Managing Coopetitive Tensions across Multiple Organizational
Levels: The Role of the Alliance Manager in
International Airline Alliances.
Master´s Thesis
Author: Jonas Stalla Student Number: S3239608
University of Groningen Faculty of Economics and Business MSc International Business and Management
Supervisor: Dr. M.M. (Miriam) Wilhelm Co-Assessor: MSc S. (Sarah) Castaldi
Date: 21.06.2017
ABSTRACT
Table of Content
I. INTRODUCTION ... 1
II. THEORETICAL BACKGROUND ... 4
-II.1. The Presence of Tensions at Different Organizational Levels ... - 4 -
II.2. The Role of Alliance Managers for the Management of Coopetitive Tensions ... - 6 -
III. METHODOLOGY ... 9
-III.1. Research Setting and Case Selection ... - 9 -
III.2. Research Method ... - 12 -
III.3. Data Collection ... - 13 -
III.4. Data Analysis ... - 14 -
IV. FINDINGS ... 15
-IV.1. Types of Tensions across Organizational Levels ... - 16 -
IV.1.1. Tensions at the Inter-Organizational Level ... - 16 -
IV.1.2. Tensions at the Intra-Organizational Level ... - 20 -
IV.1.3. Tensions at the Inter-Individual Level ... - 21 -
IV.2. Management of Tensions across Organizational Levels ... - 23 -
IV.2.1. Management of Tensions at the Inter-Organizational Level ... - 23 -
IV.2.2. Management of Tensions at the Intra-Organizational Level ... - 28 -
IV.2.3. Management of Tensions at the Inter-Individual Level ... - 30 -
V. DISCUSSION ... 31
-V.1. Observations and Interpretation of Findings ... - 31 -
V.2. Theoretical Contributions ... - 35 -
V.3. Managerial Implications ... - 37 -
V.4. Limitations and Future Research Opportunities ... - 38 -
VI. CONCLUSION ... 39
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I. INTRODUCTION
“Who gets which share of the pie?”
A leading question as old as mankind itself; and that has preoccupied countless economic actors as well as scientists throughout history. With the rising intensification of worldwide competition as a result of the globalization´s driving forces, that issue could hardly be more timely today.
In response to the growing pressures related to global market integration (Lai, Chang, & Chen, 2010), the number of international strategic alliances within the worldwide business environment has increased steadily. Drawing from the relational view, such inter-firm relationships may enable cooperating firms to generate relational rents by learning from each other through firm-specific knowledge transfers, and by leveraging complementary resource endowments (Dyer, & Singh, 1998). This approach is contrary to the more traditional belief that competition with a focus on inter-firm rivalry (Porter, 1980) is the main force which drives commercial activity (Walley, 2007). In fact, it turns out that many organizational actors actually operate between these two extremes: they cooperate and compete with other entities simultaneously within a complex, interdependent structure (Dagnino, & Padula, 2002). Based on game theory, Brandenburger and Nalebuff (1995) describe this state of interconnectedness as a “win-win” situation and name it coopetition.
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Chiambaretto, 2016), cost-sharing (Himpel, 2012), and diverging firm strategies as well as identities (Gnyawali et al., 2016). With respect to the management of tensions within coopetitive relationships, the following mechanisms have been highlighted among others: generic separation and integration principles (Bengtsson, & Kock, 2000; Lüscher, & Lewis, 2008), paradox management capabilities (Gnyawali et al., 2016), the protection of core com-petences in terms of valuable firm knowledge (Fernandez, & Chiambaretto, 2016), and the recruitment of experienced, coopetition-minded staff (Gnyawali et al., 2016).
However, most scientific studies within this sub-category of coopetition research have approached the topic with a limited view on dyadic partnerships and macro levels of analysis. This means that networks that incorporate more than two partners of different sizes and
maturity levels as well as cultural backgrounds are underrepresented in the literature. The predominant focus on a macro level of analysis (i.e. the inter-organizational level) leaves
aside a more in-depth understanding about the social dynamics around the presence and man-agement of tensions; this represents a first research gap. In order to effectively counter poten-tial tensions within coopetitive environments, it is important to give a clear picture about where such tensions arise across organizational levels, and how they are interrelated. Second, the role of individuals responsible for the management of tensions within an alliance is barely recognized in the literature. Most studies have solely investigated theoretical management principles without shedding light on how alliance managers individually develop and apply countermeasures in practice. This constitutes another knowledge gap.
Under consideration of the aforementioned research gaps, the following research question is guiding this Master´s thesis:
“How do alliance managers counter coopetitive tensions across organizational levels within a multi-firm network?”
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Fernandez, Le Roy, & Gnyawali, 2014; Fernandez, & Le Roy, 2015; Fernandez, & Chiambaretto, 2016; Gnyawali et al., 2016; Bengtsson et al., 2016).
Action research within the framework of a qualitative in-depth case study was conducted in one of the three leading international airline alliances: SkyTeam. Within that context, several medium- and top-ranking alliance managers have been interviewed and a large portfolio of secondary data was analyzed. The global commercial airline industry is an ideal research environment for examining coopetition: this highly competitive branch is characterized by many strategic alliances that facilitate coopetition, ranging from international joint ventures and bilateral codeshare networks to airline alliances, such as SkyTeam, Star Alliance and Oneworld Alliance. Even though this particular industry is a common study object within the field of coopetition research (e.g. Nason, 2009; Gudmundsson, & Lechner, 2011; Himpel, 2012; Chen, & Hao, 2013; Czakon, & Dana, 2013; Chiambaretto, & Dumez, 2016; Chiambaretto, & Fernandez, 2016; Chang, & Chiu, 2016), the majority of studies primarily focuses on how coopetition creates new challenges at the general firm level, how the organi-zation should adapt in terms of effective strategies, and how this affects the overall firm per-formance.
This Master´s thesis makes the following contributions: first, it investigates the occurrence of tensions related to value appropriation at different organizational levels within a multi-firm network. Thus, it creates a better understanding of (i) where tensions emerge, and (ii) how they interrelate. Second, the study examines the role of alliance managers in dealing with such tensions. Therefore, it sheds light on how specific formal as well as informal countermeasures are individually constructed and applied to solve value appropriation tensions at different organizational levels.
