Inter-firm Cooperation Research Articles

New business models with Industrie 4.0 in the German Mittelstand

Medium-sized enterprises called the 'Mittelstand' are an important pillar of the German economy. However, these firms have not been as quick to develop new digital business models that characterise a shift to digital manufacturing, which is called 'Industrie 4.0' or the Industrial Internet of Things (IIoT) in Germany. In this paper, we analyse different types of digital business models, including important external drivers (technology, security, and standards) and internal drivers (business processes, organisation forms, inter-firm cooperation, and human resources strategies). We show that the complexity and the chances of success of new business models with Industrie 4.0 increase with the integration of players from the respective ecosystem and a focus on the system rather than the product. To illustrate such business models in detail, we analyse a German 'Mittelstand' manufacturer that is currently implementing Industrie 4.0.

Ambidexterity, a driver to enhance small and medium enterprises' innovation autonomy

SMEs suffer from structural limitations that constrain their ability to develop innovation capacities and these constraints may affect ambidextrous strategy implementations, particularly during economic recessions. To mitigate these weaknesses, SMEs often rely on inter-firm cooperation relationships to provide resources and external sources of knowledge relevant in both exploration and exploitation. The network and organisational performance effects of ambidexterity strategy have been widely studied, but scarce research has focused on the contribution that ambidexterity linked to inter-firm cooperation strategies have on SMEs innovation capabilities over time. This longitudinal study, based on a panel dataset about innovation behaviour on 2,150 SMEs located in Spain's Basque Country during recession periods (2009-2013), verifies how ambidexterity, together with external collaboration strategy, reinforces SMEs innovation autonomy.

Trust in “Trust-free” Digital Networks: How Inter-firm Algorithmic Relationships Embed the Cardinal Principles of Value Co-creation

In this exploratory research, I develop new knowledge on trust in inter-firm cooperation that leverages recent technologies such as blockchain and the Internet of things in a digital platform ecosystem. In a digital network, advanced algorithms govern and shape inter-firm business processes. While such algorithms introduce efficiency in inter-firm business processes, their limitations, especially their apparent lack of transparency, may affect the key trust dimensions (i.e., reliability, fairness, and goodwill) in the relationships among the participating firms. I introduce algorithmic relationship, a label that embeds the concepts of smart contracts in inter-firm cooperation. Algorithmic relationships involve autonomous and semi-autonomous implementations of smart contracts in all lifecycle stages of inter-firm cooperation. By analyzing extant literature on trust, inter-firm cooperation, business model innovation, and digital platforms, I demonstrate how various factors influence whether firms adopt smart contracts: perceptions about other participants’ trustworthiness, participants’ own propensity to trust, participants’ shared goals and resource embeddedness in the network, perceived risks in inter-firm interactions, and complexity and time criticality of inter-firm interactions. Taking a temporal perspective, I also recognize the present lacunae with smart contracts from various perspectives (algorithm development, algorithm implementation, algorithm governance, and the availability of appropriate legal resources in the event that disputes occur) and demonstrate how these drawbacks impede shared value creation.

When does guanxi hurt interfirm cooperation? The moderating effects of institutional development and IT infrastructure capability

Relying on the resource-based view, this study tests the moderating effects of the region’s institutional development and the firm’s IT (information technology) infrastructure capability, and examine how and when interpersonal and government-firm (GF) guanxi influence the distributor’s opportunism and cooperative performance. Using both survey data from 550 industrial manufacturers and secondary data, the study shows that both types of guanxi can mitigate the distributor’s opportunism and facilitate cooperative performance. However, the region’s institutional development strengthens the effects of interpersonal guanxi while weakening the effects of GF guanxi, and the firm’s IT infrastructure capability weakens the effects of interpersonal guanxi while strengthening the effects of GF guanxi. These findings enrich both the literature on guanxi in the emerging economy by distinguishing two types of guanxi and RBV by testing the moderating effects of institutional development and IT infrastructure capability. Theoretical and practical implications are discussed.

