Testing a Life-Cycle Theory of Cooperative Interorganizational Relationships: Movement Across Stages and Performance

This research examines the evolution of cooperative interorganizational relationships and provides an empirical test of four propositions from the DSO (Dwyer et al. 1987) life-cycle theory, and one proposition from the RV (Ring and Van de Ven 1994) theory of relationship development. Using primary data from over 1,500 resellers in a channel of distribution, we find that the mature phase is not the pinnacle of the relationship lifecycle; relationship properties (e.g., relationship harmony, overall dependence, and the reseller's trust in the manufacturer) in this stage are no different than in the build-up phase. However, relationship properties that support relationship expansion (e.g., goal congruence and information exchange norms) reach their zenith in the build-up phase and afterwards fade into the background. All of the various relationship properties hit their nadir in the decline phase. We also examine the development of relationships over a five-year period and consider whether movement across the stages in accordance with DSO's theory has the same association to overall performance evaluations as movement through regressive patterns. We find that a negative history extracts a price: Movement through regressive patterns is negatively related to performance, and these relationships do not enjoy a fresh start. Instead, these movements can last for an extended period of time and are negatively related to performance outcomes during the decline phase. Thus, the development path taken appears to be related to the results achieved. Finally, we also find evidence of the critical role that individual sales representatives play in creating successful interorganizational relationships.