Value Creation in Business-to-Business Channel Relationships - Case: A Distribution Intermediary – Supplier Dyad in Sawmilling Industry

Abstract

An ideal business relationship should create value for both a supplier and for a buyer. In the optimum situation value is created for the whole network or value chain. Value creation in channel relationships has not been widely studied, which motivates the purpose of this study. A thorough knowledge of the channel members’ value creation process is essential in developing a suitable relationship strategy, which in turn creates a competitive advantage.

The main purpose of this single-case study is to explore value creation in business-to-business channel relationships when buying a channel offering and selling it further to the next channel member. In the empirical part value creation is studied from the perspectives of a Swedish sawn wood supplier and an English distribution intermediary by using semi-structured questionnaires and interviews. After an extensive literature study, the theoretical framework is developed and divided into three parts: social benefits, benefits from the channel offering and sacrifices. In this study value is created in channel relationships by solving channel member’s problems and by creating benefits that are important to the channel member.

The study findings are not suggested to be valid at a general level, but rather on local context of the specific case dyad. The results of this study demonstrate that besides the physical product qualities, there are also other elements that are relevant in value creation. Social benefits have an impact on value creation, because they create an atmosphere where it is simply easier to create value. Overall, the distribution intermediary receives value from the channel offering and the relationship, while the supplier receives value from functions and services that the distribution intermediary possibly performs. As the supplier is helping the distribution intermediary to solve their problems and thus create value, they could indirectly be creating value also to other members of the wood value chain.