Lyons et al., 1990; Sheth and Sharma, 1997). However, our research broadens the meaning of social benets identied in previous research (e.g., Wathne et al., 2001) to include the concepts of working together and sharing. This extended meaning concurs with the ndings of Haytko (2004) and Ganesan (1994) who identify a partnership aspect of relationships. Our research also identies the distinct category of psychological benets that, though similar to trust, is more inclusive and addresses perceptions of reliability, empathy, support, understanding between parties, and psychological assurance. The dimensions we use are similar to those found in the consumer setting by Gwinner et al. (1998) but are more specic to the B2B context. The broader psychological component also is consistent with certain customer-perceived value components identied in a B2B context by Lapierre (2000). Previous research by Murry and Heide (1998) and Wathne et al. (2001) demonstrates that B2B customers view 483

interpersonal relationships as of minimal importance compared with incentive premiums, switching costs, and the market variables of price and product assortment when they consider customer outcomes such as participation in a promotional campaign or switching. We similarly nd that economic/strategic benets are most important in developing rm commitment. Our ndings, however, show that both psychological and social benets enhance individual commitment. This result has some correspondence with research by Bolton et al. (2003), who nd that economic and social resources provided by the supplier differentially affect satisfaction with the supplier representative and the supplier rm itself. Our results highlight the importance of the role of the individual employee in contributing to overall rm-level commitment to the relationship, as well as the indirect role of the softer psychological and social benets for rm outcomes. The signicant though indirect effect of psychological and social benets on rm-level commitment is consistent with the concept of embeddedness; namely, economic action is embedded in social relationships (Granovetter, 1992). Turning our attention to the duration of the relationship, we nd that relationship benets generally increase over the stages of the relationship, as previously conceptualized by Dwyer et al. (1987). Increasing levels of benets might be

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explained through social exchange theory, in that the developing relationship becomes more socially embedded, and due to repeated interactions, benets become increasingly realized. However, the increase is not uniform, suggesting a need for further investigation of why this may be the case. While the effect of functional benets on rm commitment to the relationship remains constant over the duration of the relationship, as hypothesized, the impact of social and psychological benets does not decrease, as we had expected. Thus these benets not only appear to increase, but also continue to boost individual commitment to the relationship over the relationship duration. Thus it would seem that buyers are mindful of psychosocial aspects of the relationship throughout and that the institutionalization of activities and opinions, discussed by Ring and Van de Ven (1994) does not apply in this case. Further research should investigate this phenomenon in more detail. Managerial implications By understanding the variety of benets involved in a relationship, both buyers and suppliers can address with greater holism the factors that are important in B2B relationships. This is not to suggest that rms have previously ignored these factors, rather, we merely point out that a more open and integrated stance needs to be adopted in terms of recognizing the full spectrum of benets. In fact, we suggest that there is place for social and psychological factors on the strategic agenda as well as for functional. As a broad starting point, managers of supplier rms might consider for each of their key relationships how they are faring against the content of each of the items included in our survey battery (Table II). We suggest that suppliers are best positioned to determine what more they could do to add extra value to these key relationship dimensions. We also suggest that managers might benet from opening a dialog around these issues with relationship partners. The scale can also be used by suppliers as a measure of buyers relationship benets based on buyer feedback, or even expected buyer feedback. More specically, because employees exist within the rm and are together viewed as the rm (Zeithaml et al., 2006), suppliers should focus their attention on enhancing buyers realization of social benets in particular, as well as psychological benets and, of course, functional benets in order to cultivate buyer commitment. Developing social benets clearly takes time, as evidenced in the present study, which means that perseverance, educating the buyer, encouraging cooperation, sharing information, and gestures of friendship are necessary to achieve such benets. Psychological benets also have an indirect impact on the rm through the individual, and the supplier rm might use several strategies and tactics to increase them, such as setting clear targets and expectations of what the supplier can do for the buyer, promptly rectifying problems, and being reliable. Finally, regular communication of expectations and goals, a focus on distinct competencies, and the modication of process and production to promote greater interrm compatibility enhance functional benets. Both buyers and suppliers in B2B relationships must focus on such functional considerations, because these factors ultimately underlie relationship development (Hastings, 2003). However, clearly the relative importance of such benets may vary from customer to customer, and it is important that suppliers identify the unique needs of each buyer rm. 484

