Buyer Seller Relationship

The concept of Buyer and seller relationship is not a new concept. But the recent rise in its importance particularly seems to be due to the fact that cooperation became the instruments of strategy. since we expect relationship value to be of crucial importance for the management and, finally, the stability of cooperative buyer-seller relationships value is measured from both buyer and seller perspective and measurement results are integrated in

DETERMINANTS OF THE STABILITY OF COOPERATIVE BUSINESS RELATIONSHIPS

Interaction process between buyers and sellers in industrial markets comprise not only economic exchange but also social exchange in general. social exchange theory by Thibaut and Kelly suggest two standards for the evaluation of relationship outcome and, therefore, value: 3. Comparison Level

1. Comparison level• It arises out of the sum of own experiences in relationships and knowledge concerning other relationship which one has observed or read about. • Relationship outcome above CL are relatively satisfying and those below CL are perceived to be

2) Comparison level for alternatives• It is defined as best currently available alternative to the present relationship. • The less the probable outcome in current relationship exceeds CLalt, the more the partners will be tempted to leave the relationship.

Investment Model: • This model was developed by Mr Rusbult. • It suggests that commitment to a relationship is not only determined by relationship satisfaction and available alternatives but also by the investments put into it.

Equity theory: The theory states that an equitable relationship exists if all participants, in terms of inputs into and outcomes from the exchange, are receiving equal gains.

Hypotheses from the above theories: 2. The more present relationship value exceeds the comparison level, the higher will be the degree of satisfaction. 3. The more the present relationship value exceeds the comparison level for alternatives, the higher will be the commitment towards the relationship. 4. The higher the degree of relationship satisfaction, the higher will be the commitment towards the relationship.

• The higher the commitment towards the relationship, the more stable relationship will be. • The more extrinsic nonretreivableinvestments are tied in a relationship, the higher will be the commitment towards the relationship. • The more intrinsic nonretrievable investments are tied in a

• The more equitable a relationship, the higher will be the degree of relationship satisfaction. • The longer the duration of a relationship, the higher will be the commitment towards the relationship.

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Relationship Equity

BUYER SELLER RELATIONSHIP MODEL

Present Relationship Value Given CL

Relationships Satisfaction

Present Relationship Value Given CLalt

Extrinsic NonretrievableInvestments

Intrinsic Nonretrievable Investment

Commitment Towards Relationship Relationship Stability

Relationship Duration