Towards a typology of collusive industrial networks: Dark and shadow networks

Abstract

The prevailing understanding of collusive B2B networks is primarily based on the theories of industrial economists and organizational criminologists. 'Successful' collusive industrial networks (such as price-fixing cartels) have been seen to endure due to formal managerial structures of coordination and control. In this paper, we seek to transcend and challenge the understanding of these illegal forms of co-opetition by drawing on evidence from an in-depth examination of four price-fixing cartels that were facilitated chiefly by marketers. Our contribution introduces the notion of 'shadow networks' (networks where although attempts are made to ensure secrecy, multilateral modes of network structure dominate akin to 'normal' managerial endeavours such as joint ventures) and 'dark networks' (networks which appear more opaque and secretive through the adoption of bilateral modes of network structure and limited bureaucracy) to illustrate the types of collusive network forms that may exist. In addition, this allows us to build a deeper understanding of collusive network forms and related inter-firm interaction for an industrial marketing audience. We provide implications for marketing practice, theory, and policy. Specifically, we outline how organizations and the marketing function can perform self-administered antitrust audits in order to help avoid breaches of antitrust. Further, we consider the importance of the two forms of collusive inter-firm networks uncovered where marketers have attempted to render these secret from antitrust agencies, introducing a relatively new line of inquiry to the industrial marketing literature.

Towards a research agenda on how, when and why trust and distrust matter to coopetition

“…Trust is the underlying mechanism of cooperative governance structures, which decrease the risk of opportunism in supplier-buyer coopetition. Eriksson (2008) Trust 'acts as an alternative to information exchange and is a preferable mode of control in bilateral B2B cartels' (p. 1447) Pressey et al (2014) A balance between trust and mistrust is needed for network coopetition management (price-fixing cartels). 'One method of dealing with uncertainty is to establish some mechanisms that control members' activities, which would encourage network longevity and reduce the importance of trust through reducing the possibility of 'cheating' by participants' (p. 47).…”

Institutional means-ends decoupling work in industrial R&D project implementation

“…An institutional decoupling work approach provides a new way of understanding implementation gaps where competent network actors inhabit and maintain project implementation gaps. These findings deepen extant understandings of the workings of implementation gaps, leveraging vertical trust spaces (Newton et al, 2014), impression management tactics (Elsbach & Sutton, 1992), and creating and maintaining pricefixing cartels (Pressey et al, 2014). R&D project implementation also sheds light on the remarkable plasticity of business network institutions.…”

“…Building on calls to extend the firm as a unit of analysis (Pressey, Gilchrist, & Lenney, 2015;Yang & Su, 2014), our paper extends the industrial marketing literature in relation to an institutional understanding of R&D project implementation gaps (Blomquist & Wilson, 2007;Cova & Salle, 2007;Mele, 2011;Canhoto, Quinton, Jackson, & Dibb, 2016). As such we extends the industrial cartel research on symbolic policy adoption gaps (Pressey & Vanharanta, 2016;Pressey et al, 2014;Pressey & Ashton, 2009) as well as Newton, Ewing, and Collier's (2014) research on loose coupling. Overall, we shed light on micro-level rather macro-level institutional factors and on means-ends decoupling rather than policy-practice decoupling.…”

“…Decoupling work is commonly identified as a means to stretch certain institutional arrangements in order for the firm to buffer implementation, while also maintaining stability (Bromley & Powell, 2012): In policy-practice decoupling, an organisation adopts policies to cope with external stakeholder pressures symbolically but does not implement these policies internally; and in means-ends decoupling, an organisation adopts and implements the policies but fails to achieve the intended goals (see Crilly et al, 2012;Fiss & Zajac, 2006;Greenwood et al, 2011;King & Lenox, 2000;Meyer & Rowan, 1977;Wijen, 2014). Institutional studies in industrial marketing explicitly highlight the role of policy-practice decoupling (Yang & Su, 2014), although there are comparatively few studies apart from initial research on industrial cartels (Pressey & Vanharanta, 2016;Pressey et al, 2014;Pressey & Ashton, 2009). Drawing on data from the European Union regulator for competition (the Directorate General for Competition), Pressey and Vanharanta (2016) show how this decoupling work, via industrial cartel pricefixing networks, allow managers to deal with the pressures or demands from interested parties.…”

“…In industrial marketing study, increasing recognition of how such pressures and goals are managed through decoupling work is emerging (Pressey & Vanharanta, 2016;Newton, Ewing & Collier, 2014;Yang & Su, 2014). Prior research on industrial cartels focuses mostly on symbolic policy decoupling, however (Pressey & Vanharanta, 2016;Pressey et al, 2014;Pressey & Ashton, 2009), while alternative types of decoupling in business markets remain unexplored and under researched.…”