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II. THEORETICAL BACKGROUND
Besides prominent approaches based on sole competition and inter-firm rivalry (Porter, 1980; Barney, 1991) as well as cooperation (Dyer, & Singh, 1998), a third and relatively new option has emerged: coopetition (Brandenburger and Nalebuff (1995). It is defined as “a paradoxical relationship between two or more actors simultaneously involved in cooperative and competi-tive interactions, regardless of whether their relationship is horizontal or vertical” (Bengtsson, & Kock, 2014: 182). Within the framework of this Master´s thesis, this description will function as the basic definition of coopetition.
Coopetitive behavior becomes apparent in various business environments and strategic part-nership types (e.g. Robert, Marques, & Le Roy, 2009; Wilhelm, 2011; Fernandez, Le Roy, & Gnyawali, 2014). The global airline industry constitutes a very appropriate research area within this context since this sector is characterized by an ever growing number of global stra-tegic alliances, ranging from bilateral codeshare agreements to joint ventures and network alliances with multiple partners like SkyTeam and Star Alliance. At the same time, the vast majority of parties that are involved in such collaboration agreements remain in direct compe-tition with each other (e.g. Czakon, & Dana, 2013).
This theory section is structured according to the two research gaps which were outlined in the introduction. Therefore, it will first provide an overview of coopetitive tensions that occur at different organizational levels. After that, the role of the alliance manager for the manage-ment of such tensions is described.
II.1. The Presence of Tensions at Different Organizational Levels
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However, coopetition always comes with the risk of tension and conflict. This is due to the paradoxical nature of coopetition itself as two contradictory elements – i.e. competition and cooperation - are present simultaneously (Bengtsson, & Kock, 2014). The predominant tension that occurs among coopetitive actors is linked to the trade-off between value creation and value appropriation (e.g. Lacoste, 2012; Bengtsson, & Kock, 2014; Gnyawali et al., 2016). This trade-off is essentially about collaborative behavior (e.g. knowledge sharing) in order to create value on the one hand, and about competition regarding the appropriation of the jointly developed value on the other hand. Moreover, this tension appears in various forms within coopetitive settings and across organizational levels. For instance, a blockade mentality towards information and knowledge sharing (Fernandez et al., 2014; Fernandez, & Chiambaretto, 2016) as well as cost and risk sharing (Himpel, 2012) can often be traced back to tensions connected with value appropriation. The aforementioned tension is the most fre-quently discussed within the literature and will also be at the centre of this study´s attention.
In general, coopetitive tensions become apparent at different organizational levels. In specific, they may occur at the following three general levels: (i) the inter-individual level (i.e. between individuals), (ii) the intra-organizational level (i.e. especially between departments), and at (iii) the inter-organizational level (i.e. between the partnering organizations) (Fernandez et al., 2014; Raza-Ullah et al., 2014). The previously mentioned function as the levels of analysis within the framework of this Master´s thesis as well. At the inter-organizational level, most observed tensions are indeed linked to the distribution of jointly created value. The more the specific partner firms try to increase their private gains from jointly-created value, e.g. by absorbing co-created knowledge or by exercising power (Bengtsson, & Kock, 2000), the greater the tensions will be between them (Fernandez et al., 2014). Moreover, third-party actors and differences in the firms´ governance styles were found to be further sources of tensions as well (Fernandez et al., 2014). However, it remains unclear whether these particular tensions relate to value appropriation conflicts, or if they are rather peripheral. The same applies for the intra-organizational level where tensions mainly reflect competing resource allocation processes between departments that are rooted in natural resource limitations (Luo, Slotegraaf, & Pan, 2006). In specific, business units that are solely active in internal operations compete against those that are also involved within coopetitive activities (Tsai, 2002).
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el are mainly linked to personal reluctances against collaborative activities with partners. The value appropriation tension becomes apparent here since the individuals normally aim at acting in a way that is best for their companies, e.g. by engaging in free riding (Fernandez et al., 2014). Such behavior is basically a result of the so-called paradox of performing which occurs if one individual performs contradictory work and roles. Within the given context, it refers to situations in which employees are supposed to simultaneously respond to the de-mands of their company as well as the partner firms that are involved in a strategic partner-ship (Jarzabkowski, Lê, & Van de Ven, 2013).
In sum, tensions within coopetitive settings can be identified at three organizational levels. However, it is not always clear which of the identified tensions can be clearly traced back to the value creation vs. value appropriation dimension. Moreover, and most importantly, the interconnectedness of value appropriation tensions across levels is not well understood. In other words, there is a need to show if and how tensions at the inter-organizational level influence those at the intra-organizational as well as the inter-individual level.
II.2. The Role of Alliance Managers for the Management of Coopetitive Tensions
Clarke-Hill, Li, and Davies (2003) emphasize that the management of tensions is indeed the most important strategic issue of alliance partners. Generally speaking, teams of specific alliance managers are responsible for that challenging task. These teams might be comprised of employees from the partner firms (e.g. Le Roy, & Fernandez, 2015) or from a third party entity (e.g. Castaldo, Möllering, Grosso, & Zerbini, 2010). They all have in common that they are supposed to act as a trust bridge or mediator between the partner firms within certain strategic networks. By doing this, coopetitive tensions can be resolved, which in turn facili-tates collaboration (Castaldo et al., 2010). Attempts to identify and develop effective as well as reliable tools and methods to manage such coopetitive tensions are becoming more and more present within the coopetition literature. However, those attempts are still at an early stage and normally do not consider the role of individual actors in actively applying and shap-ing such countermeasures.
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formal mechanism could avoid the rise of tensions in advance (Himpel, 2012). Additional formal management mechanisms are e.g. the protection of partner firms´ core elements that enhances creativity and knowledge sharing since it creates a safety net for organizations. This safety net reduces the firms´ vulnerability (Gnyawali et al., 2016). Generally speaking, infor-mal countermeasures are norinfor-mally used as extensions of certain forinfor-mal countermeasures. In situations where formal mechanisms alone are incapable of resolving tensions, additional in-formal methods might be required (Fernandez, & Chiambaretto, 2016). The same applies when no appropriate formal countermeasures exist in general. In such a situation, informal methods are the only option to counter coopetitive tensions.
Even though the application of both formal and informal management mechanisms are crucial in countering coopetitive tensions (Bonner, Ruekert, & Walker, 2002; Fernandez, & Chiambaretto, 2016), the vast majority of literature did not highlight the role of the individual manager in this context. However, it is solely the alliance manager´s task to execute both for-mal as well as inforfor-mal countermeasures. In specific, it remains unclear how and when man-agers actively apply the particular mechanisms. As outlined above, this is especially relevant with respect to informal countermeasures that are individually developed and re-developed according to a given situation.
