Business Interaction, Time and Cognition
Christopher John Medlin'
University of Adelaide
Abstract
Time, cognition and business interaction are woven together and used by managers to
build their perceptions and interpretations of business networks. This paper addresses
the human construction of time and how it affects the cognition processes of managers
as thev deal with change in business relationships These constructs allow distinction
and elaboration of exchange and adaptation. two kev interaction concepts. It is argued
that the process oj cognitive substantiation, within exchange and adaptation bv firms,
results in the formation and change of cognitive maps. A case study is concluded to
explore this proposition. The results show a distinction in the way power use and firm
capability are found in adaptation interactions, while the flowing nature of lime more
strongly shapes exchange ofproduct. The paper finishes bv examining opportunities Jor
research and the management implications.
INTRODUCTION
Interaction between firms in business markets occurs in three aspects: product
exchange, information to coordinate current exchange and finally adaptation to vary
resource and activity mix over time (Hakansson and Snehota, 1995; Hallen, Johanson,
and Seyed-Mohamed, 1991). Business interactions occur for economic reasons, but are
necessarily conducted through the human social sphere (Easton and Araujo, 1994) and
via the human constructs of firms, relationships and networks. This suggests that an
understanding of business interaction and its constructs requires exploration of how
meaning is developed by social and individual cognition.
It is important to remind oneself that the nouns; 'firm', 'relationship' and 'network' are
similar to the word 'river', as they represent flowing and changing entities in time. The
human mind only perceives change relative to a more inactive background. C'hange is
only perceived against stability, and it cannot be conceptualized as all encompassing.
This is a result of bounded cognitive ability (Medlin, 2004), a more rudimentary and
profound concept than bounded rationality (Simon, l c^79). Bounded cognition focuses
simply on the physical/biological ability of a mind regardless of the culture, language
and rationality that allows expression of cognitive thought.
School of Commerce, University of Adelaide, South Australia
Telephone: (618) 8303 3103, Facsimile: (618) 8303 4368. Hmail: Ju-ivmcdlm.cKkldakk.cdu.au
Understanding and meaning are necessarily changed through time, as the sequencing of
events shapes the way humans attribute meaning within business relationships (Faston
and Araujo, 1994; Medlin, 2004). Time acts as an environment (Medlin, 2004) and
human sense making requires the construct of time (Kant. 1953). These t\\o
fundamental features allow economic actors to foresee and develop their understanding
of both interaction possibilities and expectations; that is maps of business networks
(Henneberg, Mouzas and Naude, 2004).
This paper contributes to the literature by elaborating the connections between
cognition, business interaction and time and so how cognitive maps are developed and
changed. In addition, the differences between adaptation and product exchange are
elaborated and this opens up interesting ways to conduct research.
One can consider the thoughts required by either a participant or an observer to attribute
a relationship between two firms and build-up a network picture. However, the
difference is only a matter of the evidence source and so for simplicity only the
participant is discussed in this paper. For observers, the process is not enacted (Weick.
|s>79) and so any interpretations are less certain, ho\\e\er, the result is often relied upon
in a similar fashion to participants. One other caveat is that the effects of personal
relations between individuals are not included in this paper, as thev are not required to
develop our understanding of network maps Fxidentlv personal relations \sill ^hape ihe
understandings accepted by managers, but this is an addition to the elaboration
presented here.
The remainder of this paper is organized in the following manner. First, the nexus
between time, cognition and interaction is elaborated. This section includes discussion
of time from a human perspective. Next the role of sequencing in cognition is discussed
and this allows an elaboration of the wa> the arriving future substantiates cognition of
structures/knowledge as network maps. Subsequent!}, the distinctions between product
exchange and adaptation are elaborated so that substantiation can be explored. A second
section presents the results of a case study examining inter-firm interaction in a business
relationship. This study explores the theoretical distinctions between exchange and
adaptation interaction and so highlights the factors that shape managers' perceptions of
network maps. Finally, research and managerial implications are considered.
LITERATURE REVIEW
Time
For humans, the separateness of similar events is shown b\ time and distance (Ackoff
and Finer), 1972). Human perception and understanding of realitv is partial, as a result
of our organic existence (Maturana, 1978). Bounded cognitive ability and time result in
humans apprehending reality in two ways. The human mind operates in the present
(Friedman, 1960; Mead, 1932) and so the world is perceived as 's\ nchronic'; that is
composed as only the 'present' While the past and expected futures are available in the
present, the synchronic perspective highlights that perceptions of past and expected
futures are shaped by the present. We forget and remember what we must, so as to
interact in the present (Buber translated by Smith, 1958). This means that in the
moments of present interaction, the human cognition process is free to create new
associations. When two parties interact in individual moments of synchronic perception,
it is possible to develop new insights concerning organi/ation of the firm, a relationship
or an aspect of a network. The past and expected futures do not constrain interaction to
such a high degree in a synchronic present, rather new resource and activity mixtures
can be envisaged in future times.
