Inter-firm Relationships Research Articles

The Who, Where, What, How and When of Market Entry

AbstractThis introductory, along with the eight articles contained within this Special Issue, highlights and brings greater clarity to entrant‐incumbent interactions and to firm movement – when entrants traverse market territories for the creation and/or delivery of offerings, where ‘markets’ include service or product categories, technology or resource spaces, industries, sectors and/or geographies. Collectively, this Special Issues explains that firm movement across market boundaries is highly consequential, influencing resource‐capability mixes inside firms, interfirm relations, market logic and industry value chains, and of course, people, communities and even nations. Specifically, we develop a field‐wide perspective of market entry by expanding on the framework of market entry that Zachary and his colleagues developed (Zachary et al., 2015) – i.e., the who (players such as incumbents, entrants, suppliers, etc.), when (the timing and sequence of entry), how (the strategy, resources, capabilities, etc.), where (the space of entry) and what (product, service, business model, etc.) – to include two additional categories: complements (networks, platforms, ecosystems) and non‐market elements (government, political, social and cultural arrangements). We also summarize the eight highly diverse and insightful articles that make this Special Issue, and conclude with a discussion to highlight foundational questions that point to new directions in future research in this field. In sum, we hope to inspire scholars to go beyond counting outcomes (e.g., entry/exit rates, or profiling successful versus unsuccessful entrants), to consider contexts, processes and contingencies (e.g., cost, time, collaboration, competition, interfirm relations, etc.) and to discover boundary conditions that inform a theory of market entry.

The Business Interoperability Decomposition Framework to analyse buyer-supplier dyads

The current competitive environment demands cooperative arrangements like buyer-supplier dyads to struggle for the success of supply chains. Managing inter-firm relationships is a decisive and highly demanding activity, whereas business interoperability (BI) is key to achieve meaningful interactions to create value. Nonetheless, cooperation issues due to lack of interoperability constrain the success buyer-supplier dyads. Problems ranging from technical to strategical perspectives of BI may lead to problems like lack of coordination which decrease the supply chain surplus. Interoperability literature provides several contributions and frameworks to deal with different interoperability issues. Nonetheless, it is missing a cohesive framework allowing one to address inter-firm relationships in the full scope of BI. The present paper proposes a framework to support the analysis of interoperability conditions in buyer-supplier dyads. A case study was conducted to demonstrate the framework, and what decisions are required to improve or scale-up cooperation.

Heritage and Satellite Manufacturing: Firm-level Competitiveness and the Management of Risk in Global Production Networks

abstractThis article explores the role that product- and firm-centered heritage plays as an advantage-creating resource and competitive dynamic in contributing to minimizing risks for firms in global production networks (GPN). Research on the management of risk has been identified as critical for developing an understanding of the underlying determinants of GPN. In the satellite industry, key risks relate to launch, extreme conditions in outer space, and challenges concerning repair. These risks are minimized by the development and management of heritage. Heritage is a reputational asset founded on proven technology embedded in products and/or firm-based relationships that have values or associations that accumulate and are passed down over time. The risks associated with the space sector are extreme; however, heritage also plays an important but unacknowledged role in other economic sectors, including shipping, nuclear energy, rail, medical technologies, and aviation. The article adds to the economic geography literature in three ways. First, it highlights the central role that regulators and insurance providers play in defining market imperatives for GPN. Second, it identifies and explores heritage as a reputational asset, providing both a source of competitiveness and a competitive dynamic influencing firm-based routines and interfirm relationships. Third, it provides the first in-depth analysis of the satellite industry in the context of heritage—a sector that impacts on the everyday activities of government agencies, citizens, and firms. This analysis of heritage is based on eighty in-depth interviews with representatives from across the UK space sector.

Exploring the relational dimension in a smart innovation ecosystem: a comprehensive framework to define the network structure and the network portfolio

This study analyses the relational dimension and the knowledge transfer mechanisms in an innovation ecosystems (IEs), assuming that the bottom-up creation of synergies and cooperative mechanisms between local actors are the drivers of a regional smart growth. More specifically, the study explores the configuration of the network structure and the variety of inter-organizational relationships in a case of a smart IE by capturing the heterogeneous nature of IE demography, whether most studies limit their analyses to inter-firm relationships and at the node-level. Secondly, the paper provides insights into the network portfolio composition, which has been underexplored in IE literature, allowing for the identification of those relationships considered more fruitful to enhance innovation processes from a local perspective. To capture both aspects of IE’s relational dimension (i.e. network structure and network portfolio of relationships) our paper adopts an explorative approach, by taking evidence from the empirical study of the biopharma IE in greater Boston area, which has been exemplified as a successful case. Our empirical study combines two methods, namely social network analysis and expert interviews. Firstly, we conduct a social network analysis to gain insights about the optimal network structure and secondly, we conduct a round of semi-structured interviews with key stakeholders in the ecosystem to explore the characteristics of the desirable network portfolio. Our findings show that a smart IE presents an open network structure with structural holes, a high level of modularity and a portfolio of relationships that privileges informal and non-redundant ties within small communities focused on specific themes.

