Bsc(B) IM, Bachelor Thesis
Author:
Nikolas Bakke
Supervisor:
Athanasios Krystallis
Integration of the IMP approach and business level
strategy
A conceptual model for integrating the process of relationship analysis into strategic management
Department of Marketing and Statistics
Aarhus School of Business and Social Sciences
Aarhus University
2nd of May 2011
Abstract:
Relationship and network thinking are gaining increasingly greater attention by companies
operating in B2B contexts. A shift from a focus on one-way stimulus-response schemes to
perspectives in which interaction and the counterpart plays and important part in the value
creational process, is thus initiated. An extensive cluster of literature has addressed the issues of
management of and in business relationships and networks accordingly.
However, this thesis proposes a conceptual model for strategic management in B2B networks by
integration of the work of the Industrial Marketing and Purchasing (IMP) Group and strategy-aspractice by utilizing emergent strategic processes. Initially, a comprehensive literature review of the
Industrial Marketing and Purchasing (IMP) Groups’ contributions thus far in regards of strategic
aspects and methods is initiated. The review is conducted in accordance with the three levels of
interaction, relationship and network discerned in the review. Therefore, contributions at the three
levels that are categorized as being compatible with strategic management thinking are identified.
However, in accordance with the three distinct paradoxes; a firm is both enabled and constrained by
the network; firms simultaneously define as well as being defined; and finally firms cannot control
the network, as control is destructive. Thus, precautions are made in regards of enhancing the utility
of the proposed conceptual model.
Subsequently, an integrating model embracing both relationship considerations and business level
strategy is designed, in order to create a proposal for a tangible management of both relationships
and strategy development in a complex and dynamic environment. Thus, the conceptual strategic
management framework –the ESIM model- is proposed. Incorporated in the model are traditional
processes of strategic analysis, development and implementation. Additionally, the linkages
between the constructs are scrutinized and a proposal of the relationship between the constructs is
created. Furthermore, the implications of both the conceptual model and the management tools are
scrutinized and discussed in order to capture the essence of the consequences.
Finally, further suggestions are made in order to propose validation of the conceptual model for
future academic research and managerial practice.
Keywords: Business level strategy, interaction, relationship and networks, Industrial Purchasing
and Marketing (IMP) Group, B2B context, strategic processes.
Table of contents:
1.
Introduction ............................................................................................................................................... 1
1.1 Strategy, relationships and networks - concepts & definitions................................................................ 2
1.1.1 Strategy hierarchy and definitions .................................................................................................... 2
1.1.2 IMP definition of interaction, relationships and networks ............................................................... 4
1.2 Problem statement ....................................................................................................................................... 5
1.3 Purpose and structure .............................................................................................................................. 6
1.4 Limitations............................................................................................................................................... 7
2. Methodology.................................................................................................................................................. 7
3. IMP literature review ..................................................................................................................................... 8
3.1. Introduction ............................................................................................................................................ 8
3.1.1 IMP and prescriptive strategy ........................................................................................................... 9
3.1.2 IMP and emergent strategy ............................................................................................................. 11
3.2 IMP – an alternative view to strategy .................................................................................................... 13
3.2.1 Introduction .................................................................................................................................... 13
3.2.2 IMP – interactions and relationships .............................................................................................. 14
3.2.3 IMP and networks........................................................................................................................... 16
3.2.4 IMP - framework and management propositions ........................................................................... 18
3.2.5 Strategy-as-practice as a complement and extension ..................................................................... 20
3.3 Summary, remarks and implications ..................................................................................................... 21
4. Conceptual model of integrating relationship thinking ............................................................................... 22
4.1 Emergent Strategy and Interaction Model (ESIM) ................................................................................ 24
4.2 Strategic analysis ................................................................................................................................... 28
4.2.1 Environmental analysis................................................................................................................... 28
4.2.2 Resource analysis ........................................................................................................................... 32
4.2.3 Interaction, relationship and network analysis ............................................................................... 35
4.2.4 Purpose of the organization ............................................................................................................ 46
4.3 Strategic development ........................................................................................................................... 47
4.3.1 SWOT-analysis............................................................................................................................... 48
4.3.2 Strategy development – environment-based options ...................................................................... 49
4.3.3 Strategy development – resource-based options............................................................................. 50
4.3.4 Strategy development – relationship and network-based options .................................................. 52
4.3.5 Identify major options .................................................................................................................... 56
4.4 Strategic implementation ....................................................................................................................... 57
4.4.1 Strategy choice ............................................................................................................................... 59
4.4.2 Statement of the main strategy objectives and plans ...................................................................... 59
4.4.3 Resource allocation and budgeting ................................................................................................. 60
4.4.4 Monitoring and control procedures ................................................................................................ 61
5. Discussion.................................................................................................................................................... 62
5.1 Implications of the ESIM model ........................................................................................................... 63
5.2 Limitations and remarks ........................................................................................................................ 64
6. Conclusion ................................................................................................................................................... 65
References ....................................................................................................................................................... 68
Appendix ......................................................................................................................................................... 72
1. Introduction
Relationships between companies in B2B markets are impacting many parts of the organization and
interlocking interactions in them affects various departments of different companies, e.g.
purchasing, R&D, marketing, finance and other departmental functions, which interacts with actors
from other companies. Acknowledging relationships, when operating in B2B markets, is
fundamental as the relations which companies form with other companies are initiated in order to
gain external economies of scale and/or scope (Wilkinson 2008:62).
In most cases when faced with a new “problem” companies often consider whether to internalize or
externalize, in order to deliver the promised deal. When externalizing, a firm often utilizes other
companies’ production inputs, services, or other parts in order to deliver the finished offering
(Wilkinson 2008). In order for a firm to fully exploit its unique resources in innovative ways, the
resources of other companies are needed (Ford et al. 2003:29). Thus, it is indicated that other actors
in the web of relationships are equally important in creating a firm’s offering. “A firms’
competitiveness therefore in a greater extend depends on suppliers capabilities” (Håkansson et al.
2004:173). Hence, sustainable competitive advantage (named SCA henceforth) and added value
(named AV henceforth) are both results of collaborating advantages (Wilkinson 2008). In addition
to this, “new ideas and innovation arise through the combining and adapting of existing knowledge
and ideas in new ways” (Wilkinson 2008:76). Therefore, the challenge for today’s companies has
become how to increase this collaborating advantage for the involved parties, simultaneously with
managing the long-term wellbeing of the relationships, which are vital for providing those
advantages (Ford et al. 2003).
The Industrial Marketing and Purchasing (IMP) group originally intended to offer an alternative
view to the static and mainstream approaches to marketing in the 1970’s, such as the marketing mix
(Ford 2004:139). Their viewpoints included the recognition of the customers as being active in the
transaction processes, thus shifting away from the traditional one-way, stimulus-response view of
marketing (Wilkinson 2008:258). These opposing IMP views included a focus on the interactions
and transactions between companies as the facilitator for doing successful business. The IMP views
were not only targeted at marketing, as all interactions involved in business were recognized. These
interactions in business relationships were thus recognized as having an influence on all parts of a
firm, as a result of the suggested holistic structure (Wilkinson 2008:25, Ford et al. 2003; Gadde et
al. 2003). Subsequently, the IMP group extended the importance of the interaction in relationships
to networks, which constitutes a major web of individual relationships (Wilkinson 2008:149). Thus,
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as relationships are interconnected and embedded in networks, all direct or indirect transactions in
relationships affect the wider network (Wilkinson 2008:149). The IMP group suggested that the
benefits of relationships are facilitated by the dynamic process of interaction over time (Brennan et
al. 2007:70). In this connection market transactions is a keyword, as they; do not take place in
isolation, are linked to past transactions between actors and future transactions and are linked to the
transactions or possible ones of other companies collaborating. Thus, interactions give rise to the
networks of interrelated transactions and companies (Wilkinson 2008:256).
However, as companies in the B2B markets today operates in complex networks, no normative
strategy approach can be utilized, as companies have limited control to operate individually in the
network (Ford et al. 2003:5-6). Therefore, as companies in B2B markets are interdependent on each
other, individual strategies cannot be fully efficient employed, without taking other actors into
consideration (Ford et al. 2003:8). Thus, today’s markets and relations are complex, dynamic and
unmanageable. Alternatively, strategy could be evaluated in terms of network role and position and
in regards of previous investments in relationships embedded into the network, in contrary to the
intentional imposition of a fully composed plan by a single firm. Therefore, strategies at higher
levels than functional strategy levels (e.g. marketing) must adopt IMP views in order to fully take
advantage of relationships and networks, by deliberately taking these into consideration in strategic
processes, thus planning how to optimally influence surrounding actors in the web.
1.1 Strategy, relationships and networks - concepts & definitions
1.1.1 Strategy hierarchy and definitions
The concept of strategic management and strategy levels can be differentiated and described using a
variety of hierarchies and definitions. In regards of strategic management strategic hierarchy plays
an important role, as these are the levels, where the execution of the plans to achieve purposes takes
place. The highest level commonly considered, is the corporate strategy level (Baraldi et al.
