Balancing operations

In case that outcomes are lower than expected, either because of the situation or one of the partners, some balancing operations may exist (e.g.

Frazier 1983). A balancing operation can be regarded as any act performed, by one or both partners, that aims at recovering the situation in case the comparison standards are not met. In social exchange theory these balancing operations are called as an accommodation process (e.g. Rusbult, Verette, Whitney, Slovik and Lipkus 1991) or transformation process (e.g.

Kelley and Thibault 1978) and service quality literature as service recovery (e.g. Bitner 1990; Hart, Heskett and Sasser 1990; Zemke 1994; Bitner, Booms and Mohr 1994; Lewis 1996). Service recovery cannot be, as such, compared to the others because service recovery is not an interactive concept in the sense that it only includes one actor that can effectively

affect the perceived level of service quality. Thus, service recovery is not used as such in this study.

In this stage of this study, decision is not made whether the accommodation processes or transformation processes are to be used in this study. In the following, those aspects of both these concepts, which are relevant for the evaluation of relationship quality, have been selected. It has to be noticed that the concept of balancing operation presented by Frazier (1983) is not as extensive as the one used in this study. The concept presented by Frazier (1983) covers the transformation processes, but not the accomodation processes. Frazier (1983), however, discusses the relationships between balancing operations and other concepts, and is in this respect used in this study.

The roots of both balancing operations and accommodation process can be found in transformation processes presented by Kelley and Thibault (1978). Kelley and Thibault (1978) suggested two types of outcome matrix:

given matrix and effective matrix. The given matrix represents actors' behavioral choices and the contingent outcomes they provide, which are not dependent on the relationship itself (Kelley and Thibault 1978; Anderson and Narus 1984; Rusbult, Verette, Whitney, Slovik and Lipkus 1991). By three different transformation processes, together with communication processes the given matrix is transformed into an effective matrix. These transformation processes are 1) outcome transformation, where criteria for the evaluation of outcomes is changed, 2) transpositional transformation, where by acting first, the one of the individual actors can change the given matrix, and 3) sequential transformation, where the actor/both actors adopt a different way of behaving in the future (Kelley and Thibault 1978).

Although in their presentation of transformation processes Kelley and Thibault (1978) linked them to transformation of the given matrix, which does not contain evaluation. Transformation processes can be, in my opinion, used as balancing operations in situations where the outcomes are lower than anticipated.

Accommodation process is a close concept to the transformation process, but accommodation is more heavily related to the communication between actors in case of destructive behavior performed by one of the actors (e.g.

Rusbult, Verette, Whitney, Slovik and Lipkus 1991; see also Sparks and Callan 1995). Rusbult, Verette, Whitney, Slovik and Lipkus (1991, p. 53) have defined accommodation as referring to "individual's willingness, when an actor has engaged in a potentially destructive behavior, to a) inhibit tendencies to react destructively in turn and b) instead engage in constructive reactions". Accommodation also can be related to other sources of dissatisfaction than destructive behavior (e.g. Rusbult, Zembrodt and Gunn 1982). Rusbult, Verette, Whitney, Slovik and Lipkus (1991) have used a typology of four possible responses to dissatisfaction in a close

relationship based on the typology developed by Hirschman (1970)⁵³. These responses are a) exit - actively destroy the relationship, b) voice - actively and constructively attempt to improve the relationship, c) loyalty – passively, but optimistically waiting for conditions to improve and d) neglect - passively allow the relationship to deteriorate (Rusbult, Verette, Whitney, Slovik and Lipkus 1991, pp. 53-54). Exit and neglect are seen as destructive responses (ibid.). As accommodation is quite heavily related to the destructive behavior, from the point of view of this study, it is interesting to see whether this concept is useful also in other kinds of situations in which the comparison standards are not met, for other reasons than destructive behavior.

In their six extensive studies on accommodation in close relationships, Rusbult, Verette, Whitney, Slovik and Lipkus (1991) made several interesting propositions concerning the determinants of accommodation.

Here, the ones that can be used also in business relationships are presented.

They found that accommodation is lower in the case of lower interdependence (ibid.), i.e. if actors do not feel that their actions are depending on each other, they are not willing to act constructively.

Accommodation was found to be associated with greater satisfaction, commitment, investment size, centrality of relationship, actor perspective taking and lack of quality alternatives (ibid.). Constructive responses to dissatisfaction (i.e. poor perceived quality), which is caused by destructive behavior by the other partner, are then likely to exist, if current perceived relationship quality and commitment to relationship are high, if the partner has made a lot of relationship specific investments, if relationship is perceived as being of vital importance, if the evaluative partner concerns also the perspective of the other partner and if available alternatives (cf.

CLalt) are not perceived as attractive choices. Although Rusbult, Verette, Whitney, Slovik and Lipkus (1991) relate accommodation heavily to the destructive behavior engaged by the other actor, the accommodation responses presented together with determinants of accommodation also can be useful in business relationships.

Balancing operations is a term used by Frazier (1983) in his study concerning interorganizational exchange behavior in marketing channels.

