Inter-firm Relationships Research Articles

How international SME's vicarious learning may improve their performance? The role of absorptive capacity, strength of ties with local SMEs, and their prior success experiences

This study investigates whether inter-firm relationships can raise innovation and overall performance during SME internationalization, focusing on how SMEs learn from firms in transnational markets and the nature of such relationships. It contributes to research by proposing the role of vicarious learning from networked firms in the host country to improve their absorptive capacity (ACAP), innovation, and overall performance. In particular, this study proposes the moderating roles of the strength of ties with and prior success experience of SMEs in the host country market for enhancing international SMEs' vicarious learning to improve their ACAP, innovation, and overall performance. Structural equation modeling was applied to a sample of 163 valid responses received from international SMEs operating in various industrial sectors in Saudi Arabia. The obtained results support the significantly positive role of international SMEs' vicarious learning from local firms in developing their ACAP and enhancing their innovation and overall performance. However, international SMEs must have strong ties with local firms and learn from such firms' prior success experiences to derive these benefits fully.

Interpersonal and IT-enabled communication in platform transactions: the contingent role of contract completeness and technology usage

PurposeThis paper assesses whether communication via interpersonal and IT channels accounts for short-term financial performance and long-term orientation and how these effects are influenced by contract completeness and technology usage in platform builder-platform participant relationships.Design/methodology/approachThe conceptual model and hypotheses are validated through a moderated regression of 384 survey responses from platform participant.FindingsThe empirical results indicate that interpersonal and IT-enabled communication contribute to both short-term financial gains and long-term orientation. The coexistence of interpersonal communication and IT-enabled communication has a synergetic effect on long-term orientation. Contract completeness positively moderates the effect of interpersonal communication on short-term performance while negatively moderating its effect on long-term orientation. Furthermore, contract completeness undermines the effect of IT-enabled communication on short-term performance. Technology usage enhances the effectiveness of interpersonal communication in generating long-term orientation.Originality/valueFirst, diverging from the extant research treating communication as a single dimension construct, this study differentiates communication on media channels and shows their separate and synergetic effects on short-term performance and long-term orientation. Second, our empirical findings indicate that the effects of communication are influenced by governance practices, which extends the communication literature. Third, previous studies have presented conflicting results concerning the role of governance mechanisms in inter-firm relationships. By showing that governance mechanisms also either support or suppress communication in generating performance for platform participants, this study extends the existing research on governance mechanisms. Finally, by regarding technology usage as a transactional governance mechanism, this study furthers our understanding of the role of technology in interfirm relationships.

Chinese Telecommunications Companies in Ethiopia: The Influences of Host Government Intervention and Inter-firm Competition

AbstractThis article examines Chinese engagement in Ethiopia's telecommunications sector. It argues that while theories of developmental state and global production networks contribute important insights on the roles of state agency and inter-firm relations in the rise of global lead firms from East Asia, they are insufficient to interpret the recent overseas ventures of Chinese companies in Africa. A case study of one flagship Chinese telecommunications company in Ethiopia advances the existing literature by highlighting the influences of host government intervention and inter-firm competition in shaping firms’ local operations. Specifically, this article analyses a myriad of changes in the case company's organizational structure and business practices in response to increased market competition administered by the Ethiopian government. Findings reveal that despite benefiting from official inter-state cooperation, Chinese overseas companies are neither static nor merely state-driven players but are flexible in adjusting strategies to improve their competitiveness in the local market.

Return Predictability in Firms with Complex Ownership Network

Using global cross-firm ownership data, we find that both stock returns and cash-flow news of ownership-linked firms predict focal firm’s returns for all four types of ownership structures: subsidiary−parent, parent−subsidiary, subsidiary−subsidiary, and parent−parent. These results are observed only after the establishment of cross-firm ownership links and are not subsumed by focal firm or industry momentum, or alternative inter-firm relations, including customer−supplier links, strategic alliances, common boards, and shared analyst coverage. Our findings are best explained by mispricing due to an active internal capital market – a mechanism unique to complex ownership network firms.