Determinants of E- Commerce in Indian MSME Sector

The use of electronic commerce (e-commerce) in business transactions, now a priority for many firms, is attracting increasing attention. As the world economy integrates and reduces its trade barriers, some of the greatest opportunities for small businesses will derive from their ability to participate in regional and international markets. Adopting information and communications technology (ICT) is considered a means of enabling small businesses to compete globally through improved efficiency and closer customer and supplier relationships. Information and communications technology may also help small and medium sized enterprises (SMEs) enhance their competitiveness. Electronic commerce (e-commerce) is widening the concept of business from a simple transactional approach to a broader and more complex concept of inter-firm co-operation. Amidst market globalization, growing interpenetration of national economies and the increased interdependence of national economies, e-commerce adoption remains a vital yet complex and elusive phenomenon, with very little known about its determinants. This study identifies the major determining factors in Indian small and medium sized enterprises’ (SMEs) e-commerce adoption, offers practical implications, and indicates the actions required. This research integrates technological, organizational, and environmental determinisms with social constructivism to build a practical framework for understanding e-commerce adoption among SMEs in India . Structural equation modeling was employed for data analysis.

The evolution of cooperation in the face of conflict: Evidence from the innovation ecosystem for mobile telecom standards development

AbstractResearch SummaryHow does interfirm cooperation in innovation ecosystems evolve in the face of conflict? We theorize that conflict propels firms to reconfigure cooperative relationships while maintaining and even increasing cooperation with aggressors because cooperation is the primary mechanism for value creation in such ecosystems. To empirically test our arguments, we study patent litigation and subsequent cooperation between mobile telecommunications firms within the 3GPP standards development organization. We find evidence of a dual cooperative strategy in the face of conflict: while cooperation increases between litigants, defendants also enhance cooperation with others to steer standards away from aggressors. We also highlight the contingent roles of technological complementarities and relational position underpinning cooperation after conflict. Our findings demonstrate that in innovation ecosystems, cooperation with adversaries persists despite conflict.Managerial SummaryFirms in innovation‐driven industries cooperate to develop interoperability standards and compatible technologies. Yet, cooperative firms may disagree about what constitutes fair, reasonable, and non‐discriminatory terms for licensing intellectual property. Thus, conflict and patent litigation arise even as firms cooperate to build technologies and industry standards. We find that in innovation ecosystems, firms commonly increase cooperative efforts in response to conflict. Less‐connected firms or those with valuable complementary technologies will likely expand cooperation than well‐connected firms or technological competitors. Well‐connected firms may pursue alternative cooperative opportunities. We suggest that defendant firms' managers can adopt a dual cooperative strategy: (a) identify private and shared benefits from the joint development of complementary technologies with aggressors and (b) invest in alternative technological partnerships to influence the direction of future standards development.

Revisiting exercise of power strategies from the perspective of information processing

The digitization of channel management changes how firms acquire, interpret, and analyze information, which needs to be considered when evaluating the efficacy of exercising power strategies on interfirm cooperation. Drawing insights from the three mechanisms of interorganizational information processing capability, we identify contingent factors that may affect the relationship between firms' exercise of power strategies and interfirm cooperation at the firm (i.e., IT capability), dyadic (i.e., relationship quality), and network (i.e., network density) levels. We analyzed data sampled from 288 manufacturing firms and found that manufacturers' IT capability weakens the negative effect of exercising coercive power and the positive effect of exercising noncoercive power on interfirm cooperation. At the dyadic level, relationship quality between manufacturer and distributor weakens the negative effect of exercising coercive power on interfirm cooperation. Finally, at the network level, distributors' network density strengthens the positive effect of exercising noncoercive power on interfirm cooperation. Our findings contribute to the marketing channel literature by shedding new light on the effects of the exercise of power on interfirm cooperation in this digital era and offer actionable managerial insights.

Evolutionary Dynamics of Interfirm Cooperative System for Radical Innovation from Knowledge Collaboration Perspective

Interfirm cooperation can be seen as a significant and effective way for exploring radical innovation. In this article, a framework of interfirm cooperation, with a core manufacture and upstream counterparties in industry, and its evolving mechanism in the reverse-chain radical innovation are established from the perspective of the fundamental role played by knowledge collaboration. Then, an evolution model of interfirm cooperation is constructed on the theory of vibration mechanics, and its evolutionary dynamics is explored through numerical and simulation analysis mainly on the key factors of knowledge potential difference and knowledge rent-seeking behaviour within the firms. The findings show that, if there is no knowledge-based rent-seeking behaviour from the upstream firms, the probable innovative performance from the interfirm cooperation should vary for the knowledge potential difference between the cooperative firms, but can come to a certain equilibrium state. Meanwhile, if the knowledge rent-seeking behaviour does exist, knowledge potential difference would lead the innovative performance evolving ultimately in divergence. What’s more, the negative effect caused by the rent-seeking behaviour could be alleviated or weakened to some extent by the excitation mechanisms presented by the core firms in the cooperation system. Therefore, the drawn conclusions should be useful for the core manufactures’ implementing various strategies to maintain or enhance the cooperation for radical innovation in industry.

