Competence Perspectives on Managing Interfirm Interactions: Volume 8

Firms can (and often do) learn from each other. Benchmarking has become an accepted and increasingly widely practiced initiative for interfirm learning. Benchmarking specific capabilities and processes in one firm against another can help both firms’ managers identify strategic gaps in their capabilities and processes. More detailed forms of benchmarking may even suggest specific ways in which capabilities and processes can be improved. However, extracting significant learning from benchmarking with another company – while not unnecessarily revealing important sources of competitive advantage – requires a careful, balanced approach to managing a benchmarking process. In their paper “Limitations and challenges of benchmarking: A competence-based perspective,” Jörg Freiling and Sybille Huth develop a competence-based framework for managing benchmarking. While agreeing with the important potential benefits that benchmarking can bring to competence building, the authors point out a number of threats to a firm that may arise in a benchmarking process. In particular, the authors suggest that careful attention be paid to managing isolating mechanisms during benchmarking. Isolating mechanisms may bring a benefit by protecting strategic capabilities and processes from unintended discovery and imitation by either firm, while at the same time obscuring intended observations of each firm’s capabilities and processes that may defeat the basic intent of the benchmarking exercise. Careful management of isolating mechanisms should help assure that both parties to a benchmarking process will successfully navigate the three crucial steps identified by the authors in an effective benchmarking process: recognition, assimilation, and exploitation of new “best practices.”

Benchmarking has proven itself as a tool of management, not belonging to the typical management fads. Well-known both in research and business practice, employing benchmarking as a means of increasing the competitiveness goes along with considerable problems and challenges. By analyzing the very nature of benchmarking, it turns out that the respective problems can be explained in a comprehensive way by referring to the competence-based view. The paper points out the numerous threats connected with benchmarking. The isolating mechanisms, well-known from competence-based research, help to explain why it can be so difficult for firms to make use of benchmarking effectively. Among others, the concept of the absorptive capacity plays a major role when the real character of benchmarking is to be described. Understanding benchmarking as way to get access to firm-addressable resources, the recognition, the assimilation, and the exploitation of the benchmarked “best practices” represent the crucial steps of an effective benchmarking process. Pointing out the implications of benchmarking by a competence-based analysis and to draw some managerial and theoretical conclusions represent the main objectives of this paper.

The “resources, dynamic capabilities and competences perspective” (Sanchez, 2001) has challenged firms to apply these concepts to improve their competitive position. Management consulting firms may assist clients in these efforts. However, the roles that management consulting firms fulfill in these processes can differ considerably and are under-researched. Therefore, insight in these different roles and the impact of these roles on clients’ competitive positioning in their industries is required. The purpose of this paper is to develop a conceptual framework that highlights the importance of distinguishing both roles and the implications for management consulting firms and for their clients. We illustrate the framework by elaborating on the relationship between both roles and the strategic renewal context of client firms. We conclude by pointing out the increasing importance of the competence leverage role of management consulting firms and how this development might contribute to a more hypercompetitive context for their clients.

Developments in Information Technology (IT) are perceived to be a major driver of interorganizational cooperation, both within and across industry boundaries. These developments have challenged the creation of interorganizational competitive advantages, as conceptualized in the Relational View (e.g. Dyer & Singh, 1998). The relationship between IT and effectuated interorganizational competitive advantage, however, is still unclear. This chapter is a first attempt to shed light on this unexplored area in the literature. We focus our analysis on developing a conceptual framework of the relationship between IT and interorganizational resource complementarity, which is an important determinant of interorganizational competitive advantage. Our framework suggests that cooperating organizations need to develop three distinctive but interrelated capabilities in order to effectuate interorganizational resource complementarity by means of IT. It is proposed that these capabilities give rise to interorganizational competence building, forming a pre-condition for achieving interorganizational competitive advantage. Preliminary support for our framework and proposition is provided by a brief case study of an interorganizational relationship between a large European financial services firm and a major European telecommunication firm.

This paper reports on a case study research regarding the development of capabilities from a multidimensional social capital perspective. Case study research together with a multi-disciplinary literature study are the platform for further theory development on the related questions: “How do organisations build capabilities?” and “What are the antecedents of the development of capabilities?.” We start by describing the theoretical origin of our research problem by focusing on a triangle: (1) the resource-based view; (2) the network approach; and (3) the social capital approach. Following this literature study, we discuss the case study research design that was developed within an industrial company (B2B). We next present the findings and refine our initial tentative conceptual framework.