2007:880), which includes fundamental considerations regarding what set of businesses the firm
should be in and whether they indeed are in the right businesses. Thus, the primary focus is on
scope of the business and resource allocation among those businesses (Lynch 2009). Business
strategy level, the 2nd highest level in the tier (Lynch 2009; Baraldi et al. 2007) is concerned with
competing with competitors and generating value from the resources and the SCA’s intrinsic to the
firm, in order to gain customers. The focus is ultimately on matching internal capabilities with
external relationships, in order to respond optimally to customers, competitors, suppliers and other
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stakeholders of the organization (Lynch 2009). Accordingly, the functional strategy level is
concerned with maximization of resources and focus is primarily concentrated on coordination and
integration of activities in regards of a single function or department e.g. marketing (Karlof
2005:156). The final level; the administrative strategy level emphasis is placed upon the strategies
executed on the floor (Spulber 2004).
In addition to strategy hierarchies, the literature views the strategic processes and purposes of
strategy differently. Two basic and rather opposing, but necessarily mutual exclusive, views are
commonly considered as being the fundamental, namely the prescriptive and the emergent view to
strategy. In accordance with the prescriptive view, strategic management is commonly “described
as the identification of the purpose of the organization and the plans and actions to achieve that
purpose” (Lynch 2009:5). In that sense strategy is planned in advance and directed at the
surrounding environment, utilizing the capabilities and distinct resources of the firm as the means.
The emergent view alternates highly to the prescriptive view, as strategy here is described as
identifying market opportunities, experimenting and developing long-term competitive advantages
(Lynch 2009:6). The intended purposes may not be realized, but strategy can evolve as both internal
and external events changes in the long-term horizon. Strategic management can in accordance with
this approach be described as finding market opportunities, experimenting and developing
competitive advantage over time. In the underlying strategy process in the emergent approach,
internal and external analysis is initially made in order to determine vision, mission and objectives,
which however are not firmly fixed. In the implementation phase, the strategy develops
simultaneously with various options being trailed. The three underlying processes are all
interrelated and continuous under further development - although in accordance with the
prescriptive view - it is usual to regard the analysis as being distinctive and made in advance of the
two other parts (see figure 1). However, the modern consensus view recognizes that a combination
of the two views should be sought for, as intended and emergent perspectives can be utilized
mutually, in order to apply as broad a perspective as possible.
Another strategic viewpoint, the strategy-as-practice (named SAP henceforth) approach can be
considered as both complementary to, and an extension of, the two strategy process perspectives
above. Emphasis, in these two traditional views, is on how to conduct strategy, whereas the focus of
SAP approach is the tangible activities which form the practice of these strategy making processes –
“… the how” (Baraldi et al. 2007:888). Thus, as people and not the firm are in control of the
underlying processes, attention is made in regards of the action and strategizing conducted on the
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micro-level. Consequently, it is the micro-activity amongst people interacting across firm
boundaries, which is focused upon (Baraldi et al. 2007:890).
1.1.2 IMP definition of interaction, relationships and networks
In all business transactions interactions are involved between different actors who have
relationships with one another. Relationships can be defined as “a process where two firms or other
types of organizations form strong and extensive social, economic, service and technical ties over
time, with the intent of lowering total costs and/or increasing value, thereby achieving mutual
benefit’’ (Ritter et al. 2004:176). These “relationships are patterns of interaction among those
involved over time” (Wilkinson 2008:7). These “interaction episodes over time create a
relationship with a history. Every new episode adds to this history so the relationship is shaped by
several individual episodes” (Brennan et al. 2007:73). Whether the company “creates its own
relationships and/or is the outcome of its relationships” is uncertain (Ford et al. 2003:27).
Nevertheless, relationships become “quasi-organizations” with an individual and shared nature,
which together facilitates dynamic, innovation and synergetic processes (Wilkinson 2008). The IMP
view identifies three fundamental factors, which constitutes the substance of- and facilitates a
relationship; actor bonds, activity links and resource ties (Ford et al. 2003:39-40). Actor bonds play
an important part of both initial and later stages of interaction between two actors in a relationship.
Evidently, in order for a relationship to thrive and develop, mutual learning, commitment and
communication are all essential. However, for a relationship to sustain, activity links - i.e.
continuous business transactions - are needed. Thus, importance of a relation is commonly linked to
the amount of business transactions. Lastly, if continuous development of the relationship is
desired, investments in regards of mutual adaptations are required. Adaptations create
interdependence and opportunity costs, as investments made in a particular relationship limit
investments in others. Hence, resource ties are created as an outcome of mutual adaptation of
resources in the given relationship.
Finally, all relationships are embedded into larger networks, in which they are all connected. All
actors in the network are affected by every action taking place in the larger network. Thus,
relationships are the road to the network, as no relationships would cause business to be impossible
and leave the firm isolated (Ford et al. 2003: p. 17). As, firms paradoxically both creates and is the
outcome of its relationships and of what has happened in them, the network thus becomes “both a
way to influence and to be influenced. Both situations exist simultaneously and both premises are
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equally valid” (Håkansson & Ford 2002:136). Finally, network is difficult to define and delimit, but
comprise the blurred boundaries around a firm. However, a network may be defined as a firm’s
surrounding web of “ongoing business and non-business relationships, which both enable and
constrain its performance” (Ritter et al. 2004:175).
1.2 Problem statement
In this thesis emphasis will be on the subject of B2B relationship strategy and its proposed
compatibility with business level strategy by accordingly utilizing a conceptual framework for
managing processes surrounding relationships and the interactions inherent. As already stated, the
relationships which are embedded in large networks have become a challenge for managers to cope
with, primarily due to the complexities intrinsic to relationships and networks. Hence, the work
initiated by the IMP group intended to facilitate more sufficient management of both relationships
and networks. However, many difficulties and uncertainties are identified when having to
incorporate and align relationship management with firms’ overall strategy, goals and processes.
Efforts to link the aspects of relationship management from an IMP approach to strategy in order to
facilitate tangible tools for management, have been made (Ford et al. 2002; Håkansson & Ford
2002; Ford et al. 2003; Ritter et al. 2004; Henneberg et al. 2006; Ford & Mouzas 2007; Ritter 2007;
Håkansson et al. 2009; Harrison & Prenkert 2009; Harrison et al. 2009; Harrison et al. 2010).
Nonetheless, a link between relationship management from an IMP approach has thus far not been
proposed in relation to business level strategy. The dependencies on other actors (primarily
suppliers and buyers) are increasing in the B2B marketplace in particular, which marketers and
academic researchers have not neglected. However, attempts to control and manage these
relationships are hindered due to the complexity of relationships and networks embedded in. As
complexity and interdependence in vital relationships increases, a variety of questions are raised in
connection with applying models incorporating tangible management tools into business level
strategy.
Hence, the following questions will be addressed in this report: is the IMP tradition compatible with
strategic thinking, how does IMP perceive strategy, and which contributions have been proposed in
regards of strategy and management of interactions, relationships and networks within the existing
literature of IMP tradition? How can IMP considerations regarding interaction, relationship and
network perspectives be integrated into a conceptual strategic management framework at the
business strategy level?
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1.3 Purpose and structure
By focusing on utilizing the insights of the IMP tradition in more tangible manners in regards of
business level strategy and management of relationships, the objective of this paper is to propose a
conceptualized model for business level strategy by adapting relationship and network thinking,
thus facilitating AV and SCA for the focal firm. A broad general view on the IMP tradition is
applied in the first parts, narrowing the perspective as the analysis carry on. In order to analyze the
problems raised, the focus will be on firms operating in a B2B context. Most attempts to combine
strategy and network thinking have been focused on marketing management rather than business
level strategy (Golfetto et al. 2007). Thus, in order to relate and combine theoretical thinking with
practical business problems, a framework for more tangible management will be proposed by
utilizing and combining contemporary strategic management thinking with the IMP views.
Throughout the thesis the focus is on balancing the subjects of business level strategy and
relationship management, thus adapting IMP and SAP perspectives into strategic processes utilizing
an emergent view of strategy.
The first three folded research question is dealt with by making a literature review (abbreviated LR
hereafter). Initially in order to scrutinize the compatibility of the IMP tradition with strategy, and
subsequently to investigate how IMP literature thus far have perceived strategy. Finally, the LR is
conducted in order to delineate all relevant IMP contributions in regards of strategic thinking and
management, which might be utilized in an integrated model. The contributions are scrutinized and
categorized in accordance with the three levels of interaction, relationship and network
consecutively, in order to develop a comprehension of ways to integrate the three interrelated levels
in a conceptual strategic management models. Thus, a comprehensive review of the IMP literature
helps to formulate a theoretical framework, by facilitating the delineation of methods for utilization
in strategic processes is intended. By having identified the necessary methods and aspects for
developing a framework, an outline for answering the second research question is supplied. This
entails proposing a conceptual model – a model for strategic management at the business strategy
level – by integrating IMP and SAP views utilizing the emergent strategic tradition. The conceptual
integration of strategic management and IMP and SAP views applying an emergent perspective is
the first tangible contribution, which delineates the three (later five) levels into strategic
management processes. The aim is thus to contribute to existing literature, by providing a clearer
link between the empirical phenomena of B2B constructs and real business practices in B2B
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contexts, by conceptualizing a strategic management framework, in which variables are utilized in
order to integrate distinction of the two perspectives. In extension of the framework, a thorough
discussion of the implications of the suggested conceptual model - both for future research and for
managerial practice - concludes the paper.