Global network coopetition, firm innovation and value creation

PurposeStudies on inter-firm relationships have recently shifted their attention from dyadic networks to more globally driven network structures. This condition occurs because embeddedness in global network structures may improve firm innovation and performance. In addition, the improvement of firm innovativeness and performance seems higher when globally networked firms both compete and cooperate between and among them. In this paper, we categorize the simultaneous interplay of cooperation and competition in the global arena as global network coopetition (GNC). Under GNC, multinational enterprises act jointly with their global partners-rivals to improve performance, at the same time by sharing complementary resources (cooperation side) and by undertaking independent actions to enhance their own performance (competition side). This paper aims to expand existing research on network and global coopetition by shedding light on the effects of coopetition between and among firms belonging to global network structures on value capture and innovation performance.Design/methodology/approachUsing a sample of 100 firms belonging to 14 industries organized in 47 global networks of different sizes, the authors conducted a longitudinal empirical study over the period 2000-2014 covering 1,098 observations, 1,717 interfirm relationships and 78 inter-networks linkages. A multiple regression model on panel data with random effects was conducted on the sample of 1,098 observations related to the global automotive industry to test the research hypotheses.FindingsFindings show that GNC enhances firm performance and innovation outcomes. In addition to GNC, structural characteristics such as network size, network position and network diversity have significant positive or negative effects on innovation and performance outcomes of firms belonging to these global network structures.Research limitations/implicationsOur research offers a contribution to the literature dealing with global networked structures’ effects on firm innovation performance. In fact, it effectively complements prior work on outcomes of coopetition between firms embedded in complex network structures. It also advances research in the area by introducing the notion of GNC as a network by which firms can enhance their innovation performance and, therefore, their global innovation performance. This study has some limitations. First, we acknowledge that it is focused only on 14 global coopetitive networks. It could be promising to extend the scope to integrate other networks. Second, our measures of firm actions as based on a content analysis of news reports related to firms. It would be important to complement this data collection by conducting a qualitative analysis (interviews). Atlast, it could be promising to include the study of customer needs in the new product development process.Practical implicationsOur study also offers some insights into the management of coopetition. In fact, by taking into account the existence of a context in which global coopetition networks play a role, managers may be better positioned to effectively deal with the paradox of being a partner of their direct rivals to improve their firms’ innovativeness and, consequently, achieve good performance, on the one hand, and to maintain relationships within several networks by taking into account their structural properties such as centrality and diversity, on the other hand.Originality/valueWe contribute to extant network coopetition literature in two ways. First, we introduce the notion of GNC to detect coopetition occurrence in global network structures. GNC refers to a context where actors in various networks belonging to different industries and geographies cooperate in a one (or more) innovative project/s, while simultaneously keeping on competing within and between their networks. Second, we contribute to network coopetition by analyzing specific GNC effects on firm innovation performance. In so doing, we can provide a deeper analytical understanding of GNC performance effects on firms operating in global network contexts.

The Joint Effects of Formal Institutions and Business Characteristics on Interfirm Guanxi in China: A Fuzzy Set Analysis

ABSTRACT Purpose: This research intends to investigate the effects of formal market institutions on managers’ willingness to use personal networks, such as guanxi in China, for business success. Methodology: We collect data from a major cellular phone manufacturer and its 277 retailers across China. We employ Fuzzy set Qualitative Comparative Analysis (FsQCA) to identify necessary conditions and causal recipes (combinations of antecedent conditions) for three elements of guanxi between boundary spanners (i.e., ganqing, information favor, and business support) and a firm’s operational performance. Findings: We find that formal market institutions are not the sole factor influencing managers’ decisions on exercising guanxi practices and, in turn, achieving interfirm collaboration. We also find that there exists more than one causal recipe leading to each key element of guanxi between boundary spanners. The results also suggest that well-established formal market institutions would never be able to completely eliminate guanxi practices in China. Originality: This paper is among the first to examine the joint effects of formal market institutions and key characteristics of interfirm relationships on the use of guanxi practices.