While the existing contributions to the literature are valuable to understand general types of managing coopetitive tensions, it is not always clear which of them are specifically linked to tensions related to value appropriation. Moreover, it remains unclear what specific formal and informal types of countermeasures are individually developed and applied to manage tensions that occur at different organizational levels. Within that context, the literature rather focused on the general management of coopetition, for example through separating competitive and collaborative activities at certain organizational levels (e.g. Fernandez et al., 2014; Bengtsson, & Kock, 2000).
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especially important within the context of studies on the presence and effective management of tensions linked to value creation and value appropriation. When it comes to the manage-ment of such tensions in terms of problem-solving strategies applied by alliance managers, the literature is even scarcer. In specific, most studies do not investigate individually-applied mechanisms; they rather focus on theoretical principles. However, it is the alliance manager who is solely responsible for the enforcement of written formal countermeasures and the de-velopment as well as application of informal mechanisms. Therefore, it is necessary to shed light on how these managers actually make use of the aforementioned countermeasures within specific, conflictual situations.
III. METHODOLOGY
This Master´s thesis was designed as an exploratory in-depth case study within an action re-search context. Chapter III.1. provides an overview of the particular rere-search environment: an international airline alliance. Action research as the specific research method is further discussed in chapter III.2. Chapter III.3. and III.4. describe the overall data collection as well as data analysis processes.
III.1. Research Setting and Case Selection
This research project was conducted at SkyTeam, one of the three leading airline alliances in the world. The number of strategic alliances within the airline industry – ranging from bilat-eral codeshare agreements to (global) joint ventures and alliance networks - has especially risen within the past two decades. However, it is worth noting that first bilateral partnerships were already created in the mid-20th century (Iatrou, & Oretti, 2007).
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emergence of coopetition. There is a high likelihood that coopetitive tensions are especially predominant within such kinds of alliances since the overall civil airline industry is character-ized by an intensification of global competition and relatively low, shrinking profit margins (Iatrou, & Oretti, 2007; Gudmundsson, & Lechner, 2011; Czakon, & Dana, 2013).
As a consequence, inter-firm rivalry is fierce. Moreover, those alliances generally consist of member firms that differ significantly with respect to the country of origin, cultural back-ground, firm size, firm performance, and hence also in terms of motivations, time horizons, strategies, and relative bargaining power. The high degree of heterogeneity among member carriers is therefore especially challenging when it comes to the orchestration of network ac-tivities. In sum, strategic airline networks constitute a very unique type of international strategic alli-ances that is especially characterized by complicated forms of interconnections that are limited by strict industry-specific antitrust laws.
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project management includes regular working group meetings in which representatives from all the 20 member airlines participate as well. The working groups constitute the lowest, but predominant hierarchical level. At the higher levels, there are Functional Executive Boards, the Supervisory Board, and – as the highest decision-making construct – the Governing Board. The latter one includes the CEOs of all airlines as well as the CEO of SkyTeam.
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tra-organizational level. It can be assumed that initial project stages are particularly appropri-ate for this specific kind of examination since it is likely that the member airlines´ managers would express their concerns during those phases. The reason is that the individual firms can still tailor the target´s final shape according to their own needs and motivations in the very beginning.
III.2. Research Method
In order to appropriately examine coopetitive behavior among network members in detail, an in-depth case study at SkyTeam within the context of action research has been conducted. Eisenhardt (1989) states that case studies enable an identification and understanding of certain dynamics that are present within specific single settings. Moreover, they are especially suita-ble within the framework of studies that investigate new topic areas (Eisenhardt, 1989), such as coopetitive tensions and accompanying countermeasures.
In addition, action research offers scientists the unique possibility to delve into the environ-ment that is of particular interest for their investigation. Thereby, the researchers actually in-tegrate themselves into the study context and interact with the study subjects (Argyris, 1993). As Reason and Bradbury (2001: 1) note, action research “seeks to bring together action and reflection, theory and practice, in participation with others, in the pursuit of practical solutions to issues of pressing concern to people”. Argyris (1993) highlights action research´s ability to explore the latent dynamics that occur within organizations. Within the context of the rise and management of coopetitive tensions at different organizational levels, an action research ap-proach seems to be very appropriate. In order to gain valuable insights, the research objects need to be studied within their specific environment. It is important to note that this highly interactive and flexible research method fosters a continuous process of theory development (Eden, & Huxham, 1996), whereby data is “cocreated and analyzed as the research context fosters “moments of dialogue”” (Lüscher, & Lewis, 2008: 224), and variation with regard to “the degree to which the research process is predetermined” (Lüscher, & Lewis, 2008: 224) exists.
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Company, and Van Buuren, Buijs, and Teisman´s (2010) case study about coopetitive tensions between program and project management.
III.3. Data Collection
As a first step, and before the actual data collection had begun, a template for rating third-party online booking engines was created during March 2017. After that, the template was discussed with a business development manager of SkyTeam in Amsterdam-Schiphol. Next, the benchmark was incrementally created between April and June 2017. During this period, several interactions with SkyTeam project managers took place within the context of meetings in which the booking engine project was further planned. On average, the author spent nearly one day per week at the office in Amsterdam. Besides the meetings that were directly related to the creation of the benchmark, the author was invited to numerous other ones. Those meetings included pitch presentations of potential software providers, conference calls with potential suppliers, and strategy discussions related to other online commercial opportunities. During those interactions, detailed notes about the progress, general processes, interactions of different actors, and any sort of abnormalities were taken. In specific, the author kept record by writing a weekly diary. Besides the notes that were taken at place, the sources for the diary included an extensive portfolio of secondary data: internal e-mails; external e-mails from a consulting firm; working group protocols; meeting minutes; power point presentations from SkyTeam, industry summits and (potential) external suppliers; and SkyTeam´s internal “Competition Law Compliance Manual”.
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All interviews were conducted throughout May 2017 whereby the average duration was one hour.
In sum, this thesis considers the importance of data triangulation within the context of qualita-tive case studies. Therefore, a range of multiple primary as well as secondary data sources were included in order to gain deeper insights into the research environment.