Limitations and future research suggestions We note some limitations of our research. First, our study is cross-sectional, and therefore the inference of causality or the directionality of the relationships is tenuous and highly dependent on the correct specication of the model. The validity of the model would be strengthened if it were tested using longitudinal data. Nonetheless, our model is no different than many other cross-sectional models tested (e.g., Garbarino and Johnson, 1999; Wathne et al., 2001) and furthermore tests the proposed model against an alternate model, which partially allays such concerns. Second, our model, though parsimonious, is selective in the constructs used. Relationship components such as service factors, product and price factors, supplier rm and salesperson characteristics are all known to be important factors in relationship formation (Barringer, 1997; Doney and Cannon, 1997; Ghosh et al., 1997; Lyons et al., 1990; Wathne et al., 2001) and are likely to act as antecedents to the relationship benets considered in the present study. Thus future research may integrate these aspects, offering insights as to what contributes specically to each benet type. Similarly, relationship structure, such as the number of people involved in the relationship in supplier and buyer rms, interdependence or power asymmetry and the norms established in the relationship may also be usefully examined in terms of their impact on relationship benets (Barringer, 1997; Geyskens et al., 1996; Robicheaux and Coleman, 1994). Considering the outcomes, the effect of benets on other outcomes beyond commitment, such as job satisfaction and rm performance is also a useful research direction. Third, our results represent buyers in manufacturing rms; even though we included no restriction on the type of industry the suppliers represented, the generalizability of the ndings may be limited. We restricted our study to control extraneous sources of variation, a common practice in many studies (e.g., Doney and Cannon, 1997; Morgan and Hunt, 1994), but further studies should be conducted across different sectors. For example, given the focus on internal and interactive marketing in service contexts (Zeithaml et al., 2006), a useful extension to this study might address whether psychological and social relationship benets, received by the service employee from interactions with their own rm or interactions with their customers play a signicant role in developing employee commitment to customer relationships and the service quality delivered. Finally, given relationships are of course two-way, and only one side of the dyad is evaluated in the present study, future research can examine relationship benets experienced by both parties and the cross-implications of this. We nd that relationship benets generally increase over the different stages of the relationship but that these increases are not uniform. We suggest further investigative research to explore this nding more fully. We also suggest further research into moderating factors other than time. For example, a fruitful approach might examine the moderating role of interimistic relationships (i.e. deliberately short-term, as for a specic project, often both competitive and collaborative) compared with enduring relationships (Lambe et al., 2000). Such relationships have become increasingly common (Wilson and Jantrania, 1995), and psychological and social benets may not play as signicant a role in their development.

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Based on Granovetters (1992) suggestion that attachments to others may modify economic action and therefore that social aspects may enhance positive or reduce negative aspects of economic exchanges, psychological and social benets may act as moderators of the effect of functional benets on rm outcomes. Bolton et al. (2003) investigated the augmenting role of social bonds on the effect of economic resources on relationship evaluation, but found no direct support for such a relationship. Given the meager support for this concept in previous research, we suggest that it represents a fruitful future research direction. The consistency in the benets that each party seeks, as it pertains to the principle-agent relationship, might provide an interesting avenue for further research. For example, our study has revealed that social benets have the greatest effect on the individual, whereas functional benets have the greatest effect on the rm. If the motivation with respect to the benets sought is inconsistent, the potential for principalagent problems may be greater. Building on work by Vermillon et al. (2003), we suggest that research should focus principal-agent relationships not solely at a teleological level but at the deontological level as well. This expansion would extend the work on principal-agent relationships, which makes it a topic worthy of investigation.

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Further reading
Dorsch, M.J., Swanson, S.R. and Kelley, S.W. (1998), The role of relationship quality in the stratication of vendors as perceived by customers, Journal of the Academy of Marketing Science, Vol. 26, Spring, pp. 128-42. Hallen, L. (1997), Infrastructural networks in international business, in Ford, D. (Ed.), Understanding Business Markets: Interaction, Relationships and Networks, Dryden, London, pp. 214-26. Havila, V. and Wilkinson, I. (2002), The principle of the conservation of business relationship energy: or many kinds of new beginnings, Industrial Marketing Management, Vol. 31 No. 3, pp. 191-203. Kumar, N., Scheer, L.K. and Steenkamp, J.-B.E.M. (1995), The effects of supplier fairness on vulnerable resellers, Journal of Marketing Research, Vol. 32, February, pp. 54-65.

