Tension in Networks

2015 Cambridge Business & Economics Conference

TENSION IN NETWORKS

Christina Öberg

Örebro University

School of Business

SE-701 82 Örebro, Sweden

E-mail: christina.oberg@oru.se

Telephone: +46 19 30 1480

ISBN : 9780974211428

Paper submitted to 2015 Cambridge Business and Economics Conference

Date of submission: February 25 th

, 2015

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428

ABSTRACT

This paper describes and discusses tension among parties in networks. It focuses on the triadic level of networks of companies and thereby contributes to previous research that has foremost referred to tension on dyadic levels. The focus on the negative side of relationships further contributes to the main literature on company relationships that primary describes the positive side of such relationships. The network level of tension raises important questions related to recurrent ways of organising work. The paper points to how tension may occur among firms in a triad, and relate to two of them, or involve all three parties. Tension does not only describe contradictory goals and interests, but also tension among resources. Its consequences may lead to new tension on the dyadic or triadic level. Compared to studies grasping tension as contradictions between two parties, this present study indicates may ‘move’ around the network as initial tension is dealt with.If tension is handled through diffusion specifically, including the connection with new parties, it suggests to without exception lead to new tension, while coalition leads to decreased tension in the triad. Again, this points to how the strengthening of ties, and increased trust lessens the risk for tension.

Keywords: Network; Power-dependence; Tension; Triad

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INTRODUCTION

Tension refers to contradiction between parties (Sugarman, 1969). Fang, Chang & Peng

(2011: 774) define it as “two co-existing contradictory forces with conflicting goals”. Tension

has been studied between goals within the same organisation (e.g., creativity versus performance for innovative firms), between organisational levels (top-managers and

operational staff diverging in intentions), and on inter-organisational levels (Das & Kumar,

2010; Groen, Wakkee & de Weerd-Nederhof, 2008; Tidström, 2014; van Fenema &

Loebbecke, 2014). A shared perspective is that tension is between

two parties, no less, no more.

In today’s society, but also increasingly a viewpoint shared by various research disciplines

(operation research, innovation, marketing, organisational theory), companies organise

themselves in networks. A network refers to three or more interacting parties (Smith & Laage-

Hellman, 1992). They been seenin how innovation is created (Chesbrough, 2003; Ebner,

Leimeister & Krcmar, 2009; Stieger, Matzler, Chatterjee & Ladstaetter-Fussenegger, 2012),

as multi-party alliances to deliver shared solutions (Hertz, 2001), and as ways of organising

work that include self-employed individuals joining forces (Öberg, 2012), for instance. All

these forms of networks mean that tension may occur not only between two parties, but among all those parties involved. It also means that certain parties may cluster themselves together as part of the network, while contradicting other parties and their

viewpoints.Andersson-Cederholm & Gyimothy(2010) have indicated tension on a triadic

level related to service encounters, while not studied it on a relational level of long-term business relationships, and rather indicated the complexity it brings about than focused on how companies handle the tension.

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This paper describes and discusses tension among parties in networks . It does so based on multiple case studies. To pinpoint the issue, triads are in focus and cases are selected to illustrate parties supporting an innovation, shared competence nets, and business relationships among three parties. The paper highlights tension as behavioural, structural, and

psychological (Das & Teng, 2000b; Fang et al., 2011) and uses Emerson’s (1962) work on

power-dependence to capture how parties may create and recreate relationships as antecedents or consequences of tension, and network outcomes of tension.

The paper contributes to previous research through highligting negative sides of relationships, were literature normally concerns well-functioning relationships, and through describing tension on a network level, not only as a dyadic expression. This latter point is important based on contemporary ways of organising work and hence relates to the paper’s practical contribution.

The rest of the paper is structured as follows: After this introduction, the theoretical point of departure is described. This entails a more detailed presentation of tension and how it can be understood, some words on networks and specifically triads to capture the setting in which

tension is studied, and a brief note on power-dependence based on Emerson’s (1962) seminal

work that leads into the analytical tool of the paper. After the theory section, the method is described. To illustrate tension in networks, the paper uses multiple case studies representing triads in various settings and of different types. The cases are presented following the method section and then analysed. The paper ends with conclusions, theoretical and managerial implications, and ideas for further research.