III.4. Data Analysis
In line with action research characteristics, the analysis of data was a process that already started with the active participation of the author. Due to the steady interaction with SkyTeam employees and the supply of secondary data, the research focus could be further shaped and reshaped over the whole research period. Thereby, interim findings could be integrated into upcoming interactions with the involved parties. For instance, input provided by a certain SkyTeam manager during an in-depth interview could be used within the context of another interview that followed at a later stage.
In general, all interviews were transcribed at first. After that, the transcripts were screened by applying a lens related to the research question. Therefore, the main focus lied on the presence and management of tensions across three different organizational levels: the inter-organizational, intra-inter-organizational, and inter-individual level. These organizational levels were also successfully applied by Fernandez et al. (2014) within the framework of their case study on coopetitive tensions within the telecommunications satellites manufacturing indus-try. In addition, all identified tensions were separated in terms of their connection to value creation and value appropriation. Thus, a certain type of tension could either belong to that root category or was classified as “peripheral”.
With respect to the management of tensions, the transcripts were screened for any possible type of formal or informal mechanisms applied by third-party SkyTeam managers. Moreover, all relevant information regarding the personal background and characteristics of the inter-viewees were filtered out in order to create a profile of the typical SkyTeam manager.
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servations. During the whole data analysis process, the most important literature related to the thematic field was considered as well.
IV. FINDINGS
This chapter provides an overview of all relevant findings derived from the semi-structured in-depth interviews and the extensive portfolio of secondary data sources. For this purpose, tensions and associated countermeasures applied by SkyTeam managers are separately listed according to their organizational level of occurrence: the inter-organizational, intra-organizational, and inter-individual level. The inter-organizational level deals with macro level interactions between the member airlines themselves, and between the member airlines and SkyTeam in general. Within this context, the focus rests on the interpersonal dimension and involves both airline as well as SkyTeam staff who work together in certain projects.
The intra-organizational level refers to interactions between different departments within SkyTeam´s member carriers. Last, the inter-individual level solely takes into account every kind of interaction between at least two human beings involved in the business processes within SkyTeam. Moreover, universally applied SkyTeam-wide management mechanisms (i.e. formal countermeasures) are separated from those that are individually developed and applied by specific SkyTeam managers (i.e. informal countermeasures).
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IV.1. Types of Tensions across Organizational Levels
IV.1.1. Tensions at the Inter-Organizational Level
At the inter-organizational level, only a few interviewees experienced tensions that are only peripherally connected with SkyTeam´s coopetitive environment. Among them are cultural issues, thus different and sometimes contradictory firm cultures and or universal cultures that may clash from time to time. Moreover, one SkyTeam manager described tensions due to restrictive laws and institutional regulations that are present in some carriers´ home countries.
However, most experienced tensions can be traced back to issues of value appropriation at the inter-organizational level. This also fits with the observation that most tensions occur within the context of projects that are somehow linked to commercial issues, but not to other non-monetary ones that deal for instance with safety regulations. One SkyTeam executive called the members openly “frenemies” and stated that value appropriation is the primary source of tension.
Another executive described the situation as follows:
“Each member is acting as a competitor first. Even though they might say “We are partners.” That is not true, not true. They are first competitors. (…) So they don´t want to share any new technologies or any innovative processes to all the members. They are not transferring data even though this data is related to customers. They are not aligning a lot of other things with other partners in favor of the customers. For example baggage allowances: Why gives one carrier 23 kilos while all the others are giving 20 kilos? Because they use this factor as a competitive advantage.”
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It becomes quite obvious that every single member airline always acts in accordance with its very own priorities and firm strategies. By doing this, they try to protect their relative market share, revenues, profits, competitive advantages, reputation, and negotiation power based on their level of maturity. For instance, several interviewees mentioned that mature members often take over leading positions during negotiations since they see themselves as the natural leaders within the alliance. A shared SkyTeam spirit is therefore not always present.
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“The reality is that they don´t have the luxury of resources and funding and time to focus both on themselves and on each other.”
With respect to that dilemma, the same executive provided the following example related to a specific SkyTeam project:
“Well, if a small carrier is gonna spend millions of euros, it´s not gonna be on this project. They gonna buy another airplane. So, that´s probably the greatest point of tension. It´s recognizing that we are constantly competing against internal priorities for the external priority that creates benefits and values across the entire alliance.”
Moreover, many alliance members regularly criticize the strict meeting culture within SkyTeam since it would create unnecessary costs. Furthermore, tensions also arose due to several consulting activities that were aimed at educating smaller carriers within the alliance. After a while, the more mature carriers criticized that they had to spend too much time on educating their smaller partners. With respect to the planned SkyTeam booking engine, sever-al airlines blocked plans for a specific sub-type of investment because it would directly com-pete with their own distribution channels.
Another dimension is existing and / or planned commercial cooperations with other partner airlines or external carriers. For instance, two carriers are currently offering business-to-business flight discounts to external companies. This is done within the framework of a spe-cific agreement. When there was the suggestion to integrate a third SkyTeam carrier into that agreement, the two partners refused the offer since it would have meant to “introduce your
best customer to one of your competitors.” Therefore, they did not “want other carriers to eat from the same pie”, as one SkyTeam executive described the situation. A second example is
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agreements, the involved parties actually compete against the own alliance to a certain extent; another source of tension based on value appropriation.
A third and very significant dimension of tensions is knowledge and best practice-sharing. Nearly all of the interviewed SkyTeam managers stated that several members, especially the more mature ones, regularly avoid the sharing of firm knowledge and best practices. This is due to a certain level of distrust and because they see such information as a relevant source of a competitive advantage. One interviewee described the situation as follows:
“(…), maybe they invested a lot of time and effort, and it gives them some kind of competitive advantage. So why should they share that so easily with another airline that just need to implement it and then they are on the same level?(…) They would copy and paste it, and say “Now we have it as well.” And not only for the SkyTeam agreement. No, they would also use it then for all other kinds of contracts where they are really in competition. They won´t share that, never. Because it´s a USP. And again, rightly so.”
Finally, SkyTeam itself is a root of conflict linked to value appropriation tensions. In specific, several members focus on SkyTeam in order not to become overly dependent since the coop-erative is still owned by its members. Conflicts may occur if SkyTeam is pushing its members in a too extreme way towards the participation in specific projects. This could be contradicto-ry towards own firm priorities. In such cases, SkyTeam managers are often made directly re-sponsible for value appropriation tensions. To put it simply, the member airlines accuse SkyTeam for certain issues rather than each other. The potential consequences of blaming each other directly could be simply too far-reaching. One high-ranking executive provided the following illustration:
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They not gonna do that. But at SkyTeam! SkyTeam is not threatening, 50 peo-ple paid by the members. It´s like to shoot a chicken. And so, that´s what it is.”
