Business friendship refers to the integration of “business” dealings and personal “friendship” that permeates many markets. As relationship marketing and customer relationship management become increasingly prevalent practices, business friendship as a fundamental element embedded in business relationships needs to be better understood. This paper studies how business friendship is formed and its impact on key marketing outcomes. We propose that business friendship is driven by three factors spanning business and personal domains—congeniality, rule adherence and business reputation. Our empirical analysis is based on survey and actual sales data from 263 client firms of a leading provider of business intelligence and strategic planning services. The results show the three factors contribute significantly to business friendship. We find that business friendship between the client and the supplier significantly impacts the sales to the client, and this impact is further moderated by how the two parties share responsibilities in achieving common goals. In addition, we show that business friendship induces one party to accommodate and cooperate with the other (i.e., compliance), and to engage in positive word-of-mouth. The framework and findings shed lights on how companies may influence (and be influenced by) business friendship as they increasingly emphasize long-term business relationships.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Tax calculation will be finalised during checkout.
Subscribe to journal
Immediate online access to all issues from 2019. Subscription will auto renew annually.
Tax calculation will be finalised during checkout.
Sometimes researchers refer to business friendship as commercial friendship (e.g., Price & Arnould, 1999).
In our context and business friendship embedded in interorganizational relationship in general, voluntary social interaction, communal orientation, and intrinsic orientation are important. However, intimate self-disclosure (i.e., friends have a greater level of self-disclosure and intimacy than non-friends) may not be highly relevant since disclosing personal information can be at odd with the business contexts. As Price and Arnould (1999) showed, intimate self-disclosure is more relevant in personal service settings, such as hair-styling, counselling, bar tenders, dating services, etc. Our own testing also shows that intimate self-disclosure does not load sufficiently to the business friendship construct in our surveys. This is also consistent with Grayson’s (2007) suggestion that all the items do not have to co-exist in a particular context.
The details of the control variables are provided in Table 2.
QQ, WeChat, and Weibo are all social media services popular in China.
Agrawal, A., & Mandelker, G. N. 1987. Managerial incentives and corporate investment and financing decisions. Journal of Finance, 42(4): 823–837.
Agustin, C., & Singh, J. 2005. Curvilinear effects of consumer loyalty determinants in relational exchanges. Journal of Marketing Research, 42(February): 96–108.
Aiken, L. S., & West, S. G. 1991. Multiple regression: Testing and interpreting interactions. Newbury Park: Sage.
Allan, G. A. 1989. Friendship: Developing a sociological perspective. Hertfordshire: Harvester Wheatsheaf.
Altman, I., & Taylor, D. A. 1973. Social penetration: The development of interpersonal relationships. New York: Holt, Rinehart and Wiston.
Ambady, N., Bernieri, F. J., & Richeson, J. A. 2000. Toward a histology of social behavior: Judgmental accuracy from thin slices of the behavioral stream. Advances in Experimental Social Psychology, 32: 201–271.
Anderson, E., & Weitz, B. 1992. The use of pledges to build and sustain commitment in distribution channels. Journal of Marketing Research, 29(February): 18–34.
Anderson, J. C., & Gerbing, D. W. 1988. Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin, 103(3): 411–423.
Ashforth, B. E., & Mael, F. 1989. Social identity theory and the organization. Academy of Management Review, 14(1): 20–39.
Beatty, S. E., Mayer, M., Coleman, J. E., Reynolds, K. E., & Lee, J. 1996. Customer-sales associate retail relationships. Journal of Retailing, 72(3): 223–247.
Bhattacharya, C. B., & Sen, S. 2003. Consumer-company identification: A framework for understanding consumers’ relationships with companies. Journal of Marketing, 67(April): 76–88.
Biggart, N. W., & Castanias, R. P. 2001. Collateralized social relations: The social in economic calculation. American Journal of Economics and Sociology, 60(2): 471–500.
Bilddle, B. J. 1986. Recent developments in role theory. Annual Review of Sociology, 12: 37–59.
Bolton, L. E., & Reed, A., II. 2004. Sticky priors: The perseverance of identity effects on judgments. Journal of Marketing Research, 41(October): 397–410.