1.4 Limitations
The analysis will take the viewpoint of both supplier and buyer operating on B2B markets, as
relationships are used far more extensively in this arena (Wilkinson 2008; Brennan et al. 2007). The
IMP views are exclusively utilized in order to argument, analyze, discern, develop and discuss
viewpoints. Thus, other independent management philosophies such as supply chain management
(SCM) and customer relationship management (CRM) are to a high extent neglected, in order to
focus primarily on IMP views and philosophies highly related.
The main actors focused on in the LR as well as the conceptualization, is suppliers and buyers,
although the framework developed takes relationships with other actors into account. The effort of
triangulating the subjects of management of relationships and business level strategy is the
objective, as the intention is not to investigate how relations arise in business, but rather how to
facilitate and manage intended relations. Furthermore, IMP contributions regarding functional
strategy levels are initially dealt with in order to focus on the process of discerning contributions at
the business strategy level.
Finally, in regards of the conceptual model proposed, methods and models in the strategic analysis,
development and implementation which already have been thoroughly investigated (cf. Lynch
2009) are only dealt with on a superficial basis due to a limited amount of space.
2. Methodology
The strictly theoretical LR conducted in the present thesis include a total of 48 literature sources
concerning strategic thoughts within the IMP tradition, identified from 167 sources initially
screened. The academic foundation, which the LR is based on consists of primarily books, articles
and other academic research which include empirical evidence validating arguments and viewpoints
proposed. The majority of studies obtained were collected utilizing electronic databases including
Science Direct, Emerald, and Business Source Complete all accessed through the Library of Aarhus
School of Business and Social Sciences. Furthermore, through the website www.impgroup.org a
large amount of papers where extracted. In the search process, the key words relating to the problem
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statement consisted of: “IMP”, “relationship marketing”, “interaction approach” including
combinations of the key words. Furthermore, the IMP journal was accessed through their own
international website. In order to answer the three aims above, the literature selected were in
compliance with the IMP approach. Finally, although as many studies as possible are attempted to
be included in the LR, their limited amount - due to the specialization in regards of topic - should be
taken into consideration. In relation to this, as the LR are from 2000 and onwards, these sources
may include more distinct emphasis on the network and relationship level rather than the interaction
level, which may be visible in the review.
3. IMP literature review
3.1. Introduction
The IMP tradition is rather unique and diverges highly to most other contemporary strategic
management literature, as interactions are intertwined into all relationships, which are embedded in
networks, and together comprise the central strategic facilitators. In regards of structure, the distinct
characteristics of the IMP tradition’s strategic views are thoroughly reviewed in the first section, in
conjunction with; initially prescriptive strategic viewpoints, starting with comparison with the
rational planning approach, then Porter’s viewpoints and finally the resource-based view (RBV);
and the emergent school of strategy. Thus, the first section is concerned with the IMP views
compatibility with the two main schools of strategy. In the second section, the review focuses on
discerning the IMP traditions’ alternative view to strategy. In the final third section, the IMP’s
contribution to strategy is comprehensively scrutinized by categorizing the contributions in relation
to four main clusters, namely interaction and relationships, network, proposed frameworks and
finally IMP and the SAP perspective. Holistically, the review is concerned with incorporating
contributions from the IMP tradition into strategic management by focusing on the IMP traditions’
clear connections with the emergent and SAP views.
This LR will be conducted in order to outline all previous contributions from the IMP tradition to
strategy with an emphasis on later conceptual utilization at the business strategy level. Therefore,
the focus is on the tangible models, tools and related aspects of the academic contributions.
Extendedly, thus far the focal point of criticism in regards of the IMP tradition is the lack of
tangible strategic contributions (Gadde et al. 2003; Tikkanen & Halinen 2003: Baraldi et al. 2007).
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3.1.1 IMP and prescriptive strategy
As the IMP tradition has contributed with a variety of distinct viewpoints to strategy, theoretical
efforts have been made in order to compare the IMP views to strategy with the traditional schools of
strategy. When comparing prescriptive strategy views and the IMP tradition, the rational planning
approach – distinct to the prescriptive tradition - advocate a view where the external competitive
position seems to be shaped by organizational financial objectives (e.g. market share) which
companies then pursue. In contrary, the IMP tradition believes that firms are embedded in webs,
where they regularly pursue shared initiatives and objectives, which emerges continuously (Baraldi
et al. 2007:883). This competitive position is in regards of prescriptive views enabled, by
competences and distinct resources of the firm. However, as the IMP traditions believe a firm’s
actions are influenced by other actors in the network, an emphasis stating that a firm cannot act on
its own, is clear (Baraldi 2007:883). However, Fletcher (2008) suggests that embeddedness is an
explaining factor for how firms successfully can internationalize. Hence, routes to the market may
be minimized by applying a network view, implied by the positive outcomes. By opposing the IMP
approach to traditional prescriptive strategy formulation, Håkansson and Ford (2002) clarify that
strategy formulation in regards of the IMP traditions’ view of network as markets, is not a process
of strategic analysis and development followed by implementation of optimal alternatives, carried
out in isolation by one organization. Thus, in compliance with IMP views, it becomes a necessity
for companies to proactively collaborate with actors in the network, when strategizing.
Having covered the initial part of comparing the IMP tradition to the prescriptive school of strategy,
IMP comparisons with Porter’s contributions are covered in the following part, solely utilizing the
comparative study from Baraldi et al. (2007).
As Porter’s term market positioning is a keyword in prescriptive strategy formulation - while not
neglected - it is rather network position, which is the focal center of attention in IMP literature
(Baraldi 2007:884). In extension of this, the focus in IMP writings relate to “positions in networks”
and distinct positions in relationships, in which power and dependence applies to both categories of
positions. Furthermore, as companies - in correspondence with IMP views - are not assumed to be
in control of activities, the IMP tradition disagrees with Porter in regard of performance of activities
being vital for generating advantages. Instead activities are timely executed in collaboration with
other business entities in the network. Moving the discussion on to Porter’s views in regards of
competition and competitive advantage, an important distinction can be made as the IMP tradition
primarily view advantages in relation to others, in contrary to Porter’s “against”. Thus, in a variety
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of scenarios, a firm can in one context be in direct competition with another firm, whereas in other
business contexts be partnering with the same firm e.g. when inventing a new technology.
Therefore, when defining the IMP perspectives view on rivalry, competition is not a matter of
individual attributes, but rather of relations as processes and not just final constructs. In relation to
the value chain, which is the final valuable concept developed by Porter and the IMP perspective,
the IMP view replaces the linear view of the value chain with that of an interactive value network
view. Thus, a differing emphasis is placed on value being created through interactive relationships
in which the customer holds an active role in the surrounding processes.
The last group of the prescriptive tradition, the RBV, is reviewed in the following part, thus
concluding the comparison between the IMP perspective and the prescriptive tradition by utilizing
the contributions from Baraldi et al. (2007). Under the provision that a firm’s relationships and
networks function as resources, then the IMP tradition and RBV shares the idea that a firm’s current
resources are key factors directing the strategic behavior. However, in the RBV resources are
categorized as physical, human and organizational capital, which differs from the IMP groups’
where the firm’s portfolio of relationships and network positional comprise its resources. However,
when attempting to treat these last two as resources in strategic directions, problems might occur, as
outcomes additionally will be dependent on actions taken by other actors in the network. Strategy
involves dealing with the actions of other network members, and achieving the organization's goals
by “working with, through, in spite of, or against them” (Ford et al., 2003:6). Therefore,
strategically competent companies’ performances are contingent to the performance of members of
the network, it collaborates with, making the selection of partners crucial. Thus, the IMP
perspective differs highly from the RBV, as strategy sums up to the management of relationships
and networks in which activities and resources are related in regards of collaborating actors in the
network. Therefore, in regards of strategic processes, analysis plays a much smaller role, as focus is
on the current state of relationships and on occupational position in network.