In sum, the aforementioned dimensions indicate that value creation vs. value appropriation is indeed the predominant source of tension at the inter-organizational level. Moreover, it be-comes apparent in its pure form due to the direct confrontation of the different firms´ interests at that particular level.
IV.1.2. Tensions at the Intra-Organizational Level
The value appropriation tension trickles down to the intra-organizational level, where it is mainly reflected by resource conflicts across departments within the specific carriers. One interviewee stated that such tensions arise every day since different departmental strategies clash. This can lead to “a lack of follow-through internally” after a specific airline manager might have already accepted a proposal or decision during a particular SkyTeam working group. To make it more tangible, one interviewee stated:
“Because we also have the tension challenge that a person in the meeting may agree to it, but when they go back to their finance department or their technology department, they may not agree to it. And then this person comes back and says: “Well, I agreed to it, but now my company is not capable of ex-ecuting what I agreed to. So therefore, we can´t support it.””
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the KPIs) performs better than before. In addition, specific firm´s internal hierarchies consti-tute another dimension of the aforementioned tension. Fast decision-making processes often fail since all attempts need to be approved by the next higher level that might have different priorities regarding resource allocations to SkyTeam. One interviewee described the problem in the following way:
“Isn´t that maybe the problem? Maybe it´s not the size, I mean how many silos are there, how many people need to spit on it before you can do something!”
However, tensions regarding internal hierarchies are sometimes simply a matter of cultural differences. For instance, strict internal hierarchies are traditionally common within Asian member firms. Another peripheral type of tension is miscommunication across organizational hierarchies and departments; a typical problem within large companies. Even though this par-ticular aspect creates endless coordination cycles, it is not related to value appropriation is-sues; it is a consequence of inefficient firm-internal communication management.
To sum it up, at the intra-organizational level, resource allocations to SkyTeam compete with resource allocations within the own airline company. This interrelationship constitutes the predominant tension among departments and internal hierarchies. However, this particular
resource allocation to own carrier vs. resource allocation to SkyTeam tension is an extension
of critical value appropriation issues at the inter-organizational level.
IV.1.3. Tensions at the Inter-Individual Level
Finally, the predominant tensions identified at the two aforementioned organizational levels trickle further down to the inter-individual level. The following quote perfectly describes the importance of inter-individual behavior within working group meetings at SkyTeam, and it also bridges the gap to tensions related to value appropriation:
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being ego, the second one being lack of trust – which is linked to profit and value sharing.”
It is not solely distrust representing value creation vs. value appropriation tensions, but also a sometimes pushy and even aggressive behavior in several interactions. One SkyTeam alliance manager said that he was once basically told off by one airline representative during a meet-ing. The reasons were competing priorities and strategies. In specific, the airline manager aimed at pushing forward a particular project in a way that perfectly fitted with his carrier´s strategy. However, the alliance manager suggested a different project execution strategy that would have created joint benefits for all members. Due to these competing priorities, it is of-ten the SkyTeam representative himself who becomes the target rather than other airline rep-resentatives. Within this particular context, several interviewees explained such confronta-tional behavior of airline managers with the clear directives they get from their own manage-ment before joining a SkyTeam working group. Therefore, they have relatively high personal pressure to act in favor of their carrier, even though they know that the SkyTeam alliance managers expect a more collaborative attitude. The predominant tension at the inter-individual level is therefore home carrier centricity vs. SkyTeam centricity. It refers to the particular actions and decisions carried out by the airline managers. However, it traces back to a role conflict that resides within the individuals. Therefore, the aforementioned tension ap-plies not only at the inter-individual level, but also at an intra-individual level. Interestingly, a certain number of managers who are seconded to SkyTeam mentioned the same personal pressure. This pressure was linked to the consideration of their home carrier´s priorities while at the same time being neutral SkyTeam representatives by contract. Many of the interviewees stated that it can be sometimes really difficult to apply a SkyTeam lens dur-ing the daily work instead of a home carrier lens. To illustrate this kind of role conflict, the following quote is the response of one SkyTeam manager to the question whether he had dif-ficulties with putting aside the focus on his home carrier:
“Not only in the beginning, but every time, right now. I still have this kind of trade-off between being neutral, really neutral, but don´t forget where you are coming from.”
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of SkyTeam, but not fully in line with his home carrier´s priorities. Other interviewees identi-fied the role conflict within their colleagues. For example, one alliance manager criticized that some colleagues tend to forget that SkyTeam is in fact a cooperative aimed at generating val-ue for all members through a seamless customer experience. He mentioned that those SkyTeam managers are too focused on sales and commercial opportunities. As a final exam-ple, another vice president stated that some of his colleagues were not able to create an easily articulated value proposition for all 20 members.
In sum, the home carrier centricity vs. SkyTeam centricity tension at the inter-individual as well as intra-individual level reflects the other types of tension that become apparent at the inter-organizational and intra-organizational level. They basically trickle down from top to bottom. Therefore, it becomes clear that the value creation vs. value appropriation tension is always present at every single organizational level.
IV.2. Management of Tensions across Organizational Levels
IV.2.1. Management of Tensions at the Inter-Organizational Level
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alliance managers also need to control the members´ compliance with the manual´s written guidelines which aim at creating mutual trust and limiting potential value appropriation ten-sions in advance.
Apart from that, the general membership requirements that every member has to fulfill in the very beginning when entering the alliance have a similar purpose. They clearly articulate the natural boundaries of SkyTeam and are therefore supposed to prevent any behavior which may lead to tensions. It is the alliance manager´s task to create commitment with those re-quirements in the same ways as in the case of the compliance manual.
