Levels of Analysis in Business-to-Business Marketing

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Levels of Analysis in Business-to-Business MarketingRicky Wilke a; Thomas Ritter a

a Department of Marketing, Copenhagen Business School, Frederiksberg, Denmark

To cite this Article Wilke, Ricky and Ritter, Thomas(2006) 'Levels of Analysis in Business-to-Business Marketing', Journalof Business To Business Marketing, 13: 3, 39 — 64To link to this Article: DOI: 10.1300/J033v13n03_02URL: http://dx.doi.org/10.1300/J033v13n03_02

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Levels of Analysisin Business-to-Business Marketing

Ricky WilkeThomas Ritter

ABSTRACT. Over the last 50 plus years, many authors have contributedto our understanding of business markets. As this research area is com-plex, researchers have addressed issues from different levels of analysishereby also using a variety of theories (e.g., economics, sociology, psy-chology). In order to gain a comprehensive understanding of those contri-butions and to shed light on research in business-to-business marketing asa discipline, it is important to define the different levels of analysis so thatthe different studies can be viewed in relation to each other. Therefore,this paper develops such framework for business-to-business marketing.The framework also sensitizes researchers to the relationship betweenthe level of analysis and the level at which data is collected. Furthermore,the framework can be applied to map the research areas within the busi-ness-to-business marketing field and to define areas of further investiga-tion. [Article copies available for a fee from The Haworth Document DeliveryService: 1-800-HAWORTH. E-mail address: <[email protected]> Website: <http://www.HaworthPress.com> © 2006 by The HaworthPress, Inc. All rights reserved.]

KEYWORDS. Levels of analysis, observation, paradigms, research,theory, business marketing, industrial marketing

Ricky Wilke (E-mail: [email protected]) and Thomas Ritter (E-mail: [email protected]) are both affiliated with the Department of Marketing, Copenhagen BusinessSchool, Solbjerg Plads 3.C.3, DK-2000 Frederiksberg, Denmark.

Journal of Business-to-Business Marketing, Vol. 13(3) 2006Available online at http://jbbm.haworthpress.com

© 2006 by The Haworth Press, Inc. All rights reserved.doi:10.1300/J033v13n03_02 39

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INTRODUCTION

Business-to-business (or industrial) marketing has received a lot ofattention in the last 50 years. This field has been analyzed from, e.g., thetransaction cost perspective (Williamson 1975), the interaction perspec-tive (Håkansson 1982), the network perspective (Axelsson and Easton1992). Different themes have been addressed like value and value cre-ation (Anderson and Narus 2004), development of relationships (Ford1980, Dwyer et al. 1987), technology and innovation development(Håkansson 1987). Regarding the empirical work, different methodolo-gies have been applied, e.g., case studies, quantitative studies, and ac-tion research.

The different contributions have created a situation where the defini-tion of markets and marketing has become difficult as they can be seenfrom various different angles and at various levels. Some define mar-kets as “a collection of buyers” (Kotler and Keller 2006, p. 11) whileothers see markets as “networks between and within buyers and sellers”(Mattsson and Johansson 1988). Likewise, the definition of marketingis unclear: Linguistically, marketing means being active on markets.Officially, as provided by the American Marketing Association, mar-keting is defined as “an organizational function and a set of processesfor creating, communicating, and delivering value to customers and formanaging customer relationships in ways that benefit the organizationand its stake holders” (AMA 2006). Within this vaguely described fieldof “managing customer relationships,” variance occurs as these relation-ships differ significantly in their substance and atmosphere (e.g., Covielloet al. 2002, Day 2000). For the purpose of this paper, we define marketsas institutions in which interactions (of various kinds) between sellersand buyers take place. Sellers are active by marketing and selling activi-ties and purchasers are active by purchasing, procurement and buyingactivities. Their joint interest is successful exchange, which normallyrequires mutual value creation of the exchange on both sides in along-term perspective.

Besides the wealth of studies, an overall consolidation and integrationof the research results into a theory of business-to-business marketing, atheory of interaction or a theory of business networks is still lacking.Besides other factors (like geographical distance, different professionalcultures and pressures) a major issue is the very different levels of anal-ysis used in business-to-business marketing research. In order to gainmore clarity, this paper focuses on the description of these differentlevels. A framework is developed in order to develop a better bases for

40 JOURNAL OF BUSINESS-TO-BUSINESS MARKETING


comparison of different studies and in order to identify potential re-search areas. Thus, the aim of this paper is not to provide a new, universaldefinition of markets and marketing but to offer a better understandingof the differences by outlining the different levels of analysis in busi-ness-to-business marketing research.

