Koen Siemonsma S2805847
Coopetition:
The selection of partners
MSc BA Small Business and Entrepreneurship – MSc Thesis
MSc BA Small Business and Entrepreneurship – MSc Thesis | June 20, 2016 2 Coopetition: The selection of partners University of Groningen Koen Siemonsma S2805847
Colophon
Author: Koen Siemonsma (S2805847)
Academic year: 2015-2016
Semester: 2
Date: June 20, 2016
Supervisor: Prof. Dr. P.S. Zwart
Co-assessor: Dr. Ir. J. Kraaijenbrink
MSc BA Small Business and Entrepreneurship – MSc Thesis | June 20, 2016 3 Coopetition: The selection of partners University of Groningen Koen Siemonsma S2805847
Abstract
MSc BA Small Business and Entrepreneurship – MSc Thesis | June 20, 2016 4 Coopetition: The selection of partners University of Groningen Koen Siemonsma S2805847
Table of content
Abstract ... 3
1. Introduction ... 5
1.1 Purpose and research question ... 6
1.2 Methodology ... 6
1.3 Structure of this report ... 7
2. Literature review ... 7 2.1 Collaboration ... 7 2.3 Selection Criteria ... 12 2.4 Conceptual model ... 19 3. Research design ... 19 3.1 Sample ... 20
3.2 Data collection method ... 20
3.3 Data analysis ... 22
3.4 Discussion of validity and reliability ... 22
4. Results ... 23
4.1 Selection criteria resulting from the unaided question ... 24
4.2 Task-related selection criteria ... 26
4.3 Partner-related selection criteria ... 31
4.4 Summary of the results ... 41
5. Discussion ... 41
6. Conclusion ... 51
6.1 Contribution of the research ... 52
6.2 Limitations and further research ... 53
References ... 54
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1. Introduction
For many years, corporations where able to compete successfully by exploiting scale and scope economies, or by taking advantage of the imperfections in the world’s markets. But these ways of competing are no longer as profitable as they once were (Hansen and Nohria, 2004). Competition is getting harder due to a changing environment, which is becoming more and more dynamic and product life cycles are shrinking (Chen and Li, 1999). As a result, many organisations struggle to survive nowadays and search for opportunities to maintain their continuity for the future and stay ahead of competition. In this search, it seems that knowledge is becoming a key factor of competitiveness (Tödtling, Lehner and Trippl, 2004). However, capturing all knowledge is almost impossible for one single organisation because of the associated costs. Stuart (2000), Chang (2003) and Albino (2012) mentioned that organisations therefore search for collaboration; this can be a vehicle to gain knowledge. Firms are increasingly building an alliance portfolio rather than ‘doing it alone’ (Lee, Kirkpatrick-Husk and Madhavan, 2014). However, not all partnerships succeed despite their good intentions.
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Competitor collaboration or coopetition and differs quite extensively from growth through mergers and acquisition. Although coopetition is becoming one of the new ways for doing business, application and magnitude of existing theory on this phenomenon is currently limited. Current literature about partner selection mostly focused on alliances between large established firms (Das and He, 2006). Since selection criteria as well as their priority and weighting may vary with different forms of alliances or situations (Glaister and Buckley, 1997; Chen, Lee and Wu, 2008), it is interesting to research selection criteria directed towards coopetition. Therefore, this report recommends a set of partner selection criteria suited specifically to the perspective of coopeting organizations.
1.1 Purpose and research question
The goal of this research is to discover what selection criteria coopeting organizations should use while searching for new partners. Therefore the research question, which will be central to this research, is:
Which criteria should coopeting organizations use to select new partners?
1.2 Methodology
To start, a literature review was done in order to establish an academic foundation for this research. The main sources of literature were articles from academic journals. These were mostly searched using Business Source Premier and Google Scholar. The key words used in these search machines were: horizontal alliances, collaborative coopetition, coopetition and
selection criteria.
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qualitative nature and not of quantitative nature. The main motivation for a qualitative approach is the aim of this research; understanding what selection criteria coopeting organizations should use to select new partners. According to Miles and Huberman (1994) a qualitative research is most appropriate for understanding phenomena within their context and in order to generate and refine a theory. This approach relies on past literature and empirical observation or experience as well as on the insight of the theorist to build incrementally more powerful theories (Eisenhardt, 1989). In order to gather the needed data, a case study was conducted. Case studies can contain either single or multiple cases (Yin, 1984). Due to the limited timeframe of this research, a single case study approach was used. The case that was used is one of coopeting organizations. This is a group of coopeting organizations and is therefore an ideal case to use in this research.
1.3 Structure of this report
This report proceeds in the next section with a literature review, which is the foundation of this research. It then describes the research design section. This section explains the sample, data collection method, data analysis and gives a discussion of the validity and reliability of this research. Next, the results of the interviews will be presented and analysed. Finally, a discussion of the results and conclusion are given in the last two sections of this report.
2. Literature review
To start, the theoretical backgrounds of the main concepts of this research (i.e. collaboration and selection criteria) are discussed. Next, a conceptual model will be presented.
2.1 Collaboration
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synergies in participants’ interactions (Emden, Calantone and Droge, 2006). Current literature distinguishes three types of partner-specific collaboration strategies: collaboration with the supply chain (Cao et al., 2010; Belderbos et al., 2012), collaboration with competitors (Gosh and Morita, 2012; Ritala, 2012) and collaboration with others (Brettel and Cleven, 2011; Albino et al, 2012). The only one relevant to this research is collaboration with competitors because this is a research about collaboration of firms, which are active in the same business area. Collaboration with competitors is defined as ‘collaboration among competing firms, also known as horizontal alliances or coopetition’ (Gosh and Morita, 2012; Ritala, 2012).