Even though it is one of a SkyTeam manager´s role to avoid the sharing of confidential knowledge, he also fosters general best practice and knowledge sharing in a proactive manner. By doing this, all members can learn from each other´s successes and defeats which in turn counters tensions in advance. This especially applies to the smaller and less mature carriers which can learn from their larger counterparts. Best practice and knowledge sharing, as a formal mechanism, fosters transparency, relationship-building and mutual trust among organ-izations, thus the airline companies in general. However, it is the SkyTeam manager´s duty to keep the information sharing on a level that is suitable for all members. Thus, the advantaging of particular members has to be avoided, which in turn credibly demonstrates the manager´s neutrality. In practice, depending on a given situation, the alliance managers need to proac-tively identify opportunities for knowledge transfers along with its boundaries. Therefore, he tailors this formal mechanism according to the specific requirements in every single context. The sharing of best practices and firm knowledge as a formal management mechanism is therefore rather a general application than a clearly defined method. Thus, the SkyTeam man-ager still has to tailor it individually according to the situation´s requirements. Knowledge transfers can be conducted during the working group meetings, but also on a bilateral basis between certain airlines; specifically joint venture partners. This happens in situations where specific airlines are only willing to share their knowledge with strategic partners that are also financially committed within the context of equity partnerships. In such a situation, overall value appropriation tensions cannot be fully resolved at the overall alliance level. For exam-ple, two members established an internship program in which employees from both carriers worked at their counterpart´s headquarters for a six-month period. The aim was to share best practices in order to offer a more seamless customer experience to their passengers within the
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Another formal management mechanism is to escalate tensions at higher hierarchical levels within SkyTeam, thus through a Functional Executive Board, the Supervisory Board, or the Governing Board. This option only comes into consideration if the alliance manager himself is not able to effectively solve conflicts at the inter-organizational level so that a consensus cannot be reached. Such a scenario never happened in the history of SkyTeam. The reason is that the alliance managers rather apply other informal countermeasures since they are not convinced of the method´s effectiveness. One executive also highlighted the importance of avoiding that radical type of mechanism:
“But we never use it. Why? (…) when you are using the escalation process, (…) the negative impact from that use is gonna be huge. Because you get people in by escalating and not by being able to convince them. So this is basi-cally a divorce contract. When you are using the divorce rules, the situation after the divorce can never match the wedding position.”
Due to the risks linked to an escalation process, another executive mentioned that it is neces-sary to find the fine dividing line between “when do they disagree and when do they abstain” in the decision-making and voting process. If there are tensions due to a particular carrier´s unwillingness to support a certain project, one way to solve those tensions and to keep on go-ing is to lead that carrier toward an abstention rather than a veto. By dogo-ing this, escalation can be avoided. The executive described this informal countermeasure as one of his very own working principles:
“So that´s may way – don´t tell my secret – but that´s my way of maneuvering through it. How to work toward an abstention rather than having a full veto.”
The mechanism described above is an example for a situation where an existing formal coun-termeasure is inappropriate in solving tensions. Therefore, the alliance manager counters this
inefficiency by developing his very own informal countermeasure as an alternative solution. Another manager has developed a different alternative: the acceptance of refusals. Within that
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His mechanism is to strategically leverage his personal network in order to initiate one-to-one talks with other influential people within that particular carrier. Those personal talks might help to solve the tensions at the inter-organizational level, which in turn makes an escalation process unnecessary.
Other informal countermeasures are mainly applied in contexts where simply no formal man-agement mechanism exists. Generally speaking, SkyTeam managers have only little formal mechanisms at hand to counter coopetitive tensions. Thus, informal countermeasures are pre-dominantly applied. The number one highlighted countermeasure within this context is the ability to find the right balance between accepting competition and fostering collaboration. Or in other words: to stay diplomatic and accept refusals to cooperate while still presenting the benefits of cooperation. One interviewed executive explained the situation as follows:
“So, what I always say is that alliance work is not for everyone. You need to cherish the cooperational element of your activity rather than the competitive element of the activity. There are two opposites. If you compete, you cannot co-operate. If you cooperate, you don´t compete. This is a very strong conviction in fact. Human beings are born to cooperate. This is one of the fundamental virtues, one of the fundamental powers that human beings have; it is the power of cooperation. Competition is unnatural. It´s not engrained in human beings. People hate to compete.”
Within that particular context, many interviewees compared SkyTeam with constructs such as the United Nations or the European Union. These strategic alliances are also characterized by diverse members with sometimes contradictory and competing priorities.
One manager said:
“The most of what we do is United Nations-type work. It´s finding common ground, it´s finding compromises. It´s helping people understand each other.”
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manoeuvring every single time. In sum, one vice president described this challenging task from an airline´s point of view:
“(…) When you are pushing this line to one of the extremes, you can be very far or very close to my expectations. So, if you push it very close to my expecta-tions, I am gonna be strongly supportive. And the other way around, if you are very far from my expectations, I am gonna be strongly against it. So the easiest thing for you as a manager is to keep the line on average.”
In addition, another vice president further mentioned the importance of listening to and inter-preting the specific needs of the members instead of trying to convince them of SkyTeam pro-jects:
“I skipped over the “convince you of what you need me for” part. Now, I am talking about how to execute what you need instead of going back to the point of trying to convince you of going my way (…).”
This statement is in line with most of his colleague´s strong conviction that every SkyManager should only be busy with the things that the airlines want them to do. If they would try to push their own agenda on the airlines, they would fail in the end. Therefore, the clear focus needs to be on the members´ pain points and not on project ideas created by SkyTeam managers without the involvement of members. Again, this behavior is also a demonstration of neutrality.
In sum, all of the aforementioned countermeasures applied by SkyTeam alliance managers have in common that they aim at demonstrating neutrality. This, in turn, contributes to the resolving of tensions related to value creation and value appropriation at the inter-organizational level, because the member airlines perceive significantly lower levels of risks linked to collaboration.
IV.2.2. Management of Tensions at the Intra-Organizational Level
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not openly within the alliance. However, a small number of countermeasures do exist whereby informal mechanisms prevail again. The only formal mechanism that was mentioned is the publication of the meeting agenda as well as all related documents two weeks before every working group begins. By doing this, the assigned airline representatives can discuss everything within their carriers and across departments as well as hierarchical levels before-hand. Regarding informal countermeasures, once again, an executive highlighted the importance of his personal social network based on his airline background. In specific he said that he can leverage his own network in order to influence departments; especially within his home carri-er:
“So, from my point of view, with a VP position at SkyTeam, you should be high-ranking enough within your home carrier.. (…) You should have your own network within your home carrier. At my carrier, it´s about the weight of my networking. So, about which person I can use to influence another department (…). So, you can use your background and your networking to make things happen. If you don´t have any direct impact on the other people, it´s not worth it.”
