Initiation of Business Relationships : A Study of Initiation Practices in Entrepreneurial Start-ups and Consulting Companies in Norway

• Main Authors: Leren, Fredrik Kjernli, Strand, Brage
• Format: Others
• Language: English
• Published: Norges teknisk-naturvitenskapelige universitet, Institutt for industriell økonomi og teknologiledelse 2012
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:no:ntnu:diva-21089

The purpose of this thesis was to find out how an entrepreneurial start­‐up company should go forth to initiate successful new relationships with customers. Surprisingly few researchers have focused on initiation alone as a phenomenon, even though it is essential for creating prosperous relationships. The authors have broken the aim into five research questions. The first research question are; (1) How the initiation of a relationship progresses, and which sub‐processes and factors are important for building a new relationship for an entrepreneurial start‐up. The authors have preformed a broad literature review, covering the following categories and literature perspectives to ensure a thorough theoretical study of the phenomenon; relationship development, selling and buying, and network, third parties and social embeddedness. With regard to relationship development the authors have grouped key aspects from the literature together into a synthesis of four states, including a contextual aspects, which are important sub-­processes that must be fulfilled during an initiation process, these are; (1) Pre dialogue state, (2) First contact state, (3) Forming the relationship foundation, and (4) Commitment state. In addition the authors have highlighted some contextual aspects, which may influence to process. Secondly the authors have grouped key aspects from the selling and buying literature into three phases, which describes initiation sub­‐processes from a sellers perspective, namely; (1) Establishing a strategic foundation, (2) Getting in contact, (3) Meeting and dialogue with the prospect. With regards to the third literature perspective, and network, third parties and social embeddedness, the authors have studied how sellers, third parties and buyers and social relations influence the initiation process through several interfaces, which are named; S1 (seller influences the process directly), S2 (seller influences third parties), B1 (buyer influences the process directly), T1 (third parties influences the process directly), T2 (third parties influences the buyer), and T3 (third parties influences the seller). The authors combine these insights and findings in order to create a conceptualized model to describe initiation of customer relationships. Furthermore, the authors provide an analogy of a maze of traffic lights to explain the complex process.  In addition, the authors conducted a multiple comparative case study consisting of five entrepreneurial start-­up companies and five consultancies, in order to gain further insight from an entrepreneurial and a consultant mindset. The findings from the case study provided an answer to the following research questions; (2) How do consulting companies proceed to initiate new customer relationships? (3) How do entrepreneurial start-­ups proceed to initiate new customer relationships? (4) What are the best practices used by consultancies and entrepreneurial start-­ups and what are the similarities and differences in their approaches to initiate new customer relationships? The main conclusions from the case study with regard to consultancies were that they focus most of their efforts on existing customer relationships. This is due to the fact that the consultancies are very niche and industry specific, and has a very large network and highly specialized competence within their niche and industry. Thus, even when approaching potential new customers they often have some kind of existing tie supporting the initiation process. The main conclusions from the study with regard to entrepreneurs where that they highlighted the importance of keeping the client warm through regular follow-­up and involving the client in the product development in a sustainable manner. In addition the entrepreneurial companies focused on taking advantage of network effects by, for instance, make us of hybrid structures. Finally, the authors answered the last research question, which were; How may a small entrepreneurial start‐up make use of the insight provided by the literature review and the best practices uncovered in the case study to improve their processes of business relationships initiation? In conclusion, the conceptual model and insight gained from the empirical findings into the initiation process provides an improved understanding for entrepreneurial start-­ups. This improved understanding can help entrepreneurs to adapt and improve their initiation efforts, by assessing their current initiation efforts and formulating a strategy to consciously improve their initiation practices. The authors propose several measures for establishing a strategic foundation, getting in contact, and meeting and dialogue with prospects. Furthermore it is important to understand that as a seller they can influence the process directly through sales effort and also proactively by facilitating that third parties influence the initiation process. Lastly, the authors propose several issues, which may be pursued in further research.