Understanding New Trend in Business: Inter-Firm Cooperative Alliance Between Competing Organizations

Abstract Traditional economics-based framework suggests that firm cooperates with competitors to increase its market power or efficiency in transaction for the maximization of its self-interest profit. However, nowadays growing numbers of firm engage in alliance with competitors for non-economic purpose. This paper seeks to understand the nature of inter-firm alliance between direct competitors by discussing several critical issues regarding it. The issues are chosen by the criterion that useful perspectives from either organization theory or strategic management can be applied to this phenomenon so that scholars are encouraged and can be easier to do a research on this topic in the future. In this regard, I seek to answer the question of why firm cooperates with competitor by comparatively adopting four novel approaches, which, combined together, provide an excellent complementary view to the traditional economics-based approach. Also, by understanding the distinctive feature of decision-making process when firm conduct a collaboration with competitor this study provides a practical insight on how firm structures, manages, and makes a decision when it cooperates with competitors. Overall, several conceptual ideas suggested by this paper can be an interesting starting point for the future empirical research.

Spanning Identity Borders: Migrant Entrepreneurs Building Knowledge Collaborations

The changing geopolitical landscapes and the increased migration flows across the world call for a fresh perspective on the socio- cultural and economic integration of migrants in their new ‘homes’ and ‘communities’. In this qualitative study, we provide insight into the identity work dynamics that underlie the initiation of interfirm cooperation. We see a sample of Bulgarian migrant entrepreneurs as knowledge boundary spanners who employ identity work tactics for the development of shared norms and values that facilitate interfirm cooperation in the UK. The study suggests that interfirm cooperation is preceded by a temporal identity work process, characterised by a series of inward and outward identity work tactics. The interplay between inward and outward identity work tactics occur over the phases of identifying identity differences, adopting identity cues and finally, realizing hybrid identity. The paper contributes to the literature that explores the underlying mechanisms for the initiation and the capture of interfirm opportunities by SMEs from a different cultural context.

New business models with Industrie 4.0 in the German Mittelstand

Medium-sized enterprises called the 'Mittelstand' are an important pillar of the German economy. However, these firms have not been as quick to develop new digital business models that characterise a shift to digital manufacturing, which is called 'Industrie 4.0' or the Industrial Internet of Things (IIoT) in Germany. In this paper, we analyse different types of digital business models, including important external drivers (technology, security, and standards) and internal drivers (business processes, organisation forms, inter-firm cooperation, and human resources strategies). We show that the complexity and the chances of success of new business models with Industrie 4.0 increase with the integration of players from the respective ecosystem and a focus on the system rather than the product. To illustrate such business models in detail, we analyse a German 'Mittelstand' manufacturer that is currently implementing Industrie 4.0.

The trickle-down effect of trust in business-to-business relationships: How can a supplier ensure cooperation from multiple customers?

Although several interfirm cooperation studies have expanded the unit of analysis from dyads to triads (networks), there is scant literature focusing on whether and how a supplier’s relationship with a customer influences its relationships with other customers. Individual relationship dyads are not isolated but interact with one another. Particularly, mutual trust in a supplier–customer relationship dyad may influence other customers’ cooperative behavior. This cross-dyadic influence is called the “trickle-down effect of trust.” A hypothesis for the mechanism by which this effect occurs was generated, focusing on the customers’ demand information offerings as a cooperative behavior. The results of an empirical analysis indicate that (1) a supplier’s mutual trust with its primary customer encourages nonprimary customers to offer their demand information to the supplier and (2) the quality of information from customers helps the supplier to make their new product more meaningful.