The following provides an overview of the paper. First, the articlebegins with an account of the concept of “level of analysis” and puts for-ward a framework of levels of analysis in business-to-business market-ing. Second, the issue of causality between the different levels ispresented. Third, typical research topics at different levels are listed.Fourth, we discuss some methodological issues around the differentlevels. Fifth, potential future research areas are outlined. For research-ers and practitioners alike, the paper contributes to their research inattempting to interpret and survey the research discipline of business-to-business marketing. The paper provides a framework to discussclearly research questions and methodology with respect to the level ofanalysis and level of observation.

LEVELS OF ANALYSIS IN BUSINESS-TO-BUSINESSMARKETING RESEARCH

One of the core dimensions applied to the scope of marketing is themicro-macro dichotomy (Hunt 1976). Hunt argues that “micro,” withrespect to marketing, typically refers to theories and empirical studiesoriented towards individual units, that is to say, an organization’s mar-keting activities. In contrary, “macro” refers to theories oriented to-wards larger units, such as marketing systems or groups of consumers.This scope of marketing reflects a general consensus within the socialsciences, in which society is considered hierarchical or composed of apyramid structure of subsystems or levels that can be isolated, such asmicro-phenomena and macro-phenomena. The hierarchy could, forexample, span the quasi-isolated scientific disciplines such as biology(the cellular level), psychology (the individual level) and sociology (thegroup or societal level). The level to be investigated or explained, then,is the dependent variable and the level of analysis.

However, there is a lack of consensus about the micro-macro distinc-tion within the social sciences, other than that “micro” refers to smallerunits than those implied by “macro” (Wippler and Lindenberg 1987).In marketing relationship studies, the use of the words “micro” and“macro” is different from Hunt’s interpretation, hereby reflecting the

Ricky Wilke and Thomas Ritter 41


focus on relationships as the focal unit (the micro level) and the widerindustry network as the larger system (the macro level) (Mattsson1997). It was also acknowledged that the gap between micro and macrowas too large, which eventually lead to the introduction of a meso level(Mattsson 1997). On this level, all relationships of a single firm wereconsidered which is a wider focus than analyzing a given, individualrelationship but less than all relationships existing in industries. Thelevel of direct relationships of a firm has also been called “net” in con-trast to “network,” which in this respect is used as the wider industry orsociety level (Johansson and Mattsson 1988). Möller and Halinen(1999) proposed an additional level of analysis which can be placed be-tween the micro and the meso level: the portfolio level. On that level,similar relationships are considered (e.g., customer relationships, sup-plier relationships, innovation relationships) but not the whole net(work)of a firm.

The macro level can be split up more precisely into at least two lev-els. The level of highest complexity and lowest limitations can be de-fined as the level of society. On that level, all objects and actors and alltheir relationships are considered. Society can be regarded as the “ulti-mate” level hereby including all actors within a region (e.g., a countryor a continent). On this level, business elements are intertwined with el-ements of (national) culture, politics, social aspects, etc. As our focus ison business-to-business marketing, we will not focus on societies in thereminder of the paper.

In order to produce meaningful research questions and empirical stud-ies, researchers have employed complexity defense mechanisms (Ritterand Ford 2004). Researchers have focused their attention on markets, in-dustries or clusters of firms, also interpreted as networks (markets-as-net-works). This level corresponds to Mattsson’s macro level.