However, a human's 'organic' experience is 'diachronic' and so extends through time
as the present unfolds into new presents. In this view, the flowing nature of time is
dominant and so past and expected futures shape the present. We remember the past and
it shapes our present and the potential futures. We expect a specific future and this
throws a shadow on the present (Axelrod, 1984). In this perspective, human cognition is
constrained by beliefs concerning past and expected associations. The moments of
business interaction are constrained by knowledge of the characteristics of past
interaction between firms, and by expectations that interaction will proceed in a similar
fashion.
These two perceptions of reality are not paradoxical; they are simply a result of our
specific organic and cognitive existence. A person, as mind and body, experiences
reality through both lenses and this indicates that the balance between these two forms
of experience can vary.
The synchronic nature of the human experience limits the quantity of interaction
possible between individuals and also between firms. The 'present' is limited in
quantity and so time acts in a similar way to our environment. I his means time is
shaped and defined through social processes, just as our en\ ironment is a result of social
construction. When we consider the synchronic nature of human experience, every act
must occur within an allotted time (Hedaa and Tornroos, 2002). If an act occurs later
than its allotted time, it can be meaningless or have a changed meaning. Alternately, the
diachronic sequencing of time aids cognition in determination of implied causality. That
past events explain the configuration of the present relies on the flow of time and
cognition in the present.
A way to unravel the distinctions between these two perspectives is to begin with the
period of the 'present' Given bounded cognition, the present is more easily
apprehended than is the diachronic perspective of time. The present is bounded by two
events, one past and one expected, depending on the managerial problem (Medlin,
2004). This means that the smallest period of the present is necessarily surrounded, or
inter-locked, by a multiple number of other presents, each defined by different past
events and/or future expected events, so that human interpretation of 'presents requires
multiple overlaying perspectives. This amounts to an elaboration of Halinen s (19^8)
concept of vertical time (ie variations in social, organi/ational and cultural perspectives)
and so one can see how it is that different definitions of "time" must co-exist and be
inter-related according to the nature ol the management problem!s)
Elaborating vertical time allows one to sense the shift to a diachronic perspecmc as the
sequencing of different overlapping presents. One way to elaborate vertical time further
is to examine four conceptualisations of time and their inter-relationships: objective
time, social time, organizational time (Hassard, 1991) and personal or idiosyncratic time
(Halinen and Tornroos, 1995; Hursserl and Braugh, 1991; Stanley and Tyler. 2002).
The 'objective' measure of time for humans is the rotation and revolution of the earth.
This is related to our organic existence. There is more than one conceptualisation of
'social' time. Many would regard the 'social' measure of time based on Greenwich
Mean Time and solar events as an objective measure of time. However, the distinction
between Western, Islamic and Chinese calendars shows these all to be social
constructions. In these social measures of time, the 'present' is defined b\ the
millennium, decade, year, month, day, hour, minute or second, with the event being
determined by one's global position and the markings on a clock partial!) synchronized
with the rotation and revolution of the earth. However, one can also note other socially
constructed 'presents'; such as financial years and TV rating periods, which rel) upon
social construction as the basis of their reality. Evident!) objective and social time are
interrelated according to the nature of the cognitive problem faced by a decision maker,
with objective time being framed by our human organic condition and social time by
our cognitive condition. In both orders, the diachronic is more enhanced than is the
synchronic. A decision maker cannot easily change the period of the present, there is no
leeway for free interaction; rather interaction is constrained by past and future expected
events.
The 'organizational' measure of time exists as a special subset of'social' time, where
the dynamics are separated from social time by the boundary of an organization
(Hassard, 1991). Organizations follow a separate logic and exist as somewhat
independent areas of actors, activities and resources. This provides organizations with
subtle variations in construction of time. Where a firm must interact with another firm,
social time begins to dominant; but \\ithin the realms of an organization the range of
activities may be deployed differentially in time and so actors can work to different time
spans that result from the firm's production logic. Within these internal organization
periods, the synchronic can dominant the diachronic and the present can be composed of
more freedom in the interaction.
Personal time is more idiosyncratic than organizational time. Consider the elongated
moments of personal reflection and cognition, where halted interaction removes the
constraint of time to a set rhythm. Here the synchronic dominants the diachronic
perspective. Evidently, a human life is bound within each of these conceptualisations of
vertical time to different degrees. However, it is clear that as one moves from the larger
framework to the smaller and individual perspective, the synchronic aspect of
interaction can become dominant.
Understanding the inherent distinctions between a synchronic and diachronic
perspective allows an understanding of cognitive maps of industrial systems and how
they can be changed. The next section elaborates the formation of cognitive maps of
firm networks by discussing the nature of interaction in time and the ways that
cognition is involved with interaction. The discussion moves from the individual, to
individuals and to firms as they interact through time.
Interaction, Time, Cognition, and Network Maps
Cognition is necessarily 'present' situated (Mead, 1932) and occurs alongside and
intermingled with interaction. Alternatively, cognition occurs as present situated periods
of personal reflection, concerning past events and potential future events and scenarios.
