Research Hypothesis

This section is centered on the discussion of different assumptions. It is worth to consider them in detail and assure the feasibility of each hypothesis.

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4.2.1 Relationship Quality and Organizational Learning

Past research has recommended that organizational units not only possess professed knowledge but also hold the opportunity to learn from other units (Huber, 1991). Nevertheless, it appears that not every unit is able to learn from all other units in the same organization. A specific unit would like to acquire knowledge from other units but may not have opportunites to access it.

The necessity of mataining better relationship quality must be kept in mind.

Although the knowledge is obtainable, the unit may not have ability to assimilate and apply it for its own utilization. Undoubtedly, organizational units need external access and internal capacity to learn through their busienss partners (Tsai, 2001).

Better relationships enable companies to imitate technologies possessed by cooperative partners and to develop and tailor offerings to more specific requirements.

Technologies are both developed and exploited within them. The speciality of companies’ relationships affect what happens within the companies (Hakansson &

Ford, 2002).

Even so, both buyer and seller would like to adapt to their own process or product technologies to accommodate each other (Ford, 1980). In respect of buyer-seller relationships, many buyers develop minor source suppliers on account of the pressure to reduce inventory, raise quality, carry out just-in-time (JIT) systems, and reduce time to market. The primal goal in developing capabilities is to reduce costs. The ways of cost reductions can be acquired by either of two models. In an adversarial model, buyers make suppliers oppositive in order to accomplish lower costs. In a cooperative model, both companies accomplish lower costs by working

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together to reduce buyer’s and seller’s operating costs. This reduction is achieved through deletion of unnecessary procedures and better inventory management (Wilson, 1995).

At all times, people anticipate viewing friendship relations between two individuals as reciprocated rather than as an unanswered flow of friendship from one person to the other (De Soto, 1960). However, as soon as firms in knowledge-based industries that are incable of establishing necessary links with other companies, they possibly suffer from the inclination of unconnectedness – a decreasing capability to take part in the process of learning and innovation leading to firm growth (Powell, Koput, & Smith-Doerr, 1996). Hence, one can safely state that the better relationship quality two firms maintains, the better organizational learning each firms will be.

H1: Relationship quality is positively related to organizational learning.

4.2.2 Relationship Quality and Organizational Performance

It has long been recognized that the effective management of buyer-seller relationships is critical for business success (Wilson, 1995). In the dynamic environments, a recent increase in workplace diversity has strained lots work relationship, specially the purchasing and sales professionals (Smith, 1998).

From a strategic point of view, buyer-seller relationships affect the nature and the outcome of the firms’ actions and are their potential sources of efficiency and effectiveness (Gadde et al., 2003). After all, companies develop close relationships instead of playing the market, where they can possess benefits in the form of cost reduction or increased revenues. These above statements are achieved by tailoring

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their resources to have dealing with specific buyers or sellers (Ford, 1980).

Generally, people are inclined to operate with business with contractors and others with whom they have ties of friendship or kinship rather than find exchange partners in the open market (Wenpin, 2003). Most remarkably results show only the organizational level of relationship quality influences the loyalty of business buyers (Rauyruen & Miller, 2007). Moreover, academics and practitioners regard customer loyalty as a powerful impact on company performance.

Relationship value, created by synergistic combination of the partners’ strengths, is composed of many forms, technology, market access, and information. It is obvious that knowledge gained by a partner in the relationship may be the most valuable output of the partnership but is likely the most difficult measure (Wilson, 1995). In words, it is the same that Lee and Kim (1999) and Crosby et al. (1990) consider that relationship quality affects organizational performance. Accordingly, it seems reasonable to assume :

H2: Relationship quality is positively related to organizational performance.

4.2.3 Organizational Learning and Organizational Performance

In dynamic and turbulent environments, all businesses need to pursue the processes of leaming, behavior change, and performance improvement. That is the reason why the term, organizational learning, deserves more than a passing notice. It is said that the inclusion of organization’s capability is to learn the demands and needs of its own customers and to create new products or services to satisfy them (Day, 1984).

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Besides, Hedberg & Wolff (2001), Child (2001), Reinhardt et al. (2001) all agreed that organizational learning benefits customer satisfaction and better relationship quality. As for customer satisfaction, the term has been viewed as both an indicator and a determinant of organizational performance, relying on how the indicator has been defined (Babin & Griffin, 1998). Similarily, Kaplan & Norton (1996) intermix measures of customer satisfaction in their Balanced Scorecarsd (BSC) approach to measure organizational performance.

However, empirical analysis of the relationship between organizational learning and organizational performance has been limited, for obstacle such as two-faced phenomenon or the delay between the two and the possibility that the outcomes of learning are concealed by exogenous factors (Garcia-Morales, Llorens-Montes, &

Verdu-Jover, 2007).

Some scholars observed that company with the capability to learn may possess bright performance (Fiol & Lyles, 1985; Huber, 1991; Levitt, 1988). Indeed, organizations that quickly learn possess a greater strategic capability which causes them to maintain a position of competitive advantage and to better long-term performance (Senge, 1990). It is the same that scholar consider whether a firm has the competition or not, it is due to consecutively learning new information about technology, markets, customers, and the business environment (Yang, Wang, & Niu, 2007). In other words, leaming helps behavior change that leads to better performance (Senge, 1990; Slater & Narver, 1995). Accordingly, it seems reasonable to assume :

H3: Organizational learning is positively related to organizational

performance.

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4.2.4 Network position and Organizational Performance.

Network position is a statement of social structure and has leading role in networks (Coleman, 1990). Different network positions allow varied levels of access to information and knowledge. Social networks facilitate the formation of new knowledge within organizations (Tsai 2001).

Despite the growing consensus that networks matter, the particular effects of different factors of network structure on organizational performance remain unclear (Ahuja, 2000). However, from a strategic view point, these relationships influence the nature and the outcome of the firms’ performance and their latent sources of effectiveness and efficiency (Wilkinson & Young, 2002).

The strategic network perspective affirms that the embeddedness of firms in networks of external relationships with other organizations keeps implied meaning for organization performance (Gulati, Nohria, & Zaheer, 2000). What is more, networks of knowledge transfer among organizational units enable the diversified firm either to better discriminate their products of one or more of its divisions, or to lower whole operating costs in one or more of its divisions ( Hill, Hitt, & Hoskisson, 1992). In other words, the centrality of a specific unit in the intraorganizational network may decide its access to disparate knowledge, therefore, influencing its ability to identify and reply to new market opportunities (Tsai, 2001).

As soon as a firm occupies a central network position, it is able to obtain competitive advantages in the marketplace. The reason is that the firm possesses unique access to other firms’ knowledge or practices. Such a central firm may increase its profitability by applying other firm’s knowledge or practices to get with

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its products to market demand, to reply to oncoming market trends, to improve its business operations, and to tackle competitive challenges as it is capable of possessing the benefits of scope economies by sharing the knowledge developed by other units (Tsai, 2001).

Therefore, it follows from what has been said that performance discriminates among organizations may be attributed to the differences in network positions.

H4: Network position is positively related to organizational performance.

Table 4-1 An overview of hypotheses

H1 Relationship quality is positively related to organizational learning.

H2 Relationship quality is positively related to organizational performance.

H3 Organizational learning is positively related to organizational performance.

H4 Network position is positively related to organizational performance.