The incentive for collaboration in general is mostly originated in multiple factors. Dodgson (1993) and Coombs (1996) mentioned the four most common ones:
- Escalating R&D costs;
- Shortening technology life cycles; - Increasing complexity of technologies; - Globalization of technologies and markets.
Collaboration enables organizations to bring together complementary assets, share cost and risks for high cost projects in order to improve their competitive position (Stuart, 2000; Hansen and Nohria, 2004) and to deal with the four factors mentioned above.
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order to share risks and decrease the overlap in resource utilization for similar tasks (Ritala, 2012).
There are several ways for coopeting firms to collaborate. Todeva and Knoke (2005) classified thirteen basic forms of inter-organizational relations based on theoretical and research literature. These can be found in table 1.
Table 1. Varieties of inter-organizational relations (Todeva and Knoke, 2005) HIERARCHICAL
RELATIONS
Through acquisition or merger, one firm takes full control of another’s assets and coordinates actions by the ownership rights mechanism
JOINT VENTURES
Two or more firms create a jointly owned legal organization that serves a limited purpose for its parents, such as R&D or marketing
EQUITY
INVESTMENTS
A majority or minority equity holding by one firm through a direct stock purchase of shares in another firm
COOPERATIVES
A coalition of small enterprises that combine, coordinate, and manage their collective resources
R&D CONSORTIA
Inter-firm agreements for research and development
collaboration, typically formed in fast-changing technological fields
STRATEGIC COOPERATIVE AGREEMENTS
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outcomes
CARTELS
Large corporations collude to constrain competition by cooperatively controlling production and/or prices within a specific industry
FRANCHISING
A franchiser grants a franchisee the use of a brand-name identity within a geographic area, but retains control over pricing, marketing, and standardized service norms
LICENSING
One company grants another the right to use patented technologies or production processes in return for royalties and fees
SUBCONTRACTOR NETWORKS
Inter-linked firms where a subcontractor negotiates its suppliers’ long-term prices, production runs, and delivery schedules
INDUSTRY STANDARDS GROUPS
Committees that seek the member organizations’ agreements on the adoption of technical standards for manufacturing and trade
ACTION SETS
Short-lived organizational coalitions whose members coordinate their lobbying efforts to influence public policy making
MARKET RELATIONS
Arm’s-length transactions between organizations coordinated only through the price mechanism
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Joint venture
Geringer (1991) mentioned a little more extended definition of joint ventures; the involvement of two or more legally distinct organizations (the parents), each of which actively participates, beyond mere investment role, in the decision-making activities of the jointly owned entity. Glaister and Buckley (1997) mention that in joint ventures two or more partners hold an equal stake.
Franchise organization
A little more extended definition of franchising comes from Stanworth and Curran (1999). They define franchising as a business form essentially consisting of an organization (the franchisor) with a market-tested business package centered on a product or service, entering into a contractual relationship with franchisees, typically self-financed and independently owner-managed small firms, operating under the franchisor’s trade name to produce and/or market goods or services according to a format specified by the franchisor. This format could for example include control over corporate decisions, pricing, marketing and standardized service norms.
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2.3 Selection Criteria
Current scientific literature suggests a great number of selection criteria. However, these are mostly focused on alliances between large established firms (Das and He, 2006), and do not adequately reflect the coopeting organizations mentioned in the paragraph 3.1 sample. According to Chen, Lee and Wu (2008) selection criteria as well as their priority and weightings may vary with different forms of alliances or situations. Therefore, this research aims to propose a set of selection criteria directed towards coopeting organizations. Due to the scope of this research it is not possible to discuss all the selection criteria mentioned in current literature. Nonetheless, in order to be able to establish an academic foundation for this research, three often-cited lists of selection criteria are discussed in this paragraph. The first
one is about selection criteria for joint ventures, the second one for franchise organizations and the last one for collaborations in new product development. The selection criteria for new product development are discussed in this research because of the importance of knowledge sharing in both collaboration in new product development and the coopeting organizations of the sample because of the fast-moving technological environment in both cases. At the end of this paragraph, the lists of partner selection criteria for joint ventures, franchising and new product development will be combined and will serve as the theoretical foundation for this research.
Selection criteria for joint ventures
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the one of Geringer (1991), which distinguishes task-related and partner-related selection criteria. This typology is one of the most cited in scientific literature (amongst others by Glaister and Buckley (1997), Hitt et al. (2000), Emden et al. (2006), Li et al. (2008). Geringer (1991) is cited 165 times according to Web of Science).
Typology of Geringer (1991):
‘’Task-related criteria: refer to those variables, which are intimately related to the
viability of a proposed venture’s operations regardless of whether the chosen investment mode involves multiple partners. These could be tangible or intangible, human or nonhuman. Examples are technical knowhow, financial resources, experienced managerial personnel, and access to marketing and distribution systems.
Partner-related criteria: refer to those variables, which become relevant only if the
chosen investment mode involves the presence of multiple partners. Examples are a partner’s national or corporate culture, the degree of favourable past association between partners, compatibility of and trust between partners’ top management teams, and a partner’s organizational size or structure.’’
