Trust-opportunism paradox,relationalism, and performance in interfirm relationships: evidence from the retail industry

Building on recent theoretical work documenting that interorganizational relationships (IORs) are ‘multifaceted and multiplex’ we investigate, from the agent's perspective, the joint effects of trust and opportunism in fostering (or inhibiting) relationalism, which, in turn, is predicted to influence performance within interfirm exchange relationships. Based on longitudinal survey data on 409 catalog intermediaries affiliated with a large retail firm, we found strong support for most of the hypothesized relationships. Implications for future research are offered. Copyright © 2008 John Wiley & Sons, Ltd.     

Development of Trust: A Study of Interfirm Relationships in Vietnam

The radical political and economic reforms sweeping through former socialist countries during the last decade have opened rich opportunities for privately owned businesses to emerge and develop. Since the market institutions and infrastructures in these countries are largely underdeveloped, private firms in transition economies rely extensively on interfirm partnerships. This raises the question of how—in the absence of institutions that legitimate markets, contracts, and private property—managers of new business ventures develop new relationships. This paper addresses this issue through analysis of multiple subcontracting relationships formed at a private garment company in Vietnam. This analysis suggests that firms in transition economies develop interfirm trust in ways that are quite different from their counterparts in more highly developed economies.     

Structuring interorganizational cooperation: the role of economic integration in strategic alliances

This study addresses a new dimension that describes interdependence between alliance members, namely, economic integration–the extent to which resources contributed by different alliance members and subsequent operations using these resources are effectively blended into an alliance's value chain to the point where if one member withdraws, the remaining member(s) suffer great loss. We posit that economic integration has a linear positive effect on alliance stability but a curvilinear (diminished) effect on alliance profitability. Moreover, when economic integration is stronger, other dyadic variables such as interparty trust, joint governance and procedural justice will have a greater effect on alliance performance. Analysis of 198 cross‐cultural strategic alliances in an emerging market generally supports these propositions. Copyright © 2008 John Wiley & Sons, Ltd.     

Procedural fairness and interfirm cooperation in strategic alliances

This study applies the justice theory to address interpartner cooperation in strategic alliances. It emphasizes how procedural fairness as perceived by boundary spanners in these alliances influences cooperation outcomes. We theorize that procedural fairness improves cooperation results through enhancing relational value and curtailing relational risk in an environment characterized by both economic and social exchange. Our path analysis suggests that procedural fairness has a direct effect on operational outcome, but an indirect effect on financial outcome via increased trust driven by fairness. Procedural fairness contributes more to performance outcomes when strategic alliances are equity joint ventures than if they are contractual agreements. Theoretical and managerial implications arising from the findings are highlighted. Copyright © 2007 John Wiley & Sons, Ltd.     

Networks in transition: how industry events (re)shape interfirm relationships

Interfirm relationship networks are strategic resources that can potentially be shaped by managerial action. As a first step towards understanding how managers can shape networks, we develop a framework which explains how industry networks evolve over time and in response to specific events. Our main thesis is that industry events may be either structure-reinforcing or structure-loosening, and that their potential structural impact may be predicted in advance. We validate our hypotheses with longitudinal data on the strategic alliance network in the global steel industry. © 1998 John Wiley & Sons, Ltd     

SURVIVAL OF BUSINESSES USING COLLABORATIVE RELATIONSHIPS TO COMMERCIALIZE COMPLEX GOODS

Authors with many theoretical and managerial perspectives argue that businesses commercializing technologically complex goods benefit when they collaborate closely with other businesses. Collaboration is viewed as a means for businesses to overcome competency limitations and to achieve the close configuration of components required for complex goods. We predict that collaborative relationships often assist businesses to produce complex goods, but that the relationships might also cause problems for the collaborating businesses. We find that firms using development-oriented and marketing-oriented collaborative relationships in the hospital software systems industry are less likely to shut down than businesses that follow independent approaches when the environment changes gradually, but businesses using collaborative relationships are sometimes susceptible to being acquired by other firms. Following a sudden environmental shock, businesses with collaborative relationships for activities central to the shock became more likely to shut down, while businesses with collaborative relationships for activities outside the focus of the shock became more likely to survive. The study critically evaluates and tests the widely stated but little-tested argument that interfirm collaboration is usually beneficial. The results address the issue of whether organizational choices affect comparative business performance.     