In the first case, the present is composed of instantaneous and continuous switching
between interaction and perception/cognition, with each being essential to the other
(Buber translated by Smith, 1958). In the second case, cognition results in extensive reordering or confirmation of knowledge and this prepares the person for the next round
of interaction.
In both cases, interaction precedes cognition. Interaction always precedes cognition in
the forming of the 'present' Humans live in the present, contra to Emirbayer (1998). In
the first case, it is the events arising from interaction that lead to cognition. In the
second case, it is past interaction and events or future expected events based on past
interaction that lead to reflection. These distinctions are made clear when one considers
the nature of interaction. One cannot interact according to an exact pre-cognition. as
there are always at least two points of view. Halinen (1998) makes this same point \sith
regard to firms. When these ideas are transposed to the setting of business interactions,
one can elaborate how knowledge of firm, relationship and network structures is
developed and also changed through time.
Consider the cognition required by a participant to arrive at attributing a business
relationship. Trust development is integral to attributing a strong relationship between
firms (Anderson and Weitz, 1989; Morgan and Hunt, 1994). Trust is generally
conceptualised with two theoretical dimensions, honesty/reliability/expectancy and
fairness benevolence (Geyskens, Steenkamp and Kumar, 1998). The first dimension
rests upon a belief that the other party has the expertise and capability to perform
(Anderson and Narus, 1990; Dwyer, Schurr and Oh, 1987), while fairness or
benevolence is a belief that the other party will treat the risking party well under new
conditions (Andaleeb, 1995; Anderson and Narus. 1990). It is important to see that the
second dimension passes through time, as trust involves a risk concerning future events.
However, the first dimension can only be evaluated on past events. In this sense, trust is
a construct with an inherently diachronic nature, where the past capability and power of
the firm is applied in mapping potential future capabilities and events.
It is also important to note that trust is a social-psychological construct. Trust is an
individually held conviction that allows decision makers to withstand uncertain
relationship outcomes, but trust requires social interaction for its construction
(Luhmann, 1979). Consider the information flows required by a decision maker to build
beliefs concerning the other firm's honesty, reliability and expectancy. This information
is generated by other individuals' perception of past events and future expected events
and relied upon as socially accepted fact, to some degree, by the decision maker when
attributing trust and capability to a relationship. It is the sequencing of these
expectations and of their confirmation that is important in attributing trust. Again the
diachronic nature of trust is apparent.
However, the process of cognition is never 'still' and so the attribution of trust also
involves the processes of substantiation. Trust is always tested and confirmed through
the processes of inter-firm adaptation. Trust develops when past expectations are
continuously met concerning the adaptation of resource and activity mix between two
firms.
As with trust, the cognition resulting in network pictures relies upon a mixture of
individually held beliefs and knowledge and upon social creation of that knowledge and
beliefs based upon past events and future expected events. Similar!}, network maps are
substantiated through comparison between expected and then perceived outcomes over
time.
An important point can now be elaborated. The human mind does not see the world of
firms, relationships and networks as 'flow', as ever changing. Such complexity would
overwhelm a mind (Luhmann, 1979). Instead, network maps are seen as composite
pictures, which are necessarily formed of other pictures, most of \\hich remain static in
time. Some of these pictures are personal configurations and some are a result ol other
peoples' knowledge. This limited ubilit) to include the dvnamic in network pictures is
simpl) a result of bounded cognitive abilit). So a human mind \\orks in states . 'maps
or 'pictures' to describe change over time, and these pictures are necessarily mostl\
social constructions, although individual!) held.
While a network picture accords with present esents, it remains as a cognitive tool
explaining the decision maker's world. If an event occurs that is not explained bv the
network picture, one part of the composition is re-ordered through a period of cognition.
This perspective based on interaction, time, and cognition points to the substantiation
processes in developing understanding of when and how network maps are changed. To
explore substantiation requires elucidation of time, expectations and adaptation in a
business relationship or network. However, one cannot elaborate adaptation alone, for
bounded cognition means that humans can only apprehend change by comparison. As a
result, discussion in the next section elaborates product 'exchange' in the present and
'adaptation' using the synchronic/diachronic and cognition/interaction distinctions, so
as to arrive at an understanding of how substantiation shapes network maps.
Exchange and Adaptation Differentiated in Time
Interaction is 'present' situated (Medlin, 2004), with events occurring in the everflowing present (Luhmann, 1979). Between firms, product and information is
exchanged in the present, However, the information flow between business people on
either side of an inter-firm relationship consists of two classes The first is information
to smooth the present exchange of product; the second is to effect future product
exchange (ie adaptation) (Medlin, 2004). In the first case, the 'object' of interaction is in
the 'present', with information exchanged to achieve present exchange: while in the
later, the 'object" is in the 'future' with communications concerning future deplovment
of resources and activities. Table One summarizes the distinctions discussed in this
section.