Interpersonal guanxi and partner extra-role behavior: Mediating role of relational and transactional governance strategy

This paper identifies interpersonal guanxi between boundary spanners as an individual-level antecedent of partner firms' extra-role behavior (ERB) in interfirm relationships. Drawing on interfirm governance and the guanxi literature, we propose that guanxi between boundary spanners at the operational level may promote partner firms' ERB through two governance strategies: interfirm trust and relationship-specific investment. We analyze 268 pairs of sales managers and salespeople in a variety of industries in China, and we find that guanxi between boundary spanners positively affects partner firms' ERB and that this positive relationship is strengthened by interfirm ownership homogeneity. Moreover, the relationship is mediated by interfirm trust and relationship-specific investment, and the mediation effect of interfirm trust is stronger than that of relationship-specific investment. These findings provide new insights into the relationship marketing and guanxi literature by highlighting the effects of guanxi between operational-level boundary spanners on partner firms' ERB.

A review of inter-firm relationship quality in supply chains

Purpose This paper aims to conduct a review of the recent literature on inter-firm relationship quality (RQ) in the supply chain (SC) settings. Design/methodology/approach 100 English-language scientific publications on inter-firm RQ, published from 2006 to 2015 were selected and analyzed by using a content analysis approach. Findings The results of the frequency analysis map the antecedents, dimensions and consequences – particularly the performance and behavioral intentions of collaborating partners – of buyer–seller RQ presented in the current literature. The contingency analysis offers insights into the use of relevant constructs of inter-firm RQ in SCs in the individual papers. A range of research gaps is uncovered. Research limitations/implications The category building for the content analysis was based on an RQ framework that focuses on the mediator structure and neglects the effects of moderators. Practical implications The developed framework of inter-firm RQ in SCs provides managers with a guide to the relevant influencing factors, evaluation indicators and consequences of the quality of their relationships with SC partners. Originality/value This paper provides the first literature review at the intersection of RQ and SC. The research framework developed specifies the use of the previous RQ framework in the business-to-business and SC context. A critique of the existing studies is discussed and the agenda for future research are suggested.

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 corporate groups care about company standards

The role of company standards as a strategic tool for the optimisation of internal processes and governance of inter-firm relationships has only recently received researchers’ attention. This paper adds to the very limited body of literature by providing empirical evidence of the motives to implement company standards in general and their importance in corporate groups in particular. Using data on German companies active in standardisation, the empirical analysis confirms that companies that are part of a corporate group utilise a higher number of company standards than single firms. By codifying and transferring company-specific information, internal standardisation enhances legal security, productivity, and quality. In particular for corporate groups, internal standards additionally play a crucial role in the realisation of technical interoperability, which facilitates the development and management of internal platforms. The data, therefore, provides empirical evidence that standardisation can be used as a tool to improve efficiency and communication, and thereby facilitate global governance of multinational firms.

Knowledge Sharing in Strategic Alliance Relationships: An Empirical Research on Hotels in Turkey

The study aims to investigate the influence of inter-organizational knowledge sharing enablers-communication, trust, shared vision, commitment, learning intent, and absorptive capacity directly and indirectly through interorganizational knowledge sharing process on behavioural innovation outcome in strategic alliances of 4- & 5-stars hotels of world heritage cities of Istanbul and Antalya. For data collection, the quota sampling method is applied to select the 250 senior hotel executives engaged in collaborative strategic hospitality alliances. Besides, to test the hypotheses, descriptive, correlation as well as regression analyses are performed through the SPSS. The current study finds that the six facets of relational and social capital inter-organizational knowledge sharingenablers offered and examined have significant impacts, directly and indirectly through inter-organizational knowledge sharing process on the innovative behavioural outcome of hospitality alliance firms. The results imply that the hospitality industry in its policy agenda should recognize that relational and social capital-based knowledge sharing strategic alliances can be a vital source of collaborative innovation. Finally, the current research also provides the empirical recognition of historic cities of Turkey as cultural destinations, so emphasizing the appropriateness of world heritage cities to investigate inter-firm relationships across hospitality alliance firms.