Supply chain resilience: the whole is not the sum of the parts

PurposeThe purpose of this paper is to investigate how resilience at different nodes in the supply chain influences overall supply chain resilience (SCRES) during an extreme weather event.Design/methodology/approachBased on 41 in-depth interviews, this qualitative study examines two Brazilian agri-food supply chains (AFSC). The interviews explored the impacts, preparedness, response and adaptation strategies adopted by farmers, processors and manufacturers during Brazil’s extreme drought of 2014–2015.FindingsSCRES does not depend on all organizations in the supply chain but rather on the company able to reconfigure the resources to control for the disruption. In a supply chain with low interdependence among players, individual firm resilience elements might be preferable to interorganizational ones.Research limitations/implicationsThis study is based on the context of AFSCs with low interdependence among players and during the experience of a climatic event. The results might not be generalizable to other sectors and phenomena.Practical implicationsFirms must evaluate their positions in supply chains and their interfirm relationships to determine which resilience strategy to invest in and rely on. Moreover, to leverage resilience at the supply chain level, firms must intensify information sharing and improve proactive resilience strategies upstream as well as downstream in the supply chain.Originality/valueThis study presents a broader perspective of resilience by comparing resilience elements at both the node and supply chain levels and by discussing their interactions and trade-offs.

A Comparative Study of New Developments of the Industrial System Based on Industry–Bank Relationships in Japan and Germany after World War II

This paper discusses the development of a new system of oligopolistic industrial concentration based on industry–bank relationships after World War II. Industry–bank relationships are important issues related to cooperative inter-firm relationships, the system of corporate governance, corporate development, and Japanese and German capitalism’s accumulation structures. In Japan, industry–bank relationships were restructured through the dissolution of the zaibatsu and the formation of large corporate groups that included a wide array of industries. In Germany, industry–bank relationships developed through various mechanisms such as banks’ credit and securities businesses, the shareholdings and deposited stock system, the assignment of directors from banks to corporations, and the advisory board system. First, this paper examines the postwar industrial system based on industry–bank relationships in Japan. Second, it analyzes new developments in Germany’s industrial systems based on industry–bank relationships. Drawing on these discussions, this chapter discusses the Japanese and German characteristics and the significances of their industrial systems based on industry–bank relationships.

The emerging role of coopetition within inter-firm relationships

PurposeIncreasing environmental uncertainty, more demanding customers, rapid technological growth and rising capital costs have all forced firms to evolve from collaborating with buyers and suppliers to collaborating with their competitors and that is called coopetition. The purpose of this paper is to better understand the antecedents and outcomes associated with coopetition.Design/methodology/approachBuilding from the existing literature and three theoretical foundations, resource-based theory, resource dependence theory and game theory, the authors develop a model showing the antecedents and outcomes of coopetition and associated propositions of coopetition. Using a semi-structured interview process of 21 industry executives, the authors offer empirical support for the proposed coopetition model and propositions.FindingsFirms are increasingly dependent on the knowledge and expertise in external organizations to innovate, solve problems and improve supply chain performance. This research suggests that there is a value for firms to consider coopetition as a part of their inter-firm strategies.Research limitations/implicationsThe semi-structured interview process used in this research provided a wealth of information and executive experiences in coopetition. The interviews, however, only provide a single perspective of collaborative engagements with competitors. Multiple perspectives of each project would add value to this research.Originality/valueCollaboration among buyers and suppliers have been well researched; however, there has not been as much research on coopetition. This research provides a new area for future research for academics and offers suggestions for managers to improve the effectiveness and efficiency of their coopetition projects.