Table 1. Separating Exchange and Adaptation Interaction
Purpose/Intention
Interaction object
time location
Time Perspective
Shaping of Behaviour
Structure
Network Map
Exchange
Goods/services exchanged for
economic nuin
Present
Diachronic
Past interactions and future
expectations shape present
interaction
Relies upon current resource and
activity structure previously
generated
____
A composition of static pictures
taken at different times
_______ Adaptation
Adaptation of exchange struaurc
and_or product
I LI lure
Synchronic 'Diachronic sequences
Present interaction shapes future
expectation and re-interpretations
of past interactions___________
Generates future resource and
activity structure
Compositions of static pictures
sequenced in time, with partial
semblances of flow through time
Source Adapted from Medlin 21)04
The differentiation of information flows by the construct of time has important
implications for cognition concerning the nature and characterization of that business
relationship, and other relationships that make up the recognized network. The
construction of relationship and network maps is based on evaluation of information,
with meaning attributed according to source, content and timing. However, it is the
timing element that is important in the processes of substantiation that builds network
pictures of firms, relationships and networks.
Product exchange is part of a flow through time and so is diachronic. It happens in the
present period, and as a diachronic phenomenon, it is shaped by interpretations of past
interaction and future expectations. While the synchronic perspective is available in the
present, the pre-eminence of on-going interaction parti) precludes the periods of
extended cognition required for examining and enacting ne\\ combinations of an
exchange. The result is that individuals and firms are constrained in their interaction
possibilities by the exchange structure (Medlin, 2002). For example, individuals
conducting process tasks on a production line must meet the dictates of the firm in its
relationships and so coordinate activities and resources according to pre-determined
plans (cf Braverman, 1975). Similarly, firms must meet the current expectations of their
partner firms and this leads to beliefs being confirmed and so the formation of cognitive
network maps. Once beliefs are shared the\ become available as tools for managers
seeking to change firm behaviour.
In contrast, adaptation occurs as more complex sequences of diachronic and svnchronic
phenomena between the individuals of at least two firms. In its diachronic aspect,
adaptation is perceived as shaped by interpretations of past, present and expected future
events, and so occurs as a continuing interaction process over time. However, bounded
cognition means managers must resort to moments of reflection and cognition to decpl\
understand the processes required to enact adaptation I hese periods ol reflection
represent a synchronous aspect of adaptation and thev allow more unconstrained
thought regarding inter-firm resource and activitv structures
Importantly, when individuals from two firms interact in a synchronous manner, new
insights can be generated concerning resource and activit) structures. Further, these
insights are based on more similar interpretations as a result of the processes of joint
decision-making and the surrounding discussions, which concurrently confirm aspects
of each person's cognitive maps. Potential ne\\ configurations can be envisaged and
tested using thought experiments. When two firms agree to act on these insights, the
individuals begin to develop more complex expectations of the future interaction
between these firms. Importantly, the involvement of the individuals in the enactment
process confirms the cognitive maps according!). Success v\ith adaptation suggests a
correct mapping of the net\\ork. partial failure and problems results in change to aspects
of an individual's cognitive map. In either case, the cognitive maps are available as
management tools for new rounds of adaptation.
The next section explores the distinctions between the exchange and adaptation in
business relationships by use of a case study. That cognition and interaction are
entwined is accepted, but whether managers distinguish time flow as an important
aspect of substantiation and their development of cognitive maps deserves exploration.
Exploring Distinctions between Exchange and Adaptation
The subjective nature of cognition based on socially constructed beliefs makes
exploration of network maps somewhat elusive. This suggests an in-direct approach
might be more successful. A useful research instrument for distinguishing between
exchange and adaptation is the characterization of 'relational exchange' b\ D\\\er.
Schurr and Oh (1987. pi 3). These authors use Macneifs (1974: 1978: 1980: 1983)
contractual elements to characterize 'discrete transactions and 'relational exchange
However, as we are not concerned with "discrete transactions in this anal)sis. onl) the
single categor) of'relational exchange is considered Further, the contractual clement
of'personal relations' has been excluded as the discussion above has a\oided inclusion
of social relations
To proceed, according to the arguments that place time, cognition and interaction
together in explaining managers' perceptions of relationships and networks the categor)
of 'relational exchange can be separated into exchange' and 'adaptation (see table
two). This can be achieved analytical!) on t\vo grounds: (I) location of the interaction
object in time, and (2) strong application of a s\nchronic perspective \\ithin adaptation.
This analytical division into exchange and adaptation results in t\\o propositions:
P I: Exchange interaction is characterized by the 'present" situated object (ie product,
resource, activity, firm, relationship) and the diachronic aspects of relational exchange.
P 2: Adaptation is composed of an\ aspect of relational exchange that is concerned with
i\ future object and comprises sequences of sMiehronic and diachronic perspectives
A third proposition can also be logical!) deduced from the sequencing of synchronic
and diachronic perspectives as adaptation substantiates the network map of managers
P 3: Network maps arise from substantiations arising in sequences of synchronic and
diachronic perspectives.