Cannon, J. P., & Perreault, W. D., Jr. 1999. Buyer-seller relationships in business markets. Journal of Marketing Research, 36(November): 439–460.
Cassady, R., Jr. 1946. Some economic aspects of price discrimination under non-perfect market conditions. Journal of Marketing, 11(July): 7–20.
Cheng, S. 2004. R&D expenditures and CEO compensation. Accounting Review, 79(2): 305–328.
Churchill, G. A. 1979. A paradigm for development better measures of marketing construct. Journal of Marketing Research, 16(February): 64–73.
Collins, J. 1926. Does friendship count in business. Nation’s Business, 14(October): 88–90.
Cool, K., Dierickx, I., & Jemison, D. 1989. Business strategy, market structure and risk-return relationships: A structural approach. Strategic Management Journal, 10(6): 507–522.
Dahlstorm, R., & Nygaard, A. 1999. An empirical investigation of ex post transaction costs in franchised distribution channels. Journal of Marketing Research, 36(2): 167–170.
Doney, P. M., & Cannon, J. P. 1997. An examination of the nature of trust in buyer-seller relationships. Journal of Marketing, 61(April): 35–51.
Dong, M. C., Li, C. B., & Tse, D. K. 2013. Do business and political ties differ in cultivating marketing channels for foreign and local firms in china?. Journal of International Marketing, 21(1): 39–56.
Dong, M. C., Tse, D. K., & Hung, K. 2010. Effective distributor governance in emerging markets: The salience of distributor role, relationship stages, and market uncertainty. Journal of International Marketing, 18(3): 1–17.
Fehr, B. 1996. Friendship processes. Thousand Oaks: Sage.
Fiske, S. T., & Taylor, S. E. 1991. Social cognition, 2nd ed. New York, England: McGraw-Hill Book Company.
Frenzen, J. K., & Davis, H. L. 1990. Purchasing behavior in embedded markets. Journal of Consumer Research, 17(1): 1–12.
Gouldner, H., & Strong, M. S. 1987. Speaking of friendship: Middle class women and their friends. New York: Greenwood.
Granovetter, M. 1985. Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91(3): 481–510.
Grayson, K. 2007. Friendship versus business in marketing relationships. Journal of Marketing, 71: 121–139.
Gu, F. F., Kim, N., Tse, D. K., & Wang, D. T. 2010. Managing distributors’ changing motivations over the course of a joint sales program. Journal of Marketing, 74(September): 32–47.
Halpern, J. J. 1997. Elements of a script for friendship in transactions. Journal of Conflict Resolution, 41(December): 835–868.
Hamilton, B., & Nickerson, J. 2003. Correcting for endogeneity in strategic management research. Strategic Organization, 1(1): 51–78.
Haytko, D. L. 2004. Firm-to-firm and interpersonal relationships: Perspectives from advertising agency account managers. Journal of the Academy of Marketing Science, 32(3): 312–328.
Heide, J. B., & Wathne, K. H. 2006. Friends, businesspeople, and relationship roles: A conceptual framework and a research agenda. Journal of Marketing, 70(July): 90–103.
Homburg, C., Wieseke, J., & Hoyer, W. D. 2009. Social identity and the service-profit chain. Journal of Marketing, 73(March): 38–54.
Hoskisson, R. E., Eden, L., Lau, C. M., & Wright, M. 2000. Strategy in emerging economies. Academy of Management Journal, 43(3): 249–267.
Ingram, P., & Roberts, P. W. 2000. Friendships among competitors in the Sydney hotel industry. American Journal of Sociology, 106(2): 387–423.
Jap, S. D., & Ganesan, S. 2000. Control mechanisms and the relationship life cycle: Implications for safeguarding specific investments and developing commitment. Journal of Marketing Research, 37(May): 227–245.
Johnson, M. D., & Selnes, F. 2004. Customer portfolio management: Toward a dynamic theory of exchange relationships. Journal of Marketing, 68(April): 1–17.
Joshi, A. W. 2009. Continuous supplier performance improvement: Effects of collaborative communication and control. Journal of Marketing, 73(January): 133–150.
