Relational view explained

In management, the relational view by Jeffrey H. Dyer and Harbir Singh is a theory for considering networks and dyads of firms as the unit of analysis to explain relational rents, i.e., superior individual firm performance generated within that network/dyad.^[1] This view has later been extended by Lavie (2006).^[2]

Comparison to other theories

The relational view supplements existing views. While the industry structure view explains superior returns with a firm's membership in an industry with specific structural characteristics,^[3] and the resource-based view explains superior returns with firm heterogeneity,^{[4] [5] [6] [7]} the relational view argues that idiosyncratic interfirm linkages are a source of relational rents.

Relational rents

Dyer and Singh define a relational rent as "a supernormal profit jointly generated in an exchange relationship that cannot be generated by either firm in isolation and can only be created through the joint idiosyncratic contributions of the specific alliance partners".^[8] The achievement of rents is subject to relational risk.^[9] Later research suggested companies adopt a relational strategic orientation and design strategies to generate and extract relational rents.^[10]

Sources of relational rents

Dyer and Singh propose four sources of relational rents:

1. relation-specific assets,
2. knowledge-sharing routines,
3. complementary resources/capabilities, and
4. effective governance.

Notes and References

1. Dyer, J.H., Singh, H. (1998): The relational view: Cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review, Vol. 23, pp. 660–679.
2. Lavie, D. (2006): The competitive advantage of interconnected firms: An extension of the resource-based view. Academy of Management Review, Vol. 31, pp. 638–658.
3. Porter, M.E. (1980): Competitive strategy. New York.
4. Rumelt, R.P. (1984): Towards a strategic theory of the firm. In: R.B. Lamb (Ed.): Competitive strategic management. Englewood Cliffs, NJ. pp. 556-571.
5. Rumelt, R.P. (1991): How much does industry matter? Strategic Management Journal, Vol. 12, pp. 167-185
6. Wernerfelt, B. (1984): A resource based view of the firm. Strategic Management Journal, Vol. 5, pp. 171-180.
7. Barney, J.B. (1991): Firm resources and sustained competitive advantage. Journal of Management, Vol. 17, pp. 99-120.
8. Dyer . Jeffrey H. . Singh . Harbir . The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage . The Academy of Management Review . Academy of Management . 23 . 4 . 1998 . 0363-7425 . 10.2307/259056 . 662. 259056 .
9. Klimczak . Karol Marek . Machowiak . Wojciech . Shachmurove . Yochanan . Staniec . Iwona . Perceived collaborative risk in small and medium technology enterprises . Journal of Small Business Management . Informa UK Limited . 2020-08-28 . 61 . 2 . 0047-2778 . 10.1080/00472778.2020.1799305 . 540–559. 225238339 .
10. Zakrzewska-Bielawska . Agnieszka . Recognition of relational strategy content: insight from the managers' view . . Springer Science and Business Media LLC . 9 . 2 . 2018-05-21 . 1309-4297 . 10.1007/s40821-018-0109-9 . 193–211. free .