As identified above, the IMP traditions’ alternative view to strategy is not easily compared to the
prescriptive tradition of strategy. This is primarily due to some fundamentally differing assumptions
of the strategic approaches, if the IMP is defined as such. Firstly, the one-way stimulus-response
approach carried out in the prescriptive tradition differs highly to that of the IMP views. In
accordance with IMP views, companies interact and collaborate in relationships, which are
embedded into larger networks, in which all actions are interrelated. Thus, the IMP negates the oneway stimulus-response approach, as a firm’s actions are interdependent on other actors in the
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network. Secondly, the IMP’s distinctive views in regards of position become transparent in the
comparison with Porter’s view, as focus in IMP writings relate to “positions in networks” and
distinct positions in relationships, in contrary to market positions dictated within the prescriptive
view. Thirdly, the IMP’s view of advantages is seen in relation to others, in contrary to against
other, meaning that two companies in different contexts can be direct competitors and partners
simultaneously. Additionally, in regards of the value chain, the prescriptive tradition emphasize the
value creation process as being linear, whereas the IMP regard value as being created mutually
through interactive relationships. Thus, all parties involved in the process are equally important in
regards of value creation. Finally, the IMP tradition recognizes the portfolio of relationships and
network position as comprising a firms’ resource base. However, treating both the portfolio and
network position as a resource poses difficulties, due to interdependencies with others in the
network. In conclusion, as the IMP traditions’ view to strategy highly diverse from those of the
prescriptive school and its sub-categories, the focus will henceforth be directed towards more
contemporary strategy thinking that is more IMP compatible.
3.1.2 IMP and emergent strategy
In contrary to the prescriptive views of strategy where a one-way stimulus-response approach is
utilized, a dynamic and alterable structure is facilitated by the emergent strategic view, which
enables companies to react optimally to fast changing environments. In the emergent approach,
people, politics and culture of organizations need to be taken into account, as they can have a rather
influential effect on the outcomes generated, in regards of specific strategy imposed (Lynch 2009).
Consequently, the advantage of the emergent strategy process is that it allows strategy to be
developed in accordance with the nature and practices of organizations’ structures, cultures,
employees and eventually networks. Thus, as “IMP research typically considers that the actions of
the organization in a network are incremental and emergent over time and…it is similar to the
emergent strategy school of thought” (Harrison et al. 2010:947). Furthermore, when firms interacts
with “key actors in the context, the firm also learns and ex-post rationalizes experiences that will
set its new course” (Baraldi 2007:881). This relates to a high extent to the emergent strategy
approach, where strategy survives accordingly, by adapting as the environment itself changes
(Lynch 2009:66). Therefore, in the contributions recognized a particular focus, in regards of
emergent strategy, will be inflicted on dynamics and continuous strategy development and testing.
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Thus, responsiveness is rather important in both relationship management and network strategizing
as well as and in emergent strategy views.
In regards of explicit IMP strategy writings, Baraldi et al. (2007) deducted that high degrees of
similarities existed in relation to the emergent approach to strategy. Strong connections were
identified in regards of the explicit IMP strategy writings (Ford et al., 2002; Gadde et al., 2003).
Three main connections were made in accordance with “the concept/content of strategies, their
process and, to a certain extent, also their context” (Baraldi et al. 2007:887). In relation to strategic
management; context can be defined as the environment in which a given strategy is developed and
operates within; content as the central actions of the proposed strategy; and process as how these
main actions link collectively or interact with each other as the strategy unfolds, often in fast
changing contexts (Lynch 2009:15). Process is in this connection often what causes difficulties, as
context and content are somewhat easy to distinguish, whereas processes are vague, unpredictable
and needs scrutiny, as people and contexts are involved. Thus, Baraldi et al. (2007:886) in relation
to IMP writings discerned distinctive IMP attributes of content, process and context. Content of
strategies often reflects an emergent strategic approach consisting of a pattern of choices and
actions. Process of strategies imitates emergent views, a learning by doing and experience-based
model is employed, where actions and reflections are mutually sustained. Finally, in regards of
contexts, strategies are not isolated from these, but are continuously revised in order to adapt to the
complex context.
Therefore, as strategy is developed within the context and intertwined by encompassing
complexities, the underlying processes of strategy formation entail a distinct approach, in which
emergent strategic traditions are adopted by the IMP. Thus, the strategic processes transpire by
adopting organic and incremental aspects, instead of adopting a linear prescriptive one. However, in
relation to context, companies in networks mostly operate in contexts outside the firm. Thus,
Baraldi et al. (2007:887) assess that the IMP literature has adopted emergent perspective and
extended it. This is done by including a focus on the complexities of the external context of strategy
(Ford et al. 2003) and distinguishing the strategic process as being formed by not only the firm
itself, but also interactively with the external environment (Håkansson & Ford 2002; Gadde et al.
2003). In extension of this, what remains unknown in IMP literature is how strategic formation by
actors within the network, relates, prohibits and positively influences other actors in the network in
regards of the facilitating or impediment of processes and cycles (Baraldi et al. 2007:887).
However, in accordance with the emergent school what remains vital is “the way people act and
12
interact in strategic development is vital: a process of trial-and-error can be used to devise
acceptable strategy” (Lynch 2009:59). Thus, the emergent tradition could aid the IMP tradition,
which by adopting a blend of strategic approaches in order to manage change and stability afflicted
by the network context, could facilitate a starting point for tangible strategic management
frameworks.
3.2 IMP – an alternative view to strategy
3.2.1 Introduction
The main contributions from the IMP tradition, in prior decades of the millennium, include a great
variety of depth, but consist, in tangible terms, roughly of two main empirical models, namely the
“Interaction Model” and the ”ARA Model” (see figure 19) (Baraldi et al. 2007:889). These models
functions as analytical tools, situated at the relationship- and network level accordingly. The former
model’s main empirical significance was the identification of patterns of ‘‘interactions’’ between
buyers and sellers in market transactions and a recognition of these interactions being the result of,
often close and longstanding business relationships. The ARA model on the other hand depicts B2B
markets as being a strongly interwoven network of actors, resources, and activities (Sousa
2010:415-416). In order to delimit, the review of IMP, as an alternative view to strategy, will focus
on literature from 2000 and afterwards, in order capture contemporary directions and spotlights.
The IMP approach’s main distinction to strategy varies from the traditional views, as a firm’s
degree of control over key resources - in accordance with the IMP approach – are tentative due to
interdependencies with other relationships in networks (Baraldi et al. 2007:880). Thus, “a firm's
strategy is both enabled and constrained by its external relationships and overall network position”
(Baraldi et al. 2007:889). However, the traditional marketing views’ of strategies, which the IMP
tradition originally opposed, are simple, linear and prescriptive (Ford et al. 2003). Nevertheless, this
approach has become increasingly obsolete due to complexity of current networks in B2B markets
(Wilkinson 2008), as a single actor cannot be in control, when directing its marketing mix towards a
large web of actors, due to interdependencies. An important indication of this is the differences in
which the IMP and traditional perspectives view the firm and the market. The traditional view of an
actor in the B2B market can be exemplified in regards of including a supplier market, an
intermediary firm and a final customer market. Whereas the firm, in accordance with IMP views
(see figure 2), is faced with; firstly heterogeneous suppliers, which in different contexts can be both
competitors and collaborators accordingly; and secondly a customer market, which may further
13
process supplies from both the focal firm, competitors and other intermediaries. Thus, as
contemporary companies operate in complex networks, employing a “one best way” strategy is not
feasible, due to the limited freedom to independently act in the web (Ford et al. 2003).
Consequently, intersecting comparisons can be drawn in regards of the two opposing strategy views
and traditional marketing views versus the IMP group. Thus, the emergent strategy view and the
IMP tradition both embrace the necessity to acknowledge the complexity of dynamic fast-changing
and interactive environments, whereas the prescriptive and the traditional marketing view both
supports strategy and action planned in advance, as a one-way stimulus-response view. However, as
none IMP contributions so far has explicitly proposed conceptual frameworks for incorporating
relationship thinking into strategic processes on the business strategy level (Baraldi et al. 2007), the
strategic contributions found valuable for this strategy level is reviewed in the following section.
The main units of analysis in the IMP literature revolve around the interaction, relationship, and
network level accordingly (Sousa 2010). Therefore, the strategic contributions are categorized in
relation with the discerned contemporary focuses of the IMP tradition. Thus, an initial focus in the
first section is on interaction and relationships and its management. Secondly, a focus on networks
and managerial implications in regards of strategy is discerned, followed by a third section,
including examples of the previous efforts of the IMP literature in relation to propositions of
frameworks. The final section focuses on the recent trends in regards of adopting SAP in relation to
IMP views in order to synthesize for the creation of more optimal strategic processes, functioning as
a complement and extension of traditional strategic process views.
3.2.2 IMP – interactions and relationships
IMP literature has as aforementioned, to some extent, neglected to develop tangible connections and
empirical applications between the management of interactions and relationships and strategic
management (Baraldi et al. 2007; Brennan & Turnbull 2002). Until now, the main contributions
have primarily been located at the functional strategy- and to a low extent the business strategy
level (Baraldi et al. 2007:880). Nevertheless, consistent perspectives on strategy within the IMP
tradition can explicitly and implicitly be discerned (Baraldi et al. 2007:880).