Although his view concerning balancing operations is not exactly the same as the view used in this study, it is worth looking at as he relates balancing operations to perceived inequity and perceived unfairness. In the following balancing operations related to inequity are discussed first.

Adams (1963) suggested that if a person perceives inequity he will try to restore the balance by increasing or decreasing input or outcome, by mentally distorting inputs and/or outcomes, by leaving the exchange or by changing the actor. In business relationships it is highly unlikely that the

53 Hirschman (1970) used the typology of three is his study concerning reactions to decline in formal organisations. This typology is also used extensively in customer complaint literature.

partner will leave the exchange (i.e. episode), but other forms of balancing operations can be used in business relationships. Of course the partner can leave the whole relationship as a balancing operation (cf. exist as accommodation response). The partner can also try to change the other partner's perceptions of what is equitable, or try to convince the other partner that the inequity will be remedied by rewards during the next episode (e.g. Pfeffer and Salancik 1978; Frazier 1983).

In many respects, the balancing operations are closely related to attribution processes in business relationships, because in business relationships if either dissatisfaction, inequity or unfairness is perceived the easiest question to ask is who to blame? The relationship between attribution and balancing operation is an interesting one. Clearly, both attribution and balancing operations exist if inequity, unfairness or low quality is perceived, but the temporal order of these processes can be a complicated one. Attribution may be made before and after balancing operations have taken place, but if balancing operations have really returned the balance to the relationship attribution may not be necessary.

If one or both partners perceive that what they get from the episode/relationship in relation to their inputs is not fair (i.e. perceived unfairness), balancing operations can also exist (see e.g. Frazier 1983).

This balancing operations can, according to Frazier (1983), include for example lowering the own level of contribution to the relationship. He clearly relates balancing operation to the inequity and unfairness, but as mentioned earlier, such operations can also take place as a response to a perceived lower level of episode/relationship quality (ibid.).

Transformation processes, accommodation process and balancing operations can all be used in a business relationship in order to return the balance to the relationship. Transformation processes have in my mind two important and unique aspects: criteria change and behavior change that both can be used in business relationships. If one of the partners perceives unbalance (either in episode/relationship quality i.e. between actual experience and comparison standards, in equity or in fairness), the partner can change its own criteria, or the other partner may try to convince to change either own or mutual criteria. If one of the partners is blamed, for example, for not achieving the goals put on a certain episode, this partner can try to restore the balance by trying to convince the other partner that this kind of situation will not happen in the future. Of course, the third transformation process, acting first, can be sometimes important; if for example the seller notices that its delivery time is not what they have promised, the seller may try to give the buyer something extra before the buyer even complains about delayed delivery.

Of the accommodation responses: exit, loyalty and neglect are the ones which are not covered by the transformation processes. In turn, doing something actively and constructively (as transformation processes suggest) the partner also can behave passively and destructively, or be actively destructive or be constructive but passive. In long term business

relationships, actively destructive behavior can be rare, but possible.

Usually, the partners in long term relationships, are so committed and hope to continue the relationship that they do not easily behave destructively. If, however, the perceived imbalance is so great, that the partner has no other alternative, than to close the relationship, destructive behavior can be used.

One of the balancing operations as a response to perceived inequity is mentioned distorting mentally the outcomes/inputs. This also can be used if unfairness or lower levels of quality are perceived. Consequently, all the mentioned processes and operations can in my opinion be used in business relationship in order to restore the balance. One operation which has not been mentioned directly, but may be useful is the mutual discussion about what went wrong and why, and what should be done.

If a constructive balancing operation used is a successful one, the perceived episode quality may be improved. Constructive balancing operations relate quite clearly to the episode, but by affecting the episode quality perception, balancing operations also affect the perceived relationship quality. Destructive balancing operations clearly also affect the relationship quality perception, and may even lead to a third comparison/disconfirmation process, which is discussed in chapter 4.4.4. It has to be also noticed, that parts of the balancing operations are aimed at affecting the perceived quality level of the other partner, but others are done in order to change their own perception. And some of the balancing operations affect the episode quality perception indirectly through perceived equity and/or perceived fairness.

Balancing operations also have the unique characteristic that the organizational level may change from the normal operating level (for example middle managers) to the levels above that in order to be able to execute balancing operations (see Alajoutsjärvi 1996, p. 133-136). For example, if the relationship normally works at middle manager level, and levels below that, in situations where one or both of the partners perceive unbalance, the normal levels may not be authorized or may not be able to resolve the situation. Hence above levels in organization(s) are needed to restore the balance. The normal operating levels may be willing to resolve the situation, but the above levels do not allow them to do any balancing operations. This of course can lead to tensions, both inside the organization and inside the relationship.

In conclusion as balancing operation can be regarded as any act performed by one or both partners that aims at recovering the situation in cases where the comparison standards are not met. In business relationships, the balancing operations are closely related to attribution processes. Transformation processes, accommodation process and balancing operations (presented by Frazier 1983) can all be used in business relationship in order to return the balance to the relationship.