Table 2. Exchange and Adaptation in Ongoing Business Relationships
Situational
Characteristics
Contractual
elements
Exchange
Adaptation
Timing
Present situated
interaction
Present situated object
Two or more
Constrained by interaction
requirements of other
connected parties, as set
by past adaptation and
continuing future
expectations
Established by past
adaptation and includes
future continuing
expectations
Present situated interaction
Future situated object
Number of parties
Obligations
Expectations
Process
Characterisitcs
Contractual
solidarity
Transferability of
obligations, rights,
satisfaction to
other party
Cooperation
Planning
Measurement and
specificih
Power/capability
Division of
benefits and
burdens
T wo or more
Towards those involved in the
adaptation, but constrained b\
those outside of the present
interaction
Work in the present towards
future joint expectations
Set by past agreements,
contracts, codified or
based on system feedback
mechanisms
Limited
Towards the future joint effort,
self regulated by the parties over
time
Joint current effort of
performance
Very little, rather
interaction follows
routines, which are a
result of past focused
effort Past tacit and
explicit assumptions
abound
Significant attention to
measurement and quality
of all aspects of current
performance
Very high
interdependence
according to past
applications, or future
expectations, of
power/capability.
Set by past adaptation and
future expectations
Joint effort of planning
Open to change in the future
Detailed planning of future
exchange within new
environments and to satisfy
changing goals
Significant attention to
specifying future aspects of
performance and future strategic
benefits
Judicious use of
power'capability in making
future adjustments
Variation over time as sharing
in benefits and burdens are
negotiated in adaptation
interaction
It should be noted that this analysis is separate from the characterization ot discrete
transactions, which occur outside of a continuing relationship. The anal) sis here is onl\
concerned with on-going business relationships.
This approach allows a systematic build-up of managers 1 perspectives on the theoretical
dimensions enumerated by Dwyer, Schurr and Oh (1987). This provides evidence of the
distinctions between exchange and adaptation and allows conclusions to be drawn
concerning substantiation processes b> managers that lead to development of cognitive
maps.
CASE STUDY
To explore the distinctions presented in Table I wo, a firm was selected and a number of
managers were interviewed. Sybiz Software Pt\ Ltd, was considered suitable for this
exploratory study for a number of reasons. First. S\bi/'s client and business partner
interactions were based on continuing relationships (\1edlm and Oucstcr. 1^8) and
these displayed elements of automated exchange through to adaptation Second, \\bix
displa\ed a strong element of successful adaptation over time, formed in 1975. S\bi/
produced the first accounting package in the world for the Windows 3.0 operating
system in 1990.
For a small Australian software house, this notable achievement generated much
publicity and opened world markets, so that Sybiz currently operates in 13 geographicregions including: UK, Ireland, Indonesia, Malaysia, Singapore, New Zealand, Sri
Lanka and five in Australia. More recently Sybiz has developed new proprietary
software, called Evolution, which has customer relationship management functionalities
interwoven with an accounting system. This development lead to the purchase of S\biz
by Softline Limited of South Africa in 1999 and more recently, along with
rationalization of the accounting software industry, the purchase of Softline by Sage
Group PLC of the United Kingdom in 2003. That Sybiz has developed two world-class
software applications in the past 20 years indicates the firm is an appropriate case stud)
for revealing the distinctions between exchange and adaptation interaction.
Third, customisation of the accounting software for clients is common, indicating that
adaptation is occurring through man) relationships. In Australia, Sybiz operates through
five departments and has numerous business partners who are responsible for selling
and customising accounting software to client firms. I he business partners also engage
in on-going support of clients, especiall) where the software is customised. Figure three
outlines Svbiz's operational structure and the responsibilities of each department.
lo explicate the distinctions between exchange and adaptation, interviews were
conducted with the support manager and a sales manager. The support manager is
responsible for sustaining the present exchange, while the sales manager is responsible
for on-gong partner relationships where some element of adaptation occurs. Each of the
two roles is discussed in some depth so as to provide a context.
10
Table 3: Sybiz Departments and their Responsibilities
Department
Business C are
Marketing
Sales
Software Support
Centre
Software
Development
Responsibilities
Manages non-technical matters \\ith regard to new, on going and changing
relationships between Sybiz, the business partners, clients and the Software
Support Centre. Manages Sybiz Cover, the 12-month support subscription.
Promotion of Sybiz to customers and to business partners.
Support sales process of business partners, including new leads resulting
from Marketing________________________________
Technical software support for customers and business partners, via
telephone, email and web interface.__________________
Programming software - creating, maintaining, fixing, enhancing software
Support Manager
The support manager is responsible for managing the staff and systems that provide
software support to business partners and client firms. This involves oversight of all
software problems and can be seen as the completion of the exchange process, \sith
clients achieving operational software
Given the many different proprietary systems fie computer, printer, operating system
and computer network), and the different levels of user training; on-going support of
accounting software is critical to even, client's business. Sybiz offers a 12-month
support package that provides unlimited access to business partner and Svbiz support
personnel. Support may be on the telephone, by facsimile, e-mail, on site, or \\ith
Internet access to known problems and fixes.
