ABSTRACT
The concept of a continuum of internal and external contractual relationships has been common to applied economics for many decades. It relates to transaction cost economics and the theory that the ‘boundary of the firm’ is driven by the economic costs of transactions, relative to the overall value of the goods/services required. The Relationship Continuum identifies the full range of business relationships, stretching from the most arms’ length through to those that are close-working. There are many different forms of the Relationship Continuum. Andrew Cox’s Relational Competence Model is one of the better developed models and comprises the following elements: 'Adversarial arms' length; Preferred supplier; Network sourcing; Strategic alliances/joint ventures; and Vertical integration. The Relationship Continuum identifies the full spectrum available and helps the buyer to think through the degree of competitive positioning vis-a-vis collaborative working that needs to be established with the supplier.