Table 2. Selection criteria (Glaister and Buckley, 1997)
Task-related selection criteria Partner-related selection criteria
Access to Rank Access to Rank
Knowledge of local market 1 Trust between the top management
teams
1
Distribution channels 2 Relatedness of partner’s business 2
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Knowledge of local culture 4 Financial status/financial resources
of the partner
4
Technology 5 Complementarity of partner’s
resource contribution
5
The product itself 6 Established marketing and
distribution system
6
Knowledge of production processes 7 The partner company’s size 7
Capital 8 International experience 8
Regulatory permits 9 Experience in technology
applications
9
Labour 10 Management in depth 10
Local brand names 11 Degree of favourable past
association between partners
11
Materials/natural resources 12 Partner’s ability to negotiate with
foreign government
12
Selection criteria for franchising
There are very few empirical studies, which are directed towards selection criteria in franchising. This research used the most cited one, which is from Jambulingam and Nevin (1999) (amongst others cited by Clarkin et al. (2006), Altinay et al. (2010), Blut et al. (2011) and Brookes et al. (2011). Jambulingam and Nevin (1999) are cited 44 times according to Web of Science). Their research also focused on task-related and partner-related selection criteria. In their research four categories of selection criteria were identified. These are:
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This concerns the financial position of the franchisee. - Experience and Management Skills
This concerns prior experience in similar business, prior self-employment and own other businesses.
- Demographic Characteristics
This concerns age, gender, ethnicity, education, and marital status. - Attitudes Toward Business
This concerns the franchisees’ perceived innovativeness, desire for personal development, seek work-related challenges, personal commitment to the business, and business risk-taking.
Note that these categories are all directed towards personal characteristics. That is because in franchising, a franchisor selects a franchisee. A franchisee in that case is a person who does not own a business yet.
Selection criteria for collaborations in new product development
An often-cited list of selection criteria for collaborations in new product development is the one from Emden, Calantone and Droge (2006) (amongst others cited by Dekker et al. (2010), Ma et al. (2010) and Feng et al. (2011). Emden, Calantone and Droge (2006) are cited 110 times according to Web of Science).They developed an emergent model that highlights the process managers followed to select partners (Figure 1). The model reveals three broad phases:
1. Technological alignment
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collaboration. This phase features the managers’ confirmation about technical capability, resource complementarity and overlapping knowledge bases.
2. Strategic alignment
Strategy is defined as the goals of an organization and the manner in which it seeks to achieve them (Saint-Onge, 1996). This phase includes motivation correspondence and goal correspondence.
3. Relational alignment
The last phase is relational alignment, which includes compatible cultures, propensity to change and long-term orientation.
Figure 1. Emergent theory of partner selection (Emden, Calantone and Droge, 2006)
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Koen Siemonsma S2805847
Table 3. Combination of selection criteria
Task-related selection criteria Partner-related selection criteria
Criteria Source Criteria Source
Strategic alignment Strategic alignment
- Motivation correspondence NPD
Goal correspondence NPD
Relational alignment Relational alignment
- Compatible cultures NPD
Propensity to change NPD
Long-term orientation NPD
Technology know-how Technology know-how
Access to technology JV, NPD Experience in technology applications JV
Access to knowledge of production processes JV
Access to knowledge of local culture JV
Access to knowledge of local market JV
Management experience and financial assets Management experience and financial assets
- International experience JV
Financial status/financial resources of partner JV, FR
Management in depth JV, FR
Official access Official access
Access to regulatory permits JV Partner’s ability to negotiate with foreign government JV
Relatedness of partner’s business JV
Access to labour Access to labour
Access to labour JV -
Complementary resources Complementary resources
- Complementarity of partner’s resource contribution JV, NPD
Overlapping knowledge bases NPD
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Table 3. Combination of selection criteria (continued)
Task-related selection criteria Partner-related selection criteria
Criteria Source Criteria Source
Complementary resources Complementary resources
- Established marketing and distribution system JV
Large partner with distribution access Large partner with distribution access
Access to the product itself JV The partner company size JV
Access to distribution channels JV
Highly regarded firm with link to major buyers Highly regarded firm with link to major buyers
Access to link with major buyers JV Trust between the top management teams JV
Access to materials/natural resources JV Degree of favourable past association between partners JV
Reputation JV
Access to local brand names Access to local brand names
Access to local brand names JV -
Access to capital JV
Personal characteristics of owner future partner Personal characteristics of owner future partner
- Age FR Gender FR Ethnicity FR Education FR Marital status FR Innovativeness FR
Desire for personal development FR
Seek work-related challenges FR
Personal commitment to the business FR
Business risk-taking FR
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2.4 Conceptual model
The conceptual model of this research, which is based on the previous paragraphs, is shown below.
3. Research design
For the goal of this research, a single-case research has been conducted where several stakeholders of the coopeting organization were interviewed. Interviewing several stakeholders from a case is according to Yin (2013) the most appropriate source to gather data. Yin (2013) defines a case study as ‘An empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially useful when the boundaries between phenomenon and context are not clearly evident’. The definition for a case is according to Yin (2013) ‘the main object of study and is most of the times an entity like an organization, person or community’. The main motivation for using a case study is the aim of this research; understanding what selection criteria coopeting organizations should use to select new partners. In order to make sure that the right data can be gathered, and that the gathered data is of sufficient quality, an extensive research design has to be developed (Yin, 2013). In this section, the research design of this study (i.e. sample, data collection method, data analysis and validity and reliability) will be discussed.
