Reminders

If you choose not to participate in a team project, you need to let me know by Friday.

I need your team roster and target organization by next Wednesday.

Monday’s class devoted to your team meeting. No case due!

Competition, Cooperation, Collaboration, Coopetition, Coevolution, and Organizations

BA 152

Inter-organizational Relationships

Intra-organizational relationships are established by structures, systems, and processes within an organization.

Inter-organizational relationships are established across organizations in a variety of different ways for a variety of different reasons.

How might we explain theseinter-organizational relationships?

Explanations forInter-organizational Relationships

Dissimilar Similar

Competitive ResourceDependence

Cooperative

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Explanations for Inter-organizational Relationships:

Resource Dependence

Firms attempt to minimize their dependence on others for resources

They attempt to influence their environments to make resources available

Level of dependence a function of– The importance of the resources– The control suppliers have over resources

Explanations forInter-organizational Relationships:

Resource Dependence

Strategy Implications:– Reduce the firm’s dependence on the

environment– And/or exercise power over suppliers by

establishing a variety of inter-organizational relationships.

The presumption here is the more powerful takes advantage of the less powerful.

Explanations forInter-organizational Relationships:

Resource Dependence

But what has been happening in some industries?

The auto industry, for instance, has– Gone from driving profits down for many,

many suppliers – putting some out of business . . .

– To building supportive and collaborative relationships with fewer suppliers.

But what has been happening in some industries?

Independent book sellers have– Either fought tooth and nail against each

other, individually, and against the big stores, and/or

– Formed a collaborative effort called

CollaborativeNetwork

Explanations forInter-organizational Relationships

Dissimilar Similar

Competitive ResourceDependence

Cooperative

Organization Type

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Competition

Typically marked by– Suspicion– Price wars– Limited/no information

exchange– Short-term contracts– Conflicts resolved by

legal action

Managing Competitive Relationships

Parties tend to compete away the profits. Or parties try and build a bigger pie. Parties try and control access to entry with third-party

assistance - trade associations, licensing boards, etc. Parties try to reduce competition via strategic alliances,

mergers and/or acquisitions. Parties collude and/or develop cartels - illegal in this

country.

Collaboration

Typically marked by – Trust– Equity, fairness in exchanges– Maximal information sharing– Close coordination– Long-term contracts– Mutual resolution of conflicts

Reputation and trust Co-optation - giving another group a stake

in some activity that neutralizes their opposition

Long-term contracts/Licensing Networks Minority ownership - a la keiretsu Joint ventures/strategic alliances Mergers and/or acquisitions

Ways to Collaborate

Why Collaborate?

To reduce the cost of technological development or market entry

To reduce the risk of development or market entry

To achieve economies of scale in production

To reduce the time taken to develop and commercialize new products

Competition vs. Collaboration

Options/Strategies for developing (or not) a global MBA program at UNC– Stay out of the market– Go it alone– Find appropriate partners

- Sao Paulo, Brazil

Competition vs. Collaboration

Risks with Collaboration Leakage of proprietary information Differential quality/delivery of

product/service Loss of control or ownership Divergent aims & objectives, resulting in

conflict and/or dissolution

Managing Successful Collaborations

Collaboration must be perceived as important by all partners.

Collaboration “champions” must exist at the top of the partner organizations.

A substantial degree of trust must exist between parties.

Clear planning and task milestones must be established.

Frequent communication must occur between partners.

The partners must contribute as expected. Collaboration benefits must be perceived as

equitably distributed.

Managing Successful Collaborations

What comes after collaboration?

Co-evolution or co-opetition– Development of shifting/dynamic webs of

relationships (inside and outside the firm) – These webs exploit fresh opportunities for

organizational improvement and/or drop deteriorating ones.

– Collaboration and competition may well co-exist within a single firm as well as between and among multiple firms.

Vail Ski Resorts– Formed by a 1997 merger of Vail, Breckenridge,

Keystone, and Beaver Creek ski areas to take advantage of branding with the Vail name.

– Initially, too much collaboration. Vacationers wanted unique resort experiences, not four “would-be Vail” destinations.

Co-evolution

So now each resort adapts its image to evolving and potentially competing markets.– Beaver Creek – Family skiing– Breckenridge – Western-motif and youth focus– Keystone – Meetings and conferences – Vail – Upscale skiing

Co-evolution

From Eisenhardt, L. and Galunic, D., “Coevolving: At Last, a Way to Make Synergies Work,” Harvard Business Review, Jan-Feb 2000, pp. 91-101.

Collaboration vs. Coevolution

Content and number of collaborative links

Content of collaborationFocus

Collaborate and competeCollaborateInternal Dynamics

Growth, agility, and economies of scope

Efficiency and economies of scaleObjectives

Shifting webs among businesses

Frozen links among static businessesForm of collaboration

CoevolutionTraditional

Collaboration

From Eisenhardt, L. and Galunic, D., “Coevolving: At Last, a Way to Make Synergies Work,” Harvard Business Review, Jan-Feb 2000, pp. 91-101.

Collaboration vs. Coevolution

Self-interest, based on unit performance

VariedIncentives

Against competitors’ growth, share and profits

Against budgets or preceding yearBusiness Metrics

Drive and execute collaboration

Execute collaborationBusiness Role

Set collaborative contextDrive collaborationCorporate Role

CoevolutionTraditional

Collaboration

PopulationEcology

CollaborativeNetwork

Explanations forInter-organizational Relationships

Dissimilar Similar

Competitive ResourceDependence

Cooperative

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An attempt to explain why there are so many different kinds of organizations and relationships in the world today.

Uses an evolutionary approach– Variation - large numbers of firms appear– Selection - only some find niches and survive– Retention - a few grow large and continue to

succeed

To be “selected in” firms can adopt a specialist or a generalist approach

Explanations for Inter-organizational Relationships: Population Ecology

Population Ecology

Specialist– Concentrates skills in a single niche– Develops core competencies– Can provide better customer service and

superior products, but– Can be in trouble if the niche disappears or

others enter.

Population Ecology

Generalist– Spreads skills across many niches, often

via inter-organizational relationships– Provides greater brand recognition– Can succeed when the environment is

uncertain, if risks are spread across a number of niches with multiple partners

InstitutionalismCollaborativeNetwork

Explanations forInter-organizational Relationships

Dissimilar Similar

Competitive ResourceDependence

Cooperative

Organization Type

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PopulationEcology

An attempt to explain why there are so many similar organizations and relationships in the world today.

Isomorphism is the answer:– The process whereby entities start to resemble each

other in similar environments as a way of gaining or maintaining legitimacy.

Explanations for Inter-organizational Relationships: Institutionalism

Institutionalism

How does isomorphism occur?– Mimetic isomorphism: Imitation is the

sincerest form of flattery. Usually occurs in reaction to uncertainty.

Institutionalism

How does isomorphism occur?– Coercive isomorphism: Do it this way, or

else! Reaction to political or regulatory influence.

Institutionalism

How does isomorphism occur?– Normative isomorphism: Professionals

do it this way. Results from common training and professionalism.

Today’s Take-aways

1. While competition is important, there is more than simply competition to the success of today’s organizations.

2. There are a variety of ways to explain inter-organizational relationships

3. Co-evolution may be the wave of the future. Stay tuned.