Jung, C. G. 1951. On synchronicity. In H. Read, M. Fordham, & G. Adler (Eds.). Collected works of CG. Jung (Bollingen Series 20, RFC Hull, Trans., Vol. 8: 520–531). Princeton: Princeton University Press.
Lankau, M. J., Riordan, C. M., & Thomas, C. H. 2005. The effects of similarity and liking in formal mentoring relationships between mentors and protégés. Journal of Vocational Behavior, 67(2): 252–265.
Larson, A. 1992. Network dyads in entrepreneurial settings: A study of the governance of exchange relationships. Administrative Science Quarterly, 37(1): 76–104.
Lawler, E. J. 2001. An affect theory of social exchange. American Journal of Sociology, 107(2): 321–352.
Lawler, E. J., Thye, S. R., & Yoon, J. 2000. Emotion and group cohesion in productive exchange. American Journal of Sociology, 106(3): 616–657.
Lawson, B., Tyler, B. B., & Cousins, P. D. 2008. Antecedents and consequences of social capital on buyer performance improvement. Journal of Operations Management, 26(3): 446–460.
Michell, P. C., Cataquet, H., & Hague, S. 1992. Establishing the causes of disaffection in agency-client relations. Journal of Advertising Research, 32(2): 41–48.
Montgomery, J. D. 1998. Toward a role-theoretic conception of embeddedness. American Journal of Sociology, 104(July): 92–125.
Morgan, W. R., & Sawyer, J. 1967. Bargaining, expectations and the preference of equality over equity. Journal of Personality and Social Psychology, 6(2): 139–149.
Murry, J. P., & Heide, J. B. 1998. Managing promotion program participation within manufacturer-retailer elationships. Journal of Marketing, 62(January): 58–69.
Nagar, V., Nanda, D., & Wysocki, P. 2003. Discretionary disclosure and stock-based incentives. Journal of Accounting and Economics, 34(January): 283–309.
Nunnally, J. C. 1978. Psychometric theory, 2nd ed. New York: McGraw-Hill.
Palmatier, R. W., Dant, R. P., Grewal, D., & Evans, K. R. 2006. Factors Influencing the effectiveness of relationship marketing: A meta-analysis. Journal of Marketing, 70(October): 136–153.
Payan, J. M., & McFarland, R. G. 2005. Decomposing influence strategies: Argument structure and dependence as determinants of the effectiveness of influence strategies in gaining channel member compliance. Journal of Marketing, 69: 66–79.
Pesämaa, O., & Hair, J. F., Jr. 2007. More than friendship is required: An empirical test of cooperative firm strategies. Management Decision, 45(3): 602–615.
Pfeffer, J. 1981. Power in organizations. Marshfield: Pitman.
Pinkley, R. L. 1990. Dimensions of the conflict frame: Disputant interpretations of conflict. Journal of Applied Psychology, 75(2): 117–128.
Podsakoff, P. M., MacKenzie, S. B., Lee, J.-Y., & Podsakoff, N. P. 2003. Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88(5): 879–902.
Price, L. L., & Arnould, E. J. 1999. Commercial friendships: Service provider-client relationships in context. Journal of Marketing, 63(October): 38–56.
Price, L. L., Arnould, E. J., & Deibler, S. L. 1995. Service provider influence on consumers’ emotional responses to service encounters. International Journal of Service Industries Management, 6(3): 34–61.
Rodin, M. J. 1982. Non-engagement, failure to engage, and disengagement. In S. Duck (Ed.). Personal relationships, Vol. 4: Dissolving personal relationships. London: Academic Press.
Rokkan, A. I., Heide, J. B., & Wathne, K. H. 2003. Specific investments in marketing relationships: Expropriation and bonding effects. Journal of Marketing Research, 40(May): 210–224.
Scott, S. G., & Lane, V. R. 2000. A stakeholder approach to organizational identity. Academy of Management Review, 25(1): 43–62.
Sheng, S., Zhou, K. Z., & Li, J. J. 2011. The effects of business and political ties on firm performance: Evidence from china. Journal of Marketing, 75(January): 1–15.