The Software Support Centre (SSC) uses two databases to manage support. The first is a
'solution database' of known software problems and their solutions. This is available for
searching by support staff and provides immediate answers to known problems. The
second database tracks support incidents, including product details, computer site,
software problems and support person. At any time, reports can be generated from the
incident database, providing a detailed picture of what is happening in each market
place. Such reports are particularly helpful in discussions with each business partner As
a generalization, the support manager estimated his role \\as split between exchange and
adaptation in a ratio of vMJ/10.
Sales Manager
The sales manager is responsible for providing marketing support to partners so as to
generate sales in ne\\ vertical markets, giving and receiving feedback from partners and
training of partner employees, and in addition, providing immediate help by passiny on
leads obtained as a result of Sybiz's marketing efforts in the media. It is evident that
some of these roles focus on aiding immediate exchange (eg passing on leads), \vhile
others involve the sales manager in the processes of product adaptation (eg changing the
software to suit a new vertical market) or to make adaptations in the exchange process
(eg receiving and giving information from a partner). As a generalization, the sales
II
manager estimated their role was split between exchange and adaptation in a ratio of
80/20.
Method
An interview was conducted independently with the support and sales managers. In
each case the discussion was centred on the constructs in Table Two and the results are
summarized in Appendix A. While neither respondent dealt wholh within the exchange
or adaptation spheres, the summary in Appendix A examines each person s role only
one way, with the service manager aligned with exchange and the sales manager
examining adaptation. Finally, to check the veracity of this exploratory study, the
respondents were invited to read the results (Yin, 1994) and minor changes were made.
Discussion
First, it is important to note that the two managers were able to distinguish their practise
within and between exchange and adaptation interaction. Thus, proposition one and two
appear to be supported. That a purely abstract and analytical matter, such as the timing
of the object of interaction, could allow such a directed exploration of practise indicates
an important theoretical distinction.
The case material also supports proposition three. This is evident in the interactive
association between the synchronic and diachronic aspects of interaction through time
with, as expected, the effect being more pronounced in adaptation. For example, the
support manager's understanding of the Sybiz cognitive map lead him to fixing
software problems in a way that trained partner personnel. The support manager saw
this training in Sybiz systems as worthwhile, because partner personnel would ha\e the
skills to meet end-customer expectations without using his valuable time. This example
highlights the importance of a diachronic perspective in present situated exchange, but
also indicates evidence of past cognition by the manager. One can comprehend this past
cognition as moments of synchronic perspective resulting in a well-developed cognitive
map. This suggests an addition to the previous discussion so that individual retlection,
or synchronic time, also plays an important role in creating network maps. However, it
is also important to note that individual reflection results from past interaction with
another party.
In contrast, the sales manager applied her cognitive map, including assessments of past
willingness and capability to adapt, to choose the partners with whom to trial and
introduce new systems. In this process, the need for joint planning and strong use of
communication sees application of the synchronic and diachronic aspects of interaction
being used in joint decision episodes to arrive at new configurations of exchange, which
are then projected into the future. These periods of interaction included negotiations of
the expected benefits and were based on the resources, influence and capability each
party could bring to structuring the future exchange.
The substantiation of cognitive maps is evident in the sales manager s choice ol partner
for introducing new adaptations. The sales manager was aware, from past experience,
which partners would be more likely to commit tu new rounds ol adaptation. Alreath
12
the sales manager's cognitive map contained the source for a change to a new structure
of exchange. Presumably, the cognitive map of the partner manager also represents
Sybiz as a source for change. In deciding to pursue change with a partner who had
helped in past adaptation, the Sybiz sales manager was projecting forward part of her
cognitive map. As the two managers jointly synchronize their adaptations the> enact
sequences of insight (ie a synchronic perspective) and change (ie diachronic
perspective) and their cognitive maps are enriched and changed in specific parts b\ the
results of these activities through
'to 1 time.
It is intriguing to note an unexpected outcome from the case study, which arises from
the use of Dwyer, Schurr and Oh's (1987) use of Macneils (1974. 1978, 1980. 1983)
exchange dimensions. There appears to be an interesting variation in the role of power,
influence and capability across the exchange/adaptation dichotomy, with power and
capabilit) being underplayed during exchange versus active for adaptation. The power
and capabilities of Sybiz and its parent companies played a part in constraining
adaptation (see the sales manager's examination of the contractual elements of
'obligation', 'transferability' and 'power/capability'). In addition, according to the sales
manager, the network position of the other party was an evident feature shaping
adaptation. This shows that perceptions of power and capability, embedded in a
diachronic perspective, are important in shaping managers perceptions of what is
possible. It seems that simultaneous application of the synchronic and diachronic
perspectives allows managers to project their cognitive maps forward in time, and so
work through stages of adaptation between firms.
