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Preventing Spread of Negative Change in Business Networks: Managing bankruptcies, Mergers and acquisitions
Uppsala University, Humanistisk-samhällsvetenskapliga vetenskapsområdet, Faculty of Social Sciences, Department of Business Studies.
2005 (English)In: Insolvencies in Transition Economies, Stockholm, 2005Conference paper (Other (popular scientific, debate etc.))
Abstract [en]

During the last part of the 20th century many IT companies were established on the Swedish market. Business actors, politicians and consumers had high expectations on information technology (IT) and what it could accomplish both in business and in everyday life. IT companies soon became important providers of diverse products and services to a wide target group and took positions in already existing business networks. Nevertheless, this period has been described in terms of an IT-bubble with unsubstantial business concepts, untested business models, overrated companies and unsafe IT shares.

In the year 2000 the number of new IT companies continued to increase. At the same time what many analysts anticipated happened: the IT-bubble burst. Positive expectations were interrupted by decline and disappointment. This so called dotcom crash can be linked to a wave of bankruptcies, mergers and acquisitions in the Swedish IT industry. This also implies that many business relationships with customers, suppliers and other counterparts dissolved.

During the last ten years dissolution of business relationships has attained increasing scholar attention. Focus has mainly been on the process of relationship endings per se and on the factors influencing the ending of business relationships. However, we still know very little about how one relationship ending – for example caused by a sudden bankruptcy, merger or acquisition – affect other business relationships in the surrounding network. In a business network perspective relationships are connected with one another, so that changes that occur in one relationship can spread and have implications for other relationships as well. Changes spread when actors react to changes in one of their relationships by making changes in others.

Previous research suggests that the communication strategies employed by the disengaging company affect the outcomes for the two parties involved as well as for the connected business network. To prevent potential negative effects from spreading, relationship endings must be managed in a proper way. Yet, we lack a comprehensive framework of communication methods available for the terminating firm, and we still don’t know how the connected network is affected by one relationship ending.

Place, publisher, year, edition, pages
Keyword [en]
Business Networks, Relationship endings, Dissolution Communication, Spread of Change, Network Effects
National Category
Business Administration
URN: urn:nbn:se:uu:diva-73965OAI: oai:DiVA.org:uu-73965DiVA: diva2:101876
Available from: 2008-08-20 Created: 2008-08-20

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