Creativity enables sustainable development: Supplier engagement as a boundary condition for the positive effect on green innovation

Despite the increasing awareness of business and academic research toward creative thinking, the investigation of its uptake by industry is still limited. Supplier engagement attracts considerable interest as a means to improve green innovation. Previous research studies in an inter-firm relationship have addressed the impact of green innovation on sustainability performance. While some studies have concluded that creative thinking can lead to sustainable performance outcomes, others have questioned the positive influence of creative thinking on innovation. This study takes a top-up perspective on ways to stimulate creative thinking with supplier engagement. Relying on the social capital theory and its wider contextualization in relation with the creativity, the authors argue that supplier engagement levers for driving green innovation and facilitates the sustainable development. We aim to advance understanding of the role of creativity, along with how and why creativity is important for the development of green innovation practices for a sustainable future. This study provides a more finegrained perspective by developing a theoretical model. Contributions from this study include research propositions to help explain and predict why and how firm resources become more important when combined with the creative thinking. Creative thinking is a fast-growing topic among the global community for the way that it enables sustainable development initiatives. Creativity boosts environmental, social and economic performance by enabling the development of green products and processes. Creative thinking has become an important tool driving green innovation within organizations and plays a critical role in enhancing sustainability performance. This study provides novel insights into how to organize creative abilities for sustainable development and provide actionable research direction and policy implications for both practitioners and academicians.

The effect of language use on the financial performance of microfinance banks: Evidence from cross-border activities in 74 countries

This multi-year study examines the relationship between financial performance and language use, observing 405 partnerships between microfinance banks and their international financial partners in 74 countries. Drawing on language research in international business, we find that microfinance banks based in English-speaking, French-speaking, and Spanish-speaking countries have higher performance. Furthermore, the linguistic distance between the home country of a microfinance bank and the home country of its international partner(s) is negatively related to its financial performance. Our large-scale study confirms the effect of language use on organization-level financial performance and extends research on language in multinationals from intra-firm to inter-firm relationships.

Buyer-supplier relational strength and buying firm's marketing capability: An outside-in perspective

Extant literature in marketing capability with an inside-out perspective stresses existing internal resources as the basis for developing marketing capability. This study, taking an outside-in perspective, argues that starting from external environment and developing strong buyer-supplier relationship can help formulate strong marketing capability of the buying firm. Using survey data from 199 Chinese manufacturing buyers who identified 937 suppliers, we found that strong buyer-supplier relationship can breed strong supplier information sharing and supplier flexibility, which fully mediate the effect of buyer-supplier relationship on buying firms' marketing capability. The findings provide support to the outside-in approach and reveal how external inter-firm relationship can be turned into intra-firm capability, and suggest that strong upstream buyer-supplier relationship can be a necessity for building downstream buyers' marketing capabilities. The findings also suggest an alternative strategy for developing marketing capabilities starting from external suppliers, and may help close the gap between marketing capability and dynamic external environment.

Using partially state-owned enterprises for development in Indonesia

ABSTRACTThe Indonesian government, under Joko Widodo, has begun to actively use partially state-owned enterprises (PSOEs) to achieve its development goals. This government has pursued its plans despite minority shareholders’ dissatisfaction with the shift in PSOEs’ corporate goals towards national development objectives. This paper investigates the state’s influence on PSOEs by analysing the government’s direct and indirect ownership, control of corporate governance and financial systems, and inter-firm relations. The paper demonstrates that the business system, under the government’s strong influence, has enabled Indonesian PSOEs to focus on carrying out development projects and shielded PSOEs from minority shareholders’ demands.

An analysis of the farmers contractual preferences in process innovation implementation

Purpose The purpose of this paper is to consider how farmers cope with the uncertainty-related broiler process innovation in long-term contractual relationships. Design/methodology/approach This paper conceptualizes the process innovation implementation in terms of governance structure adaptation. The focus of the study is on the property and decision rights combination in process innovation implementation. It is argued that this approach highlights a key aspect of the nexus between governance mode and innovation within inter-firms relationships. Findings The results first show that the allocation of the decision rights between the farmer and the processor explains the process innovation implementation and, second, that the farmer contractual preferences are caused by the expected costs of the adaptation. Third, estimates of transaction and production costs variations are proposed. Research limitations/implications This study considers only the uncertainty stemming from the process innovation, whereas further uncertainty sources may influence the contract negotiation. Second, the lack of sample representativeness requires further information to be gathered. Finally, the investigation could be developed by modeling the farmer-processor negotiation. Practical implications The results indicate that effective governance structures in poultry production should give room to the adaptation in order to facilitate process innovation. Originality/value To conceptualize the process innovation implementation as an adaptation of the governance structure strengthens the knowledge of innovation in the sector context and contributes to the extent of the applied field of transaction cost economics.