Specificity of Pragmatism Evaluation of Interfirm-Relations between Enterprises at Network Structures in the Conditions of Business Macro Trends

Modern scientific research points to the fact that the enterprises at network structures are a kind of system that is formed of different components, which are related by various connections. In this context, it is quite relevant to study the assessment of inter-firm relationships of enterprises at network structures in the context of business macro trends. The article substantiates the list of indicators that can be used to assess the most important properties at network on the basis of existing economic relationships and determine certain of their limits, according to which they can be classified as network. It is established that the relationships should not be extremely rigid, as in this case they will be inherent in the hierarchically centralized business structures. It is investigated that the choice of system at indicators for assessing inter-firm relationships and establishing their upper and lower limits will allow based on statistical processing of source information to draw clear conclusions about the presence or absence at network structure. Based on this, it is established that indicative analysis can also be used to assess the dynamics at network, establish its type and study the transformation processes and draw conclusions. It is noted that the studied method of analysis relationships based on an indicative approach has the following disadvantages: the need to use to calculate the array of business information, the collection of which is problematic for managers of companies due to the significant time spent on it; fears of disclosing commercial information, as well as the advantages – ease of calculation at indicators and fairly high accuracy of assessment. It is established that for economically developed countries the tendency to form inter-firm networks on market principles with the use of decentralized mechanisms of coordination activities based on partnership trust prevails, the Ukrainian economy is dominated by hierarchical networks with centralized management. Keywords: enterprises of network structures, interfirm relations, evaluation indicators, partnership relations, interfirm networks.

Breaking the Chains of Open Innovation: Post-Blockchain and the Case of Sensorica

Open innovation is a concept in flux; from the practice of large-scale, internet-mediated collaboration, to a strategic option and business model for firms. However, the scope and breadth of its transformative dynamic is arguably restrained. Despite the theoretical and empirical benefits of openness, established firms face significant challenges deploying the coordination patterns of open innovation communities, further reducing the potential of spill-overs in the supply chain. Viewed differently, open innovation presents more user-centric and responsible innovation paths. These are manifested in the processes and outputs of open innovation by empowering participation and by successfully employing the capacities of user communities. To reap the benefits of open innovation, a rapid reconfiguration of the production and exchange structures is needed in intrafirm and interfirm relations. Sensorica is an open enterprise that achieves such forms of organization and a unique techno-social infrastructure supporting them. It illustrates a potential path that can realize the full potential of open innovation, for users, firms, and the economic system as a whole.

Private equity firms and management control: the framing of shareholder-oriented practices

This paper seeks to respond to the call for further research into the management control mechanisms (MCMs) used in inter-organizational relationships between private equity (PE) and portfolio firms. We based our analysis on the concept of change agent developed in institutional studies and the concepts of framing and frame alignment. Drawing on a multiple case study, this paper investigates the deployment of MCMs by PE firms with the aim at promoting and sustaining the shareholder focused frame and ensuring an effective alignment of portfolio companies. The study then shifts its focus on the reasons for distinct relevance of such MCMs based on the context-specific frame. Findings show the variety of MCMs that may be used in aligning interests of portfolio firm managers, considering PE firms as a case of inter-firm relationship between interdependent actors.

STRATEGIC ALLIANCES AS EXAMPLES FOR RELATIONSHIP MANAGEMENT IN B2B ENVIRONMENTS

The aim of this paper is to show the importance of relationship marketing in business-to-business contexts and present a “Model of Relationship Management Variables in B2B Environments”. First, the article gives an explanation of the paradigm shift in today’s marketing understanding vis-a-vis the traditional transaction-oriented view of marketing. Further, the article looks into business-to-business applications of relationship marketing, gives a definiuon of strategic alliances, which are examples of interfirm relationships and presents relationship variables affecting every single phase of an alliance. The article ends with the explanation of a “Relationship Net”, in which the strategic alliance does not only cover two partners but a whole set of partners along the value chain.

