The dark side of effectuation in a Key Account Management relationship

Purpose: The purpose of this paper is to consider the impact of effectuation when used by small suppliers within Key Account Management relationships.

Design/methodology/approach: An exploratory longitudinal case study approach was used to examine a single small supplier operating in the snack foods sector of the UK foods industry, as it entered into a new Key Account Management relationship with a major retailer and undertook four new product development projects.

Findings: Findings suggest effectuation may positively moderate the ability of a small supplier to enter into a Key Account Management relationship by enabling it to obtain resources and limit risk. However, once within the relationship, the use of effectuation may negatively impact success by increasing potential for failure to co-create new product development, leading to sub-optimal products, impacting buyer confidence and trust. Furthermore, a failed Key Account Management relationship may impact other customers through attempts to recover revenues by selling these products, which may promote short term success but, in the long-term, lead to cascading sales failure.

Research limitations/implications: It cannot be claimed that findings of just one case study represent all small suppliers or Key Account Management relationships. Furthermore, the case presented specifically concerns buyer-supplier relationships within the food sector.

Practical implications: This study appears to suggest caution be exercised when applying effectuation to enter into a Key Account Management relationship, as reliance on effectual means to garner required resources may lead to production of sub-optimal products, which are rejected by the customer. Additionally, a large customer considering entering into a Key Account Management relationship with a small supplier should take care to ensure their chosen partner has all resources needed to successfully deliver as required, or be prepared to provide sufficient support to avoid production of sub-optimal products.

Originality/value: Findings suggest use of effectuation within a Key Account Management relationship has potential to develop a dark side within business-to-business buyer-supplier relationships through unintentional breaches of trust by the selling party.