ServiceFriday: Capital Crisis – How Capital Affects B2B Collaborations

It has become fairly common for researchers to investigate the concept of value co-creation (VCC) in the business-to-business (B2B) context. However, the plot twist known as value co-destruction (VCD) has now been thrown into the fray. One study, recently published in the Journal of Service Research, sought to help explain the relationship between service provider-customer interactions, resource-integration (RI), and VCD in terms of the B2B environment.

The case study collected and compared data from eight cases at a large Scandinavian engineering consulting firm that was engaged in public infrastructure projects. Researchers conducted 10 workshops to observe the projects and also conducted face-face interviews, informal conversations with workshop participants, and oral and written reports by the eight project managers. They chose to focus on a recent branch of research that defines value as the “variations in the amount of capital owned by any actor after he or she interacts with other actors in the same field.”

The results from the data collected indicate that there are four forms of capital affected by VCD practices:

1. Cultural capital
2. An example of a VCD practice affecting cultural capital is when project managers from Case 3 ignored pieces of information made available from the customers which were needed for a proper estimation of energy. This often occurs due to engineers placing so much emphasis on the highly specialized “know-how” aspect of their roles while undervaluing the resources the customers have proposed to have integrated in the project.
3. Economic capital
4. An example of VCD practices ruining economic capital is when the Case 6 engineering team became over-focused on very small details that resulted in the mismanagement of time devoted to the design work and this also increased engineering cost.
5. Social capital
6. There are several ways social capital was impacted by VCD practices such as when actors “stole ideas from others (Case 2), abandoned the workshop (Case 3), were continuously distracted when another was presenting solutions (Case 4), or blamed/betrayed another actor (Case 1, Case 7, Case 8).”
7. Symbolic capital
8. Actors gain symbolic capital (such as reputation) by proposing innovative ideas. Damaging an actor’s legitimacy or interacting negatively can destroy symbolic capital. For example, the Case 8 engineering team had a younger engineer who proposed an idea that the customer actually liked but the senior members of the team boycotted it due to the lack of trust in the younger engineer.

Managerial implications

Value-minded B2B relationships are characterized by managers who allow access to capital and provide opportunities to exploit that capital across project disciplines and functions. Recognizing and counteracting the VCD practices at the advent of a project helps move away from VCD and toward higher social and symbolic capital.

“Similarly, managerial policies that facilitate the integration of cultural and financial resources among the participants in B2B relationships are most useful to avoid losses in cultural and economic capital.”

To capitalize on the full article, go to the Journal of Service Research. (A fee may apply.)