Appendix
The partial disaggregation approach involves combining variables into subgroups, thereby reducing the number of parameters to be estimated (Bagozzi and Heatherton, 1994). In our case, the approach ensures that when we assess the moderating power of the length and stage of the relationship, our number of observations was at least ve times the number of parameters to be estimated (Kline, 1998). We compared specic hypothesized paths across two groups that represented more recently and longer established relationships, which we developed so that they were maximally different by excluding a middle value in the scales. For example, the length of the supplier relationships with the rm was either ve years or less (n 79) or more than ten years (n 122), so we excluded relationships of ve to ten years duration. We also considered the need to balance sub-sample sizes. Because the total sample size across the two groups was 201 for length of the rmsupplier relationship, 229 for the length of the individualsupplier relationship, and 243 for the exploration/expansion versus commitment stages, we needed to reduce the number of parameters to be estimated, using the partial disaggregation approach, to 38, which is consistent with Klines (1998) recommendation. This structure represents the case in which one structural parameter is freed at a time, the procedure that we adopted (see Tables VII-IX).

Corresponding author
Jillian C. Sweeney can be contacted at: jsweeney@ biz.uwa.edu.au

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Functional, psychological, and social relationship benets Jillian C. Sweeney and David A. Webb

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toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benet of the material present. How functional, psychological, and social relationship benets inuence individual and rm commitment to the relationship Picture the scene. A group of employees spending rather more time than an employer might think they should, hanging round the coffee machine and chatting. Stop hanging about, and get on with your work might be one employers reaction. What the boss probably did not realize was that it was through these informal conversations at relatively slack parts of the day that some of the companys most important work was being done employees sharing work experiences and together guring out how best to get the job done and satisfy the customer. Stopping the social interaction in the expectation that employees could use their time doing some real work might prove to be false economy. But it is not just social interaction with colleagues which has benets for companies. It is the bonds and friendships which ourish within the marketplace between, for instance, supplier and buyer organizations. Individual employees are far better and developing trust and condence in an organization that the organization as an entity. Anthropologists could ll a library with books on the subject. So, too, could marketing academics. However, the fact that many enlightened companies now accept that it is people, not organizations, which get things done and that people are the organization, does not mean to say they would not benet from a clearer understanding of how the functional aspects of doing business ts in with social and psychological factors. Jillian C. Sweeney and David A. Webb say: By understanding the variety of benets involved in a relationship, both buyers and suppliers can address with greater holism the factors that are important in B2B relationships. This is not to suggest that rms have previously ignored these factors, rather, we merely point out that a more open and integrated stance needs to be adopted in terms of recognizing the full spectrum of benets. In fact, we suggest that there is place for social and psychological factors on the strategic agenda as well as for functional. Functional benets are the economic and strategic advantages derived through an interaction with another rm that enhance rm competitiveness and drive its nancial position. However, action is socially embedded and cannot be explained by functional motives alone. The concept of exchange, which has been central to the development of marketing knowledge for the past 30 years, has long been differentiated along economic and social lines. The authors propose that psychological benets forms a third component of benets in the B2B context, dening social benets as

perceptions of afnity, friendship, and sharing with another party, and psychological benets as feelings of trust or condence in the other party that result in greater peace of mind. In a study of employees of buyer rms, who had prime responsibility for a relationship with a supplier rm, they found support for their hypotheses that: . The greater the individual commitment to the relationship, the greater the rm commitment to the relationship will be. . The greater the social benets, the greater the individual commitment to the relationship will be. . The greater the psychological benets, the greater the individual commitment to the relationship will be. . The greater the functional benets, the greater the rm commitment to the relationship will be. They were also supported in their view that, the later the stage of the relationship, the greater the level of all three benet types. The authors suggest that managers of supplier rms might consider for each of their key relationships how they are faring against the content of each of the items included in their survey of buyers, which were: . Psychological benets. We have peace of mind in dealing with them. We trust them. We know what to expect of/ from them. If they give us their word, we know that whatever it is, it will be done. Theres a real sense of understanding between us. . Functional benets. Having a relationship with them enables us to compete in the market. We are able to capitalize on the value they offer. As a result of the relationship, we are able to maximize nancial outcomes. We complement each other in terms of expertise. Our relationship sets up proactive opportunities. . Social benets. We have more than a formal business relationship with them. We have a real friendship with them. We work on things together. We share information. Sweeney and Webb suggest that suppliers are best positioned to determine what more they could do to add extra value to these key relationship dimensions and also suggest that managers might benet from opening a dialog around these issues with relationship partners. The scale can also be used by suppliers as a measure of buyers relationship benets based on buyer feedback, or even expected buyer feedback. Suppliers should focus attention on enhancing buyers realization of social benets in particular, as well as psychological benets and, of course, functional benets in order to cultivate buyer commitment. (A precis of the article How functional, psychological, and social relationship benets inuence individual and rm commitment to the relationship. Supplied by Marketing Consultants for Emerald.)

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