As the importance of interactions in B2B markets was spreading globally, the strategic relevance of
business relationships became essential (Sousa 2004). Therefore, as Gadde et al. (2003:357)
expressed it, in order to improve output, a firm needs to relate its activities in conjunction with
those of other firms’, as new resource scope is identified and advanced, through this permanent
14
interactive combining (and recombining) of existing resources. Relationships can, additionally to
those advantages in regards of resources, function as sources of problems and solutions, rather than
being simple vehicles of transaction (Håkansson et al. 2004:106). Thus, the importance of managing
these relationships is articulated as an extension, in which models and approaches have been
shaped, in order for “companies to allocate resources efficiently and effectively to different kinds of
relationships” (Leek et al. 2004:4). Therefore, a variety of suggestions has been made in regards of
analyzing and managing relationships optimally. Initially, compatibility is a keyword, as successful
companies forming relationships often shares compatible attributes (Wilkinson et al. 2005).
Time is the defining characteristic of relationships, as the shaping of a relationship, is the function
of previous episodes of interaction (Ford et al. 2003; Claybomb & Franwick 2010; Medlin 2004).
Holmlund (2004) proposes the use of five levels for analyzing business relationships, including
actions, episodes, sequences, relationships, and partner base accordingly (see figure 18). Thus, a
proposal of interaction types being hierarchical levels, ranging “from a single individual exchange
to the entire relationship portfolio of a firm” (Holmlund 2004:286), suggests a primary structure,
which assists in classifying relationships. Schurr (2007) on the other hand focus on critical incidents
in relationships as the main driver. Another perspective is added by Huemer et al. (2009) in regards
of optimal relationship development, in which trust is regarded as the key source to facilitate
collaborative interaction. A model is thus proposed in regard of the interplay between control and
trust, in which both function as a substitute as well as complements. Thus, both control and trust are
needed in order to develop optimal relationships.
Additionally, Ritter (2007) argues that companies need to understand both, how the existing
position possessed fits the function of particular relationships, and the other actors’ potential and
evaluation criteria. Finally, Kothandaraman & Wilson (2000) argue that intra-organizational factors
are also important in relationships, as desired behavior needs to be aligned with strategic directions.
However, caution is advised in regard of managing relations, as the IMP tradition argues business
relationships are incontrollable for all actors involved, as relations are inevitable outcomes from the
nature of business (Ford & Håkansson 2006). However, Zaefarian et al. (2010) investigates the
strategic fit of business relationships with business strategy and concludes that a triangulation can
exist.
The main contributions disseminated within the IMP view in relation to managing relationships are
constituted in the work of Ford et al (2002) and (2003). Ford et al. (2002) suggest a framework for
the management of relationships, by delineating 6 overall tasks for managing relationships
15
including “know your customers/suppliers (1) and yourself (2), manage each relationship (3), build
and deliver an offering within each relationship (4), manage your portfolio of relationship (5) and
manage your network position (6)” (Ford et al. 2002:96). Furthermore, in relation to strategy Ford
et al. (2002) dedicate two chapters, in which “the idea of strategy” and “developing strategy” is
proposed, highly inspired by emergent strategy views (Baraldi et al. 2007). However, the notion of
strategy is in Ford et al. (2002) reflected on in regards of IMP views, but not synthesized into
tangible frameworks (Baraldi et al. 2007), but thoughtful spotlight is directed towards prioritizing
relationships in accordance of importance (see figure 3) and (see figure 4). Ford et al. (2003) argues
that mutual obligations facilitated by interdependence are imperative in relationships, functioning as
an essential mediator for actors not to apply too much control in relationships (Ford et al. 2003:8).
Thus, “companies should only engage in relationships, which are right for both parties” (Ford et al.
2003:10). A vital task for companies, then become how to evaluate which to enter and the strategies
involved. Additionally, three facets of relationships are proposed in conjunction as a medium for
management of relationships, including seeing relationships as; a device, assets and problems (Ford
et al. 2003:42). Thus, a relationship can be seen as a device to achieve efficiency and innovation as
well as to influence others. In regards of seeing relationships as assets, they develop over time due
to interaction episodes and reaches different stages, in which different troubles and opportunities
may occur in accordance with the 4 stage model (see figure 5). Finally, relationships need to be
managed consciously as they may be defined as problems, as relationships can be unruly,
undetermined, demanding, exclusive and sticky. Finally, common for the work of Ford et al. (2002)
and (2003) is a shared emphasis of relationships being embedded into networks.
The IMP perspectives in regard of relationships have primarily included a focus on dyadic units
(Baraldi et al. 2007:881). The question then relates to how to incorporate relationship management
into network thinking, as relationships are embedded in networks, meaning that all actions
conducted by actors within the network have consequences for others.
3.2.3 IMP and networks
The management of relationships is complex due to their embeddedness in networks. The network
operates at a higher level involving pull of the network and (inter)action of the individual
organization (Harrison et al. 2010, Håkansson & Ford 2002; Möller & Svahn 2003; Ritter et al.
2004; Håkansson et al. 2009). When the demand is pulled, it is the external environment, which
requires solutions from the market place. Therefore, as output is dependent on the outcomes of
16
relationships, these could be classified as resources, as some control might be coerced, whereas
networks might not be regarded as resources due to its complexity and difficulties in controlling it
(Baraldi et al 2007:885). Thus, several central key resources of a firm may only be controlled
through the medium of interactive relationships and networks, as these resources are under the
direct or indirect control of others (Ford & Håkansson 2006).
Furthermore, in relation with networks as facilitators of demand and opportunities, the three
paradoxes of networks are commonly acknowledged within the IMP literature (Ford et al. 2003;
Håkansson et al. 2009). The first paradox comprise that “the network simultaneously enables and
restricts a firm”. Secondly, “relationships are developed and defined by companies, but companies
are also developed and defined by relationships and finally companies try to control the network,
but control is destructive” (Ford et al 2003: p. 23). In the last paradox, control is regarded as
destructive in networks as it disables mutual obligations, innovation and synergy (Ford et al. 2003;
Wilkinson 2008). Adding to this, Ford et al. (2003) argue that no strategic approaches to managing
in networks exist, but rather proposes the model of managing in networks (see figure 6) consisting
of three elements; network pictures, networking and network outcomes. This model reflects that
actors have different pictures of the network based and shaped by their distinct characteristics, that
networking is based on choices within existing relations about position and how to network, and
finally that network outcomes are continuously produced individually as well as collectively.
However, as “no clearly articulated network view of strategy exists” (Baraldi 2007:881), the IMP
tradition has to an increasingly degree been identifying the scopes for action, thus utilizing the
aspects of strategizing within these. This may be linked with the associated nature of the unit of
analysis in the IMP tradition (the three levels), which differs from the standard unit of analysis
(firm) in strategy research (Baraldi et al 2007:881). Nonetheless, IMP views ought to encourage
relationship and network thinking, in which strategic management perspectives are facilitated
(Baraldi et al 2007). Therefore, a firm must in regard of its strategic processes allocate these scopes
“for individual action and work with the constraints of the network” (Ford et al. 2003:6) when
utilizing strategic frameworks. Nonetheless, strategy formulation and interactive strategy in
relationships and networks remains poorly understood, but Gadde et al. (2003:357) imply that “the
heterogeneity of resources and interdependencies between activities across firm boundaries, as well
as the organized collaboration among the companies involved”, should be considered concurrently.
Furthermore, Mouzas & Ford (2009) identify networks as system of values, norms, rules and other
conventions, which are shared among companies in a network, in which actors invest and harvest
17
practices in order to develop or gain control over resources. Thus, in accordance with emergent
strategic views, these features imply that “the strategy process is interactive, evolutionary and
responsive, rather than independently developed and implemented” (Håkansson & Ford, 2002:137).
Additionally, in regards of the abilities companies will need to successfully manage complex
network, Ritter et al. (2004) argued that companies should actively incorporate relationship and
network thinking into corporate practices, processes and strategy development, along the different
levels of relationship and network management (see figure 7). Finally, Storbacka & Nenonen
(2011) discerned how a firm can influence market configurations (i.e. the network) by working on
its mental models and business models. Thus effectiveness is mediated by the network position and
size of the firm, and anticipated reactions from other companies due to changes in regard of any
factor, are managed consciously.
Thus, as networks constitute the highest tier in the interacted levels, they are the most complex
configurations and as a result the most difficult to navigate in. The strategic management of both
interaction in relationships and networks is needed, as interaction occurs in relationships, which are
embedded into networks.
3.2.4 IMP - framework and management propositions
As the three levels of interaction are interrelated, a need of a framework integrating them arises. On
this matter Tikkanen & Halinen (2003) notices that “from the perspective of strategic management
and network research, it is somehow striking that despite their long co-existence, cross-fertilization
between strategy research and the different schools of network research is still very limited”.