In order to organize the wealth of levels we follow a distinction be-tween actors and structure made by Ritter and Gemünden (2003). Re-garding structural elements, we can again distinguish between fourlevels. The basic element of interorganizational research is a dyad, i.e.,the relationship between two actors. Following Halinen and Möller(1999), portfolios can be seen as the next level comprising similarrelationships (e.g., customer portfolio, supplier portfolio, innovationpartners). Typically, relationship portfolio analysis does only considerseveral relationships but not their interconnections (compare, e.g., Krap-fel et al. 1991 and Shapiro et al. 1987). Beyond dyads, further relation-ships need to be considered because relationships potentially influenceeach other (Blankenholm et al. 1999, Ritter 2000). The smallest entity



which displays all interconnection issues is a triad (Havila 1996). How-ever, in business marketing research, there is a tendency to extend thatlevel towards organizational set (Evans 1966) or a firm’s net (Johanssonand Mattsson 1988), i.e., all direct relationships of a firm also called.Finally, the network defines a level which goes beyond triads or nets. Itis hard to specify a network boundary on a general basis. It can be mar-kets (markets as networks, Johansson and Mattsson 1988), industries,value creation systems (frequently called supply chains) or regionalclusters. Seen from an individual actor’s perspective, the (relevant) net-work may be the part of the network they are aware of. This has been la-beled “network horizon” (Anderson, Håkansson and Johnsson 1994).The “ultimate” network is the whole society. However, as noted above,this level is not meaningful in research and business practice due to itscomplexity. Thus, we do not include it in our further discussion.

The above discussion leads us to a framework of structural levels ofanalysis which is depicted in Figure 1.

Regarding actors as levels of analysis, the objects typically are deci-sion-making units ranging from individuals to households and organi-zations. In organizational studies there are frequently made distinctionsbetween individuals, groups/teams and the firm. Individuals can be seenas the lowest level, who fulfills a certain role in a given context. Movingone level upwards, groups, teams or departments are collections of indi-viduals (or better the roles they perform) all (at least partially) aligned toa joint task and, thus, sharing some values and work practices (e.g., in abuying center). Further, firms are seen as larger collections of groupswith potentially different values and work practices. Here, the bondingelement is the shared participation in a firm, its successes and its chal-lenges as well as a corporate vision, strategy and culture. The fourthlevel is seen in groups of firms, e.g., seen as industries (firms with simi-lar resources and market positions), clusters (seen as regional group-


FIGURE 1. Illustration of Different Structural Levels of Analysis


ings), supply and delivery networks (seen as value creating systems).The level of abstraction and complexity increases as various corporatevisions, strategies and cultures are considered. Figure 2 illustrates thedifferent actor levels of analysis.

For each study, there is a given level of analysis and this becomes themicro level for the research. The immediate higher level is then seen asthe meso level as the impacts from this level are normally strong and ob-servable. All other higher levels form the macro level, often also de-scribed as the environment. Studies typically can choose along the twoidentified dimensions, structure and actor. For example, a dyad can beanalyzed at the different actor levels: between two sales people (individ-ual level), between a sales and a purchasing department (group level),between a buying and a selling firm (organization level), between Siliconvalley (US) and Medicon valley (Denmark) (cluster level). Therefore,the framework for positioning studies in business marketing is a ma-trix built by the two dimensions discussed above (see Figure 3). As itis possible to neglect one dimension the “none” option is added. Anexample is a study of a firms internal buying procedures (thus nostructural dimension applies) or a study of interconnections betweenrelationships (thus no actor dimension applies).

This depiction of the construction of society suggests a layout bymeans of rational-analytical thought. In some way it follows an attemptto reduce the complexity of specific phenomena, such as society or itssublevels (networks or organizations) by breaking them down into un-derlying subsystems (for example, a buying center). Such hierarchies oflevels suggest that they can be isolated or kept apart from the remainingenvironment. By breaking the subsystems down into simpler compo-nents (such as structures, relationships or individuals) causal effect maybecomes understandable. Even though this deduction logic has its


FIGURE 2. Illustration of Different Actor Levels of Analysis


appeal and can be compared to research in physics and chemistry, it in-cludes the problem of separating things which only can be understoodin its totality. While focus on specific research questions at low levels ofcomplexity may contribute significantly to our general understandingof a phenomenon, potential connections between sublevels can be over-seen. Thus, using different levels of analysis is a positive endeavor aslong as the different results are connected to a greater picture.

