Small business challenges in developing value partner relationships

In service research, the widely adopted theoretical argumentation has been based on the transition from Goods-dominant logic (G-D logic) towards Service-dominant logic (S-D logic). However, the growing debate on S-D logic still lacks empirical evidence concerning complex transformation processes of business relations. The objective was to explore challenges a small firm faces during the transformation process from product provider to value partner, especially the focus was on the changing customer relationship and collaborative process of defining the value proposition. The research methodology used in this studywas qualitative case study. The selected cases consisted of six business relationships (one provider and six customers) in different development phases. Empirical research data was gathered by in-depth interviews of key persons in the companies. The analysis tool we utilized a framework that combines strategic and value proposition perspectives, relationship connectors and the transitions from G-D logic towards S-D logic as built-in different trajectories. The identified challenges of an SME were related to: the different value expectations of customers; defining new value proposition (provider)and re-building operational bonds and communication practices with new key persons. The previous and current cooperation and trust played a crucial role - and called for re-negotiation. Findings - The need for customer understanding increases and the interface between companies broadens as a company moves up the development steps. During the transformation process a company needs to build up certain capabilities and also to modify the value proposition process accordingly. The effect of the history of the relationship in the development seems twofold: it builds trust and increases understanding but it may also hinder development if a customer has a strong view of the provider's role in customer's business processes.