Brennan et al. (2008:1) explains this as the result of the very nature of research conducted within
the IMP tradition, which emphasize on explaining phenomena, rather than focusing on managerial
questions. Furthermore, as “Ford et al. (2003) quite explicitly set out to undermine the notion that
strategy in industrial networks can reasonably be conceptualized as a carefully planned and
implemented rational response to environmental and competitive circumstances” (Brennan et al.
2008:1). The rationale which this is directed through is the three ‘myths’: the myth of action, the
myth of independence, and the myth of completeness (Ford et al. 2003). However, an increasing
degree of examples can be found in relation to the integration of network thinking with strategic
management. Ritter (2007) proposed a framework for analyzing relationships governance,
incorporating both relationship thinking and network thinking. Thus, by suggesting a relationship
between two companies can vary significantly from the two actors’ point of views, the integrating
18
hierarchy-markets-network framework was proposed for dyadic and dynamic analyses. Although,
the framework does not integrate strategic thinking as such, Ritter argued that “the model may be
used for strategizing in relationships” (Ritter 2007:200). Sousa (2004) suggested employing the
RBV in relation to IMP views in strategizing, based on relationships immediate comparability with
resources.
Further attempts of conceptual frameworks for managing different business nets have been
proposed (see Möller, Rajala & Svahn 2005; Möller & Svahn 2003; Svahn 2003). These studies
focus primarily on business nets, its categories (by adopting of a value-continuum) and the derived
optimal management in connection with these, which tends to vary in accordance with type of
network. Möller & Svahn (2003) distinguish a firm’s subnetworks in accordance with a functional
level, e.g., production networks, innovation networks and distribution networks. Ford & Mouzas
(2007) propose a matrix which facilitates analysis, assessment and management of a specific
company’s portfolio of relationships. Thus, an outline is made of existing and possible relations,
which all are pertinent in relation to the matrix’ four cells. In an attempt to incorporate strategic
thinking Baraldi (2008) inferred, by the use of empirical evidence from an IKEA case, that business
relationships and networks play a vital role in the strategy of large companies as IKEA. Baraldi
(2008) suggests that companies need to adopt a “network strategy,” i.e. both consider and utilize the
network in order to realize own goals. Finally, Zaefarian et al. 2010 empirically tested the concept
of strategic fit of business strategy and relationship alignment and concluded (like Baraldi) that in
order to achieve superior relationship results, internal consistency is vital in relation to the
alignment of a firm’s relationship features in accordance with business strategy.
Although, attempts has been made in order to provide tangible tools for strategizing in networks by
applying strategic management perspectives, no framework has been provided. Furthermore, when
utilizing the concepts of management and strategy in networks, the contributions suggested so far
easily become too abstract for others than top-management. Therefore, additional efforts need to be
made in regard of aligning network and relationship strategy with business level strategy, in order
for middle-management and individual actors at lower levels to understand and appreciate the
alignment of strategies. Thus, approaches making these strategies more tacit for lower management
are needed.
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3.2.5 Strategy-as-practice as a complement and extension
As emergent strategy approaches and the IMP traditions’ alternative views to strategy link well,
additional devices are needed in regard of strategic management on the micro-level, as strategy is
executed by individuals interacting on this level. Therefore, in order to search for tangible devices
for this purpose, the IMP contributions in relation to the SAP approach to strategy is reviewed in
the following section. The emerging SAP focuses on micro-level behaviors, which depicts “a
striking resemblance to the preferred research approach of many IMP researchers” (Baraldi
2007:882). Baraldi et al. (2007) pinpoint that SAP has not yet been explored in a B2B network or
relationship context (for an exception see Harrison and Prenkert 2009; Harrison et al. 2010).
Nevertheless, as actors at the micro-level are factors which influence strategy, it is argued that IMP
is clearly relevant for SAP. Additionally, contemporary IMP literature has to an evolving degree
utilized SAP, in which strategy is viewed as a practice rather than something an organization has
(Borgström & Hertz 2008). SAP is a strategic tradition in which focus is on micro-level activities,
i.e. desired actions are guided from the higher organizational level, so an alignment of strategies
throughout the organization, when individual actors performing strategizing activities, may be
facilitated (Baraldi et al. 2007).
A number of important studies integrating SAP and IMP have been made (Borgström & Hertz
2008; Benson-Rae 2007; Canning & Brennan 2004; Harrison et al. 2009; Harrison & Prenkert
2009; Harrison et al. 2010). Borgström & Hertz (2008) empirically investigated a case in which
strategizing was referred to as actions, interactions and negotiations of multiple actors in a shared
setting (practice). Strategizing types were categorized and roles in these activities were investigated.
Of particular interest was the scrutiny of how people’s activities link to organizational strategies,
both in term of content (i.e. strategy) and in regards of process (how strategy develops). BensonRae (2007) utilized SAP’s multi-level notions of praxis, practice, and practitioner in order to focus
understanding of strategizing in networks (see figure 8). These three notions relate to the sensible
corporate alignment of business strategy and relationship. Additionally, in the empirical case macro
(industry), meso (relationship) and micro-level (firm) was related to strategy outcomes in terms of
actor bonds, activity links and resource ties. Thus, insightful attempts to integrate IMP and SAP
were made. Furthermore, Canning & Brennan (2004) suggested that a key feature of strategy
content and process is the adaptation mode in which a firm employs resources to realize its goals.
Harrison et al. (2009) argued that the strategizing task is to identify where there is scope for action,
“through cognitive, positioning or adaptive strategizing respectively” which was originally
20
proposed by Harrison & Prenkert (2009:662). Furthermore, the case study identified different forms
of strategizing, at different levels of the organization, namely muddling out, muddling in, managing
out and managing, and these where not deemed mutually exclusive. Harrison & Prenkert (2009)
identified in their case study three network strategizing trajectories, which to some extent overlap
and are emphasized in the planned strategizing phases. Thus, a proposal of strategizing - involving
the conscious and systematic linking of activity structures in the network- were made assisted by
the ARA model in order to utilize resource configurations. Finally, Harrison et al. (2010) build on
the work of Harrison and Prenkert (2009) and propose five approaches for deliberate strategizing in
full-faced network contexts. In these five modes, a continuum may be identified ranging from high
to low degrees of commitment and mutual involvement. Thus, these two aspects comprise the key
indicators of which strategizing type to employ in a specific scenario (Harrison et al. 2010: p. 947).
As in Harrison et al. (2009), the usage of the five approaches can be applied separately or in
conjunction. Hence, integration is made under the influence of earlier IMP work (Gadde et al. 2003;
Ford et al. 2003; Håkansson & Ford 2002; Håkansson et al. 2009; Baraldi et al. 2007).
3.3 Summary, remarks and implications
The IMP view to strategy is unique and originally developed as an opposition to the traditional
marketing view. The IMP and the prescriptive tradition of strategy differ due to some essentially
deviating assumptions. However, the emergent tradition and IMP tradition complement each other,
as a variety of distinct assumptions and viewpoints to a high degree are shared. Several IMP views
validate this suggestion, as emergent strategic thoughts are identified throughout the contemporary
IMP field. However, the emergent tradition could aid the IMP tradition additionally, by the
integration of strategic approaches in tacit strategic management frameworks.
In regards of the contemporary field of the IMP traditions, the current literature focuses on
interactions in embedded inter-organizational relationships. Thus, a movement within the IMP is
focused on management of interaction in relationships, whereas others focus on managing
networks. Consequently, how to incorporate and integrate relationship management into network
thinking - as relationships are embedded in networks - is the main concern for the majority of
present IMP views. Therefore, further research is needed in regard of aligning network and
relationship with strategy. Thus, the recent integration of SAP and IMP views is made in order to
provide tangible contributions for strategizing and aligning of strategies at the business strategy
level. This includes an emphasis of integrating strategies developed at the top-management level
21
into lower levels of the organizational hierarchies. By integrating SAP views, the IMP tradition is
referring to a more holistic adaptation of strategic approaches, rather than merely “strategy” or
“strategy formation” (Baraldi et al 2007). This, alternative view of strategy primarily includes the
adaptation of the term strategizing. Thus, the nature of mission and objectives in strategic
development, ought to be both alterable, overall assessments and desired directions, experimental
and emergent. In summary, the upcoming challenges of the integration of SAP and the IMP
tradition revolves around the continuance of substance “by bridging the content-process dichotomy
in the strategy literature, to link practices to the organization, industry and environmental levels,
and to consider the role of actors outside firm boundaries” (Baraldi et al. 2007:888).
4. Conceptual model of integrating relationship thinking
As aforementioned, most contributions from the IMP tradition have been focused on the functional
strategy level. Although many of these contributions are insightful – and some rather operational –
most of the contributions are to a lesser extent useful for the strategic processes located at the
business level. Thus, valid conceptualization, of frameworks which are straightforward to process,
lacks. Hence, the proposed conceptual model in the present paper may be considered as both an
appraisal and critique of the existent empirical and theoretical IMP work, as well as a
complementing extension. In terms of strategizing thus far, “the contributions within the IMP have
either focused on deliberate strategizing processes and the management of networks (or nets) (see
e.g. Möller & Svahn, 2003), or more emergent strategizing processes when trying to manage in a
network (see e.g. Ritter et al. 2004)” (Harrison et al. 2009:10).
