Chapter 2: The Business Firm in International Business Networks
In the previous chapter we presented some basic features of the embedded MNC, which is regarded as a network of interconnected exchange relationships. This network not only comprises the relationships between units within the MNC, but also includes the MNC’s direct and indirect relationships with external parties. In particular, we stressed the role of relationships with other firms. Against this background, Chapter 2 focuses on the nature of exchange relationships between firms. We will refer to important exchange relationships between firms doing business with one another as ‘business relationships’. The first section of the chapter deals with the nature of such business relationships, the second discusses the way the business relationships affect the firm while the third addresses the nature of the firm’s markets. Through the business relationships the business firm is embedded in a network of relationships. BUSINESS RELATIONSHIPS Every experienced business person knows that doing business is not only a matter of selling or purchasing; it also means establishing and developing business relationships with important customers or intermediaries, and suppliers. These relationships, the business people recognize, are the framework within which future exchanges will take place. Every business person also knows that it takes time and effort to build a working relationship and, once such a relationship has been established, that it is an important asset on which the firm can base its future business. Obviously, not all the sales and purchases of firms occur within business relationships, but for most firms, relationships with a limited number of...
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