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THEORETICAL POINT OF DEPARTURE

ISBN : 9780974211428

Tension

In interaction, various parties may represent different goals and interests (Corsaro & Snehota,

2011; Öberg & Shih, 2014). Fang et al. (2011), and van Fenema and Loebbecke(2014)

describe tension in business relationships. As such, the differences may be combinable and

co-exist (Mack & Snyder, 1957; Pondy, 1967;Schmidt & Kochan, 1972). Complementary

interests, for instance, mean that parties do not share intentions, while their interests do not collide. It is when they are non-combinable that tension emerges. And it is first when the noncombinable goals and interests are brought to light that the tension may lead to an actual conflict. Literature refers to how tension may be latent and emerge due to changes in

interactions(Hibbard, Kumar & Stern, 2001; Sugarman, 1969). It may surface as relationships

develop and claims put on them become visible to its interaction partners(van Fenema &

Loebbecke, 2014), and could hence be brought forward through change or visualised through

it. The visual side of tension is by some scholars referred to as conflict (Schmidt & Kochan,

1972; Tjosvold, 2006). Tension could hence be the described as a phase preceding conflict,

but also as a state of the relationship. In literature on the related dark side of relationships, it is

even suggested that negative impact raises over time as a relationship develops (Barnes, 2006;

Grayson & Ambler, 1999; Moorman, Zaitman & Deshpande, 1992), while others thus suggest it to be there based on, for instance, opportunistic behaviour of interacting parties (Noordhoff,

Kyriakopoulos, Moorman, Pauwels & Dellaert, 2011).

Whichever understanding is put on tension, literature indicates how it weakens relationships,

or how it leads to relationships remaining distant (Das & Kumar, 2010; Ekici, 2013). Tension is hence associated with negativity (Dant & Gleiberman, 2011). Such a standpoint would

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428 however mean that the tension is brought to light, or at the very least indicatively perceived through the activities of the other party.

Several scholars relate tension to trust (or the lack of it)(Molina-Morales, Martinez-Fernandez

& Torlo, 2011; Skinner, Dietz & Weibel, 2014), while Fang et al. (2011),and Das &

Teng(2000b)refer to tension in terms of behavioural, structural, and psychological tension.

Behavioural tension describescompetition and cooperation between companies (Bengtsson &

Kock, 2000; Tidström, 2014), and an imbalance between them. Structural tension is defined in

terms of firms’ adaptability. Fang et al. (2011) describe the tension to being one between

rigidity and flexibility in the interaction between parties. Rigidity would here be represented by closeness and interconnectivity. Psychological tension, lastly, is described as the long- or short-term, or relational or transactional, orientation of firms. These various dimensions have

previously been described on a dyadic, relational level (Håkansson, 1982), but then without

problematising differences in orientation between interacting parties and rather as a means to characterise various relationships.

In this paper, tension refers to differences in goals or interests that are difficult to combine

(Corsaro & Snehota, 2011; Öberg & Shih, 2014). It is studied in the dimensions suggested by

Fang et al. (2011): behavioural, structural, and psychological tension, and grasped as

imbalances. While it may not have resulted in an open conflict, the awareness of the differences has been captured by at least one of the parties in the network.

The network and the triad

In literature on tension in business relationships (and the dark side of such relationships), focus is on the dyadic level, usually represented by a buying and a selling organisation. Also when tension is described on intra-organisational levels, tension refers to contradictions

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between two parties, and this is also seen in Fang et al.’s (2011) definition of tension.

However, it is increasingly acknowledged across research disciplines, that companies interact

on network levels. A network is defined as three or more interconnected firms (cf. Anderson,

Håkansson & Johanson, 1994; Emerson, 1962). This interconnectivity, in turn, may mean that

all parties have direct relationships with one another, or that they are indirectly connected through how the connection to one party indirectly means that a company is connected to that

party’s other connections (Anderson et al., 1994). In studies on social networks, this is

referred to as the complexity and density of the network; how many connections there are

among parties and its number of elements (e.g., Kim. Y., Choi, Yan & Dooley,

2011).Andersson-Cederholm&Gyimothy(2010) discuss tension in triad, and points to them as

entailing loyalty and disloyalty, trust and distrust, and empowerment and disempowermentas simultaneous forces. These scholars however focus on service encounters rather than overall business relationships or networks, and further; only indicates the existence of tension, while not addressing how it is dealt with in the triad.

In studies on networks, networks are either referred to as constructed and limited in time

and/or space(Autio, 1997; Das & Teng, 2000a), or networks simply depict how companies are directly or indirectly interconnected through business engagements among them(Anderson et al., 1994). This latter way of referring to networks means that they are indefinite, while constantly evolving through dynamics(Hallén, Johanson & Seyed-Mohamed, 1991). Such a network may in turn embed the constructed and delimited networks (Alajoutsijärvi, Möller &

Rosenbröijer, 1999; Möller, Rajala & Svahn, 2005). The constructed network may be created

for a shared cause and thereby often create offerings external to the network, or they may be based on different parties supporting a central firm with complementary resources.