Regarding the framework, we see some clear dynamics. Until aboutthirty years ago, the majority of business-to-business marketing re-search was oriented towards organizational buying behavior (includ-ing intra-organizational issue such as group dynamics, but structuraldimension not applied). Since then, researchers are working with lev-els of analysis other than actors, specifically with structural elementsof markets such as relationships between two organizations (dyads)and network levels. Researchers provide different reasons for thischange in level of analysis. Bonoma et al. (1978, p. 53) wrote:

. . . the usual approach in industrial marketing has been to regard thesituation as a unit; a single buyer (or buying department) within anorganization is examined as a respondent to certain external stim-uli which affects the activities (. . .). Actually, the industrial buyeris embedded in a series of relationships both intra-organizationallyand inter-organizationally (. . .) supplier-buyer relationships ob-taining in the real world are major ones for understanding buying


FIGURE 3. Framework of Different Levels of Analysis


decisions. None of these can be suitable viewed as external stimuliinfringing on an “independent” actor’s decision-making processes.

Parkinson and Baker (1986, p. 188) wrote that one could have experi-enced “a substantial re-appraisal of the literature dealing with industrialand organizational buying decisions.” Parkinson and Baker refer their“re-appraisal” to “the IMP school,” and continue (p. 189), “Essentiallythis has stemmed from the growing realization that concentration uponspecific decisions has tended to convey the impression that such deci-sions (buying decisions) enjoy a discrete existence and are the result ofactive sellers manipulating passive buyers. Clearly, both of these impres-sions are wrong.” (cf. also Ford 2002). Also within the IMP research,there has been a move from the interaction model (dyad level, e.g.,Håkansson 1982) towards a network view (net and network level, e.g.,Axelsson and Easton 1992).

CAUSALITY BETWEEN DIFFERENT LEVELS

Based on the different levels of analysis we can build a frameworkto position different contributions in relation to each other. Also Dix-on and Wilkinson (1989) point out that various levels of analysis existin marketing theory and that the different levels have impacts on eachother.

The different levels described above do not exist in isolation nor arethey researched separately. Rather the interplay between the differentlevels is most often reported in studies. Table 1 reports some studies toillustrate the different levels. As such, the suggested framework can beused to structure and illustrate antecedent and consequence variables ina given study.

Descriptions of society and its subsystems rest upon a system theoryapproach, while empirically tested theories are usually oriented towardsone of the most important explanations after the principle of linear cau-sality (causal effect occurring sequentially). An essential element of levelmentality involves the links that connect the different quasi-isolatedlevels. Often, a causal direction in our theories starts at a higher leveland moves towards a lower level; from macro to micro. In most theories(e.g., Webster and Wind 1972), the causal arrows start at the environ-ment and move towards the organization. The so-called buying classes,new task, modified rebuy and straight rebuy (Robinson et al. 1967),which are commonly used to evaluate an organization’s environment,



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pp.6

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49


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O/D

50


are also an expression of the characteristics of an organization’s envi-ronment–which is to say how the organization interprets its environ-mental characteristics.

Although micro and macro levels are normally considered to influ-ence each other reciprocally, no existing theories are able to manageboth causalities at once (DiMaggio 1991). Huber (1991, p. 12) states:

Implicitly, the causal arrows neatly point in one direction, al-though common sense and research make us aware that everythinginteracts with everything else. The problem is how to untangle thesnarl of causal arrows. Under what conditions do individuals af-fect the societies in which they live? Under what conditions dosocieties affect individual destinies? An old joke says that econo-mists explain why people make certain choices; sociologists ex-plain why they don’t have any to make. The comparison is funny.The reality is sobering. Neither discipline has solved the problemof conceptualizing and analyzing the simultaneous interaction be-tween individuconceptualize the problem only along one direction,from micro to macro or from macro to micro. . . .

The problem is referred to as “the action-structure paradox” (Van deVen and Poole 1988) or “the micro-macro link/dilemma” (Huber 1991).If we examine the relationship between the individual and the organiza-tion, between the organization and the dyad or between the dyad and thenetwork, it is obvious that these levels influence each other reciprocally.But introducing the causal arrows in two directions, for example, frommicro to macro and from macro to micro, would result in circular cau-sality, virtually impossible to verify. Models that focus on the reciprocalinteraction between two levels of analysis, for instance, between the or-ganization and the network, therefore can be considered as conceptualmaps of reality rather than precise theories. The different levels of anal-ysis must be treated as quasi-isolated but as complementary connectedin our efforts to understand the overall picture.