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3.1 Sample
The case that was used is confidential.
Table 4. Company and interviewee profiles
Company Business
description
Interviewee’s position Number
of
employees
3.2 Data collection method
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questions regarding selection criteria are presented. These questions are both aided- and unaided questions. In order to make sure that the interviewees answer the questions with regards to the phenomenon under study, the interviewer explained concepts in case an interviewee did not fully understand that concept. Interviews were held in English and Dutch, since some interviewees preferred Dutch instead of English. Furthermore, all interviews were recorded in order for the interviewer to be able to entirely focus on interviewing. After the interviews, the recordings were transcribed.
Table 5. Variables and raw variables
Conceptual variable Raw variable Format for answers
Introducing questions
Identifying Interviewee
Self-description (Background, position in the company).
Open question.
Identifying Company
Number of employees. Open question.
Questions regarding selection criteria
Selection criteria unaided (interviewee’s own contribution, without help of the interviewer)
Selection criteria interviewee uses to select new partners. Also, motives for his answer.
Open question.
Selection Criteria
aided (specific, with
Whether the interviewee uses the selection criteria mentioned in table 3.
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help of the
interviewer, based on theory)
Also, motives for his answer.
Ranking Relative importance of the used
selection criteria according to the interviewee.
1 – 7 likert scale.
3.3 Data analysis
The gathered data was analysed using the three concurrent steps for analysing qualitative data from Miles and Huberman (1984). The steps are data reduction, data display, and conclusion-drawing/verification. The first step, data reduction, refers to the process of selecting, focusing, simplifying, abstracting, and transforming the raw data that appear from the interviews. The second step, data display, refers to the process of an organized assembly of information that permits conclusion drawing. This could include a wide range of matrices, graphs, networks, and charts. For this research, the data was organized in an Excel sheet in order to make the data easier to analyse. The results are described in section 4. The third step, conclusion drawing and verification, refers to drawing meaning form displayed, reduced data. This can be found in chapter 5.
3.4 Discussion of validity and reliability
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Construct validity
The concepts of this research are based on established theories. This improved the construct validity. The concepts were operationalized by using the interview guide of Emans (2004)
External validity
The results of this research are to a very limited extent generalizable to coopetition in other industries than the sample. As mentioned in the introduction, selection criteria as well as their weighting may vary with different forms of alliances or situations (Glaister and Buckley, 1997; Chen, Lee and Wu, 2008). Even for coopetition within the same industry as the sample, the results might be generalizable to a limited extent.
Reliability
The research procedures that were used are described in the research design and in the interview guide (Appendix 1). In this way the reliability of this research was strengthened.
4. Results
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4.1 Selection criteria resulting from the unaided question
This paragraph describes the criteria, which the interviewees mentioned themselves, without the help of the interviewer. Table 6 gives an overview of these criteria, including which interviewee mentioned what criterion.
Table 6. Selection criteria resulting from the unaided question
Selection criteria resulting from the unaided question
Criteria AA* BB* CC* EE* FF*
X = interviewees who mentioned the selection criteria
Experience in technology applications** X X X X
Independency X X X
Geographical location X X X
Financial status** X
The partner company size** X
Degree of favourable past association between partners**
X
Goal correspondence** X
Propensity to change** X
Long-term orientation** X
* The letters are the initials of the interviewees.
** Also present in one of the lists of selection criteria in the theoretical foundation of this research.
Experience in technology applications
The criterion ‘experience in technology applications’ was mentioned by 4/5 of the interviewees. All four interviewees wanted a new partner to already be engaged in ‘modern technologies’. One of them mentioned that a new partner also has to be willing to go further with technologies. This criterion is classified as a partner-related criterion.
Independency
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tied to strict purchasing contracts). Furthermore, the new partner cannot be financed by private equity organisations because then they are not fully free in making decisions. In addition, a new partner cannot be affiliated to a similar collaboration. This criterion is classified as a partner-related criterion.
The partner company size
The criterion ‘the partner company size’ was mentioned by 2/5 of the interviewees. One of them did not specifically name a quantitative measure, the other did. He said that a new partner at least needs 10 employees. This criterion is classified as a partner-related criterion.
Geographical location
The criterion ‘geographical location’ was mentioned by 2/5 of the interviewees. Both mentioned that a new partner cannot be located too close to one of the existing partners. Underlying reason is that they are probably direct competitors of each other. This criterion is classified as a partner-related criterion.
Financial status
The criterion ‘financial status’ was mentioned by 2/5 of the interviewees. Both mentioned that a new partner has to be financially healthy. They mentioned that it is not desirable if a partner for example goes bankrupt one year after accession to the coopetition. This criterion is classified as a partner-related criterion.
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The criterion ‘degree of favourable past association between partners’ was mentioned by 1/5 of the interviewees. The interviewee said that it would be beneficial if there already is some information about a new partner. This criterion is classified as a partner-related criterion.
Goal correspondence
The criterion ‘goal correspondence’ was mentioned by 1/5 of the interviewees. The interviewee mentioned that the partners have to ‘match’ each other in goals; there has to grow a synergy in thinking and doing. This criterion is classified as a partner-related criterion.
Propensity to change
The criterion ‘willingness to change’ was mentioned by 1/5 of the interviewees. The interviewee mentioned that a propensity has to be present, and that a new partner has to understand the need for change. This criterion is classified as a partner-related criterion.
