CONCEPTUALIZING THE CO-CREATION OF COMPETITIVE ADVANTAGE IN TECHNOLOGY-INTENSIVE B2B MARKETS: AGENT-BASED MODELING APPROACH

Abstract

The importance and challenges of supplier–customer cooperation has been widely recognized in the academic literature but the dynamics of such relationship remain understudied. We do not yet fully understand how customer–supplier relationship should be pursued in order to co-create mutual competitive advantage. Our simulation results show that there are differences in absolute profitability and profit distribution between cooperation partners when moving from individual firm-level management to holistic system-based management. We further find that if the supplier manages cooperation from individualistic perspective it is able to achieve the highest short-term profits by sacrificing the profitability of its customer. However, when the supplier acknowledges the profitability logic of its customer, the long-term overall profitability of the cooperation as a whole, i. e., the system, becomes significantly higher than with opportunistic individually-oriented (short-term) management. In described cases, it is actually profitable for the supplier to limit the distribution of its unique resources (e. g., technology).