A Capability Perspective on Relationship Ending and its Impact on Product Innovation Success and Firm Performance

How to manage in business relationships due to resource-dependence issues has become one of the most important research topics in management and strategy research. Such business relationships with customers and suppliers are pivotal for the success of collaborative innovation activities and ultimately firm performance. However, business relationship management is most often researched with regard to organizational capabilities in the context of the development of already existing relationships, or the instigation of new ones. Ending business relationships as a managerial activity with strategic importance, and the underlying organizational capabilities enabling such relationship terminations, have not been at the core of research in this area. In order to affect product innovation activities positively, a company must be able to effectively re-use the resources, which have been freed by ending business relationships. Thus, our article focuses on relationship ending capabilities and their impact on product innovation success, as well as overall firm performance. This is carried out empirically in the context of a sample of supplier companies to the Iranian automotive industry. We support our findings by outlining that relationship ending capabilities make available resources, which were previously used in a suboptimal manner, and which can subsequently be used to instigate new or strengthen existing collaborative business relationships with positive effects for innovativeness. We furthermore show that the impact of relationship ending capabilities is amplified by the organizational culture, specifically the attitudes within the focal company regarding acceptance of relationship terminations.