Trust is viewed as the fundamental cornerstone of business-to-business relationship (Dwyer et al., 1987; Hakansson et al., 2004). The concept of trust is linked to the red-blue game also known as prisoner's dilemma is a phenomenon whereby the reaction of the prisoner will depend on the action of the other prisoner. But in the business perspective whereby there is alliance or joint venture between two companies, when one firm hold back (from taking more risk or seeking for self interest the other will also retaliate Kay (1993). Simpson (2000) suggested that the red-blue game is characterised by uncertainties about the movement of the parties (suppliers or customers) as their behavioural pattern may change at any particular moment.
Win/Lose or Lose/Win
Simpson (2000) claim that business relationships are epitomise by human behaviour whereby companies try to play a defensive and protective role when engage in any form of partnership. This could be in the form of opaque legislative instrument or strategy to escape certain clause. Argyris (1999) strongly pointed out the fact that precedents of poor business practices and skills by founding members or business tycoons in the form of self indulgence and "power play" has exacerbated distrust in the business environment resulting in unhealthy relationships. Thus always attempting to gain advantages in bids by displaying strength and superiority. These is in accordance to a research conducted by Humphries and Wilding (2004) about companies that protect or defend themselves based on past experience they have encountered with either their suppliers or customers. Coulson-Thomas (2005) also clearly stated that the phenomenon of red-blue game reveal that some organisations seek their interest at the expense of the other companies which makes them reluctant to share accurate information to benefit all the parties. This then intensify conflicts of interest and does not foster collaboration.
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Inter-organizational trust is sometimes also interrupted by competition in the market causing changes in some companies' objectives and interest in dealing with their partners which may not sustain their relationship (Mouzas et al., 2007). Considering the case of Baird verses Marks and Spencer, whereby Marks and Spencer abruptly stopped Baird from supplying them with supplies after delivering the current orders. This was an attempt for Marks and Spencer to improve its profit margin by way of streamlining their sourcing policies. Baird then took a court action against its customer to claim cost of closing some production sites (Blois, 2003). In this case though the relationship seems to be breaking apart, they compromise in engaging in any form of business negotiation again (Ogilvie and Kidder, 2008).
Humphries and Wilding (2004, p.13) stipulated that relationships are characterised by synergy where high trust sincerity produce solution better than the sum of contributions and participants enjoy a creative enterprise. The paradox of the red-blue game lays the fact that parties involved in business relationship will impede the progress despite realising the benefits of corporation and effectiveness of communication (Kay, 1993). Though the issue of trust as elaborated is a complex entity which is not easy to be quantified (Gulati, 1995), the only medium of developing trust is through transparent and effective communication (Simpson, 2000).
According to Armistead and Pettigrew (2004) suppliers or customers who portray the attitude of insincerity, personal gains, power conscious, all deals are one-offs and aspiring to win at all cost in any form of business do not promote collaborative relationships. However Humphries and Wilding (2004) suggested that supplier or customer who demonstrates the attitude of openness, contribution towards quality, trust and desiring into long term deals brings about corporation, coordination and collaboration. Their aim is for both parties to reduce cost and reasonable profit. The below diagram illustrates a successive business relationship cycle.
- Argyris, C. (1999) On Organisational Learning. 2nd Edition, Oxford: Blackwell
- Blois, K.J. (2003) B2B 'relationships': a social construction of reality? A study of Marks and Spencer and one of its major suppliers, Marketing Theory, Vol.3, No. 1, pp. 79-95
- Dwyer, F.R., Schurr, P.H. and Oh, S. (1987) Developing buyer-seller relationships, Journal of Marketing, Vol. 51, pp. 11-27
- Gulati, R. (1995) Does Familiarity Breed Trust? The Implication of Repeated Ties for Contractual Choice in Alliances, Academy of Management Journal, Vol. 38, No. 1, pp. 85-112
- Hakansson, H., Harrison, D. and Waluszewski, A. (2004) Rethinking Marketing: Developing a New Understanding of Markets. Wiley, Chichester.
- Humphries, A.S. and Wilding, R. (2004) Long term collaborative business relationship: the impact of trust and C3 behaviour, Journal of Marketing Management, Vol. 20, No. 9/10, pp. 1107-1122
- Kay, J. (1993) Foundation of corporate success. 1st Edition, Oxford University Press
- Mouzas, S., Henneberg, S. and Naude, P. (2007) Trust and reliance in business relationships, European Journal of Marketing, Vol. 41. No. 9/10, pp. 1016-1032
- Ogilvie, J.R. and Kidder, D.L. (2008) What about negotiator styles? International Journal of Conflict Management, Vol. 19, No. 2, pp. 132-147
- Simpson, P. (2000) Using a red-blue exercise to facilitate learning about complex systems, Journal of European Industrial Training, Vol. 25, No. 5, pp. 291-296
- Armistead and Pettigrew (2004) Effective partnerships: building a sub-regional network of reflective practitioners, The International Journal of Public Sector Management, Vol. 17, No. 7, pp. 571-585
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