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THE RELATIONAL VIEW: COOPERATIVE STRATEGY AND SOURCES OF INTERORGANIZATIONAL COMPETITIVE ADVANTAGE

JEFFREY H. DYER HARBIR SINGH. THE RELATIONAL VIEW: COOPERATIVE STRATEGY AND SOURCES OF INTERORGANIZATIONAL COMPETITIVE ADVANTAGE. Realized by : Sonia Infante Alice Carboni - Simona Morganti. Sources of competitive advantages.

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THE RELATIONAL VIEW: COOPERATIVE STRATEGY AND SOURCES OF INTERORGANIZATIONAL COMPETITIVE ADVANTAGE

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  1. JEFFREY H. DYER HARBIR SINGH THE RELATIONAL VIEW: COOPERATIVE STRATEGY AND SOURCES OF INTERORGANIZATIONAL COMPETITIVE ADVANTAGE • Realizedby: • Sonia Infante • Alice Carboni • - Simona Morganti

  2. Sourcesof competitive advantages

  3. Supernatural profit jointlygenerated in anexchangerelationshipthatcannotbegeneratedbyeitherfirm in isolation and can onlybecreatedthrough the joint idiosyncraticcontributionof the specificalliancepartners. Whatis the relationalrent?

  4. Investment in relational-specificassets; • Substantialknowledgeexchange; • Combiningofcomplementaryresources; • Lowertransactioncoststhan competitor alliances. Sourcesofrelationalrent

  5. Investment in relational-specificassets; • Substantialknowledgeexchange; • Combiningofcomplementaryresources; • Lowertransactioncoststhan competitor alliances. Sourcesofrelationalrent

  6. Three kindassetsspecificity: (Williamson, 1985)

  7. MALONE, 1987 • JOSKOW, 1988 • ERRAMILLI & RAO, 1993 …THERE ARE OTHER SCHOLARS THAT HAVE ACKOWLEDGED THE MULTIDIMENTIONAL PROPERTY OF ASSET SPECIFICITY… • Site specificity • Physicalassetspecificity • Humanassetspecificity • Timespecificity • Site specificity • Physicalassetspecificity • Humanassetspecificity • Dedicatedspecificity • Professional skills • Specializedknow-how • Customization

  8. The length (in years) of the governancearrangementdesignedtosafeguardagainstopportunisminfluences the abilityofalliancepartnerstoinvest in relation specificassets Subprocessesof relation- specificassets

  9. Supplier relations: Japanesecompanies

  10. …infact in 1995 Nissan and Toyotasupportedlargeteamsof more than 60 internalconsultantstoprovideassistancetosuppliers • TOYOTA CASE • Ithasbuilt strong and closerelationshipswithitssuppliersbased on the needformutualsupport and a harmonious society • Ithelpedquicklyrestorenormalityto production systemsafter the Great East JapanEarthquake http://www.youtube.com/watch?v=IrjvfihcboY&feature=youtu.be

  11. Abilitytosubstitutespecial-purposeassetsforgeneralpurposeassetsisinfluencedby the total volume and breadthoftransactionbetween the alliancepartners Subprocessesof relation- specificassets

  12. Investment in relational-specificassets; • Substantialknowledgeexchange; • Combiningofcomplementaryresources ; • Lowertransactioncoststhan competitor alliances Sourcesofrelationalrent

  13. Interorganizationallearningiscriticalto competitive success… …but Organizationsoftenlearnbycollaboratingwithotherorganizations InterfirmKnowledge-SharingRoutines

  14. Is the secondpotential source ofinterorganizational competitive advantage Firm’s alliancepartners: source of new ideas and information that resultin performance-enhancing technology and innovations. Knowledge-SharingRoutines:

  15. Alliance partners rents by developing superior interfirm knowledge-sharing routines. Def: “regular pattern of interfirm interactions that permits the transfer,recombination, or creation of specializedknowledge . (Grant, 1996) ------- interfirm processes: are useful to facilitate knowledge exchanges betweenalliance partners

  16. 2. The greater the alliancepartners' investment is in interfirmknowledge-sharing routines, the greater the potential will be forrelational rents. • Many scholars divide knowledge into two types: • information and • know-how Substantialknowledgeexchange

  17. Information: easily codifiable knowledge that can be transmitted • Know-how : involves knowledge that is tacit, complex, difficult to codify and difficult to imitate and transfer ---However, compared to information, know-how is more likely toresult in advantages that are sustainable.

  18. 2 (a). The greater the partner- specific absorptive capacity is, The greater the potential will be to generate relational rents through knowledge sharing. 2 (b). The greater the alignment of incentives by alliance partners is to encourage transparencyand reciprocity and to discourage free riding, The greater the potential will be to generate relational rentsthrough knowledge sharing Substantialknowledgeexchange

  19. A comparison of Toyota's and GM's productionnetworks Toyota: knowledgetransfers to-and among-suppliers . (These transfers: increasepartner-specific absorptive capacity.)

