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Jan Heide’s Pioneering Research Took the Business-to-Business Relationship from Niche to Mainstream

By Clare Becker

April 12, 2017

Jan Heide

For a business-to-business marketer, the 1980s were an interesting time to watch unfold.

“When I wrote my dissertation, there were a lot of things happening, especially in the auto industry,” recalls Jan Heide, marketing professor at the Wisconsin School of Business. “Companies like General Motors, Ford, and Chrysler were getting beat up by their Japanese competitors. I think, to a large extent, the source of these Japanese firms’ competitive advantage was due to having stronger supply relationships and stronger distributor relationships.”

The observation became not only the subject of Heide’s dissertation, but also set the foundation for his landmark research of the 1990s. Grounded in transaction cost economics, a series of papers described the business-to-business relationship in a new way, giving firms options along a continuum between the competitive “arm’s length” relationship and having a supplier in-house (vertical integration).

It seems hard to fathom now—an American Marketing Association study named Heide the third most influential marketing researcher nationally—but he says the work was not immediately well received.

“This notion of business-to-business marketing was not sexy; it was a bit weird and didn’t really fit the standard business-to-consumer marketing. Early on, this was not a mainstream topic, but I think it caught on.”

‘Black box’ of business-to-business relationship

Heide’s work focused on market relationships, looking at the “different kinds of distribution arrangements, supply chain relationships, and interfirm alliances,” says Alok Kumar, a former Ph.D. student of Heide and now an associate professor of marketing at the University of Nebraska–Lincoln.

“At the time, there was really no systematic or conceptual lens, certainly not within marketing, through which you could describe these business-to-business relationships; they were a bit of a ‘black box,’” Kumar says. “Jan’s work helped unpack this black box, and that in turn, helped us understand when firms should or should not invest in building strong marketing partnerships in the first place.”

An economics term, “discriminating alignment” is how Heide says he would characterize the common thread running through the four papers, meaning that firms can choose the right relationship to fit their particular circumstance. The right matchup will give a firm the greatest performance implications.

A company like Honda, for example, might decide to go into a partnership arrangement with suppliers. They would use that option in a selective fashion, looking on it as a strategic relationship. Other types of purchasing situations may not justify the setup and maintenance costs that a true partnership would entail.

“What we tried to do was show under what conditions these relationship dimensions produced performance,” Heide says. “If you do X, good things will happen.” Heide pull quoteHeide also made a significant contribution to the data by designing survey mechanisms that could go across industries.

“We went out and got our hands dirty talking to actual companies,” Heide says. To study these questions, there were simply no archival or secondary data available. “People in industry were intrigued because they were wrestling with these things themselves. I think we were able to shed some light on these questions with the very detailed data that we had.”

Research impact

Heide’s work was published in top marketing journals and crossed disciplines, appearing in economics, strategy, organization theory, and law publications. One of the most highly cited researchers working in the field of marketing today, Heide’s work has been cited thousands of times and by scholars like Nobel Prize-winning economist Oliver Williamson.

Heide has received numerous awards including a Lifetime Achievement Award in 2012 from the American Marketing Association’s Interorganizational Special Interest Group and the prestigious Harold H. Maynard Award from the Journal of Marketing. He also received the University of Wisconsin–Madison’s Underkofler Excellence in Teaching Award and the Erwin A. Gaumnitz Distinguished Faculty Award.

Moving the research forward

Heide has started a new branch of research, one that still builds on prior work, but expands to questions of organizational identity: how the right identity for firms internally can help them establish the right relationship externally.

Going back to the auto industry as an example, Heide says, there were many firms that were so set in a competitive worldview that they couldn’t make long-term partnerships work.

“Who you are as an organization allows you to manage your external partners in a certain way,” Heide says. “It’s not a given that establishing a partnership is easy and that all firms have it in them to pull it off.”

Jan Heide
Jan Heide, professor of marketing. PHOTO: PAUL L. NEWBY II

He also finds enjoyment in the interconnectedness of teaching and research, not sharing the view that they are two separate “buckets” that divide one’s time.

“I never really bought into that. I think teaching and research are really related,” Heide says. “A benefit of having research-active faculty is that people will bring their findings into the classroom. Students will hear about what’s going on before it makes it into the textbooks. I always like talking about my research to students and—I’m biased, of course—but I think they like seeing that different side of me.”

Kenneth Wathne, a professor of marketing at the University of Stavanger Business School in Norway and a former Ph.D. student of Heide, calls Heide “a true role model.”

“For the past three decades, his passion for and dedication to research has served to shape the way we think about interorganizational relationship and marketing strategy, and his influence has reached far beyond the boundaries of the marketing discipline,” Wathne says.

Kumar says that Heide’s thorough approach to research and his persistence in not settling for anything less than the topmost publication outlets were the “greatest gift to me as a junior scholar.”

“He always says, ‘this is going to fly, I’m convinced it’s going to,'” reflects Kumar. “I think he’s so influential because he took one area—an important slice of marketing—and went so deep into it.”

Others tend to turn away if there’s a new wind blowing or a new fad enveloping the field, Kumar says, but not Heide.

“He’s rooted in his tradition. Some might question their identity as a scholar. For Jan, there is no doubt in that.”

Read the papers:

“Alliances in Industrial Purchasing: The Determin
ants of Joint Action in Buyer-Supplier Relationships”
 published by the Journal of Marketing Research.

“Do Norms Matter in Marketing Relationships?” published by the Journal of Marketing.

“Interorganizational Governance in Marketing Channels” published by the Journal of Marketing.

“Transaction Cost Analysis: Past, Present and Future Applications” published by the Journal of Marketing.

Jan Heide is the Irwin Maier Chair and professor in the Department of Marketing at the Wisconsin School of Business.