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This paper focuses on the triad (Smith & Laage-Hellman, 1992) as part of an indefinite

network. This triad in turn reflects in the paper’s empirical illustrations, a triad created for a shared cause, one based on complementary, supporting resources, and one that is simply made up by three parties interacting as a description of general business interaction. Focusing on the triad allows the illustration of the network level, while not raising complexity beyond such limits that may make it difficult to capture its consequences.

Power dependence and analytical tool

When tension becomes visible in a dyadic relationship, it may lead to increased weakening of the relationship, decisions not to invest more in its (a status quo with a more or less transactional orientation of the relationship), or it may cause the relationship’s dissolution. All these alternatives would in turn affect surrounding parties; dissolution or weakening of a relationship may lead to started or more intense interaction with a third party, and the transactional orientation may well be complemented with more relational exchanges with other parties.

Tension in a network means that different parties on a network level represent variances in

goals and interests, and that these are non-combinable as issues emerge or in general(Barnes,

2006; Grayson & Ambler, 1999; Moorman et al., 1992). Opposed to the dyadic relationship, a

single party cannot easily disconnect from all its network parties, but presumes to ally with certain of these in terms of interests and goals. And, tension may also emerge between sets of interacting parties. Its outcome may restructure the network in terms of who interacts with whom, and also in orientations such as competition versus cooperation, flexibility versus

rigidity, and long-term versus short-term orientation (cf. Fang et al., 2011).

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Power dependencerefers to how power can be balanced or imbalanced in relationships.

Emerson (1962) described power dependence on a dyadic level as how power results from

dependencies and is decided based on control and ability to influence the operations of the other party. Balance points to how dependence (and power) between interacting parties is equal; the first party’s dependence on the second party, is as large as the second party’s dependence on the first party. Imbalance reflects how one party is more dependent on the

other, than reverse. Emerson (1962) refers to four ways of dealing with imbalance: (i)

decreased engagement or withdrawal by the more dependent party; (ii) changed structures on network levels through diffusion of dependency into new relationships; (iii) the dependent party achieves status recognition; and (iv) the dependent party forms coalitions to on the group level meet the more powerful party. In turn, this suggests two things; parties strive to reach balance, and: imbalance on a dyadic level may have network consequences. The former

has been questioned by such researchers as Hingley(2005) and Kumar (1996), who point to

how companies may well want to maintain a power-advantage compared to others. The latter, the network consequences, would be presumed to be seen through changed structures on network levels, diffusion, and status recognition (received from third parties, for instance).

So what would this mean for tension in networks? As referred to by Fang et al. (2011) tension

may take some different forms. Essential it reflects the imbalance between these different relational items (behavioural, structural, and psychological), and hence associates to

Emerson’s (1962) reasoning on imbalance. In the triad, as focused on in this paper, the

tension may be present between two parties (and not include the third one), be between two parties vis-à-vis the third one, or be present among all three parties. In the outcome – the parties’ attempts to deal with the tension, and hence once it is realised–the parties may

regroup or establish relationships with additional parties, it would be presumed (cf. Emerson,

1962), and this paper uses Emerson’s (1962) four ways of dealing with imbalance as a means

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428 to capture consequences of tension. Figure 1 outlines how different variables are connected in this paper and functions as the analytical tool.

[Please insert Figure 1 about here]

METHOD

The empirical part of this paper is based on case study research(Yin, 1994). Multiple cases

were used to illustrated tension on a triadic network level in various settings. The idea to use different settings was to increase generalisablity of findings; findings would not be context

specific; while adding aspects through the multiple cases(Eisenhardt & Graebner, 2007).

The individual cases were chosen to each represent different settings and types of triads. They include the innovation setting where various actors support an innovative firm; the competence net shaped for a common cause but representing complementary resources; and a business relationship triad.For each case, semi-structured interviews constituted the main data source, and were complemented with secondary data and observatory research in individual cases. Interviewees included representatives of the various firms in the triads, and also companies surrounding these triads. The interviewees held such positions as owners, CEO, sales, marketing and procurement managers, and sales staff and users. Questions captured, without being limited, the following areas: descriptions of the companies’ businesses, their goals and interests related to interacting with the other parties, developments of relationships with other parties over time, and issues with such developments and interactions. The interviewees particularly reflected on events and developments related to the other parties in the triads. Secondary data included newspaper items, annual reports, and internal documentation from the companies. It meant to validate data from interviews, especially in

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terms of how it enabled the capturing of events at their time of reporting (Huber & Power,

1985) (while the interviews reflected on events in retrospect).