Employment, innovation, and interfirm networks

This paper studies the employment impact of business network agreements, an innovative policy instrument introduced in Italy in 2010 to stimulate interfirm cooperation, with the aim of increasing innovative capacity and market competitiveness. We estimate the impact of these networks on employment for a panel of Italian firms using a system generalized method of moments and considering the literature on the employment impact of innovation. We find that networks, which can be interpreted as a form of open innovation, have a positive impact on employment; moreover, this impact appears positively influenced by sectoral and regional heterogeneity of firms and the region’s innovation capacities. Overall, the results suggest that participation in networks where firms share industrial, commercial, and technical knowledge improves firm performance, creating synergies that help firms, especially small and medium-sized enterprises, to manage the growing complexity of knowledge and the fierce competition arising from increasingly globalized markets. JEL codes : D85, J2, O36

Investing in IT: a new method for improving the efficiency of contract governance in interfirm relationships

PurposeThis study aims to enhance our understanding of how advanced IT improves the efficiency of contract governance in mitigating partners' opportunistic behaviors in interfirm cooperation and the moderating effects of boundary spanners' personal relationships and cooperative orientation.Design/methodology/approachContract governance is divided into two subdimensions: contract completeness and contract execution safeguards. Then, the hypotheses are examined using partial least squares–based structural equation modeling based on survey data collected from manufacturers in supply chain relationships.FindingsThe results first demonstrate that advanced IT can improve efficiency in both the design of complete contracts and the provision of contract execution safeguards. Second, the results also show that both the personal relationships between boundary spanners and the cooperative orientation of the firm have different moderating effects. Finally, contract execution safeguards are effective in mitigating partners' opportunistic behaviors, whereas contract completeness is not.Originality/valueThis study enriches the contract governance literature in two ways. First, it unveils how advanced IT improves the efficiency of contract governance and the effects of two contingent factors (i.e. personal relationships and cooperative orientation), thus extending the research on contract governance. Second, it reveals the different effects of contract completeness and contract execution safeguards on partners' opportunistic behaviors, thus deepening our understanding of the role of contracts in interfirm cooperation.

The Impact of Special Economic Zones and Government Intervention on Firm Productivity: The Case of Batam, Indonesia

Various studies have explored the effects of industrial agglomeration and special economic zones (SEZs) in Asia, but there has been a lack of data-driven analysis of SEZ performance. This paper provides a case study on Batam, which has been developed as an SEZ through government-to-government (G2G) cooperation, offering lessons for other developing countries. The study examines the effects of industrial zones, foreign investment and government intervention on firm productivity, using an ex-post evaluation method and econometric models. The paper does not find conclusive evidence that Batam’s status as an SEZ affects firm productivity and growth. Although firm agglomeration proves beneficial for firm productivity, it is not clear that SEZ policy has driven this productivity. The paper argues that government policies should stimulate innovation and inter-firm cooperation to increase knowledge spillovers and technology transfer instead of focusing on attracting investment.

How do knowledge characteristics affect firm’s knowledge sharing intention in interfirm cooperation? An empirical study

Based on the knowledge-based view and relational view, we develop a research model to explore how a firm’s knowledge structure attributes (i.e. breadth, depth) are associated with its intention to share knowledge, as well as the moderating effects of two relational factors (strategic consensus and bilateral specific asset investments) on these relationships in interfirm cooperation. Hierarchical regression analyses are conducted to test the research model based on the data collected from 270 manufacturing firms in China. The results suggest that knowledge breadth and depth affect knowledge sharing intention in opposite directions. Specifically, firms with a broad knowledge base are more likely to share their knowledge in interfirm cooperation, whereas firms with deep knowledge are reluctant to share. More importantly, the empirical results suggest that both strategic consensus and bilateral specific asset investments positively moderate the relationships between knowledge structure attributes and knowledge sharing intention, implying that both mechanisms can improve the efficiency and effectiveness of knowledge sharing and consequently, affect senders’ intention to share their knowledge.

How to balance interfirm relationships? A case from high-speed railway industry

Purpose Balancing interfirm relationships is important for firms’ long-term superior performance. However, prior studies mainly focus on interfirm competition or interfirm cooperation separately, ignoring the balance of interfirm relationships. To bridge this gap in knowledge, this study aims to develop a framework to evaluate the balance of interfirm competition and interfirm cooperation and propose strategies to optimize a firm’s interfirm relationships. Design/methodology/approach After an in-depth literature review, a framework was developed for evaluating and optimizing the interfirm relationships. Taking the high-speed railway industry as an example, the proposed framework was implemented. Findings The results of the case confirm that the balancing of interfirm relationships can lead to more superior firm performance. Also, rather than mutual suppression, the interfirm competition and interfirm cooperation present a roughly positive relationship. Originality/value This study would contribute to the existing knowledge body by developing a framework for balancing interfirm relationships. Also, this study can aid practitioners in evaluating and optimizing their interfirm relationship structures.