RESEARCH TOPICS AT DIFFERENT LEVELS

At the lowest level of analysis within business-to-business market-ing, an individual’s characteristics are analyzed. Hereby variables areconsidered, such as an individual’s personality, age or educational back-ground (Webster and Wind 1972). At the group level issues like group



processes, division of labor, portfolio of qualifications in the group areconsidered (Helfert and Vith 1999). A significant study on this level isWebster and Wind’s (1972) investigation of the buying center. Also, effi-ciency of purchasing and sales departments a unit, organizational buildupare discussed. At the organization level, studies analyze the interplaybetween different department, e.g., sales and marketing, marketing andfinance, marketing and production (e.g., Rueckert and Walter 1987).

At the dyad level, focus is placed on exchange episodes (a delivery, apayment, a meeting) and the coordination of the two firms’ activitiesand the development of the relationship between the two actors. For thislevel of analysis one can refer to, for example, The IMP Group’s “Inter-action Model” (e.g., Håkansson 1982), “The Political Economy Frame-work” (Stern and Reve 1980) which represents statistical conceptual-izations of a dyad, and Dwyer et al.’s (1987) and Ford’s (1980) concep-tualization of the dynamics of organizational dyads. Wilson’s (1978)conceptualization of the pattern of development that characterizes ne-gotiations between individuals from two organizations is also repre-sented here.

On the portfolio level, we have studies on customer and supplierportfolios (e.g., Freytag and Clarke 2001, Turnbull and Zolkiewski1997). Most studies try either to differentiate relationships into differentgroups or to detect interconnections within the set of relationships. Thestudy of triads and nets forms the next level. Examples are a triad analy-sis (Havila 1996), firm’s production net (Johanson and Mattsson 1988)and innovation net (Gemünden et al. 1996).

The network level examines the formal or informal connections be-tween various relationships. A network can be interpreted as all systemsthat meet the necessary criteria in order to characterize them as social sys-tems (Van de Ven et al. 1974). A group of organizations, in other words,must have some form of common explicit or implicit goals and interac-tions between the organizations, in order to be considered as a network.As mentioned above, networks can have various boundaries: e.g., StarAlliance and World One are two networks in the airline industry net-work. The economy of geographically localized areas can be consideredas a network although these companies may operate in different indus-tries. It would be a very decentralized network, however, from the localauthorities’ point of view (which would act as the “network coordina-tor”) having one or several explicit or implicit common goals with re-spect to the local community.



CHOICES OF LEVEL OF ANALYSIS

Regarding Research Questions

In principle, the researcher’s problem statement determines the levelof analysis–the researcher normally addresses the problem statement ata specific level. Within the research milieu there does not seem to beany particular guidelines, (1) one can support the idea of choosing thehighest level of analysis possible in order to include as much informationas possible in the analysis, (2) alternatively, one can advocate employingthe lowest level of analysis thus reducing complexity, (3) finally, one can,as this article suggests, argue for the necessity of addressing all of thelevels (or at least different ones) as they collectively complement eachother in an attempt to see the entire picture.

Re (1) The mid-1970s critique against organizational buying be-havior theory seemed to inspire several researchers to reconsider thestructural level, initially toward dyads (Bonoma et al. 1978, Håkansson1982). This discussion involved considering higher interorganizationallevels of analysis because organizations are neither passive nor closedinformation processing systems. But if the organization is not viewed asa closed system which adjusts based on external environmental forcesentirely, then neither should the dyad be considered as a closed system.This same line of argumentation has more recently been employedagainst the dyad as the level of analysis insofar as dyads are a part of thenetwork level. Ford (2002) writes, “More recently, our analysis has sug-gested that it is inappropriate to focus solely on single relationships. In-stead, we see the company as embedded in a range of relationships withbuyers, sellers, partners, government, etc. . . . This concept of networkhas the potential to provide greater understanding of individual, firmand industry behavior.” That is to say that fewer demarcations reducethe risk of excluding information which is relevant to the analysis.Braddach and Eccles’s (1989) study provides a good example of howthe study of the organizational set (a firm’s net) can contribute to under-standing an organization’s behavior. They illustrate an organization thatbought out a customer in order to avoid the company’s franchisee ex-hibiting opportunistic behavior based on asymmetrical information.One should be aware, however, that one has to reach the societal levelbefore one can avoid this critique of the chosen level of analysis. AsVan de Ven et al. (1974) expressed, “Only society, which Parsons(1966: 17-18) defines as a ‘total social system,’ includes all the actionsnecessary to its own existence.”