Long-term orientation
The criterion ‘long-term orientation’ was mentioned by 1/5 of the interviewees. The interviewee said that a long-term orientation is needed because that is an important pillar of the coopetition: together fighting the future. This criterion is classified as a partner-related criterion.
4.2 Task-related selection criteria
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question. The rankings that the interviewees gave can be found in table 7. In order to determine the relative importance of every selection criterion, the mean of the rankings is added to this table.
Table 7. Ranking task-related selection criteria
Task-related selection criteria
Criteria AA* BB* CC* EE* FF* Mean
Technology know-how
Access to technology 7 5 6 4 3 5
Access to knowledge of production processes 7 6 6 6 4 6
Access to knowledge of local culture 1 1 1 1 1 1
Access to knowledge of local market 1 1 1 1 1 1
Official access
Access to regulatory permits 1 1 1 1 1 1
Access to labour
Access to labour 6 5 6 6 6 6
Large partner with distribution access
Access to the product itself 4 5 3 4 4 4
Access to distribution channels 1 1 1 1 1 1
Highly regarded firm with link to major buyers
Access to link with major buyers 4 4 3 3 3 3
Access to materials/natural resources 1 1 1 1 1 1
Access to local brand names
Access to local brand names 5 1 4 1 4 3
Access to capital 4 6 2 2 2 3
Mean task-related selection criteria 2,93
Access to technology
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a basis is present, catching up should be feasible, we can learn/give them the other 2’. This interviewee ranked this criterion as a 5. According to Glaister and Buckley (1997), this finding is not surprising, since the degree of technological expertise in this sector.
Access to knowledge of production processes
The mean ranking that the interviewees gave the criterion ‘access to knowledge of production processes’ is a 6. The main argument was that a new partner must have access to the basics of knowledge of the production processes. According to Glaister and Buckley (1997), this finding is not surprising, since knowledge of production processes is more likely to be sought by manufacturing firms.
Access to knowledge of local culture and local market
Both the mean ranking that the interviewees gave the criteria ‘access to knowledge of local culture’ and ‘access to knowledge of local market’ is a 1. All of the interviewees said that there is no difference in local culture nor market within the area that they are active.
Access to regulatory permits
The mean ranking that the interviewees gave the criterion ‘access to regulatory permits’ is a 1. Every interviewee said that this was not applicable in his or her situations. One of them mentioned that if this would be necessary in their market, it would only apply to their suppliers because they deliver product innovations.
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The mean ranking that the interviewees gave the criterion ‘access to labour’ is a 6. The argument that all the others used was that access to labour is needed in order to be able to share knowledge with the others of the group, which also implies that the knowledge is originated in the skills and competences of the labour force.
Access to the product itself
The mean ranking that the interviewees gave the criterion ‘access to the product itself’ is a 4. The uniform argument was that a new partner has to have access to all the basic products; all the extras are beneficial.
Access to distribution channels
The mean ranking that the interviewees gave the criterion ‘access to distribution channels’ is a 1. According to the interviewees this is not applicable for this industry. Also, when asking the interviewees whether they use some sort of dealer, distributor or agents network they all answered no.
Access to link with major buyers
The mean ranking that the interviewees gave the criterion ‘access to link with major buyers’ is a 3. All of the interviewees answered that this could be beneficial, for example if one partner has a link with a mayor buyer but is not able to serve that buyer on its own, then they could cooperate to serve that buyer after all.
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The mean ranking that the interviewees gave the criterion ‘access to materials/natural resources’ is a 1. It turned out that every partner has the same access to materials/natural resources. Thus, these are probably not scarce.
Access to local brand names
The mean ranking that the interviewees gave the criterion ‘access to local brand names’ is a 3. The results of this criterion are quite contrasting in several ways. Two of the interviewees preferred a new partner not to have a local brand name. They prefer that their coopetition is going to provide a joint brand name, which can be distributed by all affiliated partners. Furthermore, having an own brand name would make it more difficult to change when the coopetition wants to introduce a joint brand name. Two other interviewees said that if a new partner has its own brand name, they have knowledge, which the coopetition can use.
Access to capital
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4.3 Partner-related selection criteria
This paragraph describes the results of the partner-related selection criteria, which are based on the theoretical foundation of this research. Every criterion was explained to the interviewee, which resulted in more sophisticated answers from the interviewees than at the unaided question. The rankings that the interviewees gave can be found in table 8. In order to determine the relative importance of every selection criterion, the mean of the rankings is added to this table.