In the analysis procedure, each source of information was first coded separately(cf. Pratt,

2009). Codes were created along this initial analysis procedure and meant to capture how the

relationship was referred to related to various events, perceived tension (and conflict), and actions taken as such concerns became visible, and to capture goals and interests with the interactions. In a second round of coding, various interviewees’ standpoints were compared on an intra-case basis. This involved comparing different representatives of the same firm, to thereafter compare descriptions among parties in each triad. In the former, possible discrepancies were either discussed in further detail with the interviewees, or referred to their position in the company. No major differences were however captured at that step. When comparing the descriptions among companies in the triad, descriptions of events as such were as in the intra-company analysis met with further questions to reach consensus on their existence, while reflections on meaning of such events, interests, goals, and overall description of the party’s participation in the triad, were ascribed to represent that company’s view. This was in turn accomplished based on the coherency for each firm reached in the preceding step of analysis. Inter-organisational differences were then analysed to capture their meaning and outcome.

In the last step of the analysis, the different cases were compared. This part of the analysis intended to capture similarities and differences among the cases and in an explorative manner search for explanations to such similarities and differences. Here, findings were also reflected

to previous research, and then specifically to Fang et al.’s (2011) way of referring to different types of tension, and Emerson’s (1962) description on how imbalance in relationships can be

handled.

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CASE STUDIES

ISBN : 9780974211428

Case I: Innovation – Parties developing and supporting an innovation

The first case describes an innovative firm and companies surrounding the firm to enable its further development. The triad studied consists of the innovative firm (Sensor), a venture company (Venture), and a company acting as a supplier (Module) in the industry sector the innovative firm meant to target with its innovation.

Sensor was established as the result of research at a university and its founder was a researcher that came to initially co-own the firm with an industry representative. Focus was early set on the application of the research finding, sensor software, to be implemented into cars. Venture operated with a specific focus on that industry and was owned by a car manufacturer. Module was a supplier to the industry. Sensor wanted to commercialise its innovation, while it needed financial resources to complete the functionality of its software, and contacts with business partners to enable itself to create customer contacts. As for the development of the software, the founders had a long-term perspective and the researcher also continued to integrate attempts to establish the firm on the market with his own research career. Venture has less of a long-term orientation to Sensor, while it did provide financial resources for Sensor’s development of its software and also provided industry knowledge.

While Venture was owned by a car manufacturer, its ownership in Sensor was focused on a return on investment. This became additionally clear as its owner divested its car manufacturing division to focus on heavy vehicle and related. The owner thereby repositioned itself, in turn partly the result of those difficulties that were evident in the car manufacturing industry. Module, as a supplier to car manufacturers, was one of those companies that had gained power over car manufacturers as the latter ones had outsourced more and more of their operations and development. In doing so, it also controlled hardware and related that Sensor’s

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428 software needed to be fitted with. The interaction between Sensor and Module, however, had less to do with the software, and more to do with how Module placed small development projects with Sensor. For Sensor, this provided income, while not much else came out of the interaction. Sensor though participated in the interaction also with the hope to thereby establish a closer contact with Module and start discussions on further development and integration of solutions. Module saw Sensor as a very small company that could help with targeted knowledge for specific solutions at the edge of its own knowledge base.

So, there was an outspoken tension between Module and indirectly Venture. This related to an imbalance in resources and power between the two, also seen as imbalances between car manufacturers and their suppliers in general. The owner of Venture had first taken measures to try to uneven that imbalance by investing in development projects, such as Sensor, in order to strengthen its position and regain power towards suppliers. This measure though challenged the interaction with the suppliers further. At a later stage, the owner decided to divest its car manufacturing business instead, hence practicing a different route to the tension with suppliers. As for Sensor, the firm was in many ways considered as an independent actor by both Module and Venture. Hence, it had been able to interact with both parties, but then with a difference in orientation towards time with Venture, and a difference in focus with Module.

Venture pushed Sensor for an exit, not only directed by the venture company’s usual business of investing for return, but also as a consequence of the owner’s divesture and how Sensor was no longer in line with its overall business aim. Sensor approached Module (among others) for it to step into Venture’s place, but was declined. Module was not that interested in

Sensor’s software and hoped to continue to run its interaction with Sensor as previously, although its dependence on Sensor was limited. In terms of the software, Module had a solution that competed with Sensor’s and hence, it was not very interested to adjust its

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428 hardware to Sensor. Competition thus rose in the interaction, though more on a solution than a company level. Sensor knew it needed some long-term financial support and neither Module nor Venture had enabled the firm to establish customer contacts. Squeezed between Venture’s short-term interest, its matching of resources but lack of customer connections, and Module’s development projects that provided some income, but also did not lead to any further development of the software nor any abilities to create a long-term engagement or reach customers, Sensor started to look for alternatives outside the triad. It went to search for customers, while also looking for a new owner. The firm had realised that its credibility was limited as an independent firm and that it did not manage to get its interests represented in interactions with other parties. Eventually, Sensor was acquired. Venture thereby concluded its interaction and ownership with Sensor. Its exit goal was fulfilled. Module, on the other hand, ended its interaction for another reason; Sensor had been acquired by a car manufacturer, and the tension between such suppliers as Module and car manufacturers made it not wanting to continue any operations with Sensor. The supplier saw it as if it would provide financial income to a competitor if it did. Module thereafter put increased effort to develop its competing solution.