However, focus in the proposed model is threefold as IMP, emergent and SAP viewpoints are
integrated as complements and extension of each other. The subject of strategy, in the Emergent
Strategy and Interaction model (henceforth named ESIM), is incorporated into three levels, namely
macro, micro and meso. Thus, the units of analysis, development and implementation - focal firm,
dyadic relationships and network - are distinguished in relation to these three levels. The emergent
strategic foundation adopted, is applied in order to incorporate the macro-level. The IMP literature
has to date, as mentioned above, emphasized the strategic implications on the dyadic and network
level (meso-level). IMP views can be assisted in developing holistic strategic management
frameworks by focusing more on the firm level. Thus, the aim of the ESIM model is to “connect
more tightly the focal firm's internal processes and performance to other specific actors' processes
and performances” (Baraldi et al. 2007.887). Therefore IMP contributions, in which partial
22
elements are useful for strategic processes on the business level, will be utilized. Finally, the SAP
approach is applied in order to integrate strategic considerations at the micro-level, by making the
alignment of strategies throughout the organization more operational in terms of plans for actions
located at the micro-level, consisting of managers and non-managers.
By utilizing IMP views certain constraints must be acknowledged as companies cannot act
independently by carrying “out its own analysis of the environment in which it operates, develop
and implement its own strategy based on its own resources, taking into account its own
shortcomings” (Ford et al. 2003:5). Therefore, a firm must in regard of its strategic processes
allocate “where there is scope for individual action and work with the constraints of the network”
(Ford et al. 2003:6) when applying strategic frameworks. The outcomes of a firm’s action will thus
“be strongly influenced by the attitudes and actions of those with whom they have relationships”
(Ford et al. 2003:6). The main intention for the focal company thus revolves around strategic action
involving both actions concerned with network positioning and that within relationships - i.e. the
process of relating (Håkansson et al. 2009).
In relation to this, considerations need to be made in regards of the three paradoxes aforementioned.
In regards of the first paradox, when delivering an offering, all companies are dependent on other
actors in the value creation process, which requires the recognition that in order to develop or
exploit own resources; those of other actors’ are needed. The second paradox implies that the focal
company both influences and is influenced simultaneously in networks. This interconnection is
critical, as each actor to some extent determines the future of the other. Having the right
counterparts then becomes critical, as control is destructive. These three features imply that strategy
processes ought to be “interactive, evolutionary and responsive, rather than independently
developed and implemented” (Håkansson & Ford, 2002:137). Additionally, the first and last
paradox implies an emphasis on interdependencies and interplay, in which mutual collaboration and
synergies are essential key words. Identifying the scope for action, within existing and potential
relationships and operating effectively with others within the internal and external constraints that
limit that scope, is thus of vital importance. Finally, by utilizing relationships and adopting a focus
on enhancing these, inevitably provide companies with additional SCA’s via its network structures,
which will very difficult to imitate.
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4.1 Emergent Strategy and Interaction Model (ESIM)
Before illuminating the ESIM model, general considerations are needed in order to validly develop
the constructs. A comprehensive LR has been conducted in order to outline the foundation of
present literature which may assist in developing these constructs. In regards of the theoretical
implications, key constructs are initially distinguished and their relationship is delineated. Then the
ESIM model will be proposed in which the key constructs are included and elements are explained.
Finally, the nature of independent and dependent variables are scrutinized, as well as considerations
regarding hypotheses, including identification of what might constitute causal and correlation
effects.
In relation to configuration, the ESIM model has three key constructs (strategic processes), namely
strategic analysis, strategic development and strategic implementation, each dealt with separately.
As aforementioned context, content and process are particularly vital aspects of every strategic
framework. Thus, the analysis section refers to context in which the firm operates within and
includes a macro perspective, whereas strategic development refer to content i.e. the actual
strategies and is situated at the meso level, and finally strategic implementation is focused on microlevel processes.
In regards of the analytical process, this consists of an analysis of the environment, resources,
interaction, relationships and networks as well development of the purpose of the organization. As
the novel proposition featured is the section of interaction, relationships and networks, focus will be
directed at this section. Thus, environmental and resource analysis is only dealt with on a superficial
basis, as integration of these processes are outside the scope of the present paper.
The strategic development process initially consists of a SWOT-analysis, which outline the results
of the analysis conducted in the previous processes. From this outline, strategic options are
identified on the basis of three integrated methods; environmental-based, resource-based and finally
relationship and network-based options, in which particular attention is paid to the last part. Thus, in
accordance with the scope of this work, the former two methods are to a less degree meticulously
scrutinized. The final construct, although it is distinguished as being a part of the strategic
development, is concerned with the process of strategic implementation, which is particularly
focused on identifying scopes for strategizing by utilizing the SAP approach, which implies a focus
on individual managers (and indeed non-managers) rather than organizations. Additionally, this part
of the process is rather iterating, meaning that strategic developments continuously are being
24
monitored, managed and altered in order to react quickly to changes, thus ensuring that the firm is
constantly being flexible.
Distinct theoretical implications of the ESIM are present. These particularly regard the relationships
between the constructs (processes) created. However, as no conceptual frameworks - of the sort
proposed here – have been suggested, difficulties exist in regards of delineating the relationship
between the processes within the strategic analysis, development and implementation, as well as
those intrinsic processes pertinent to the three categories. In the ESIM model, the threefold
analytical process of strategic analysis is identified as the independent variable, whereas the
selection of strategy choice pertinent to the development/implementation construct is identified as
the dependent variable. Thus, the outcome of the two independent variables and their distributed
effects on the dependent variable may fluctuate in accordance with the intermediate variable of
purpose.
In order to capture and evolve the valuable insights of IMP views, by utilizing emergent strategic
management processes and SAP practices accordingly, the ESIM conceptual model is thus
proposed below:
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The ESIM model, which may be seen as a schematic diagram of the relationships between key
variables is greatly inspired by and is proposed as an extension of the “emergent strategic process”
(see figure 9) outlined by Lynch (2009). Thus, it is hoped that the integration of IMP and SAP
views may complement the emergent strategic process model with additional bricks in relation to
the strategic analysis, development and implementation. The foundation of the framework consists
of the emergent strategic processes, in which IMP views consistently are added, while SAP
perspectives are particularly related to the implementation processes.
Finally, when creating hypotheses of the relationship of variables, it is important to consider the
independent and dependent variables. This is vital in regard of delineating key processes of the
configuration as well as scrutinizing relationships among variables included. Therefore, hypotheses
are a necessity in regards of predicting and explaining relationships among the variables included in
the ESIM model. The existing literature, empirical as well as theoretical, facilitates the foundation
in which the development of hypotheses can be derived. However, a methodical scrutiny and
construction of hypotheses utilizing previous literature is outside the scope of the present paper,
although theoretical validation is crucial. Nevertheless, hypotheses are a requirement in regards of
validating the ESIM model as well as the developed framework in which the applicability in real
practice can be tested and evaluated. As all companies are unique in regards of environment,
resources and relationships, hypotheses might be rather difficult to validate and apply. Thus, in
regards of causal and correlation effects between constructs, these ought to be thoroughly examined
in order to determine effects of the independent variable towards the dependent variables in the
ESIM model. These interrelated relationships are illustrated in the constructs of the ESIM model
below:
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Thus, it is hypothesized, that the analytical process of environment (A), resources (B) and
interaction, relationships and networks (C) have a causal effect in regards of explaining the purpose
construct (D), which positively affect the development and selection of strategies, which is
distinguished as the outcome or dependent variable (E). Additionally, in regards of the construct
(D), two kinds of variables may have an auxiliary effect on the outcome of (D). Mediating variables
(Y) are those, which have a positive effect on (D), whereas moderating variables (X) include
variables have negative effects on (D). As Bennett (2000:415) articulates it: “mediators and
moderators are variables that affect the association between an independent variable and an
outcome variable”. Thus, mediator variables might include factors such internal managers or
stakeholders, which assist in strongly associating the (D) and (E) constructs accordingly. In
contrast, moderating variables include factors, which might cause a weak association between (D)
and (E), which were predicted to have a connected relationship. These moderating effects might be
the result of external sources, such as relationships and networks.
When delineating the relationships between the three analytical constructs and the purpose construct
(D), it is essential to identify and evaluate both the inputs and outputs of constructs (A), (B), and
(C). In regards of (A), the inputs constitute the 7 methods for analyzing the external environment,
whereas output may be evaluated in regards to the quality/value of the analysis. In (B) the inputs
include the two distinct routes, namely AV and SCA, whereas the outcome may be evaluated and
assessed in relation of performance indicators of resources. Finally, in (C), the inputs are the
portfolio of relationships and the outcome may be evaluated and assessed in regards of net value.