Another executive thought that the only way to manage such intra-organizational tensions is a clear formulation of a universal value proposition that applies to all members. The main point is that such tensions and conflicts will not occur if every member carrier´s departments can clearly and easily identify own benefits from certain projects. To put it in other words, if the SkyTeam manager is doing his overall job right, such types of tensions will not arise since every department would be convinced of a certain project´s advantages. The executive de-scribed this point in the following way:
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To sum it up, the alliance manager´s informal countermeasures at the intra-organizational level are basically about internal lobbying. In case of tension, it is the manager´s role to di-rectly insert alliance goals and the spirit of collaboration within the specific members´ de-partments.
IV.2.3. Management of Tensions at the Inter-Individual Level
Finally, tensions at the inter-individual level are countered by both formal and informal coun-termeasures. However, all formal countermeasures are basically tailored by every alliance manager in accordance with the contextual setting. For example, in order to foster trust, rela-tionship-building and mutual understanding, several social networking events are part of eve-ry working group meeting. Such events almost always include a joint dinner and sometimes also the visit of a museum, for instance. One interviewee described such events as “one of the
most important things in a SkyTeam meeting” since they create a significantly higher
willing-ness among participants to cooperate within the alliance. Those events do not only counter peripheral tensions related to the diverse cultural and firm backgrounds of the participants. They are also effective in connecting airline managers who are strictly aiming to protect their carrier´s priorities. A similar micromanagement strategy is a meeting rotation principle. SkyTeam avoids conducting working group meetings exclusively in Amsterdam. Therefore, after every meeting in the Amsterdam office, the respective next meeting is at a member´s headquarters. By doing this, the participating airline managers get to know different cultures and airline companies. Moreover, there is a relatively frequent meeting culture in general which contributes to higher levels of trust and relationship-building as well. The role of SkyTeam managers within the meetings is to introduce everyone and “to engage everyone to
be part of the conversation.” The latter aspect is also a cultural one and requires a certain
lev-el of intercultural sensitivity. Therefore, many SkyTeam managers highlight the need of re-cruiting business managers with international experience in the airline industry as a prerequi-site for successful collaboration.
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A second micromanagement strategy that was highlighted by interviewees is to find the right balance between being too diplomatic and too conative. One executive summarized it in the following way:
“The second thing is that you should be smart enough to keep a balance between being diplomatic and pushy. This kind of soft skills you can´t get from school, but from your experience. It means that you have to be not only an expert at a management level. Because as an expert from a technical side, you just know the way to solve technical problems. But when you are running a project for SkyTeam at a management level, you are dealing with humans. And sometimes humans don´t have the same reasoning like robots. So, you have to be rational enough to talk to a robot, but polite enough to convince the human side.”
In sum, the applied countermeasures at the inter-individual level all have in common that they aim at enabling social networking among the individual participants of SkyTeam meetings. Those mechanisms are therefore important to create personal trust and mutual acceptance which also counters the previously described role conflict related to home carrier centricity vs. SkyTeam centricity. The idea is to create a shared collaborative SkyTeam mentality which still acknowledges and accepts the individual´s backgrounds and priorities.
V. DISCUSSION
V.1. Observations and Interpretation of Findings
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With respect to the first research gap, the analysis shows first of all that tensions indeed occur across all of the three investigated organizational levels: the inter-organizational, intra-organizational, and inter-individual level. This finding is in line with Fernandez et al. (2014) who identify a variety of different tensions across the same levels. At the inter-organizational level, all firms that constitute the multi-firm network are facing each other directly with their very own business strategies and priorities. Multiple conflicts can be observed, but in the end, the majority of them can be traced back to one superordinate predominant tension: value crea-tion vs. value appropriacrea-tion. Next, at the intra-organizacrea-tional level, the majority of observed conflicts relate to resource allocations. In specific, resource allocations to SkyTeam compete with those that focus on the own company. This creates tensions across departments since they differ in terms of willingness to engage in collaborative SkyTeam activities. At a first glance, most of the tensions that appear at the inter-individual level seem to be solely periph-eral, thus linked to the diverse cultural, firm and personal backgrounds of the airline manag-ers. However, a surprising amount can be actually traced back to the contradictory relation-ship between home carrier centricity and SkyTeam centricity. To make it more understanda-ble, airline managers who are assigned to SkyTeam meetings on behalf of their home carrier are constantly in need to evaluate their home carrier´s priorities against those of SkyTeam. The aforementioned superordinate types of tensions that were identified across organizational levels are consistent with prior findings. Fernandez et al. (2014) identify a predominance of value appropriation conflicts at the inter-organizational level as well as tensions related to conflicting identities at the inter-individual level. The described role conflict at that level fur-ther reflects the paradox of performing highlighted by Jarzabkowski et al. (2013).
The findings at the intra-organizational level are in line with previous research which high-lighted the predominance of conflicts between departments that compete against each other in terms of resource allocations (Tsai, 2002; Luo et al., 2006).
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the form of resource allocation tensions. From the intra-organizational level, it trickles down to the inter-individual level where the tensions become apparent in the form of conflicts con-nected with home carrier centricity vs. SkyTeam centricity. In general, this trickle-down ef-fect creates an omnipresence of the value creation vs. value appropriation tension across the multi-firm network. The previously described findings are summarized in the following ob-servations:
Observation 1: In multi-firm networks, tensions related to value creation vs. value
appropriation trickle down from the inter-organizational to the inter-individual level via the intra-organizational level.
Observation 2: In multi-firm networks, tensions related to value creation and value
appropriation are reflected in the form of resource allocation conflicts at the intra-organizational level, and in the form of competing home carrier and SkyTeam centricities at the inter-individual level.
Besides, the data analysis revealed that the observed tensions regarding home carrier and SkyTeam centricity do not solely occur between at least two individual actors at the inter-individual level. The same tensions become also apparent within inter-individuals in the form of role conflicts. This applies to both airline representatives who join SkyTeam meetings on be-half of their carriers, and SkyTeam alliance managers that are seconded from their home car-rier which is also a member of the alliance. Altogether, this particular superordinate tension is therefore also observable at an intra-individual level:
Observation 3: The home carrier centricity vs. SkyTeam centricity tension at the
inter-individual level becomes also apparent in form of role conflicts at the intra-inter-individual level.