This case indicates behavioural tension (Das & Teng, 2000b; Fang et al., 2011)among all

three parties, in terms of them engaging in cooperation on dyadic levels (Module and Venture, respectively cooperated with Sensor), while competing first between Module and Venture, and later also between Sensor and Module. The triad, and the independent role of Sensor illustrate how one party (Sensor) was able to cooperate with two parties that competed at the same time. As Sensor’s relationship with Venture was exchanged for a new owner, its relationship with Module shifted to be competing, which points to how tension can change as the result of actions to cope with tension in one relationship (here tension in terms of differences in time orientation (psychological tension according to below)) and transfer to

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428 tension in another interaction (here behavioural tension). As for structural tension, Sensor opted for more stable conditions, while being met with ever evolving, non-stability by both

Venture and Module. These parties were not willing to invest heavily in Sensor, and in all, the structural tension could be seen as an expression of an imbalance in dependence between

Sensor and the other two parties. Here there was no tension between Module and Venture.

Psychological tension lastly, was prevalent in how Sensor wanted longevity, while Venture provided a short-term interest in Sensor, and this difference in orientation to time was also seen in Sensor’s and Venture’s differences in time to complete the functionality of the software. Module’s orientation may not initially have been limited in time (while becoming so due to Sensor’s new ownership), but was more transactional than Sensor’s interest in the interaction from onwards on.

Case II: Competence nets – Selfemployed individuals creating an alliance

The second case refers to a competence net, Marketing, consisting of self-employed individuals in the advertising sector. In order to build and deliver offerings to customers, these self-employed persons had constructed a net (or alliance) as an umbrella company in which they contributed with their complementary competences: web, copywriting, and graphic design. The self-employed individuals each represented the umbrella company on equal terms, and none of them was considered more central in the net. Customers met the umbrella organisation, Marketing, (that is, this is what is marketed towards customers and it is also the brand name of the umbrella organisation that is communicated towards other parties). The self-employed individuals had complementary skills based on their professional orientations; one was focused on texts, the other one on visual expressions, and the third one specifically focused on web solutions with more of an advanced computer background than the other two.

All three though worked on how advertisements should be designed in individual customer projects.

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In many ways, the competence net Marketing functioned as an ordinary company. It had also been decided that profits would be split equally among the self-employed individuals. The individuals felt committed to the net, while the graphic designer had run its business from before and thereby also felt she wanted to represent herself on occasions, and was among customers talked about as the self-employed individual rather than the net, based on how customers strongly associated the individual with her former operations.

In their capacities as self-employed the different individuals also had some strong ideas on how customers’ advertisement campaigns would be run, and they also diverged in terms of style. Customers hence experienced how solutions would differ in terms of expressions of newness and style depending on who came to be in charge of the specific account.

Additionally, it was easier for the individual engaging in web design to have ideas and solutions for the graphic design, than reverse. This had to do with the technological skill barrier to the web design, which also led to how those engaging in graphic design and copywriting not knew what could be accomplished when they talked with customers about integrating web design into advertisement concepts. The individual with skills in web design hence felt disappointed as he did not consider that his skills were put forth as they should.

There was also the tension that customers experienced as concepts involving all three skills

(web, graphics, and copywriting) did not show coherency as specifically the graphics and web solutions differed in design. Quality was also experienced to differ.

As web design increased in importance in advertisement generally, the individual representing those skills experienced how customers were only interested in his solutions, while potentially wanting to buy other solutions from other firms. The competence net was also approached by another advertisement agency that based its business on the more traditional graphics, copywriting, and art director skills, while lacking web design and other new media solutions

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428 as part of its portfolio. That agency wanted a long-term collaboration deal with Marketing, but was actually only interested to reach the web design part of the business. The collaboration would also mean competition between that agency’s graphic design and copywriting and that of Marketing. A contract was signed, but later dissolved between the agency and Marketing.

Reasons were that the contract was considered to limit both the agency’s and Marketing’s flexibility and that Marketing felt subordinated by the agency in customer contacts.

