Framework for analysis of data

This section operationalizes the links between data and concepts. The purpose of the framework is to link interaction, interconnection and position, value functions and data.

The section is organized in three parts which describe and define how interaction, interconnection and position are observed in the empirical.

Interaction

The basic structure of triadic networks (fig. 5.3) defines a tie as a matter of interaction. The interaction model (fig. 4.1) describes interaction as a process which includes episodes and relationships. But as pointed out in chapter 6, relationships are not an unambiguous indicator of interaction. Relationships are an element of position and interconnection, too.

But activities are an unambiguous indicator of interaction. Neither interconnection, not position is a matter of activities. Moreover, activities are the foundation for profit/ cost-reduction, volume, quality and safeguarding which signifies the direct value function. Thus,

it is possible to link interaction as a dimension in the triadic structure, the direct value function, and activities as indicators.

When a dyadic approach is substituted by a triadic perspective intermediation becomes an issue, as everybody is assumed to intermediate between everybody in a network. In consequence, the intermediation activities must be included as indicators of value creation in triadic structures. Channel research defines these function or activities as logistics, information and risk. These three types of activities are chosen as indicators of the direct value function.

Two further indicators, the product and administrative services, are included as indicators of the activities which create value. These indicators are selected on the basis of

background interviews with members of the two involved suppliers’ organizations, and with a number of respondents with extensive knowledge about the building material industry. The background interviews all point to the product, defined as price, quality and time of delivery as the most important argument in the marketing of building materials;

these elements are regarded as primary indicators of the value of the offering. Moreover, the background interviews point to the merchants’ administrative support to the customers as an additional valuable activity. The inclusion of these two indicators facilitates a further contextualization of the relevant activities on which to collect data.

Interconnection

The starting point for the categorization of indicators of interconnection is that the triadic relationships under study are a channel relationship. Such channel relationships have been described in terms of degree and variation of the patterns of interconnection (Smith, Laage-Hellman 1992). Moreover, interconnection in triadic structures with three actors and three ties (a closed triadic structure) has been described in terms of neutrality, initiation, by-pass and hierarchy effects which can hinder, weaken, strengthen and enforce another relationship (Ritter 2000).

In chapter 5 these studies are combined to construct five patterns of intermediation as indicators of interconnection:

 Brokerage

 Initiation / bridging

 Mutually strengthening (cohesion)

 Flanking

 Avoidance

These patterns can describe a constellation of interconnections irrespective of the specific identity of the involved actors, and they illustrate various value potentials. They are applicable for any constellation of three connected actors, and conform to the network tenet that everybody intermediates between everybody. In this study these patterns are defined as the value function of the actor perceived interconnections.

Relationships are a dimension of interaction, interconnection and position. But as described in the preceding section on interaction, activities are an unambiguous indicator of interaction, and market access is an unambiguous indicator of positions (see the following section on position). Consequently, it is possible to define data on relationships as the indicators of interconnection. This creates a link between interconnection, pattern of intermediation and relationships. In order to capture the patterns of intermediation, the following relationship indicators have been selected: The actors’ assessment of the relationships, the intermediary’s role, and perceived interconnection between

relationships. These indicators are applied to collect data on the respondents’ perception of the pattern of intermediation, and the ways in which this pattern is connected to the perceived value potential of a structure in terms of direct and indirect value functions.

Position

In the description of the basic structure of triadic networks (fig. 5.3), it is pointed out that positions have two dimensions. It links the objective resource and activity

interdependencies, and it is the platform for strategizing. The link between position and indirect value functions is founded on Johanson and Mattson’s (1992) limited definition of position; the exchange relationships of an actor, and the identities of the counterparts in those relationships in terms of their relationships to other actors. This identity of the counterparts is of importance for the potential network access they offer.

Thus, the indirect value of position refers to the way in which the positions of the actors influence the linkages between the triad on the one hand, and the surrounding network of actors and resources on the other hand. This is a property of positions, which neither interaction nor interconnection offers. It is an unambiguous indicator of the position. As described in chapter 6 this access related to the indirect value function is indicated by market access, scouting and innovation possibilities. These dimensions of the indirect value function are chosen as an indicator of indirect value function related to position.

In contrast to the direct value functions which have been conceptualized for the specific constellation of a supplier, a merchant and a customer, the indirect value functions are applied without contextualization. But as pointed out in chapter 5, positions indicate

strategic platforms, and network positioning is the way that actors in a network attempt to create advantageous strategic platform. This strategizing is exercised in network

positioning; the establishment of new relationships, the ending of existing relationships and the development of existing relationships. Consequently, the change in the actors’

collection of ties over time is an indicator of this strategizing. However, this study is not longitudinal, but a study of the value creation in a number of existing triadic relationships at the point in time, when the data collection takes place. Thus, the indirect value is indicated by the market, scout and innovation potential of the actual positions, alone. It does not include the related indirect value of developing the portfolio of relationships.

Summing up, existing studies of triadic structures and of value creation offers conceptualizations of the links between interaction, the direct value function and activities. And they offer conceptualizations of the links between position, the indirect value function and market access. The pattern of intermediation developed in this thesis offers a conceptualization of the link between interconnection and relationships. However, relationships are elements of interaction (the direct value function) and position (the indirect value function), too. Consequently, the pattern of intermediation offers the prospect of synthesizing the indirect and the direct value function into a combined construct.

Reviews of literature presented in chapters 3-6 and the research questions resulting from these reviews, point to this combined construct, the pattern of intermediation as a core construct. When a dyadic perspective is substituted with a triadic, it is not the individual dyads, but the value potential of triadic relationship as a whole which motivates the actors to participate. And this value potential is a composite of the direct value function of the interaction in the relationships and the indirect value function of the positions. This is expressed in the pattern of intermediation, which is the core concept of the framework of analysis in figure 8.2 on the following page.

In the following chapter 9 this framework is applied for the analysis of data collected on four triadic business relationships in the Danish Building Material Industry.

Po si ti on

In te rac ti on In ter co nn ec ti on In di rec tv al ue fu nc ti on

D ir ec tv al ue fu nc ti on

•Profit / cost-reduction •Volume •Quality •Safeguarding Indicatedby the division of labourin the performance of valuecreating activities: •Product •Logistic •Information •Financial •Administrative

Pa tt er n of in ter med ia ti on

El emen ts of tri ad ic an al ysi s Val ue fu nc ti on s In di ca to rs

Figure 8.2: Framework for analysis of triadic value creation