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applied by the team of alliance managers. Examples are a strict meeting culture that empha-sizes a rotation principle as well as frequent get-togethers, and various knowledge sharing opportunities to create mutual trust. However, the vast majority of these formal countermeas-ures cannot be universally applied to resolve any potential tension. They have to be re-developed according to specific situations´ requirements. Therefore, it is not the alliance manager´s task to simply execute a certain formal mechanism. Instead, he first needs to tailor the formal countermeasure under consideration of a given situation´s demands. In addition, the analysis shows that all SkyTeam alliance managers primarily use informal countermeas-ures within the boundaries of their function as mediators and trust bridges (Castaldo et al., 2010). If a specific situation arises that is characterized by tension, the commonly applied first step is to listen to the member carriers´ needs and standpoints to understand the conflictual situation. After that, the alliance managers make use of informal management mechanisms that were either successfully applied in previous situations, or that are newly tailored to the specific new situation. In general, there are two common contexts in which alliance managers make use of informal countermeasures: first, if formal countermeasures do not exist. And se-cond, if existing formal countermeasures are either inappropriate in general, or only useful to a certain extent.
Finally, it is worth noting that all alliance managers make extensive use of their prior experience that they consider to be indispensable, also for future recruits (Bez et al., 2015;
Gnyawali et al., 2016).
The following observations summarize the aforementioned findings:
Observation 4: In order to resolve tensions at different organizational levels within
multi-firm networks, alliance managers tailor formal countermeasures according to the specific requirements of a conflictual situation.
Observation 5: In order to resolve tensions at different organizational levels within
multi-firm networks, alliance managers apply informal countermeasures if formal countermeasures are either non-existent or largely inappropriate.
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demonstrating neutrality. Since SkyTeam alliance managers are supposed to be neutral by contract, it is their duty to act accordingly throughout all activities they are involved in. In the case of tensions between member airlines, the demonstration of their neutrality becomes even more important in order to avoid blocking behavior by guaranteeing the protection of the members´ core competencies (Gnyawali et al., 2016). Within the specific context of SkyTeam, this countermeasure is especially important since most alliance managers are se-conded from their home carriers. Therefore, other carriers that are part of the alliance might constantly question the manager´s neutrality. At the intra-organizational level, the majority of countermeasures can be described as subtypes of internal lobbying. Thus, the alliance manag-ers directly approach departments and business units which are of particular importance with-in the context of a certawith-in conflictual situation. For with-instance, by leveragwith-ing their personal net-works within the member carriers, they can resolve tensions besides alliance activities where all 20 members are present. Finally, countermeasures at the inter-individual level are primari-ly mechanisms to enable social networking among the participants who represent their home carriers during SkyTeam meetings. Therefore, these countermeasures support the creation of mutual acceptance and trust between those airline managers, but also between them and the alliance managers (Gnyawali et al., 2016). These findings are summarized as follows:
Observation 5: In multi-firm networks, alliance managers counter tensions related to value
creation and value appropriation by demonstrating neutrality at the inter-organizational level, through internal lobbying at the intra-organizational level, and by enabling social net-working at the inter-individual level.
V.2. Theoretical Contributions
intra-- 36 intra--
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investigation. Last, this Master´s thesis is one of very few studies (Van Buuren et al., 2010) that applied action research as its primary research method.
V.3. Managerial Implications
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be more cost and time-efficient to first optimize this portfolio before developing and applying tailored informal countermeasures. Finally, the findings highlight the importance of alliance managers´ previous experience for the successful management of coopetitive tensions. Therefore, this study suggests the recruitment of managers that have significant international industry experience, a strong social network within the alliance´s member firms, and a pro-nounced intercultural sensitivity. However, it needs to be noted that the secondment from one of the alliance´s members pose the risk that a particular alliance manager might struggle with an internal role conflict; a reflection of value appropriation tensions. Thus, the alliance man-ager might play a contradictory role in the end: being a source of tension and the problem solver at once.
V.4. Limitations and Future Research Opportunities
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airline industry cannot be easily compared with other existing industries and branches. Therefore, the generalizability of this study´s results needs to be treated carefully with respect to other multi-firm as well as dyadic networks. Finally, action research as the applied research method constitutes a limitation in itself. The reason is that this flexible and experimental method is highly contextual and dynamic. The researcher delves into a very specific research context and becomes basically a part of it. By doing this, the overall generalizability is nar-rowed down as well.
In addition to the aforementioned future research opportunities, this study constitutes a fruitful basis for future studies within the particular research stream. While this study investigated the interrelatedness of tensions across organizational levels, it did not examine the interconnect-edness of various countermeasures applied at different organizational levels. Future studies could try to investigate if and how a particular management mechanism applied by an alliance manager spreads from one organizational level to another. This could also contribute to a better understanding on how alliance managers should ideally place such countermeasures in order to successfully resolve tensions. The latter aspect relates to a separate future research opportunity: the investigation of the identified countermeasures´ efficiency. Finally, it would be also interesting to explore the potential role conflicts that reside within managers in more detail. This would contribute to a better understanding of the overall context regarding tensions across organizational levels, and how individual managers counter such specific types of tension.
VI. CONCLUSION
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2014; Fernandez, Le Roy, & Gnyawali, 2014; Fernandez, & Le Roy, 2015; Fernandez, & Chiambaretto, 2016; Gnyawali et al., 2016; Bengtsson et al., 2016).
The analysis of the extensive amount of data has revealed several important insights. First, the study identifies a trickle-down effect of value appropriation tensions across three organiza-tional levels. In specific, tensions that are linked to the trade-off between value creation and value appropriation are reflected in different forms at each single level. Second, the thesis shows that alliance managers individually tailor and apply a range of both formal as well as informal countermeasures to resolve such types of tension at different organizational levels. In particular, alliance managers predominantly use informal countermeasures since formal mechanisms are often non-existent or largely inappropriate.
Even though several limitations are acknowledged, the study´s findings supplement the scarce literature on coopetitive tensions and accompanying countermeasures in some important ways. It provides an understanding of the interrelatedness of value appropriation tensions across organizational levels. Within that context, the thesis also highlights the existence of role conflicts that affect individuals who are engaged in alliance management activities. Moreover, this study is among the first that sheds light on the individual role of alliance managers in managing value appropriation tensions across organizational levels. In specific, it shows how these managers proactively apply countermeasures in practice. Therefore, the existing studies´ limited view on theoretical management principles is extended.