While Marketing continued to experience tension, both among its self-employed indiviualsand with collaboration partners and in customer contacts, the competence net continued as before. The increased attention to web solutions though meant that the web designer increasingly got a say in how solutions would be designed. So, while not taking an official lead on the operations of the net, he became increasingly important for the customer projects given to the net and thereby got increasingly more influence over the all over business of Marketing. The tension among the self-employed, that never reached a conflict state, and more had to do with skills and ideas on output than goals and interests to run the net together, was also balanced by another thing: the personal relationships among the selfemployed. Essentially, the individuals had known one another from before they founded

Marketing and they increasingly got socially involved in each other’s lives, which meant that friendship ties were created and strengthened, although there might have been tension among skills and in customer projects.

Tension in this case was foremost a matter of tension in resources. Compared to the previous case, the individuals shared goals and interests, but resources (expressed as skills in the case) pointed to tension on the triadic level. Foremost, this was seen between the graphic and the web designer, while the copywriter played down his role to avoid conflict. In how goals and interests were shared, so were structural and psychological items, leading to balance rather

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428 than tension. Competition and cooperation coexisted, but the competition never took over the cooperation. Instead such tension occurred when collaboration was introduced with the advertising agency, which, as did customers, put pressure on more of flexibility to only reach the web design, while not including the other individuals.

Case III: A business network triad – doing business in a network

The third case refers to business relationships among three parties; Manufacturer, Reseller, and Customer. Manufacturer was the result of an acquisition between two companies and operated on an international level in an industry sector focusing on producing material equipment for industry customers. Reseller was an independent sales company selling

Manufacturer’s equipment to customers. Reseller operated on a regional level with customers in the geographical area predefined by contracts with Manufacturer. Reseller also distributed other (competing) companies’ material equipment to customers. Customer was an industry party in the vehicle sector. It had for long had a business relationship with Reseller, while it prior to the Manufacturer acquisition did not have any direct contact with Manufacturer.

Tension ran two ways in the case. Customer had for some time wanted to decrease its dependence on Manufacturer and negotiated so-called preferred supplier deals with some various suppliers of material equipment. Intentions here were to make price more important, while limiting decisions to a few. For each individual delivery, Customer could choose from those pre-negotiated deals, which meant that suppliers committed to deliver, while not being certain that they actually would get the order. This also increased competition among suppliers. Customers also put pressure on suppliers to offer them a full-range supply.

Secondly, in terms of tension, Reseller was able to choose among its suppliers and thereby impact customers’ decisions. However, the acquisition that preceded this case, and which

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428 resulted from customers’ pressure for full-range supply, redraw the possibilities for Reseller.

While it previously had operated as the only supplier of Manufacturer’s equipment in its geographical market, and also handled part of its maintenance, Manufacturer was now able to resell and maintain the equipment itself. This was the consequence of how the target in the acquisition, now an integrated part of Manufacturer, already had its own distribution net. On each geographical market that this company held a presence before the acquisition, resellers such as Reseller now competed with its supplier, Manufacturer. Resource wise, Manufacturer complemented Customer, while there were hence overlaps and competition between

Manufacturer and Reseller.

The tension between Customer and Manufacturer, based on how Customer wanted to strengthen its negotiation power, resulted in how Manufacturer thus tried to strengthen its offering through an acquisition, while it was still affected by the preferred supplier deals, making Manufacturer losing some of its power, and stressing competition with others further.

The goals of the interaction were hence different here, with Manufacturer wanting a long-term business relationship and also tried to connect itself further with Customer through increased service offerings, and Customer striving for more transactional relationships with its suppliers. While representing quite major investments, Manufacturer’s products should be seen as supporting to Customer’s operations, but not critical for its business.

The tension between Reseller and Manufacturer resulted from the acquisition, but had to some extent been there from before. Reseller looked for the best deal with customers and therefore sold whatever equipment it could based on income. Focus was on selling rather than maintaining and Reseller often accepted price reductions for the customer to choose Reseller over other distributors in the region. Manufacturer was obviously interested to be the chosen supplier and also to commit to customers through maintenance. It had previously solved the

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428 latter issue through offering own maintenance staff. As the acquisition happened, Reseller found itself competing with similar equipment with its supplier, Manufacturer. Reseller lowered prices to win deals over its supplier, while Manufacturer tried to diversify offerings through only providing Reseller with some of its products. Customers, such as Customer, took advantage of the situation, and went to both Manufacturer and Reseller for the same solution.

Reseller here often won the deals based on how it pressed its margins, and hence income.

To deal with the situation with Reseller, Manufacturer decided to acquire Reseller and merge it with its own distribution net. This in turn meant that Customer could no longer play

Reseller and Manufacturer off against one another. But instead, it introduced a new competitor into its preferred supplier arrangements.