Re (2) One can also be critical of choosing the network level of analy-sis. Critics in the 1970s and 1980s claimed that it was incorrect toaddress the complex network level of analysis before a satisfactorycomprehension of the lower dyadic level of analysis was achieved(Bonoma et al. 1978, Achrol et al. 1983). Achrol et al. (1983) referred tothe few empirical observations and the relatively underdeveloped statethat characterized theory development on the network level, and sur-mised that one should only consider the network theories as descriptivetools (e.g., in connection with flow-charts), which do not allow for ex-tensive tests, theory- and hypothesis formulations. At that point in time,the available empirical and theoretical background material on dyadicrelationships was significantly more developed and comprehensivethan the material which addressed networks. Bonoma et al. (1978) dem-onstrated that researchers were primarily concerned with the dyadiclevel of analysis within psychology and sociology; those disciplineswhich traditionally have influenced marketing. Although the criticsadmitted that a network level “. . . would more completely capture thecomplexity of interorganizational relations . . .” (Achrol et al. 1983),and that it “. . . may in fact present a more accurate view of the marketingworld than a dyadic perspective . . .” (Bonoma et al. 1978), the critics em-phasized that interorganizational research was, at present, best servedby remaining at the dyadic level of analysis. Thus, today’s research atthe network level is still at an early stage. The IMP group has carried outnumerous network studies that seem to be very promising (Ford 2003).“It poses obvious conceptual and methodological problems–but then sodid interfirm relations some years ago” (Ford 2003).

Re (3) There is hardly any doubt that higher levels (e.g., cluster andnetwork) are relevant and fruitful levels of analysis today. It is worthyto note, however, that an orientation towards higher levels of analy-sis should not exclude the lower levels of analysis such as the dyad orthe individual, as long as the analysis potential at these levels is notdepleted. Selecting one level of analysis excludes the others. This is dueto the fact that the other levels of analysis must be considered as given,as long as there is no solution to the micro-macro dilemma. Therefore,understanding higher levels is not only achieved by addressing them di-rectly but can also be accomplished by studying lower levels which in-fluence higher levels of analysis. An important issue with this approachis the combination of different research results. There, meta-analysesand reviews should not be limited to given levels but focus more widelyacross levels.

Some research questions are exemplified in Figure 4.



Regarding Empirical Data Collection

Given a research question, there should be congruence between thelevel of analysis and the level of observation. Inevitably, a central issueaccompanying the level discussion concerns the issue of how macro-phenomena or micro-phenomena should, or could, be reduced to or ex-plained by theories or empirical observations of lower levels, typicallythe individual level. This is a complex discussion with several view-points and nuances. The most extreme and controversial opinions pres-ently being debated are individualist and collectivist methodologies(Agassi 1973).

Individualist methodology subscribes that supraindividual (such associal) phenomena should be reduced to the individual level when giv-ing scientific explanations. For example, individualist methodologywould hold that the explanation of organizational buying behavior, or amarket, should occur on an individual level, and the organizational ormarket phenomena should be explained as an aggregate sum of the in-volved individuals’ behavior. Individualist methodologists contend thatindividuals, compared to organizations, are easier to observe and there-fore easier to acknowledge.


How characteristics ofan individual influence a

relationship’s development?(e.g., salesperson’s education)

FIGURE 4. Research Questions Across Different Levels of Analysis


On the other hand, the collective methodologist contends that thebehavior of an organization is greater than the sum of the involved indi-viduals’ behavior, or that “social phenomena should be explicable in asocial context” (Durkheim 1972). Some supraindividual phenomena arenot only a result of individuals’ conscience behavior, but they have theirown identity which is independent of other individuals (e.g., corporateculture).

The methodology chosen is of vital importance to relate theory anddata. Neoclassical microeconomics can be considered as individualistmethodology, i.e., not applying the structural dimensions and herebyseeing actors as independent. Within neoclassical microeconomic re-search, markets are considered to be aggregated phenomena. Thereforeit would be appropriate to base one’s studies of supraindividual, or socialphenomena, macro-phenomena, exclusively on observations of individ-uals. But when moving away from pure individualism-based methodol-ogy, there must be an accordance between theory and data. Studies ofsocial phenomena cannot solely be based on observations of specific in-dividuals.