Interfirm differences in scale economies and the evolution of market shares

Evolutionary and resource‐based theories imply that firms in an industry with different resources and capabilities may differ in critical characteristics of their production functions, such as economies of scale. This paper measures these inter‐firm differences in economies of scale and examines how they affect the subsequent evolution of the market share distribution in the money market mutual fund industry. The findings indicate that fund families with larger marginal benefits to increasing their scale do subsequently gain market share at the expense of their rivals, but that this effect diminishes as the fund family ages, perhaps as a consequence of imitation. Copyright © 1999 John Wiley & Sons, Ltd.     

Strategic alliances as social capital: a multidimensional view

Defining social capital in terms of the information benefits available to a firm due to its strategic alliances we present a theory of social capital that conceptualizes it as a multidimensional construct. We draw from the literature to argue that social capital yields three distinctly different kinds of information benefits in the form of information volume, information diversity, and information richness. This extends current theoretical and empirical research by specifying and empirically demonstrating three interrelated yet distinct dimensions of social capital. Firms vary in their levels of social capital not just on their structural position in an alliance network but also in the dynamics that underlie alliance formation and maintenance. More importantly, the different dimensions of social capital theoretically provide differential benefits. We establish the construct validity of our proposed three‐dimensional conceptualization of social capital using longitudinal data on the population of strategic alliances formed during the period 1980–94 by firms in the global steel industry. In addition, we establish predictive validity by demonstrating that the information dimensions have differential effects on firm performance, using firm nationality as a contingency. Copyright © 2002 John Wiley & Sons, Ltd.     

The leveraging of interfirm relationships as a distinctive organizational capability: a longitudinal study

In this paper we present a study of the structure of three lead firm‐network relationships at two points in time. Using data on companies in the packaging machine industry, we study the process of vertical disintegration and focus on the ability to coordinate competencies and combine knowledge across corporate boundaries. We argue that the capability to interact with other companies—which we call relational capability—accelerates the lead firm’s knowledge access and transfer with relevant effects on company growth and innovativeness. This study provides evidence that interfirm networks can be shaped and deliberately designed: over time managers develop a specialized supplier network and build a narrower and more competitive set of core competencies. The ability to integrate knowledge residing both inside and outside the firm’s boundaries emerges as a distinctive organizational capability. Our main goal is to contribute to the current discussion of cooperative ties and dynamic aspects of interfirm networks, adding new dimensions to resource‐based and knowledge‐based interpretations of company performance. Copyright © 1999 John Wiley & Sons, Ltd.     

企业间领导力:一种理解联盟企业行为与战略的新视角

资源异质性所引起的联盟企业之间的非对等地位,使得少数企业拥有了凌驾于联盟伙伴之上的领导能力,即核心企业对成员企业的影响力,本文称之为企业间领导力。企业间领导力的形成伴随着核心企业网络位置向网络中心迁移,并最终取得网络认同。网络能力构成了企业间领导力的基础,而网络结构和网络规则能够促进能力向领导力转化。在一致性认知和合法性认知的作用下,基于网络能力而形成的网络主导地位得以被联盟伙伴接受,最终催生企业间领导力。基于此,中国企业联盟建构策略包括:发展系统设计能力、深化迂回生产链的技术分工、强化联盟企业间非对称性依赖关系。     

The diffusion of technological innovation in the commercial banking industry

This paper examines the propensity of organizations to adopt technological innovations. Technological innovations evolve from the stock of skills which organizations have accumulated over time. Linkages with extramural sources of technology are presumed to be important as well. Hypotheses are tested on a sample of commercial banks. Findings show that prior experience in information technology, in tandem with a variety of interfirm linkages, will affect the banks' decision to adopt this innovation.     