In this case, there were tension between goals and interests both between Manufacturer and

Reseller, and between Reseller and Customer. As Manufacturer got in direct contact with

Customer, tension also became evident there. Before, all cases of tension had been

‘transported’ through Reseller. In addition to tension between goals and interests, there was also tension in the resource dimension between Manufacturer and Reseller following the acquisition, and based on how offerings overlapped and how Reseller also reached competing

equipment. Looking at the various dimensions of tension outlined by Das &Teng(2000b), and

Fang et al. (2011), behavioural tension existed in the competition between Manufacturer and

Reseller, which became increasingly evident following the acquisition, while it before had only been expressed in how Reseller could choose to offer a different equipment than

Manufacturer’s. This competition coexisted with cooperation in the same relationship, as

Manufacturer supplied Reseller with its equipment. Structural tension was evident between

Customer and Manufacturer, where Manufacturer tried to create stable structures and provided maintenance and financial solutions as part of them, while Customer through its

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428 preferred supplier deals tried to create itself flexibility. The pressure for full-range supply could be seen as Customer’s (and others’) attempt to increase rigidity, and was also met by such. Psychological tension, lastly, included Customer’s increased focus on transactions (over relations) with suppliers, while these transactions remained embedded in long-term deals.

When Manufacturer decided to only provide Reseller with a more limited supply, this could also be seen as an expression of an increased transactional orientation. The case thus points to how tension of various kinds emerged due to claims put on other parties.

ANALYSIS

This paper described and discussed tension among parties in networks. The analytical tool

pointed to three types of tension: behavioural, structural, and psychological (Das & Teng,

2000b; Fang et al., 2011), and Emerson’s (1962) description of how power imbalances are

dealt with, to capture how the parties in the triad potentially would react to the tension.

The cases reveal two types of tension: that among resources (including knowledge/skills), and that of diverging interests and goals. This takes tension away from only dealing with differences in interests and goals, to also concern resources. The paper also discusses the tension on a network level, rather than as in most cases: as a contradiction between two parties (or items). The three cases illustrate three different types of triads, and the tension

among actors in them. Tension could, as suggested in Tjosvold’s(2006) discussion on conflict,

be understood as differences that are combinable and non-combinable, where the present paper defines tension in the latter sense: the non-combinable contradiction.

The supporting companies to an innovation (Case I) points to complementarities in resources, while non-combinable goals and interests. These differences in goals and interests became visualas, for instance, Venture raised its wish for an exit, and in Module’s, the

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428 supplier’s,interaction with car manufacturers, and later Sensor. The embedding of the case is one of tension and conflict that transfers into the triad. Sensordeals with the tension through diffusion into new interactions in terms of looking for a new owner, while Venture and

Module both decreased their engagement. This all points to how parties both experiencing that they could manage the relationship, and those being managed acted based on the tension among them. The case also points to how various dimensions of tension (behavioural, structural and psychological) may coexist, but that one of them is was guides consequences; in the case dominated by the tension between cooperation and competition.

The competence net (Case II) is characterised by shared interests and goals, but resources that raised tension among the parties in the triad. Tension here occurred both among the parties, in how they had issues to agree on design and related, and based on customers’ (and the collaboration partner’s) wishes for only one of the self-employed’s offerings. Tension could hence be said to be stressed by its external embedding. The tension concerned how the need for one of the parties (the web designer) was bigger than for the other parties, and based on differences in skills (both factual in terms of what they did, and related to the perception of it; its quality and preferences). The tension was here handled among the self-employed through increasing their social interaction (cf. coalition) and making increased differences between contractual agreements and actual interaction. This in turn indicates how the parties continued to live with the tension, rather than uneven it.

In the business network case (Case III), tension both related to individual goals and interests, and to resources. The resource provisions though followed from parties trying to get their goals and interests to be those followed also by others. In the case, all three parties –

Manufacturer, Reseller, and Customer – aimed to maximise their financial return. The issue was however that they would do so based on each other’s benefits. Their interest to create

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2015 Cambridge Business & Economics Conference ISBN : 9780974211428 long-term relationships differed as a consequence; Manufacturer wanted a close and longterm relationship with Customer; Customer tried to make its relationship more transactional; and Reseller in its acting increased focus on transactions, while it ideally would want the long-term customer involvement. Tension was in the case handled through partial withdrawlal from Customer’s part, diffusion (in terms of the acquisition) from Manufacturer’s side, and later coalition with Reseller as this party was acquired. Reseller, lastly, diffused through linking competing parties’ offerings to its customer contacts. The case indicates how the consequence of tension may lead to tension both in present relationships, and in other ones, meaning that the triad shifts in tension. This could be seen as how balance is not necessarily

the intention as parties interact (Hingley, 2005), and indicate how tension may remain present

yet take different forms and occur in different parts of the triad.

Table 1 summarises the cases.