Table 8. Ranking partner-related selection criteria
Partner-related selection criteria
Criteria AA BB CC EE FF Mean Strategic alignment Motivation correspondence 7 7 7 6 7 7 Goal correspondence 7 6 7 6 7 7 Relational alignment Compatible cultures 3 3 4 4 6 4 Propensity to change 7 5 5 7 7 6 Long-term orientation 7 6 6 7 7 7 Technology know-how
Experience in technology applications 7 5 7 5 7 6
Management experience and financial assets
International experience 3 1 4 2 3 3
Financial status/financial resources of partner 6 5 6 6 7 6
Management in depth 3 4 6 5 5 5
Official access
Partner’s ability to negotiate with foreign government
1 1 1 1 1 1
Relatedness of partner’s business 3 3 1 6 3 3
Complementary resources
Complementarity of partner’s resource contribution
5 6 5 3 5 5
Overlapping knowledge bases 1 1 1 1 3 1
Established marketing and distribution system
3 2 4 3 2 3
Large partner with distribution access
The partner company size 7 4 3 6 7 5
Highly regarded firm with link to major buyers
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Degree of favourable past association between partners
4 5 6 3 7 5
Reputation 7 7 7 7 7 7
Access to local brand names
Age 5 5 1 6 1 4 Gender 1 1 1 1 1 1 Ethnicity 1 1 1 1 1 1 Education 3 4 6 4 1 4 Marital status 1 1 1 1 1 1 Innovativeness 5 4 5 6 5 5
Desire for personal development 4 6 6 6 1 5
Seek work-related challenges 5 5 6 6 7 6
Personal commitment to the business 7 7 5 6 7 6
Business risk-taking 5 6 5 4 5 5
Mean partner-related selection criteria 4,44
Motivation correspondence
The mean ranking that the interviewees gave the criterion ‘motivation correspondence’ is a 7. The high ranking of this criterion is originated in the shared opinion of every interviewee that coopetition is not possible without motivational correspondence, otherwise opinions could clash at some point. Furthermore, two of the interviewees mentioned that missing motivational correspondence could lead to one partner taking advantage of the others without giving something in return. This is in line with Emden, Calantone and Droge (2006) who mention that if motivational correspondence is missing, opportunistic behaviour can occur.
Goal correspondence
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Compatible cultures
The mean ranking that the interviewees gave the criterion ‘compatible cultures’ is a 4. The arguments, which the interviewees gave for this criterion where diverse. One of the interviewee said that different cultures could also complement each other. Another interviewee found compatible cultures more important at the starting phase than in a later phase of coopetition: ‘In case your basis is not sufficient yet, you are vulnerable for influences from other cultures’. When asking what he meant with ‘other cultures’ he said that he thinks culture differs between large and small companies.
Propensity to change
The mean ranking that the interviewees gave the criterion ‘propensity to change’ is a 6. One of the interviewees’ quote displays the view of every interviewee very well: ‘The market is not the same as 10 years ago; it became and is becoming more dynamic. This requires flexibility, so there has to be a propensity to change.’ This is in line with Emden, Calantone and Droge (2006), who consider propensity to change necessary, since that is the basis for the needed flexibility for coopetition. One of the other interviewees complemented this argument by saying ‘we do not have to change because of the changing, but we together have to look for change in order to improve’. This implies that a new partner should be willing to change, but only to a certain extend; the partner should not only be changing because everybody in the market is saying change is needed.
Long-term orientation
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because the focus of the coopetitions is on the long term; they want to establish a basis for surviving in the future. One of the interviewees mentioned that short-term sacrifices (financially) might be needed. Furthermore, two of the interviewees had the same reasoning as Emden, Calantone and Droge (2006) as to why a long-term orientation is important. They argued that a long-term orientation gives the ability to overcome obstacles and to continue under uncertainty.
Experience in technology applications
The mean ranking that the interviewees gave the criterion ‘experience in technology applications’ is a 6. The first thing that almost all interviewees mentioned was that experience in technology applications is very important since knowledge sharing is an important feature of coopetition in these cases. As one of the interviewees said: ‘Sharing knowledge is the basis of our group, so everybody has to bring in some knowledge’. Another interviewee said that it is a requirement for a new partner that they already made the switch to modern production, otherwise they only gather knowledge instead of also sharing theirs. Furthermore, he mentioned experience in technology applications is important because only then the partner is able to help testing new technologies.
International experience
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Financial status/financial resources
The mean ranking that the interviewees gave the criterion ‘financial status/financial resources’ is a 6. Arguments where two-fold; they think that financial resources are important for investments, and that a bad financial situation is not beneficial for the reputation. Regarding the first argument, one of the interviewees said ‘It is very important to be able to invest in the future, without investing you cannot keep up with the fast moving environment, investing in new technologies is necessary to survive in the future’. This is in line with Glaister and Buckley (1997), who mentioned that (great) capital costs might occur in manufacturing companies and that is it important that partners have the necessary financial standing to fully participate in the funding of the coopetition. Regarding the second argument, all of the interviewees thought it is important that a new partner is financially healthy and that the company will be in business for many more years. Otherwise, the reputation of the coopetition can easily be damaged (directed towards both customers and suppliers). Furthermore, one interviewee said that a new partner should not become a member because of forced reasons (needs coopetition, otherwise they e.g. go bankrupt).
Management in depth
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Partner’s ability to negotiate with foreign government
The mean ranking that the interviewees gave the criterion ‘partner’s ability to negotiate with foreign government’ is a 1. Every interviewee answered that this criterion is not applicable.
Relatedness of partner’s business
The mean ranking that the interviewees gave the criterion ‘relatedness of partner’s business’ is a 3. It turned out that none of the interviewees value the relatedness high. According to Glaister and Buckley (1997), this would mean that the coopetition might be looking for diversification. When asking this, the interviewees responded that diversification is not necessary, but it might be a nice addition at some point in the future.
Complementarity of partner’s resource contribution
The mean ranking that the interviewees gave the criterion ‘complementarity of partner’s resource contribution’ is a 5. Overall opinion was that a new partner having complementary resources would be nice, but it is not a strict criterion for selection. One of the interviewees said that is would be beneficial, because having much different resources within the coopetition means we have to sell a ‘no, we are not able to deliver that’ less often. Another said that it would be beneficial because outsourcing will become more common in the future. Subsequently, one can outsource to a partner with a complementary resource. This is in line with Emden, Calantone and Droge (2006), who mention new opportunities appear when combining complementary resources.