However, within exchange, the role of power and capability seemed diminished. An
examination of the summary made by the support manager with regard to current
exchange (see Appendix A) shows a willingness to work \\ith the other part) to resolve
issues in a reasonably cooperative manner. For example, while the contract may specify
the level of support, the manager is more concerned with the qualit) of the interaction
and the need to find a workable solution within the constraints of the situation. There is
recognition that experience in the field is required after training and this is supported
with these personnel receiving more support in the expectation the\ will gain skills to
be autonomous. Thus, we see that 'transferability of rights, obligations, and satisfactions
to the other party' is not 'limited', as anticipated in Table Two. Rather, a degree of
flexibilit) is apparent from the support manager's perspective, especially where client
satisfaction is concerned, but clearly within the constraints of the situation. This shows
that a manager dealing with immediate exchange is strongly entrapped by the diachronic
aspect of interaction. In effect, the need to satisfy the end-client strongl\ constrains
current exchange, regardless of the contractual arrangement between the two partners.
While this example displays the importance of examining the network in understanding
the dynamics between two firms in a business relationship, it also shows that the
diachronic perspective is strong when a network view is taken.
The observed variations in 'power and 'capability between exchange and adaptation
interaction has not been explicitly noted in past research, fhere are important
implications for future research, as adaptation is central to the processes of formation
and substantiation of cognitive maps. Clearl). interpretations of power and firm
capability follow from network position and have a significant impact on individual
manager's cognitive maps.
The distinctions between exchange and adaptation interaction highlight the different
roles of cognitive maps in allowing individuals to manage complex inter-firm
interactions through time. Exchange tends towards constrained patterns entrapped
within a diachronic perspective, while adaptation applies synchronic and diachronic
perspectives to reshape future exchange.
The next section addresses the research and managerial implications of the distinctions
between exchange and adaptation, and their role in the processes of substantiation ol
cognitive maps.
RESEARCH AM) MANAGERIAL IMPLICATIONS
Analytical distinction between exchange and adaptation \\ithin business relationships
offers claritv concerning the sources of emergence and the structuring of business
networks. Further, exchange and adaptation are related in the confirmation of
relationship and network maps.
Future Research
A number of theoretical distinctions have been discussed in this paper. The variation in
the object of interaction in time along with the dual nature of human existence in time
(ie, synchronic/diachronic) has been shown to differentiate exchange and adaptation in
business relationships. This has important implications for future research, as each type
of interaction presents different manifestations and behavioural dynamics. Clearly
future research must address the distinction between exchange and adaptation when
sampling. For example, that 'power use" and 'capability' appear to pla\ a more
important role in shaping future interaction, rather than present exchange, suggests that
studies of these constructs should be focused within adaptation situations. Specifically,
research should pursue variations in appraisal of power use and capabilit) attribution in
shaping the cognitive maps of managers. Given managers' roles in deciding how and
when to adapt the resource and activity structures between firms it \\ould be useful to
identify how perceptions of power and network position influence formation of
cognitive maps. Further, concentrating research on adaptation situations should improve
respondents' ability to focus on these constructs.
In addition, the role of actors in creating emergence is now apparent; whether the
perception of change is begun from other relationships in the network, or within the
focal relationship, the emergence of new activity and relationships in the moments of
interaction (ie the present) is found in the 'interpretation' of managers' cognitive maps
and then 'intention' and 'expectation' of the individual actors. Thus, there is a need to
examine more deeply the roles of the actors in shaping networks of business
relationships. Further, it appears 'expectation' (Hadjikhani and Johanson, 2002) and
'substantiation' deserves closer research attention.
14
A more practical question is that of balance across the present/future dichotom)
according to job role. It would be interesting to examine the proportion ot present;future
focus according to hierarchical position. Would C'EU's be more focused on the future
and sales managers focused on the present? B\ looking at different roles, it might be
possible to examine the interactive affects between the synchronic and diachronic
perspectives and so the ways business relationships develop.
Finally, a few words are required on the limitations of using the present/future
dichotomy. While it is apparent that significant insights may be obtained, there remain
problems with defining the period of the 'present' (Medlin, 2004). Clearly, the question
hinges on the nature of the management problem, where some problems have
intrinsically large time periods with little interaction and change and so the time of the
present can be considered quite long; but equall), other management problems have
very minute present periods. An interesting aspect here is the way cognitive maps
change through time, for each map is of a 'present' Bounded cognitive ability limits
network maps to mostly static representation, with each change being an event that
separates one significant present from another and so one representation of the network
from another. Understanding the nature of these events, and so the transformation into a
nev\ 'present' can help to conceptualize change of managers' cognitive maps.
Management Implications
When managers can understand ho\\ the> conceptualise business relationships and
networks and how these conceptualisations change through time, the> will be in a
position to explain their network strategy. Further, this will be a dvnamic explanation of
strategv and considerably more useful than the static representations that current!) exist
in the management literature.