Today’s business-to-business marketing researchers are not pure in-dividualist methodologists. It is not assumed, for example, that organi-zational buyer behavior is merely an aggregated phenomenon whichcan be derived as a sum of the respective individual’s behavior. Busi-ness-to-business marketing researchers would normally research socialphenomena in a social context. This suggests that we must, as a mini-mum, research or observe organizations with all of the characteristicsand dimensions that we acknowledge, characterize or conceptualize. Inaddition to the individuals involved, one would typically describe an or-ganization in terms of processes, configurations, cultures or other fac-tors that are observable. Nevertheless, one often experiences a gapbetween theory and data. Coleman (1990, p. 1) expresses it as follows:

A central problem in social science is that of accounting for thefunctioning of some kind of social system. Yet in most social sci-ence, observations are not made on the system as a whole, but onsome part of it. In fact, a natural unit of observation is the individualperson; and in the development of quantitative methods of re-search, the dependence on individual-level data–most often inter-views, but sometimes administrative records of behavior, directobservation, or other forms of data–has increased greatly. This hasled to a widening gap between theory and research: Social theorycontinues to be about the functioning of social systems of behavior,



but empirical research is often concerned with explaining individ-ual behavior. (cf. Huber 1991, Alexander et al. 1987, Giddens1990)

One cannot ignore the fact that within business-to-business market-ing research there are a few studies which exhibit an apparent lack ofcongruency between the level of analysis and the level of observation.This could be attributed to the fact that the researchers carrying outthese studies are individualist methodologists. But often, however, thislack of congruency is probably due to the author not describing his cho-sen level of analysis sufficiently. For example, if one were to ask oneor more individuals from one organization about the dyads or inter-organizational relations involving their organization, it would not beunacceptable to assume that the study concerns interorganizational rela-tions, as is the case with Pfeffer and Salancik (1978). One should, how-ever, be aware that the aforementioned study did not analyze a dyad, aninterorganizational relation, because the level of analysis was the orga-nization. The observation can help us to understand how an organiza-tion, or individuals from an organization, interpret and organize theirtasks in order to influence the interorganizational relationships in whichthey are involved. The organization or individuals of an organization,remain the dependent variables. Figure 5 illustrates the link between thelevel of analysis (research question) and the level of observation atwhich data are gathered.

It is quite natural to demand multi-informant data while analyzing acomplex issue like industrial marketing. However, while multi-infor-mant data solves some problems (e.g., common source bias), it createsother challenges. A central issue is how to combine the different answersof individuals about one relationship. There are several possibilities:

• MINIMUM implies that the minimum score from all respondentsis taken as the combined measure. This would imply that the weak-est link determines the outcome.

• MAXIMUM is similar to MIN but here the highest value counts.• AVERAGE takes the mean value of all respondents and thus ac-

counts for a moderate compensation. The problem with this mea-sure is that larger differences are treated equal to small difference.For example, if respondents submit a level 4 answer it makes thecase similar to when one respondent is on level 2 and the other onlevel 6. Such a linear substitution seems therewith questionable(Medlin 2003).



• ROOT corrects for the above-mentioned deficiency as greater dif-ferences between the two respondents are reflected in lower valuesfor the mutual measurement.

All the above possibilities are potentially applicable depending onthe specific question. Thus, we need theoretical arguments and empiri-cal testing in order to develop guidelines on when to use what sort ofcombination method.

POTENTIAL FUTURE RESEARCH TOPICS

The presented framework of levels of analysis does not solve the prob-lems of research in business-to-business marketing. However, it providesa tool for understanding of the different approaches and enables research-ers to position their work more precisely. Such positioning could enablea better comparison of results and could help to consolidate the researchfindings into a comprehensive theory. The use of Figures 3 and 5 to po-sition studies can increase understanding and Table 2 may help organizemeta studies and reviews.


FIGURE 5. Levels of Observant vs. Level of Observation


The developed framework may help to identify neglected areas and,thus, help to provide guidance for further research questions. As ex-pressed above, various studies deal with different levels of actors andtheir influences on structure as well as object. However, there is a ten-dency that higher levels (e.g., cluster, network) are less developed. Inparticular, the interplay of these elements opens rich research questions:

• How can networks be managed by cluster? Which different rolesexist and which competencies are needed in order to fulfill differentnetwork roles? A study at this level is Harland and Knight (1998).