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The mean ranking that the interviewees gave the criterion ‘Overlapping knowledge bases’ is a 1. All interviewees expect a similar knowledge base at every new partner, so they are not using this as a selection criterion.
Established marketing and distribution system
The mean ranking that the interviewees gave the criterion ‘established marketing and distribution system’ is a 3. One interviewee prefers a new partner not to have this, since the coopetition wants to facilitate a marketing strategy. The overall opinion is that the cooperative company should facilitate this for the partners, but knowledge about this can be beneficial.
The partner company size
The mean ranking that the interviewees gave the criterion ‘the partner company size’ is a 5. Four interviewees said that size does not matter as long as they can contribute to the coopetition.
Trust between the top management teams
The mean ranking that the interviewees gave the criterion ‘trust between the top management teams’ is a 7. A missing basis to cooperate and risk of opportunistic behaviour are reasons for the high ranking. This quote is a good representation of all interviewee’s answers: ‘if there is no mutual trust, there is no basis for coopetition’.
Degree of favourable past association between partners
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find it beneficial. ‘If there already is a basis, if makes the process easier’. This is in line with Glaister and Buckley (2007) who mention that a favourable past association reduces search costs of finding a suitable partner.
Reputation
The mean ranking that the interviewees gave the criterion ‘reputation’ is a 7. The following quote characterizes all interviewees’ opinions towards reputation: ‘A new partner transfers his reputation into the cooperative company, so it is very important that it is a good one. The reputation has to fit with the reputation of the other partners’.
Age
The mean ranking that the interviewees gave the criterion ‘age’ is a 4. Results of this criterion where contrasting; some said it does not matter, and other thought age is more important. Two interviewees did not think age is important, since it also can give other useful insights if there is a good natural mix of different ages. The others said that the age of the owner of a new partner should not lie close to retirement age. They think a person with such an age has no long-term orientation. When asking whether a good succession plan would help, they answered positive.
Gender and ethnicity
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Education
The mean ranking that the interviewees gave the criterion ‘education’ is a 4. It turned out that formal education does not matter, ‘one can have a lot of diploma’s, but at the same time to left hands’. Furthermore, a good craftsman without diploma’s can be a good addition to the group, according to the interviewees. However, the interviewees found it important that a new partner needs a certain intellectual ability in order to contribute to the coopetition, ‘new partners should not drive behind/with us in the last wagon’.
Marital status
The mean ranking that the interviewees gave the criterion ‘marital status’ is a 1. Every interviewee said that this is not a criterion they would use at all.
Innovativeness
The mean ranking that the interviewees gave the criterion ‘innovativeness’ is a 5. This ranking is mostly originated in the fact that the market is becoming more dynamic, ‘a new partner has to have some tendency to engage in innovative projects, because the market is becoming more innovative. But the tendency does not necessarily need to be very high, the owner should be able to facilitate innovativeness within his company’.
Desire for personal development
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Apparently, these interviewees think that desire for personal development influences innovativeness and readiness to change.
Seek work-related challenges
The mean ranking that the interviewees gave the criterion ‘seek work-related challenges’ is a 6. The interviewees think this is necessary in order to contribute to the coopetition. One of them said that this is the basis for being innovative. Another one said ‘Ik heb liever trekpaarden dan aanhangwagens’, which implies he prefers people who take initiative in new challenges. The last interviewee mentioned that he prefers a good mix of people with a high and a low tendency to seek work-related challenges because people with a high tendency might want to go too fast, and people with a low tendency might want to go too slow.
Personal commitment to the business
The mean ranking that the interviewees gave the criterion ‘personal commitment to the business’ is a 6. The interviewees ranked this criterion high, because they think personal commitment to the business is important in order to have commitment to the coopetition. This is in line with Jambulingam and Nevin (1999), who found that if there is commitment to the business, then there will also be a high chance that the owner will be committed to the coopetition because the success of their own business could depend on this.
Business risk-taking
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willing to change and according to him change comes with risk. Thus, a new partner has to be willing to take risks. However, he said, taking risk becomes easier if you do it together, because you can share the risks. The others mostly mentioned that risk taking is needed because of the dynamic environment, which requires change.
4.4 Summary of the results
Overall, there is a great conformity in the rankings and arguments, which the interviewees gave. The greatest conformity was found in the selection criteria that are based on the theoretical foundation of this research. Both task- and partner related criteria received some high en some low rankings. The mean ranking of task-related selection criteria is 2,93. The mean ranking of partner-related selection criteria is 4,57. Furthermore, it is interesting to see that there is even some conformity in the selection criteria, which the interviewees mentioned themselves (results from the unaided question).
5. Discussion
In this chapter a discussion of the results will be given. Furthermore, a list of selection criteria, which managers that are involved in the formation of coopeting organizations could use, will be proposed.
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the resources and skills of a new partner do not influence the success of the coopetition as much as the partner related selection criteria do.
Looking at specific selection criteria, the results of this research suggest that most of the selection criteria from the three lists of the theoretical foundation are also applicable for coopeting organizations of the sample to a greater or lesser extent. However, there are some differences. The first difference is that some selection criteria are ranked ‘1’ and the second difference is that the interviewees mentioned some additional criteria, which are not present in the theoretical foundation. These differences will be discussed next.
