Marriage of Inconvenience: Value Co-Destruction in an Inter-Dependent Supply Chain Relationship

The ability to co-create value in high technology, capital-intensive, markets requires close cooperation and goal congruence between allied firms. The aerospace industry is such a market, so it provides an appropriate context to explore supply chain relationships and how they contribute (or otherwise) to sustainable value co-creation. Whilst the concept of value co-creation has received research attention in the last decade (see Vargo and Lusch, 2008), there is little research on the co-destruction of value and the contexts and mechanisms that lead to it. This research explores a fraught inter-organizational relationship between an aircraft manufacturer and one of its key suppliers. The two organizations are highly interdependent, possess advanced technical capabilities, and have signed a risk sharing partnership. Top management across the two companies regard the relationship as vital for the success of both businesses. Despite these integrative factors, the relationship is described by managers in the dyad as “short-term-istic”, “transactional”, a “struggle”, and “deteriorating”. In order to highlight the behaviors that lead to the co-destruction of value, we research the expectations and perceptions of key individuals in the relationship using semi-structured interviews within the case dyad. We found that, in spite of the existence of formal mechanisms to govern the relationship, key individuals engaged in processes of self-legitimization, biased interpretation of the contract, and justification of positions that severely contaminated the relationship. Our study suggests that this leads to what we label ‘relational strabismus’, incongruence between stated goals and demonstrated practices, whereby partners are focused on protecting immediate interests as opposed to on building a longer-term relationship. This led to value co-destruction, potentially compromising the long-term sustainability of the partnership.