Sierra, J. J., & McQuitty, S. 2005. Service providers and customers: Social exchange theory and service loyalty. Journal of Services Marketing, 19(6): 392–400.
Siu, W.-S. 2008. Yuan and marketing: The perception of Chinese owner-managers. Journal of World Business, 43(4): 449–462.
Slotegraaf, R. J., Moorman, C., & Inman, J. J. 2003. The role of firm resources in returns to market deployment. Journal of Marketing Research, 40(August): 295–309.
Thaler, R. 1985. Mental accounting and consumer choice. Marketing Science, 4(3): 199–214.
Uzzi, B. 1997. Social structure and competition in interfirm networks: The paradox of embeddedness. Administrative Science Quarterly, 42(1): 35–67.
Uzzi, B. 1999. Embeddedness in the making of financial capital: How social relations and networks benefit firms seeking financing. American Sociological Review, 64(4): 481–505.
Vargo, S. L., & Lusch, R. F. 2004. Evolving to a new dominant logic for marketing. Journal of Marketing, 68(January): 1–17.
Villena, V. H., Revilla, E., & Choi, T. Y. 2011. The dark side of buyer–supplier relationships: A social capital perspective. Journal of Operations Management, 29(6): 561–576.
Weitz, B. A., Sujan, H., & Sujan, M. 1986. Knowledge, motivation, and adaptive behavior: A framework for improving selling effectiveness. Journal of Marketing, 50(October): 174–191.
Winarick, K. 1985. The “chemistry” of personal attraction. American Journal of Psychoanalysis, 45(4): 380–388.
Xin, K. R., & Pearce, J. L. 1996. Guanxi: Connections as substitutes for formal institutional support. Academy of Management Journal, 39(6): 1461–1568.
Zaheer, A., McEvily, B., & Perrone, V. 1998. Does trust matter? Exploring the effects of interorganizational and interpersonal trust on performance. Organization Science, 9(2): 141–159.
Zaichkowsky, J. L. 1985. Measuring the involvement construct. Journal of Consumer Research, 12(3): 341–352.
The authors acknowledge the support from the National Natural Science Foundation of China (71572099, 71328202, 71102064) and Shanghai Pujiang Program Foundation (15PJC042). The authors are listed alphabetically and contributed equally to the paper.
Appendix 1. Survey quality procedures and tests
In this appendix, we report the handling of key informant knowledgeability, common method bias, and nonresponse bias. We implemented two procedures to ensure the knowledgeability of the key informants (purchasing managers): (1) through prescreening telephone interviews in which informants were asked about their knowledgeability about survey issues, and (2) by asking them to report on their level of knowledgeability in the final survey, which showed high levels of knowledge. To reduce concerns about common method variance (CMV) and response biases, we used several of the procedural remedies by Podsakoff, MacKenzie, Lee, and Podsakoff (2003: 887–88). First, to minimize social desirability biases, the survey’s first page emphasized that each survey would be submitted anonymously and that no identifying information would be collected in the survey. Second, each section included text that reassured respondents that no particular answer was encouraged or discouraged. All the items met Podsakoff et al.’s (2003) criteria for minimizing ambiguity. Third, the data were collected form two sources. The sales were objective actual data while others were gathered from respondents. Forth, we conducted Harman’s one factor-test following Podsakoff et al. (2003). The result indicated that common method variance was not a serious problem. Taken together, we can conclude that common method bias is not a serious problem in this study. Finally, a comparison of participating and nonparticipating buyers indicated no significant differences in key firm characteristics, such as age, size, and sales. Similarly, early and late respondents were compared with regard to the substantive constructs in the model, and showed no statistically significant differences. Thus, nonresponse bias is not a concern in this study.
About this article
Cite this article
Gao, W., Liu, Y. & Qian, L. The personal touch of business relationship: A study of the determinants and impact of business friendship. Asia Pac J Manag 33, 469–498 (2016). https://doi.org/10.1007/s10490-016-9464-1
- Business friendship
- Customer relationship management
- Interorganizational relations
- Relationship marketing
- Rule adherence