  20. GM: • and its suppliers have a historyof keeping innovations proprietary. • GM has not cultivateda stable network of supplier companies and consequently, suppliers rationallyrefuse to engage in costly knowledge-sharingactivities … there is significantlygreater knowledge sharing between Toyota and its suppliers than between GM and its suppliers.

  21. Investment in relational-specificassets; • Substantialknowledgeexchange; • Combiningofcomplementaryresources ; • Lowertransactioncoststhan competitor alliances. Sourcesofrelationalrent

  22. Complementaryresoucesendowment “Distinctiveresourcesofalliancepartnersthat collectively generate greaterrentsthan the sum ofthoseobtainedfrom the individualendowmentsofeachpartner”.

  23. Coca-Cola & Nestlealliance

  24. COMPLEMENTARY RESOURCES ENDOWMENT “ The greater the propositionisofsynergy- sensitive resourcesownedbyalliancepartnersthat, whencombined, increase the degreetowhich the resources are valuable, rare and difficultto imitate, the grater the potentialwillbeto generate relationalrents”.

  25. Abilitytoidentifypotentialpartners and valuetheircomplementaryresources. Subprocessesofcomplementaryresourcesendowment • Priorallianceexperience; • Evaluationcapability ; • Acquisitionof information.

  26. Abilitytodevelopanorganizationalcomplementary . Subprocessesofcomplementaryresourcesendowment • compatibleorganizational system , processes and culture

  27. Investment in relational-specificassets; • Substantialknowledgeexchange; • Combiningofcomplementaryresources; • Lowertransactioncoststhan competitor alliances Sourcesofrelationalrent

  28. EffectiveGovernace formal informal

  29. Abilitytodevelop a self-enforcingmechanismratherthan a third-partyenforcement . Subprocessesofeffectivegovernance

  30. Abilitytoimployaninformalself-enforcingmechanismratherthan a formalself-enforcing . Subprocessesofeffectivegovernance

  31. generated by alliance partners: • -Interorganizational asset interconnectedness • -Partner scarcity • -Resource indivisibility • -Institutional environment MECHANISMS THAT PRESERVE RELATIONALRENTS

  32. Interorganizational Asset Interconnectedness alliance partners mayneed to make "bundles" of related relation specificinvestments in order to realize the fullpotential of those investments in an alliancerelationship. • Partner Scarcity The creation of relational rents is often contingenton a firm's ability to find a partner with: ---complementary strategic resources ---a relational capability <<< there are strong first mover advantages >>>

  33. Resource Indivisibility Partners may combine resources or jointly develop capabilities in such a way that the resultingresources are both: idiosyncratic and indivisible • Institutional Environment An institutional environment that encourages or fosters trust among trading partners may facilitate the creationof relational rents (North, 1990)

  34. IN SUMMARY… the relational rents generated by alliance partners are preserved because competing firms: • cannot imitate practices or investments • cannot find a partner with the requisite complementary strategic resources or relational capability • cannot access the capabilities of a potential partner because these capabilities are indivisible • cannot replicate a socially complex institutional environment

  35. RBVVIEW: focuses on individualfirms generate supernaturalreturnsbaseduponresources, assets and capabilitiesthat are housedwithinfirm VS RELATIONAL VIEW: a firm in isolation, irrespectiveofitscapabilities or resourcescannotenjoytheserents • RBV VIEW: anindividualfirmshouldattempttoprotectvaluableproprietaryknow-how VS RELATIONAL VIEW: share valuableknow-howwithalliancepartners • INDUSTRY STRUCTURE VIEW: firmsshouldincreasenumberofsuppliers VS RELATIONAL VIEW: firms can increaseprofitsbyincreasingtheirdependence on a smallnumberofsuppliers Comparingdifferentview…

  36. …Conclusion… Relationshipsbetweenfirms are anincreasinglyimportantunitofanalysisforexplainingsupernatural profit results The relationalviewoffers a usefultheoreticallensthroughwichresearches can examine and explorevalue-creatinglinkagesbetweenorganizations

  37. Thanksforyourattention!!!

  38. “The relational View: Cooperative strategy and Sources of Interorganizational Competitive Advantage”, Dyer and Singh, 1998 • “Remade in America, translating & transforming japanese management systems”, edited by Jeffrey K. Liker, W. Mark Fruin & Pave S. Adler • “The determinants of inter-firm trust in supplier- automaker relationships in te U.S., Japan, Korea”, Jeffrey H. Dyer, 1997 • http://www.toyota-global.com/sustainability/of_initiatives/stakeholders/partners/#supplier • www.youtube.com Bibliography/ sitography

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