Selection criteria ranked ‘1’
The selection criteria that are ranked ‘1’, implies that, according to the results of this research, those criteria are probably not applicable for coopeting organizations when searching for new partners. These criteria will be discussed next.
Access to knowledge of local culture and local market
An explanation for the low ranking could be that they are not going to explore new markets with different cultures in their coopetition.
Access to regulatory permits
This finding is in line with a finding from Glaister and Buckley (1997) that says that access to regulatory permits is unlikely to be needed in developed markets, amongst others due to the open access in Western Europe.
Access to distribution channels
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Access to materials/natural resources
This is not a selection criterion for the interviewees, since every partner has the same access to materials/natural resources. Thus, these are probably not scarce. Partner’s ability to negotiate with foreign government
This finding is in line with Glaister and Buckley (1997) who mentioned that this is unlikely to be required in developed markets.
Overlapping knowledge bases
All interviewees assume a similar knowledge base at every new partner, so they are not using this as a selection criterion. An explanation could be that they are not looking for diversification in their coopetition.
Gender and ethnicity
These cooperative organizations are mostly located in free cultures where there are no preferences for gender or ethnicity. Some interviewees argued that a natural mix could be beneficial for coopetition.
Marital status
According to the sample marital status does not matter for coopetitions like these. Literature might say otherwise (e.g. more responsible, family support), however these aspects might be too speculative for the interviewees.
Selection criteria that where ranked ‘1’ are not present on the proposed list of selection criteria, since according to the results of this research, these are probably not applicable for coopeting organizations.
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As shown in table 6 of the result section, the interviewees mentioned 9 selection criteria themselves at the beginning of the interviews, without the help of the interviewee. Seven of them are also mentioned in the selection criteria of the theoretical foundation of this research, while two of them are additional selection criteria. Interesting to see is that 4 out of the 5 interviewees mentioned ‘experience in technology applications’, which is also present in the theoretical foundation of this research, by themselves and ranked them high (mean 6) at the aided question. This suggests that for coopeting organizations, it is very important that a new partner has to have a strong technology basis in order to join them. A possible explanation could be that they want to avoid that new partners are going to free ride. Furthermore, the interviewees mentioned several times during the interviews that a new partner really has to contribute to the group. This again implies that they do not appreciate free riding partners. A second interesting result are the two additional selection criteria mentioned by the interviewees. These criteria are not present in the lists of the theoretical foundation of this research, and will be discussed next.
Independency
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persons are mostly independent, except for the financial part, but this is covered in the criterion of ‘financial status’, which is present in the list of criteria for franchising.
Geographical location
Geographical location is mentioned by the majority of the interviewees. This criterion is not present in the list of selection criteria for joint ventures and new product development. This could, again, be declared by the focus on alliances between large established firms in these lists. It might be that for these firms, geographical location is less important. Geographical location is also not present in the list of selection criteria for franchising. Possible reason could be that these criteria are focused on a search for individual persons. These persons are mostly flexible when it comes to geographical location.
Since these two selection criteria are mentioned by three out of five of the interviewees, these are added to the proposed list of selection criteria. The remaining 6 selection criteria, which the interviewees mentioned themselves, are also present in the lists of selection criteria from the theoretical foundation of this research. Each of these 6 criteria where only mentioned by one of the interviewees themselves, while all of the interviewees ranked these criteria quite high when asking them with the aided questions. Therefore, we can only discuss that these criteria are not that obvious for the interviewees, but are clearly important to them. Therefore, these criteria are also in the list of proposed criteria for coopeting organizations.
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Table 9. Proposed selection criteria for coopeting organizations
Task-related selection criteria Partner-related selection criteria
Criteria Rank Criteria Rank
Strategic alignment Strategic alignment
- Motivation correspondence 3 / 4
Goal correspondence 6
Relational alignment Relational alignment
- Compatible cultures 20
Propensity to change 8 / 9
Long-term orientation 5
Technology know-how Technology know-how
Access to technology 3 Experience in technology applications 8 / 9
Access to knowledge of production processes 1 / 2
Management experience and financial assets Management experience and financial assets
- International experience 25
Financial status/financial resources of partner 10 / 11
Management in depth 19
Official access Official access
Relatedness of partner’s business 23
Access to labour Access to labour
Access to labour 1 / 2 -
Complementary resources Complementary resources
- Complementarity of partner’s resource contribution 17
Overlapping knowledge bases 26
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Table 9. Proposed selection criteria for coopeting organizations (continued)
Task-related selection criteria Partner-related selection criteria
Criteria Rank Criteria Rank
Large partner with distribution access Large partner with distribution access
Access to the product itself 4 The partner company size 13
Highly regarded firm with link to major buyers Highly regarded firm with link to major buyers
Access to link with major buyers 5 Trust between the top management teams 1 / 2
Degree of favourable past association between partners 14/15/16
Reputation 1 / 2
Access to local brand names Access to local brand names
Access to local brand names 7 -
Access to capital 6
Personal characteristics of owner future partner Personal characteristics of owner future partner
- Age 21/22
Education 21/22
Innovativeness 14/15/16
Desire for personal development 18
Seek work-related challenges 12
Personal commitment to the business 7
Business risk-taking 14/15/16
Additional selection criteria Additional selection criteria
- Independency -