Why do network organizations fail?

PurposeThe purpose of this paper is to examine network failures and the main reasons why network organizations, intentionally developed by a group of actors to pursue specific goals, become unfruitful and fail in their goals and expectations of creating collective value. The goal of this paper is thus to contribute a better understanding of the reasons network organizations encounter problems in their dynamics that prevent them from reaching the expected outcomes.Design/methodology/approachThe study is firstly based on a literature review finalized to identify the main variables considered as potentially impacting on network failures. Secondly, the paper is based on a survey conducted on 189 strategic networks that highlighted difficulties in achieving their goals. An analysis of the 24 questionnaires returned generated the results discussed. The empirical study concerns strategic networks intentionally created and signed by Italian SMEs according to a specific law designed to promote the development of inter-firm cooperation (“network contracts”).FindingsThe results of the research highlight the role of specific key items related to individual, structural, legitimacy, interaction and governance variables in explaining failures in network organizations. According to the data, failure can occur immediately before the network start-up, resulting in a blocked network or in a subsequent developmental stage, resulting in a dormant network. The empirical research demonstrated that the items affecting network failure differ between blocked and dormant networks. The authors explain such differences, considering them according to the expected goals declared by the two different types of networks.Originality/valueThe question of why networks fail is relevant in times of disruption and digitalization when new forms of organization are needed to link businesses and various stakeholders and thereby develop innovative and sustainable ideas for an entrepreneurial future. However, very few studies have examined network failure. The study contributes to this field of research by investigating the dynamics of networks intentionally developed to reach shared goals. The findings can be useful to both companies that decide to start up a strategic network and the policymakers that promote, finance and monitor inter-firm collaboration.

Can CEOs’ Corporate Social Responsibility Orientation Improve Firms’ Cooperation in International Scenarios?

This paper intends to analyze the role of the chief executive officer’s (CEO) Corporate Social Responsibility Orientation (CSRO) on interfirm cooperation. Interfirm cooperation is central to gaining competitiveness, particularly in international scenarios where firms must deal with uncertain challenges. Nonetheless, the current understanding of its key determinants needs further development. We argue that whereas environmental hostility pushes firms to cooperate for self-interested purposes, CEOs’ CSRO pulls towards cooperation as an end in itself, even more so under hostile conditions where the need for good-willed committed partners is higher. In a sample of 124 internationalized Spanish firms, we found that CEOs’ CSRO alone increases firms’ international interfirm cooperation and that this impact is stronger under hostile international environments. Our findings thus highlight the importance of leading firms in a socially responsible direction to boost their interfirm cooperation levels in international scenarios.

How can open innovation ecosystem modes push product innovation forward? An fsQCA analysis

Firms in open innovation ecosystems expand organizational resources and allow for collaborations across organizations, which can promote the flow, aggregation, and integration of resources within business network ecosystems. Yet, particular gaps in the literature limit our understanding of how open innovation ecosystems contribute to firm product innovation. Therefore, this study explores the causal recipes of how open innovation ecosystem modes promote product innovation by using both grounded theory and fuzzy set qualitative comparative analysis (fsQCA). First, by taking four innovative firms as case studies and applying grounded theory, we identify six specific open innovation ecosystem modes: “firm-university-institute cooperation,” “interfirm cooperation,” “firm-intermediary cooperation,” “firm-user cooperation,” “asset divestiture,” and “technology transfer.” Then, based on the data of 226 innovative firms, we employ fsQCA to explore the causal configurations of the open innovation ecosystem modes that consistently improve product innovation. The findings reveal that three particular combinations can explain the high level of product innovation: (1) interfirm cooperation, firm-intermediary cooperation, and technology transfer combined with asset divestiture; (2) interfirm cooperation, firm-intermediary cooperation, and technology transfer combined with firm-university-institute cooperation; and (3) interfirm cooperation, firm-intermediary cooperation, and firm-university-institute cooperation combined with firm-user cooperation. Overall, this work contributes to the theoretical literature on open innovation ecosystems and provides practical information for firms looking to achieve value creation.