Elsevier

Journal of Retailing

Volume 85, Issue 4, December 2009, Pages 493-501
Journal of Retailing

When Do Relationships Pay Off for Small Retailers? Exploring Targets and Contexts to Understand the Value of Relationship Marketing

https://doi.org/10.1016/j.jretai.2009.09.001Get rights and content

Abstract

Relationship marketing has taken on a significant role in both retail practice and academic study. However, from the introduction of the concept of relationship marketing into the literature scholars have noted that relationship building may not be beneficial to all firms under all conditions. In this study, we investigate this issue attempting to gain a greater understanding of the value of relationship marketing activities across targets (i.e., customers and suppliers) and within contexts (i.e., competitive intensity and three elements of market dynamism) on a retailer's ability to develop the capability of market responsiveness. Our findings, based upon a sample of 172 small retailers, demonstrate that differences do in fact exist in the value delivery to retailers from relationships with different targets and across different contexts in which the retailer operates. As such, the results of this study extend the extant relationship marketing literature, refining our understanding of the value of relationship marketing. Implications for academics and practitioners are discussed.

Section snippets

Theoretical background

The resource-based perspective envisions the organization as a unique bundle of accumulated resources (Barney, 1991, Srivastava et al., 1998). Most frequently, resources are conceived of as internal attributes that are linked to or are controlled by the organization (Barney 1991). In extensions to the resource-based perspective researchers have argued that idiosyncratic interfirm linkages (i.e., relationships) can be a source of relational rents and competitive advantage (Barney and Hansen, 1994

Relationship quality with customers

High relationship quality with customers enhances customer value delivery and minimizes customer defection (e.g., increases switching costs) (Auh et al., 2008, Han et al., 1998, Johnson and Selnes, 2004). The theoretical underpinning of the derived value binding the customer to the retailer is achieved through the firm's ability to meet customers’ needs in a speedy manner, that is, market responsiveness. A long lasting customer–retailer relationship develops when the customer perceives that

Sample and data collection procedures

Hypotheses were examined in a sample of small retailers (as classified by the U.S. Small Business Administration as less than 100 employees and less than $3.6 million in annual revenue). A listing of chamber of commerce offices in a southern state were randomly contacted and asked to provide a listing of retailers in their respective counties. Three trained marketing researchers called the identified retailers to ascertain their small retailer status and if they were willing to participate in

Measure validation

Confirmatory factor analysis (CFA) was used for measurement validation (see Table 1). Separate models were run for the first order and second-order constructs. The relationship quality models (relationship quality with customers and suppliers) illustrated that relationship stability did not load significantly onto the second-order relationship quality construct. Thus, relationship stability was eliminated. Further, two competitive intensity items were eliminated due to nonsignificant factor

Discussion and implications

The purpose of this study was to identify when relationships with specific targets (i.e., customers and suppliers) pay off for small retailers. Our findings indicate that the value of relationships with targets varies by context. Specifically, we found that while a small retailer's relationship quality with customers was able to stimulate greater market responsiveness, relationship quality with suppliers did not significantly enhance a small retailer's ability to quickly respond to customer

Limitations and conclusion

Although this study has a number of limitations (e.g., narrow focus on a single capability, employment of only two relational targets, data collected from multiple informants), we wish to draw attention to an issue that we believe is of fundamental concern to the advancement of research on this topic. Specifically, we believe that the current approach to relationship quality is limiting. Although relationship quality has become a relatively common construct within the relationship marketing

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  • Cited by (0)

    The authors would like to thank Roger J. Calantone, Qimei Chen, Dhruv Grewal, Mike Levy, Charles H. Noble, Joanna Phillips, Steven H. Seggie, and J. Chris White for their assistance with, and insightful comments on, previous versions of the manuscript. The authors would also like to thank the editors as well as the three anonymous reviewers for their efforts in working with the authors to improve the manuscript.

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