This paper offers some methods for conceptualising time, cognition and interaction and
presents a reasonably dynamic perspective of a manager's role in undertaking
adaptation in business partnerships. Also presented are some simple tools for thinking
about the processes underlying adaptation within business relationships. The dichotomy
of exchange and adaptation and how they are related to each other in time provides a
simple means for ordering sequences of events. The simple variation of the object of
interaction in time offers managers an insightful tool for quickls separating a series of
cognitive maps and so sequencing management tasks. The idea that people apprehend
realitv in different wa\s at different points of time and in different situations can allow
managers to think about where and when thev should m\ol\e themselves in changing
their own and other manager s cognitive maps. Ihus. these simple conceptual devices
offer a means of elaborating one cognitive map into the next, lor the timing ol .iciiv itics
and variation of resource mix becomes apparent simplv b\ examining the lunciional
steps required to arrive at an end adaptation.
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18
Appendix A: Roles and Interaction Mode
Situational
Characteristics
Contractual
elements
Support Manager
(Exchange interaction)
Timing
Both managers understood the distinction between exchange
and adaptation on the basis of timing
Two, three, four or more parties were considered in certain
interactions For example, an interaction between S\ hi/ and a
channel partner might also include consideration of the rights
of a customer, Softlink and Sage ( five parties)
Sale of software results in In interacting \\ith a channel
partner to make an adaptation
obligation to fix an> bug
the sales manager recogm/ed
Business partners using
obligations to the partner and
Sybiz Central (ie a past
adaptation) can meet their Sybiz, but was also constrained
by Softlink, Sage and the
obligations. Alternately,
Sybiz support staff can
perceived needs of the customer
meet obligations
bv Svbiz
according to their abilit)
within the constraints of
the Software Support
Centre.
There is an expectation
The sales manager worked to
develop future joint
that any problems will be
fixed, but within the
expectations, but these
constraints of systems (ie
expectations were constrained
past adaptations) and of
by the needs of Sybiz and its
the other parties involved
parent companies. That is
(ie business partner and
power capability pla\ed an
client) Sometimes
important part in developing
expectations ot future
expectations.
software changes are used Another factor seen to effect
to limit the need to makeexpectations was the culture and
complete changes in the\\illingness of the partner lo
present
undertake change Some
partners were \ lewed as earh
adopters and others as lair-Mids
Number of parties
Obligations
Expectations
19
Sales Manger
(Adaptation interaction)
Appendix A continued
Process
characteristics
Contractual
elements
Support Manager
(Exchange interaction)
Sales Manger
(Adaptation interaction)
Contractual
solidarity
There is a service contract
that codifies the nature of
events that must be resolved
by Sybiz. There is also an
on going personal
agreement resulting from
communications with clients
that problems will be
resolved as soon as
practical
Some flexibility, usually so
as to ensure customer
satisfaction I his max result
in a business partner
obtaining benefits from the
customer over a longer
term.
Level of support depends on
practical considerations.
Degree of expertise, stress
level, and customer needs
and drive influenced the
degree of cooperation
provided.
None with regard to the
present exchange, routines
are followed. Every day is
new and you just deal with
new problems.
While there was solidarity
towards future joint effort,
there was also recognition of
the constraints placed on the
interaction by other parties.
Customers were seen as
important as were the
principals of Sybiz.
Transferability of
obligations, rights,
satisfaction to
other parts
Cooperation
Planning
The relationship was seen to
be ime of change, \\ith the
capabilit\ ol S\bi/and its
principals as important
sources of change.
Achieving joint planning was
seen as important, especially
important was communication
flows and achieving
integration with Sybiz
procedures.
Communication was used to
advise partner firms of Sybiz
plans for the future.
Appendix A continued
Process
characteristics
(continued)
Contractual
elements
Measurement and
specificity
Power/capability
Division of
benefits and
burdens
Support Manager
(Exchange interaction)
All interactions are logged
in details, the event nature,
the personnel, and the
solution. But concentrate on
quality of interaction and
achieving solution rather
reducing service cost.
"Very interdependent!
Very interdependent!
We rely on them to do the
field work and they rely on
us should there be problems.
Neither could work without
each other. We need each
other "
There is equal
interdependency.
There is a reasonable
division of benefits and
burdens, on average 50/50.
Although, some variation at
the person level as people
gain experience, so
accounting for a future
expectation
21
Sales Manger
(Adaptation interaction)
Attention was given to future
processes and sales and the
future benefits of continuing
to develop with Sybiz.
The different capabilities of
Sybiz and the respective
partners were important
elements of decisions about
strategic changes to product
and process.
There was a variance seen in
the capabilities of the
different partners Some
partners were viewed as more
strongly positioned in the
network and seen to be
pursuing strategies to further
their network position
There was variation in sharing
in benefits and burdens and
these were negotiated. The
capability of Sybiz and
principals was seen as an
important factor.