Collaborative advantage and geographical embeddedness of the firm have recently been receiving a growing amount of attention in a dynamic vision of the attainment and sustainability of the competitive advantage of firms. Concepts such as the Industrial District and Regional Cluster have been used in these studies, yet in spite of this interest little effort has been devoted to establishing links between these competitive dimensions and theories of differences in firm performance. This work consists of a multisource case study of the Spanish Ceramic Tile Industry. This empirical study focused on investigating the nature and implications of interfirm relationships and social control. The paper suggests that the competitiveness of clustered firms can be accounted for by low transaction costs and strategic knowledge-based resources.

The concept of core competence underlies competence-based competition and competence-based management. When new firms get established, due to resource constraints, managers have to make conscious decisions to develop certain competencies and not others. In order to have all competencies that are required to be successful, firms look for strategic alliances and to leverage their partner firms’ competencies. In this paper, we develop a contingency model for firms that have to go for strategic alliances to explain which core competencies should be developed internally, which core competencies could be from the alliance partner, which type of alliance will be suitable and whether the firm should choose a short-term, long-term or permanent alliance. Using Hamel’s (1994) generic core competencies and the type of market (industrial or individual), we suggest which type of strategic alliance should be chosen for leveraging a partner’s competencies.

Over the past years, unprecedented attention has been paid to alliance management in the academic and management literature. However, failure rates of alliances have remained very high. Nonetheless, research efforts have shown that alliance management can be significantly enhanced by prior alliance experience. Consequently, it has become important for firms to understand how to make use of their alliance experience and how to develop alliance capabilities. On the basis of a global survey among alliance managers, this study aims to reveal recent trends in alliance capability building and tries to uncover novel ways in which firms try to enhance their alliance performance.

The inter-organizational transfer of competence is a subject that presents several interesting perspectives for research. This article proposes elements for defining a model for its analysis. The model is based on three main groups of constructs: transfer level and state of the knowledge transferred; objectives of the transfer; transfer mechanisms. Through the study of the method developed by Renault in Brazil in order to transfer logistical skills, capabilities and competencies to its local suppliers, the applicability of the model is assessed. The case study is also used to develop the model through three propositions.

The paper describes six major approaches within strategic groups research: the industrial organization perspective (the IO-view), the strategic choice perspective, the strategy types perspective, the cognitive perspective, the customer perspective, and the business definition perspective. The two most promising perspectives to make real advances in the strategic management discipline seem to be the cognitive view and the business definition perspective. The purpose of a grouping based on business definitions is to provide an insight, as objective as possible, of the industry’s substructure which also corroborates with the cognitive maps of the industry which the CEOs have in mind. From a practical point of view, the classification of firms in groups based on commonality in business definition (buyer scope, product scope, geographical scope and degree of vertical integration), allows managers to compare their own firms with comparable firms (the firms within the same group). The research concerning strategic groups in the Belgian beer brewing sector and the Belgian electrical wholesale sector is presented. The major problems within the strategic groups research are discussed.

This paper analyzes the dynamics in resource development and the complexity of resource origin. Three factors – stakeholders, interactions, and scarcity – prove helpful to explain both dynamics and complexity of factor-markets. We build on these three factors and propose a systemic model on dynamic interactions to illustrate the structural characteristics of a factor-market. We suggest to managers to analyze first factor-markets separately, so they can collect as much information as possible on resource relationships with strategic importance. Then this information is incorporated in a “resource matrix,” which facilitates analyzing the interdependencies of various resource relationships and helps practitioners develop an integrated strategy to compete in factor-markets.

The aim of both marketing theorists and resource-based view proponents is to explain the creation and the sustainability of competitive advantages (Srivastava et al., 2001, p. 777). What has not been considered so far is the role of exploitation positions within the competitive game. The purpose of this article is to investigate the consequences of a strategy concerning the active creation of exploitation positions on the side of the customers. The reason for this is the observed tendency in several industries – elevators, paper machines, gas turbines – to actively create such positions. The underlying assumption is that this strategy leads to a competitive advantage for the initial transaction as well as to higher profits for the supplier taking into account the entire relationship. Mainly the second advantage of a higher profit depends heavily on the sustainability of an exploitation position. Therefore, this paper identifies the drivers controlling the sustainability of an exploitation position. In order to derive a broad understanding three different theoretical approaches – Transaction Cost Economics, the Resource-Based View, and Market Process Theory (Austrian Economics) – will be used to explain the effects of exploitation on the competitive position and the profit of the supplier. Finally, the outcome of this paper is threefold: First, the competitive consequences of an exploitation strategy will be identified. Second, the impact of each theoretical approach on the question of exploitation will be analyzed. Third, the integrative potential of the three different theoretical approaches will be examined. More precisely, we discuss institutional economics and information asymmetry in a truly dynamic setting and the impact of radical ignorance and alertness on the idea of isolating mechanisms. This will be done in a parallel discussion of the problems in general and along one case study which focuses on the elevator market.