Long Term Relationships of Hungarian Companies

Abstract

Considering the growing interest of firms regarding their long term relationships in our constant and rapidly changing world, we study these types of relationships maintained by Hungarian companies. The study is based on the Competitiveness Research Centre’s database created in 2013, more than 80% of the firms in the sample belong to SMEs. Our goal is to get a deeper insight and understanding of these long term relationships. Therefore, we identify different reasons for developing them, based on these reasons we create specific clusters and compare the relationship content of them along three dimensions: (i) the level of commitment between partners; (ii) social bonds; and (iii) the value of the relationship. We have a triadic approach and examine both supplier and customer relationship of the focal firms filling out our questionnaire. Results suggest that on the supplier side, two factors (reliable/stable supply and potential radical cooperation in innovation), while on the customer side, three factors (stable capacity utilisation, new orders by the customer, potential small cooperation in innovation) determine the reasons of maintaining long term relationships. We could identify three significantly different clusters on both sides of the supply triad that reflect a relational content contradicting the traditional relationship management literature suggesting two types of balanced long term relationships, the so called arm’s length and the strategic relationship.