• How can individuals develop their network picture (Ford et al.2004)? Given the importance of networks for a firm’s businesssuccess, an understanding of a firm’s network is essential. How-ever, little is known about network analysis processes, i.e., withwhich tools do firms analyze their networks and to which extentare these tools efficient?

CONCLUSIONS

In this paper, we have provided a detailed framework of different lev-els of analysis. Hereby, we have distinguished between actors and struc-ture. The framework allows for a more detailed discussion of the variouscontributions to business-to-business marketing. We think that it is avaluable contribution in order to specify a studies background.


TABLE 2. Matrix for Meta Study Analysis

ObservedObserving

Network Net Portfolio Dyad Cluster Organization Group Indi-vidual

Network

Net

Portfolio

Dyad

Cluster

Organization

Group

Individual


Furthermore the methodological discussion “level of analysis vs.level of observation” improves by highlighting potential discrepanciesin levels of analysis rather than avoiding such discussions. Gaps be-tween the two levels should be addressed either by analyzing phenom-ena at other levels or by developing methodologies which explicitlydeal with the gap between these two levels.

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EXECUTIVE SUMMARY

Executives, as well as academics, in business-to-business firms facechallenges in analyzing the position and interactions of their own firmwithin complex business networks in which relationships betweenfirms are normally multiplex, often long-term oriented and intercon-nected. They also face a wealth of theoretical arguments, analyticalmodels, and toolboxes with which they may gain insights about theirbusiness system complexity. However, some of these contributionsseem to contradict each other at first sight but a closer analysis revealsthat they are operating at different levels of analysis. As such it is impor-tant to understand the different levels in business to business.

In order to address this potential confusion, this paper develops aframework for distinguishing different levels of analysis. Hereby, eightlevels of analysis in business-to-business marketing are suggested cov-ering two different dimensions: structure and actors. Starting with thestructural level, we identify dyad, portfolio, net and network as relevantlevels. From a managerial perspective, these different levels deal withdifferent tasks: What does a firm want with a given customer relation-ship (dyad)? What kind of different customers are in their customer base(portfolio)? How are different innovation initiatives with customersconnected to a firm’s innovation strategy (net)? Which position doesa firm have in its value chain (network)? Related to this, differentperformance measures apply at these different levels: e.g., a personresponsible for synergies between relationships (net level) should be re-warded for realizing such synergies. In many firms, such views chal-lenge existing procedures and mind-sets.

At the actor level, individuals, groups, firms and clusters can be dis-tinguished. These different levels may influence, manage, participateand/or interact in business markets. Again, different issues are relatedto these levels: Which personality matches best a given customer (indi-vidual)? What characteristics are important for successful team selling(group)? How does a firm position itself on a market (firm)? How canwe organize efficient responses to customer demand changes along thevalue chain (cluster)? Also with dimension, different approaches to per-formance evaluation need to be employed: if, e.g., a firm wants to in-crease its team sales effectiveness, incentives should be related to teamperformance instead of individual achievements.

Furthermore, the paper discusses the difference between the level ofanalysis (or in managerial terms the focus of decision making) and thelevel of observation (i.e., the source of information). Ever so often, we



witness a great discrepancy between the two. A typical example in-cludes one respondent to answer for a whole industry. This is not per sewrong but there are limits to this approach and decision makers needto understand these limits. As such, the framework offers a searchingarena for alternative observation methods or actors.

Applying the framework, executives can organize their managerialtool box in order to match tools with tasks at the appropriate level. It isinefficient, if not dangerous, to apply the wrong tools to a given situa-tion. As such, a clear understanding of the relevant level of analysis is aprecondition for good decision making. Furthermore, the frameworkhelps managers to identify gaps in their knowledge base or organiza-tional set-up, e.g., limited data is available for specific levels, or nofunction is responsible for a given level. If certain aspects of analysisare permanently overseen, the firm is blind to certain areas of their envi-ronment and thus becomes vulnerable to change because such change isperceived as unpredictable and no precautions can be taken. Therefore,an understanding of the levels and an application of the framework areessential for any manager, regardless of hierarchical level, industry orgeographical place.



Documents

Levels of Analysis in Business-to-Business Marketing