Forming close relationships with suppliers or customers is a popular business strategy, but such partnerships can develop problems. The authors observe that many close business relationships — whether joint ventures or loose alliances — fail. They describe a phenomenon they call the "dark side" of close relationships and maintain that close relationships that seem quite stable can, in fact, be vulnerable to decline and destruction. The authors draw both on their own surveys of business relationships and on other examples.
The authors point out that the same factors that strengthen a partnership can also open the door to relationship problems. For example, when an automaker and a supplier built up personal relationships between employees at the two firms to facilitate their alliance and just-in-time manufacturing process, the trust and personal relationships also enabled the supplier more easily to cut corners in the production process. While observing that business relationships with problems can linger on for a surprisingly long time, the authors recommend strategies to prevent the "dark side" from taking over a business relationship. One such strategy is to ensure that both parties in the relationship make investments in it, in effect swapping "mutual hostages." If, however, damage to the relationship has already occurred, possible strategies include turning the crisis into an opportunity to improve the partnership, rotating in new personnel, reconfiguring the relationship or terminating it.
Erin Anderson is the John H. Loudon Chaired Professor of International Management and Professor of Marketing at INSEAD in Fontainebleau, France. Sandy D. Jap is the Caldwell Research Fellow Associate Professor of Marketing at Goizueta Business School at Emory University in Atlanta, Georgia. They can be reached at erin.anderson@insead.edu and sandy_jap@bus.emory.edu.
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