Theodor-Lieser-Str. 2 | Halle | | | phone LEIBNIZ INSTITUTE OF AGRICULTURAL DEVELOPMENT IN CENTRAL AND EASTERN EUROPE

Gagalyuk, Taras Hanf, Jon H. How Should Successful Supply Chain Management Look Like? The Model of Interfirm Network Success | phone XI International Academic Conference on Economic and Social Development Moscow, April 6-8, 2010

3  Focus on the agri-food sector in Central and East-European countries (CEEC)  Vertical coordination, food chain management, B2B marketing Background The Model of Interfirm Network Success

4 Supply chain networks  Long-term exchange relationships between three and more participants of the supply chain (Lazzarini et al. 2001)  Strategic networks (Jarillo 1988)  “ Strategic networks are manageable ” (Ritter et al. 2004)  Focal company / hub firm / chain captain, e.g., Metro, Unilever, etc. The Model of Interfirm Network Success Supply Chain Networks

5 Supply Chain Networks – Examples The Model of Interfirm Network Success Chain Captain

The Model of Interfirm Network Success Framework of chain management (Hanf and Dautzenberg, 2006) Cooperation (alignment of interests) Firm level Collective strategy Coordination (alignment of actions) Dyadic level Network level Strategic Chain Management Problem of cooperation → Conflicts of interests among the supply chain actors (Gulati et al., 2005) Problem of coordination → Uncertainty caused by actions of the interdependent supply chain actors (Gulati et al., 2005)

7 … more than 50% of all interorganizational projects in supply chains fail (Brinkhoff and Thonemann, 2007) … problems of supply and quality, relationship breakdown among supply chain actors in CEEC (Swinnen, 2006) How to manage supply chain networks successfully? However… The Model of Interfirm Network Success

8 Problem  It is not clear up to now what the success of supply chain networks is Objective  Develop the model of supply chain network success Research Problem and Objective The Model of Interfirm Network Success

9 The achievement of goals underlies most interpretations of success (Ariño 2003). Goals of supply chain network members:  Network-level goals → goals which can only be achieved if all network actors work together to achieve them, e.g., total chain quality  Firm-level goals → single firms want to achieve for themselves by participating in a network, e.g., knowledge Success of Supply Chain Networks – Goals of Network Members The Model of Interfirm Network Success

10 We are talking about manageable relationships. Goals of chain management must be included:  Cooperation goal → alignment of interests (commitment, low levels of conflict among actors)  Coordination goal → alignment of actions (high levels of synchronization and communication among actors) Success of Supply Chain Networks – Goals of Chain Management The Model of Interfirm Network Success

11 Network success factors can be grouped as follows (Gulati et al., 2000):  Network structural characteristics  Network membership characteristics  Network tie modality Success of Supply Chain Networks – Determinants of Goal Achievement The Model of Interfirm Network Success

12 Network structural characteristics → overall pattern of relationships in a network :  Chain transparency → Level of transparency of the supply chain network’s structure (Theuvsen, 2004)  Interdependency → Level of interdependency among supply chain network’s members (Lazzarini et al., 2001) Determinants of Goal Achievement – Structural Characteristics The Model of Interfirm Network Success

13 Network membership characteristics → identities, resources of network members, etc. :  Collaborative capabilities → Abilities by actors to work in a network (Dyer and Hatch, 2006; Provan and Kenis, 2007)  Members’ complementarities → Strategic, cultural, resource fit, etc. (Park and Ungson, 2001) Determinants of Goal Achievement – Member Characteristics The Model of Interfirm Network Success

14 Network tie modality → set of institutionalized rules and norms that govern appropriate behavior in a network :  Use of power → Mechanisms of influence used in a network (Leonidou et al., 2008)  Trustful relationships among network members (Gulati and Nickerson, 2008) Determinants of Goal Achievement – Tie Modality The Model of Interfirm Network Success

15 Model of Supply Chain Network Success Network structure Achievement of network management goals Achievement of network member goals Determinants of goal achievement Level of transparency: the focal firms’ knowledge of the partners’ decision making Use of non-coercive power by the focal firm to achieve partners’ compliance Level of interdependence between the focal firm and its direct partners Alignment of interests: Level of commitment, and relation-specific investments by network members Alignment of actions: Level of synchronization and communication among network members Trustful relationships between the focal firm and its partners Coordination capabilities of the network members Complementarities among network members in strategy, culture and resources Network-level goals: Extent of supply quality, partner responsiveness and sales of the branded product Firm-level goals: Profit generated in the network, knowledge and reputation gained in the network Network membership Network tie modality The Model of Interfirm Network Success

16 Model has to be tested! → Potential Implications:  Differentiation between network-level and firm-level goals  Network-level (collective) goals important  Alignment of interests and alignment of actions necessary to achieve both network-level and firm-level goals  Model applicable to other types of business networks Implications for Chain Management The Model of Interfirm Network Success

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