Academic journal article Academy of Strategic Management Journal

Determinants of Interfirm Rivalry or Cooperation: Implications for Management

Academic journal article Academy of Strategic Management Journal

Determinants of Interfirm Rivalry or Cooperation: Implications for Management

Article excerpt

INTRODUCTION

* Question 1--How are PepsiCo, Coca-Cola, Monsanto, and McDonald's interrelated?

* Question 2--How is IKEA interrelated with its rivals or stakeholders?

* Question 3--How are Microsoft, Intel, IBM, Netscape, America Online, and Hewlett Packard interrelated?

The answer to the first question is that these organizations primarily have opportunistic, competitive interfirm exchanges and it is via such exchanges that they are interrelated. Our response to the second question is that IKEA tends to have cooperative, nonconfrontational interactions with its stakeholders and rivals and this is how IKEA is interrelated with them. The answer we provide to the third question is that the enterprises mentioned have cooperative and competitive interfirm exchanges and it is through these exchanges that such firms are interrelated. A fundamental difference, however, may be discerned between the first group of firms and the latter two groups of firms. In the first group, the viabilities of PepsiCo, Coca-Cola, Monsanto, and McDonald's tend to be independent of each other as each firm develops on its own. In the other two groups, the viability of IKEA and its rivals/stakeholders, and on the other hand, the viability of Microsoft, Intel, IBM, Netscape, America Online, and Hewlett-Packard may be interdependent.

In this paper, we recognize interrelatedness as a recurring pattern of interfirm behavior which can be characterized as predominantly competitive, cooperative, or both competitive and cooperative. Our concern is with firms which are interrelated but remain autonomous. Included in our analysis are groups of firms which contain competing enterprises as well as their stakeholder organizations. The reason we include such organization as competitors, strategic allies, suppliers and buyers in our work is that the roles played by some firms as the interact with each other may not always be clear-cut at any given point in time, For instance, on any given day, one organization may find another to be simultaneously a rival, a partner, a supplier, and/or a customer (Hamel & Prahalad, 1994). Additionally, some enterprises are increasingly involving stakeholder organizations in quality training, product design and other previously private internal processes, making interfirm boundaries ambiguous. Consequently, the inclusion of competing organizations and their stakeholder organizations in our examination of interrelated firms makes sense since interorganizational roles and boundaries in some situations have become somewhat obscured.

We realize that it is difficult to characterize interactions among organizations as either strictly competitive or cooperative. That is because both cooperation and competition may occur among organizations. For instance, firms which may collaborate on specific projects tend to compete when the time comes for them to divide the pie. On the other hand, rival firms may cooperate (e.g., competing firms, such as General Motors and Toyota, cooperate on the production of small cars). Although both rivalry and collaboration may occur within a group of interacting firms, a competitive predisposition will ordinarily dominate cooperative tendencies in some groups of interrelated enterprises. Alternatively, a cooperative orientation may dominate competitive behavior in other group of firms. Yet within other groups of interrelated organizations, collaborative as well as rivalrous forces may approach balance.

We recognize that rivalry may be more intense among competing organizations relative to interfirm exchanges which involve firms and their suppliers, customers, or strategic allies. However, in a group of firms predisposed to competitive behavior, we contend that adversarial forces will be more intense among rivals and their stakeholder organizations. In a group of firms with cooperative tendencies, collaborative forces will be comparatively more pronounced and, in a competitive and cooperative group, these forces may approximate parity. …

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