Cooperative strategy and new venture performance: The role of business strategy and management experience

This paper reports the results of a study of new ventures which examine the relationships between performance and the experience of a new venture's management team, its choice of competitive strategy, and its use of various cooperative arrangements. The findings of the moderated regression analysis indicate that cooperative arrangements are most beneficial to those new ventures whose management teams possess the most experience.     

Structural homophily or social asymmetry? The formation of alliances by poorly embedded firms

Recent research shows that preexisting network structure constrains the formation of new interorganizational alliances. Firms that are poorly embedded in a network structure are less likely than richly embedded firms to form alliances, because they lack informational and reputational benefits. This study examines the types of ties that poorly embedded firms can form to overcome the constraints that their structural positions impose, in turn helping to explain how firms' actions can transform existing network structures. We argue that poorly embedded firms are more likely to participate in ties characterized by social asymmetry than in ties characterized by structural homophily. We analyze the terms of trade that socially asymmetric partners negotiate for alliance governance and discuss how such alliances influence network dynamics. To test our arguments, we use longitudinal data on the alliance activities of 97 global chemical firms from 1979 to 1991. Copyright © 2009 John Wiley & Sons, Ltd.     

The market that never was: Turf wars and failed alliances in mobile payments

In this inductive multiple‐case study set in the nascent market for mobile payments, we investigate how global firms from different industries attempt to define the architecture for a new market. We find that powerful players from different industries have difficulty in reaching agreement on the new market's architecture due to their history of dominance in their respective industries. This disagreement in turn leads to a weak compromise on market architecture and creates a vicious cycle of resource allocation deferment. We show that the nascent market is thus less likely to emerge despite country‐level attempts at resolving these issues. Our findings contribute to resource dependence theory and to theories of market emergence, and lead to a deeper understanding of when and how markets fail to emerge. Copyright © 2014 John Wiley & Sons, Ltd.     

Recreating and extending Japanese automobile buyer'supplier links in north America

We compare buyer'supplier links established by pairs of Japanese-owned automobile assemblers and component manufacturers operating in Japan and in North America during 1989-90. Eight assemblers and more than 170 Japanese component manufacturers had established North American manufacturing facilities. In total, Japanese automobile assembly organizations operating in North America had recreated about a quarter of their Japanese supply links. The suppliers that set up North American facilities had recreated almost 60 percent of their links with traditional buyers and formed more than 16 percent of the possible extension links with new assembler partners. We identify several economic and organizational factors that influence whether an existing buyer'supplier link will be recreated in a new location and whether firms that do not have a buyer'supplier relationship at home will form an extension link in the new location. We find that the presence of a long-term buyer'supplier relationship, buyer and supplier entry timing to the new location, the joint venture status of the buyer, supplier size, and the breadth of a supplier's sales base in the home market influence the likelihood that links will be recreated and extension links will be formed.     

Explaining interfirm cooperation and performance: toward a reconciliation of predictions from the resource‐based view and organizational economics

Interfirm cooperation and its performance implications are examined in the context of two widely cited theoretical approaches to organizations. Broadly speaking, the resource‐based view suggests that firms seek to capitalize on and increase their capabilities and endowments, whereas organizational economics asserts that firms focus on minimizing the costs of organizing. Although these perspectives agree on managers’ likely actions in many areas, their predictions diverge when interfirm cooperation is considered. We take a step toward reconciling these differences by positing that firms place resource‐based concerns in front of considerations from organizational economics when deciding whether or not to engage in interfirm cooperation. We examined this prediction using data from 94 publicly held restaurant chains. The results support our integrated view, but also suggest that giving primacy to resource concerns detracts from the performance of some firms. We derive several implications of these findings in an effort to guide subsequent inquiry. Copyright © 1999 John Wiley & Sons, Ltd.     