Blockchain and Smart-Contract: A Pioneering Approach of Inter-Firms Relationships? The Case of Franchise Networks

This paper is interested in the analysis of Blockchains and Smart-contracts applied to inter-firms relationships, in particular the franchise networks. After defining the Blockchain technology and the Smart-contract as a particular type of contract stored in blockchains, we question the theory of contracts and its conception(s) of transactions, information asymmetries, firm or inter-firm relations. To better understand the challenges of blockchain for franchise networks and identify opportunities for implementation in these networks, we present some relevant applications of this technology. We identify different ways where blockchain technology could improve the network management and therefore their performance: the supply-chain, the brand-name protection, security and transparency in the payment of fees and royalties, access to reliable information via an oracle.

Personal Relationships And Loyalty In Supply Chain

Majority of the literature on personal relationships in the business discipline, specifically marketing literature, suggests that such relationships generate positive firm-level outcomes such as enhanced business volume for supplying firms. However, personal relationships can also deviate managers from the firm’s interest and lead to negative firm-level outcomes. For instance, managers may begin to use personal relationships to address their self-interest instead of using such relationships to promote the interest of the firm. Despite this, the current body of knowledge on this issue is relatively fragmented. This study fills this important gap in the literature. This study employs a qualitative case study method. Overall, 10 in-depth interviews with senior managers of buying and supplying firms from Australian manufacturing and service sectors were conducted. Senior managers from the buying firms belonged to the following organizations: manufacturer of chemical products, coffee machines, leather products, solar panels and construction materials. Senior managers from the supplying firm were associated with the following organizations: supplier of web services, financial services provider, education services provider, aviation services provider and a supplier of gaming parts. Results reveal that that Procurement Managers continue to grant more business to Sale Managers as a result of the personal relationship and do not actively look for other suppliers offering superior services and quality products, which results in higher opportunity costs for the buying firms. Furthermore, Procurement Managers continue to chase Sales Managers from one supplying firm to another in the competition, instead of continuing a business relationship with current supplying firms, resulting in reduced business volume with currently supplying firms. This study has implications for firms as well. For instance, firms can use findings from this study to explicitly understand action (personal loyalty etc.) that managers engage in as a result of personal relationships with their counterparts across firms, as well as the corresponding negative consequences associated with it (higher opportunity costs and reduced sales volume). Firms can further use findings from this study to develop policies in order to mitigate the negative consequences of personal relationships within inter-firm relationships and to further streamline its objectives.

The Impact of Inter-Organizational Cooperation on R&D Expenditure of Manufacturing Companies

In order to drive innovation and provide sustainable growth, companies allocate substantial resources to Research and Development (R&D). R&D cooperation with external parties can offer possibilities to complement the often limited internal research resources. It also implies potential innovation opportunities and creating new customer value. Thus, implementing open innovation strategies contributes to achieving competitive advantage of companies. This paper examines the relationship between cooperation with external parties and R&D expenditure of manufacturing companies. For the purpose of this study data taken from the European Manufacturing Survey are used. Empirical results revealed that inter-firm relationships in production area and cooperation with research institutions and universities in R&D area tend to decrease the expenditure on R&D, while cooperation with other companies in R&D increases R&D expenditure. The results presented in this study have important implications for managers of manufacturing companies interested in creating competitive advantage through various cooperative activities.

Types of Inter-Firm Relations and Their Comparative Economic Performance: Evidence from Russian Retail Market

Based on economic-sociological, marketing, and strategic management literature, we combine two classifications of inter-firm relations (horizontal and vertical) and propose the original typology of four ideal types of inter-firm exchange. The quantitative prevalence and the comparative economic efficiency of each ideal type are estimated using indicators of sales dynamics, changes in commodity range and competitive positions. The empirical analysis is based on data from a standardized survey of 684 corporate managers (of retailer and supplier firms) operating in Russia in the food and non-food markets conducted by the HSE in 2016. The analysis revealed high prevalence of building intensive inter-firm relations in the supply chain and low prevalence of network connections with competitors. Additionally, the combination of horizontal relationships with competitors and building vertical relationships in accordance with the concept of relationship marketing is associated with the highest rates of economic efficiency.

