The influence of economic crises on network behavior

Abstract

Purpose Following industrial network theory, this paper aims to address network behavior from a focal company’s perspective. Special attention is paid to examining the effect of perceptions of the economic crisis on network behavior. Design/methodology/approach The study is built on a quantitative analysis of an empirical database of 300 companies based on a survey completed in 2013 in Hungary. A focal company network behavior model was developed and applied to investigate the link between variables (valuable customer relationships, valuable supplier relationships, relationship strategy and relational outcomes) and the effect of managers’ perceptions about the intensity of the crisis. To obtain a deeper understanding of the effect of the crisis, structural modeling methodology was applied during data analysis. Findings How crises are perceived has a moderating influence on companies’ network behavior. In a context in which a crisis is strongly perceived, valuable customer relationships are considered more important than valuable supplier relationships; relationship strategy becomes more intensive; and performance is increasingly focused on operations and less on innovation. The main difference in network behavior is found with the management of the supply side. A different level of attention is paid to supplier relationships in a high crisis-perception context than when a crisis is perceived as being less critical. Research limitations/implications Results emphasize the importance of perceptions as a key factor in managerial attitudes, behavior and, ultimately, decision-making. This finding merits more attention from both researchers of business relationships and networks. Practical implications From a managerial point of view, the results emphasize the existence of potentially new opportunities in network management. The reinforcement of attention to the customer during a period of crisis implies the importance of the customer orientation, but also suggests that firms may have unexploited opportunities and more potential resources on the supplier side. Originality/value The paper combines an analysis of network behavior and perceptions of crisis, helping to explain managerial decisions and attitudes. Analysis was undertaken from a focal firms’ perspective and differences were investigated in attitudes concerning both supplier- and customer-side relations. How crises are perceived is a moderating variable of network behavior.

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