A Research on Prediction of Inter-firm Relationships

A Research on Prediction of Inter-firm Relationships

Building supplier innovation triads

PurposeThe past decade has seen substantial changes in how organizational leaders work with external stakeholders to improve innovation performance. As leaders have encouraged the extensive involvement of suppliers and customers into the innovation process this has led to the formation of supplier innovation triads that are often governed by a portfolio of strategic alliances. The purpose of this paper is to explore how leaders’ inter-firm relationships and strategic alliances influence the development of supplier innovation triads.Design/methodology/approachThe sample of firms in the Toyota supplier association is constructed from multiple data sets, including the Japan Patent Office, BoardEx and S&PCapitalIQ. The authors test the hypotheses using multivariate techniques, moderation analysis and endogeneity tests.FindingsThe results indicate that leadership relationships to Toyota and its suppliers have a positive effect on the formation of supplier innovation triads. The authors find that firm–external leadership relationships and alliance partner diversity have differential moderating effects on how customer and supplier leadership relationships could be used to build supplier innovation triads.Research limitations/implicationsThe results focus on the firms within the Toyota supplier association, and this limits the paper’s generalizability. Although patent data provide a detailed information resource, it do not capture all collaborations.Originality/valueThe authors expand the leadership literature by undertaking one of the first studies of inter-firm leadership relationships and their differential effects on innovation triads. The authors contribute to the literature by exploring the antecedents and moderating factors that influence buyer–supplier–supplier triads within an innovation setting.

Competitor Perceptions in Tourism Coopetition

Our study aims at understanding how coopeting tourism managers perceive their competitors. Competitor perceptions are consequential because they have implications for interfirm relationships. Collaboration with competitors offers benefits otherwise unattainable, such as improved destination marketing, more successful attracting of tourists, increased tourism product complexity, and better service, but is used to various degrees by tourism firms. We use a purposeful sampling procedure for maximum heterogeneity to select interviewees from Polish tourism DMO member firms. We inductively code and thematically group their perceptions to find that tourism managers develop a detailed understanding of collaboration with competitors and precisely identify their competitors, but interpret this so as to either facilitate collaboration or to remain in rivalrous mode, depending on their behavioral disposition. We propose a framework for developing perceptions with mindsets in a pivotal role.

A Comparative Study of Antecedents to Contracting Practice in Buyer-Seller Relationships in Egypt and China

The purpose of this study is to analyze the influences of transaction factors on inter-firms relationships in different businesses. The study focuses on the comparison between the Chinese and Egyptian business with regarding to buyer and seller relationships in textile industry in order to find out the differences in buyer-seller relationships between Egypt and China and how the cultural factors influence the contracting practice between these two countries. Therefore, transaction cost analysis (TCA), relational contracting theory (RCT) and resource dependence theory (RDT) would act as the important tools to find out how the business relationship works in different culture background. Combining the three theories, we can conclude the general view about the transaction mechanism in the two countries. Chinese market situation, weak legal system and informal institutions combining with the “guanxi” embedded business environment make the Chinese small firms rely on the relational contracting more than formal contracting. Meanwhile, the high value for law makes Egyptians prefer to formal contracting. The findings highlight the fact that the level of contracting mechanism was found to be more positive in Egypt than in China and was statistically significant. In other words, the Egyptians tend to use the formal transactional mechanisms which emphasize legal conditions and incentive systems, whereas the Chinese prefer the relational mechanisms that govern exchanges through moral control and trust in the relationships between the buyers and suppliers. A hierarchical multiple regression approach employing the OLS regression model was carried out and the findings show that almost 30% of contracting mechanisms can be explained by the model, while the remaining percentage (70%) can be explained by other factors not included in the research model. In addition, the findings revealed that the association between supplier specific investments and contracting becomes significantly more enforced in Egypt than in China when the size of the buying firm increases. Furthermore, contracts have a control effect on buyer-supplier relationships in case of unanticipated eventualities.

Value Preserving Platform Regulation: Network effects, platform value and regulatory remedies.

The digitization of the economy is transforming not just the internal firms’ operational processes but entire sectors by redefining how firms create and deliver value. This is achieved through new ways of organizing firms’ value chains and interfirm relationships, which now increasingly occur not in isolation but in digital ecosystems and digital marketplaces. Digital platforms represent the engine of this transformation: they enable new structures of economic relationships, facilitate and manage interactions among multiple groups of users, and create new roles and innovation opportunities by empowering value-adding contributions by external firms and users. While this market orchestration power has produced large benefits for consumers and the economy at large, those benefits may hide risks associated with market power concentration. This report explores these implications by revisiting first the role of network size for network effects, then discusses when data can lead to network effects dynamics and create entry barriers or when they might stimulate greater innovation and competition. It concludes with a brief account of the challenges and issues with the writing of effective competition law.