LEIBNIZ INSTITUTE OF
AGRICULTURAL DEVELOPMENT
IN CENTRAL AND EASTERN
EUROPE
Theodor-Lieser-Str. 2 | 06120 Halle | e-mail iamo@iamo.de | www.iamo.de | phone +49 345 2928-310
How Should Successful Supply Chain
Management Look Like? The Model of Interfirm
Network Success
Gagalyuk, Taras
Hanf, Jon H.
XI International Academic Conference on Economic and Social Development
Moscow, April 6-8, 2010
e-mail gagalyuk@iamo.de | phone +49 345 2928-232
Background
 Focus on the agri-food sector in Central and
East-European countries (CEEC)
 Vertical coordination, food chain management,
B2B marketing
The Model of Interfirm Network Success
3
Supply Chain Networks
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
4
Supply Chain Networks – Examples
Chain Captain
The Model of Interfirm Network Success
5
Strategic Chain Management
Framework of chain management (Hanf and Dautzenberg, 2006)
Collective strategy
Cooperation
(alignment of interests)
Firm level
Dyadic level
Network level
Coordination
(alignment of actions)
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)
The Model of Interfirm Network Success
However…
… 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?
The Model of Interfirm Network Success
7
Research Problem and Objective
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
The Model of Interfirm Network Success
8
Success of Supply Chain Networks – Goals of Network
Members
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
The Model of Interfirm Network Success
9
Success of Supply Chain Networks – Goals of Chain
Management
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)
The Model of Interfirm Network Success
10
Success of Supply Chain Networks – Determinants of Goal
Achievement
Network success factors can be grouped as follows (Gulati et al.,
2000):
 Network structural characteristics
 Network membership characteristics
 Network tie modality
The Model of Interfirm Network Success
11
Determinants of Goal Achievement – Structural
Characteristics
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)
The Model of Interfirm Network Success
12
Determinants of Goal Achievement – Member Characteristics
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)
The Model of Interfirm Network Success
13
Determinants of Goal Achievement – Tie Modality
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)
The Model of Interfirm Network Success
14
Model of Supply Chain Network Success
Determinants of goal
achievement
Achievement of
network management
goals
Achievement of
network member
goals
Trustful relationships
between the focal firm and its
partners
Network
tie
modality
Use of non-coercive power
by the focal firm to achieve
partners’ compliance
Level of transparency: the
focal firms’ knowledge of the
partners’ decision making
Alignment of interests:
Level of commitment, and
relation-specific
investments by network
members
Network-level
goals: Extent of
supply quality,
partner
responsiveness and
sales of the branded
product
Network
structure
Level of interdependence
between the focal firm and its
direct partners
Network
membership
Complementarities among
network members in
strategy, culture and
resources
Alignment of actions:
Level of synchronization
and communication
among network members
Firm-level goals:
Profit generated in
the network,
knowledge and
reputation gained in
the network
Coordination capabilities of
the network members
The Model of Interfirm Network Success
15
Implications for Chain Management
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
The Model of Interfirm Network Success
16
Thank you for your attention!