[Please insert Table 1 about here]

CONCLUSIONS

The paper points to how tension may occur among firms in a triad, and relate to two of them, or involve all three parties. Its consequences may lead to new tension on the dyadic or triadic level. Compared to studies grasping tension as contradictions between two parties, this present study indicates may ‘move’ around the network as initial tension is dealt with.

Theoretical implications

In literature on tension in relationships (or between parties in an organisation for that matter), tension seems to refer to differences in goals and related. This paper also started off based on that notion, but its empirical examples indicate also a different type of tension: the one among

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resources (including competences and skills). Katila, Rosenberger &Eisenhardt(2008) have

previously discussed tension related to entrepreneurs, their need for resources, and their choice of partners that may not fit them, but are still chosen as their resources are needed.

Also that study, however, does not focus on resource tension, but on how companies may choose parties with different goals and interests to reach their resources.

Resource tension may coexist with tension in goals and interests, or these types of tension may, as pointed to in the cases, be present without the other one being so. They do not appear to have a causal connection.

The studying of triads indicates how tension and its consequences may lead to new tensions as companies try to deal with it. If tension is handled through diffusion specifically, including the connection with new parties, it suggests to without exception lead to new tension, while coalition leads to decreased tension in the triad. Again, this points to how the strengthening of

ties, and increased trust (Molina-Morales, Martinez-Fernandez & Torlo, 2011; Skinner, Dietz

& Weibel, 2014) lessens the risk for tension, while pooling of interests and the alliancing with

other parties increases risk for tension.

Practical implications

Tension could be expected in any type of interaction. In fact, it may even be the force that takes the relationship forward, creates pressure for development and leads to a healthy

dynamics among parties (cf. Kirzner, 1973). In the study of tension, and in its business reality,

it is though the individual party’s experience of the tension and its consequences that affects its business. So, while tension might be positive for all over development, it may harm individual companies.

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For a company, to learn to deal with tension is important, and to learn to recognise it is pivotal. This specifically applies to tension in relationships with parties that are critical to the firm. Tension in networks could be grasped through increased network insights, indicating the importance of grasping and relating to goals and interests of others.

Further research

This paper focused on tension in networks and empirically illustrated this with triad. For further research, it would be interesting to expand the inclusion of parties further (i.e. beyond three parties) and further study networks in other areas. Potentially, it would also be interesting to study personal level tension as part of business relationships or networks, that is, conflicts and related among individuals representing firms, while the companies as such work in balanced relationships.

Literature makes a distinction between tension and conflict. In literature on conflict, this item

is also seen as something potentially positive (cf. Tjosvold, 2006). While tension could be

considered as a creative force that power change in relationships and dynamics in networks, it is for the most part depicted as something destructive. For further research, it would be of interest to study tension further and what positive events it brings about related to various network constellations (or as part of intra-organisational tensions, for instance).

This paper indicated tension as differences in goals and interests (cf. Öberg & Shih, 2014),

but also concluded that tension could occur based on resource differences. For further research, it would be interesting to study resource tension, and also relate it to tensions in goals and interests in a further depth.

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Table 1: Case summaries

ISBN : 9780974211428

Actors in the triad

Case I: Innovation support

Innovative firm, venture company and business partner

Tension

Behavioural tension Competition between Module and Venture, while Sensor worked with both of them.

Shifting to competing as ownership changed.

Structural tension Sensor wanted more stable conditions, the other ones not.

-

Case II: Competence net

Self-employed individuals in advertising sector

Coexistence of competition and cooperation. Competition rose in collaboration with others.

Case III: Business triad

Supplier, reseller and customer

Competition between

Manufacturer and Reseller, while coexisting with cooperation.

Psychological tension

Consequences

-

-

-

Decreased engagement

Diffusion

Status recognition

Coalition

Goals and interests, and resources

Sensor wanted longevity;

Venture’s orientation was shortterm and Module’s turned into short-term

Module and Venture

Sensor through looking for new owner

Complementary resources; tension in goals and interests

-

Social ties strengthened in the triad.

Tension among resources; shared goals and interests

Between Customer and

Manufacturer, where customer wanted more flexibility and

Manufacturer tried to create stable relationships

Customer increasingly focused on transactions. Increased transactional orientation in relationship between Reseller and Manufacturer.

Customer partly withdrew.

Manufacturer’s acquisition;

Reseller looked for competing parties to Manufacturer.

Tension in goals and interest and in resources.

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Figure 1: Analytical tool

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Tension in Networks

TENSION IN NETWORKS

ABSTRACT

INTRODUCTION

THEORETICAL POINT OF DEPARTURE

METHOD

CASE STUDIES

ANALYSIS

CONCLUSIONS

REFERENCES

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Tension in Networks