Coordinated interaction and paradox in business relationships

Purpose – In this paper the authors present a theoretical framework that shows how interaction between two or more companies depends on its context of performance. Reflexivity between two or more levels of context potentially leads the parties to a situation exhibiting an apparently contradictory nature: paradox. The authors study the manner in which such situations occur and are resolved. Design/methodology/approach – The data in this paper comes from a three‐year‐long multiple case study investigation. Data was gathered from 15 different organizations through interviews, participant observation and document reviews. Findings – Context‐bounded interaction between organizational actors can be interpreted in different, sometimes contradictory, ways, which can create paradox. Parties cannot stay in paradox for long because it may produce adverse personal and social consequences. Thus, resolution of paradox potentially causes significant changes to the structural attributes of relationships. Practical implications – Paradox has potentially significant and destructive consequences for the quality of business‐to‐business relationships. Organizational actors who understand that paradox has been encountered can develop strategies for exiting paradox and maintaining high‐quality relationships with their partners. Originality/value – This paper presents a novel theoretical framework that explains how business interaction can lead to paradox, the experience and resolution of which potentially makes significant changes to the structure of business relationships.