Local horizontal network membership for accelerated global market reach

PurposeThe purpose of this paper is to explain how some born global firms can leverage the rich social capital in their local (home country) horizontal network for accelerated international market entry and growth. Horizontal networks warrant separate attention from their vertical counterparts, which, along with those focussed on external international contexts, dominate most network studies in the realm of born global research.Design/methodology/approachThe study utilises a multi-level qualitative approach in the study of a multi-firm population of animators in Ireland that, due to the small domestic market for their product, needed to pursue global customers from inception. The case study domain was purposely selected as a critical exemplar of a local horizontal network operating in a highly globalised industry. The authors collected data through in-depth interviews with 16 company founders. This primary interview data were complemented by interviews with staff at the apposite industry association and triangulated with secondary data on the local and global industry conditions, members’ international successes and awards.FindingsThe results demonstrate how active membership of a local horizontal network can be leveraged for the acquisition of international market knowledge and customers for born global ventures. This arises from the sharing of collective market knowledge and communal global customer information within the network to mutual benefit.Originality/valueAlthough limited by the specific conditions in this highly globalised, non-competitive industry context, this study is unique in that it finds that cooperative interpersonal and inter-firm relationships embedded in a local horizontal social network, and mediated in part by an institutional support actor, emerge as important levers for a born global’s accelerated acquisition of foreign market knowledge and of global customers.

Managing differences, interaction, and partnership quality in global inter-firm relationships

PurposeThe purpose of this paper is to develop and to empirically test a model that explains how managing differences between an information technology (IT) provider and an overseas client influences partnership quality and ultimately affects the continuity of the relationship.Design/methodology/approachA field survey by distributing questionnaires to Indonesian IT providers was conducted over four months, yielding 78 completed responses. These empirical data were analyzed by the partial least squares–structural equation modeling technique to examine the measurement and structural models.FindingsManaging differences, i.e. cultural, temporal and standards differences, has a positive impact on partnership quality through inter-firm interaction, i.e. information exchange, coordination and participation. Partnership quality, consisting of the dimensions of commitment, trust and integration, has a substantial positive impact on the continuity of the relationship.Research limitations/implicationsThis study was limited by the use of a limited number of samples, reducing the precision of the results.Practical implicationsThis study suggests that if the IT provider is able to manage the cultural, temporal and standards differences with the overseas client, it increases information exchange, coordination and participation between both parties, which are necessary for establishing a high-quality partnership.Originality/valueThis study is the first empirical examination of how the management of differences between an IT provider and an overseas client influences the continuity of their relationship through interaction and partnership quality.

Governing Interfirm Relationships for Social Sustainability: The Relationship between Governance Mechanisms, Sustainable Collaboration, and Cultural Intelligence

The concept of social sustainability is gaining attention within the field of supply chain relationships and international business. There are conflicting arguments regarding the effectiveness of contract governance and collaboration in an interfirm relationship. Previous studies have investigated the effect of a national culture on contract governance and opportunism. This study examines the effects of contract governance on collaboration, incorporating the moderating influence of cultural intelligence. Survey data were collected from 239 export manufacturing firms in different industries. The current authors suggest that contract governance might be more effective under conditions of a greater level of firm cultural intelligence capabilities. Cultural intelligence plays an important role in the shaping and implementation of collaboration and is the key to manage cross-culture relationship management in a supply chain. Cultural intelligence constitutes one potential way for the export industry to manage intercultural differences and profitably achieve an increase in collaboration. Collaboration with a socially responsible partner brings about improved social performance. The social dimensions of sustainability, such as fair labor practices and decent worker conditions, health and safety, no child labor, and employee empowerment must be addressed to accomplish the most sustainable growth. Managers also need to take advantage of cultural intelligence to adapt, collaborate, and share cultural knowledge.

Navigating Embeddedness: Experiences of Indian IT Suppliers and Employees in the Netherlands

In this article, we shift the usual analytical attention of the GPN framework from lead firms to suppliers in the network and from production to IT services. Our focus is on how Indian IT suppliers embed in the Netherlands along the threefold characterization of societal, territorial and network embeddedness. We argue that Indian IT suppliers attempt to display societal embeddedness when they move to The Netherlands. Our findings reveal that the endeavour by Indian IT suppliers to territorially dis-embed from the Dutch context is reinforced by their peripheral position in the network and their ability to offshore work in a bid to contain costs, in addition to the influence of client domination. Therefore, territorial embeddedness is considered to be secondary to societal embeddedness which is intertwined with client interest while neglecting the interest of other network members. Nonetheless, the inter-firm relationship is complex, given the tension between societal, territorial and network embeddedness. While preferring Indian IT suppliers because of their low pricing, Dutch clients also insist on compliance with the institutional context of the Netherlands especially when it comes to Dutch employees. This results in hybridization which means that Indian IT suppliers find ways to adhere to the institutional framework for Dutch nationals while simultaneously insulating Indian employees from the same. Consequently, a highly unfair segmented internal labour market develops, with Dutch nationals being treated more favourably as compared to Indian nationals. Nonetheless, to address these violations, Indian employees prefer individual strategies of resilience and rework rather than a collectivization response.