Growing with the market: How changing conditions during market growth affect formation and evolution of interfirm ties

Research Summary: Market conditions are known to matter for firm performance and growth. This study explores how changing levels of uncertainty and competition affect interfirm ties of entrepreneurial firms as markets transition from nascent to growth stage. Tracing six entrepreneurial game publishers during the growth stage of the U.S. wireless gaming market, the findings reveal that in a growth stage market, as uncertainty decreases, certain ties of entrepreneurial firms are terminated. First, existing partners may cut ties and become competitors after entering the market directly. This is a “winner's curse” as more successful firms are more likely to entice their partners to enter the market directly. Second, ties may be terminated as prominent firms that are “overwhelmed” with too many partners cut ties with low to mediocre performance, while their remaining partners enter a positive spiral of tie strength and performance. Finally, as uncertainty decreases, new firms may enter the market as competitors to prominent firms. While entrepreneurial firms with high‐ and low‐performing ties to prominent partners may find ties with these new entrants attractive, those with mediocre ties to few prominent partners find this move too risky and wait for a first mover to legitimate it. Overall, the findings show that changing levels of uncertainty and competition in growth stage markets can have different consequences for firms due to heterogeneity in their ties and power relative to partners. The findings provide several contributions to literature regarding the relationship among interfirm ties, firm performance, and market evolution. Managerial Summary: Based on interviews at six entrepreneurial game publishers in the United States and their partners, this study shows how changing levels of uncertainty and competition in growing markets can have different consequences for firms based on the different types of alliances in their portfolio and their power relative to partners. The findings highlight the importance of managing partners differently based on alliance type and goal of the partner. They advocate remaining flexible in alliance management as information asymmetries, intentions and bargaining power of partners can change and lead to abrupt alliance dissolution. They show that alliance portfolio management goes beyond a firm's capability of managing individual alliances, and provide a tool for managers to evaluate their alliance portfolios and take the necessary precautions.     

Benefiting from network position: firm capabilities,structural holes,and performance

While strategy scholars primarily focus on internal firm capabilities and network scholars typically examine network structure, we posit that firms with superior network structures may be better able to exploit their internal capabilities and thus enhance their performance. We examine how innovative capabilities—both those of focal firms and those they access through their networks—influence the performance of Canadian mutual fund companies. We find that a firm's innovative capabilities and its network structure both enhance firm performance, while the innovativeness of its contacts does not do so directly. Innovative firms that also bridge structural holes get a further performance boost, suggesting that firms need to develop network‐enabled capabilities—capabilities accruing to innovative firms that bridge structural holes. Copyright © 2005 John Wiley & Sons, Ltd.     

Reassessing the fundamentals and beyond: Ronald Coase,the transaction cost and resource‐based theories of the firm and the institutional structure of production

In this paper, three points are argued. The first is that Ronald Coase, best known as the forefather of transaction cost theory, foresaw many of the critical questions that proponents of the resource‐based view are concerned with today. The second is that resource‐based theory plays a potentially much more critical role in economic theory and in explaining the institutional structure of production than even many resource‐based scholars recognize. The last point is that a more complete understanding of the organization of economic activity requires a greater sensitivity to the interdependence of production and exchange relations. The arguments presented in this paper highlight important, but relatively ignored, elements in Coase's work that inform strategy research. More importantly, this paper makes the case for a triangular alignment between the triumvirate of governance structure, transaction, and resource attributes and demonstrates how the identity and strategy of a particular firm influences how its resources interact with the transaction and how the firm chooses to govern it. The general argument is then applied to the context of interfirm collaborative relations, where the key focus is broadened from just cost to also include skills/knowledge and the interdependence between cost and skills with respect to firm boundaries, both in terms of choice and nature. Such a broadening of focus enables us to additionally examine the transacting process as a productive endeavor, which underpins the co‐evolution of the competencies of partner firms. Copyright © 2002 John Wiley & Sons, Ltd.