Choosing the right business partner is crucial for any company's success, but it's not always easy to discern whether a partner firm's joint goals align with yours. A new study published in the Journal of Marketing warns that such disconnect can cause heartbreak and feelings of disloyalty. This is because different relationship expectations can lead to misunderstandings, damaging the partnership and affecting governance and management implications.
The study emphasizes the importance of understanding the differences between a relational (two-party) orientation and a collectivist orientation. While both represent 'other-regarding' dispositions, they are fundamentally different, leading to pseudo-matches. A pseudo-match is when two companies believe they share values and goals, but in reality, they don't.
Such pseudo-matches can create clear governance issues, exposing the focal firm to a form of opportunism from a partner, making it harder to detect such behavior from a partner firm seeking to exploit the relationship. For instance, imagine a biotech firm working with a local manufacturer to commercialize a new product. The biotech firm may believe it has formed a unique and special relationship with the manufacturer, but the manufacturer sees the relationship as one of several close partnerships. When the biotech firm discovers this, it can feel betrayed, causing serious damage to the partnership and undermining the partners' ability to work together.
The study, entitled "Who we are and how we govern: the effect of identity orientation on governance choice," was co-authored by Jan Heide of the University of Wisconsin-Madison, Simon Bell of Melbourne University, and Paul Tracey of Cambridge Judge Business School. Professor Tracey emphasizes that partnering with firms that appear to share identity and focus may produce transaction efficiencies, but it also creates a clear risk.
In conclusion, the importance of understanding and aligning the partnership expectations cannot be overstated. A business partnership that seems ideal on the surface may not be a good match if the partners' goals and values don't align. Companies need to avoid pseudo-matches and invest time in understanding their potential partners' identity and orientation. Doing so will help create a successful and fruitful business partnership that benefits all parties involved.
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