Competitive advantage in interfirm cooperation: old and new explanations

Abstract

Purpose -The purpose of this paper is to examine how different strategy theories complement each other with respect to understanding competitive advantage of a single firm that utilizes interfirm cooperation. Design/methodology/approach -The paper provides an analytical review of three schools of strategy research in order to highlight their contributions, shortcomings, and interrelations with respect to sustainable competitive advantage and to clarify their explanations of competitive advantage in interfirm cooperation. On the basis of this analysis, an integrated perspective that captures industry, organization, and relationship attributes is proposed. Findings -The paper suggests that old and new paradigms in strategic management (industrial organization economics, resource-based theories, and the relational view) are applicable alongside each other when analyzing how a single firm gains competitive advantage by utilizing interfirm cooperation. It is argued here that no paradigm can be used to substitute others and thus an integrated perspective is needed. The paper provides a discussion and implications on how each paradigm complements others and illustrate this by sketching a refined strengths, weaknesses, opportunities, threats (SWOT) analysis framework. Practical implications -The paper gives a practical implication for managers who utilize traditional SWOT analysis in their decision making. By including relationship potential and limitations to the conceptual toolbox of thinking strategy through SWOT, managers can gain additional insight into internal strengths and weaknesses and external opportunities and threats analysis. Originality/value -The study increases understanding on how prevailing perspectives on competitive advantage can be used in analyzing interfirm cooperation.

The Role of Management Innovation in Enabling Technological Process Innovation: An Inter‐Organizational Perspective

“…Putting in place new‐to‐the‐firm management activities of coordinating these processes needs to be complemented with new‐to‐the‐firm management activities associated with setting objectives (from intra‐ to inter‐organizational objectives), motivating employees (from intra‐ to inter‐organizational work motivation) and with decision making (from intra‐ to inter‐organizational resource allocation). These new‐to‐the‐firm management activities are provided by and enabled in a bundle of idiosyncratic resources and capabilities in the inter‐organizational context and, therefore, hard to imitate (Ritala and Ellonen, ), contributing to sustained competitive advantage for the focal firm (Mol and Birkinshaw, ). Extending the management innovation perspective of Birkinshaw and colleagues (Birkinshaw et al ., ; Birkinshaw and Goddard, ; Birkinshaw, ), we define management innovation in an inter‐organizational context as firm‐specific, new‐to‐the‐firm management activities associated with setting objectives, motivating employees, coordinating activities and making decisions, which arise due to new inter‐organizational relations and are intended to further organizational goals.…”

Recognition of relational strategy content: insight from the managers’ view

“…For example, Lavie (2006) pointed out that relational orientation is related to formation and development of many various relations with individual partners on the one hand, and on the other it should take into account partners' needs. Ritala and Ellonen (2010) noted that clearly defined goals of cooperation and the meeting of reciprocal needs is the foundation of a relational orientation. Certainly, the relational orientation should be expressed in a firm's relational strategy.…”

“…From this point of view, the relational orientation as the strategic orientation of the firm is defined as the extent to which firms emphasize developing and maintaining relationships with customers, suppliers, competitors and other partners that result in mutual exchange and benefits (Panayides 2007;Ho et al 2016). This orientation is expressed not only in the formation and development of many diverse relationships with individual parties in the environment (Lavie 2006), but also in the knowledge of the mutual expectations of the partners, clearly defined goals of the cooperation, the meeting of reciprocal needs (Ritala and Ellonen 2010), as well as conscious management of interorganizational relations (Gulati 1998;Child et al 2005) through the use of various dedicated tools (e.g., CRM, SCM). The expectations of collaboration partners should be taken into account in a firm's strategy so as to effectively build and manage a portfolio of heterogeneous relations (Hoffmann 2007).…”

“…The management team must make its own strategic choice regarding the logic of value creation as well as the mechanism for appropriating it. In the first case, a choice can be made between the logic of a value chain (Hammervoll 2009), according to which forming and maintaining relations is of a transactional character, and the logic of a value network (Peppard and Rylander 2006;Ritala and Ellonen 2010), according to which the collaboration of businesses, clients (consumers), suppliers, complementors and competitors provides benefits to each of these (Stabell and Fjeldstad 1998). Regarding appropriating value, strategists make a choice between mechanisms for protecting value and mechanisms for maximizing value (Ellegaard et al 2014).…”

“…The relational orientation, as mentioned above, is expressed by a conscious orientation toward forming and developing interorganizational relations with the goal of obtaining particular benefits (Lavie 2006;Ho et al 2016). At the same time, a relational orientation determines the portfolio of a firm's interorganizational relations, their dynamic configuration, and the way in which they are managed (Panayides 2007;Ritala and Ellonen 2010). One may thus presume that the stronger the relational orientation is, as expressed in the number of interorganizational relations and their diversity, in knowledge of the expectations and needs of partners, taking these into account in strategy and satisfying these through actions taken, the greater then the content of the relational strategy should take into account choices that determine key partners for the firm, the manner in which common value is created and appropriated, the interorganizational dynamics as well as the approach to creating, developing and withdrawing from particular relations.…”