The equation for net value can be defined as investments minus outcome (in terms of value).
The causal effect of variables (A), (B), and (C) on D may be difficult to assess. However, by
reviewing the existing literature, empirical evidence supporting hypotheses which delineate the
individual as well as the collective causal of effect of (A), (B), and (C), might be identified.
Additionally, in regards of (A), (B) and (C) correlation characteristics might be present. This
include that e.g. (B) may be positively or negatively associated with (C). Thus, correlation is the
number, which describes the degree of relationship between two variables. Although, construct (A)
may correlate with (B) and (C), the relationship between (B) and (C) is focused upon, as a positive
relationship may be identified between internal resources and relationship. The investigation of
resources and relationships and what comes first, is in this connection important to investigate.
The IMP literature recognizes relationships as resources, but also emphasizes how each firm’s
resources are developed and exploited interactively through relationships (Håkansson et al.
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2004:106). As resources in itself are passive, their usefulness may be determined by its interaction
with the resources of others actors in the network (Håkansson et al. 2009:68). The factors which
deliver value to the focal firm are not only derived from internal sources, but also external sources.
Thus, firms form activity with actors to develop relations in order to gain access to and construct
valuable resources (Håkansson et al. 2009:69). The consequence is that resources have several
identities and their value and usefulness should be evaluated on several criteria pertinent to the
identity. Thus, a resource needs to accommodate with other internal resources, function in relation
to specific counterparts (i.e. suppliers, customers and other nodes interacted with) and finally fit
with into the larger resource constellations it is related to within the network (Håkansson et al.
2009:69). On the basis of this, my hypothesis in regards of the relationship between resources and
relationships is that; initially resources are predecessor, but later on, in order to maintain and
facilitate resources, knowledge and competences, the management of relationships needs to be fully
exploited.
Delineating one hypothesis is not sufficient. However, the ESIM model is in need of empirical
validation, as the aspects of integrating the IMP, SAP and emergent aspect are novel. This is, as
aforementioned outside the scope of the present paper. Nevertheless, the need in regards of
validating the ESIM model includes the provision of measurements of; degrees of causal effects of
the constructs; the strength of correlated relationships among the constructs; and finally identifying
moderating and mediating variables. Thus, the academic testing of numerous hypotheses is
required, where efforts are provided in regards of explaining these relationships.
4.2 Strategic analysis
This part will deal with the analytical process within the ESIM model. Thus, the analyses of
environment, resource and interaction, relationships and networks are described in this section. The
purpose of the organization is additionally extended into the process of analysis, as vision, mission
and objectives of an organization are shaped as a consequence of both the analysis of the internal
and external contexts as well the firm’s individual assessment of its intended purpose in regards of
business.
4.2.1 Environmental analysis
In the analysis made by an organization in regards of the environment in which the firm operates
within, the customer usually comes first, the competition second and environmental issues come
third. Normally, three levels of analysis are employed namely national level, industry level and a
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firm level (Lynch 2009). Furthermore, past, present and future levels and data are generally utilized
in order to examine the given firm’s situation. When exploring the competitive environment three
difficulties aspire when determining the connection between the firm’s strategic management and
the surrounding environment. The first difficulty entails the debate of strategic viewpoint, whereas
the second focuses on the uncertainty always inherent in regards of which view is taken, as all
strategists regard the environment as uncertain. As it is difficult to actively manage all issues
influencing strategies of a firm, a desired solution often include the identification of the key factors
for success in the industry, and then direct the environmental analysis towards these factors. In
general, the environmental analysis is applied in order to provide proactive strategies or highlight
reactive strategic conditions, as adaptation is needed, when environments change (Lynch 2009:75).
To analyze an organizations’ external environment Lynch (2009:74) propose the utilization of nine
basic steps (see figure 10).
However, the IMP tradition neglects that companies need environmental analysis as an integral part
for identifying opportunities to thrive from options in the market. This is explicitly illustrated by
Brennan et al. (2008:2) which reject that companies are “merely responding to environmental
forces, and by following a predefined series of environmental analyses can choose an appropriate
strategic approach to maintain its market position”. Alternatively, IMP researchers have addressed
aspects such as interdependency, when considering the problems relating to the interactive nature of
strategy (Ford et al. 2003). Therefore, companies’ outcomes, by being embedded in networks, are
dependent upon the reactions and actions of other actors in the network.
Furthermore, both contradictions and useful contributions within the 9 adopted strategic models and
IMP views can be identified. Firstly, environmental basics usefully cover three basic areas that need
clarification before starting the environmental analysis: market definition and size, market growth
and market share.
Secondly, the degree of turbulence is a model directed at identifying the extent to which the
dynamics of the environment impacts the strategy of companies in a given industry. Thus, useful
additions may be contributed in regards of providing the firm, with a specific picture of the rate of
change as well as directions for the required degree of adaptation to changes.
Subsequently, the analysis of the macro-environment (PESTEL) is a framework utilized for
analyzing the external environments, although it should be regarded as a checklist. It functions as a
tool utilized in order to get an overview of key influences, apprehend interconnections between
entities as well as events. Valuable insights may be captured, regardless of applying a network
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perspective, particularly in regards of those factors in which the given firm has no influence on.
Emergent viewpoints possess an ambivalent position in connection with the model, as some
emergent strategists argue that the future is so uncertain that predictions are obsolete. However, the
majority of emergent viewpoints acknowledge the model as useful in relation to strategic
management, when employed with caution (Lynch 2009).
Analysis of stages of market growth (ILC) is a model applied in order to assess the growth and
development of an industry or a segment in the industry. Four phases are normally identified in this
model, including phases of introduction, growth, maturity and decline. Thus a variety of
opportunities and threats are allocated in the different phases. However, difficulties may arise in
regard of determining the duration of some life cycles and to allocate the precise stage, which the
market is currently in. Additionally, in other industries some stages are missed or the location of the
stage cannot be clearly identified, usually as a result of technological change. In this connection, the
nature of competition may be different at each stage of the evolution due to various reasons. Finally,
some companies can change the shape of the ILC curve, by initiating changes in their products. As
a consequence of change in stages, companies occasionally undertake changes - thus in accordance
with emergent strategic view - initiating and handling changes followed by periods of maintaining
stability, becomes a necessity (Baraldi et al. 2007:887). Therefore, in order to assess current stage,
the ILC model thus contributes with what may be valuable insights.
Alternatively, the analysis of key factors for success (KFS), which are usually defined as: “the
resources, skills and attributes of a firm in an industry, which are essential to deliver success in
accordance with the objectives of the firm” (Lynch 2009:94). However, utilizing the analysis of
KFS does not necessarily differentiate the firm from other players in the market, as most KFS are
highly related to the industry. However, in accordance with network views this might be useful, as
the factors may guide the firm in regard of identifying what to enhance in order to participate more
efficiently in the network. In order to identify the most vital elements of the environment, the
analysis can be facilitated through an examination of the resources used and the way in which
resources are employed. However, in accordance with emergent viewpoints, success can in some
cases come from innovation, changes in the industry or finding a niche segment, rather than mere
identification of current KFS (Lynch 2009). The sixth method, the analysis of industry structure (5forces) is a framework for analyzing the competitive structure in an industry. The model consists of
all types of actors who have or might have an influence on the structure. The goal of the framework
is to find an optimal position in the industry where the firm can, defend itself against, or influence
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the five forces. Furthermore, the framework enable a firm to scrutinize the attractiveness of the
industry operated in or other possible industries, enabling it to determine how to form its strategies
in order to develop opportunities in the surrounding environment. The five forces consist of market
competitors, suppliers, buyers, substitutes and new entrants. However, emergent criticism is
directed at the model as the analytical framework for being too static while existing environment is
constantly changing. Furthermore, the model assumes that an organisation’s own interests come
first and that all aspects of micro-environment have the same importance to the firm. The resulting
strategy formed is prescriptive rather than emergent, which might disable the firm to adjust to
industrial or environmental changes quickly enough. Finally, the model views the environment as a
threat and could therefore, discourage co-operation with suppliers and customers. Therefore, the
model is directly negated by IMP views, as the intended purpose of the IMP’s network view seeks
to mutually enhance outcomes by acknowledging interdependencies, rather than reactively defend
the position of the focal firm.
Analysis of co-operation in the industry (Lynch 4 links) is utilized in order to assess; primarily
opportunities, but also threats, that arise as a result of the formal and informal co-operative linkages
and networks, complementors and government links and network in which the firm operates with
and around. The analysis assists the firm in establishing the strength and nature of the co-operation
that exists between it and its environment. Thus, the analysis derived can identify which network to
harvest and further develop and which to reduce. The model as such is useful, as it recognizes
networks as being possible opportunities for enhancing business performance and competitive
advantage; however whether is fits the proactive view of collaborating advantages of the IMP is
questionable. However, the model is a simplification of, what IMP views see as multilayered in
regards of interaction in relationships, characterize outcomes in networks. Therefore, adoptions of
models, which integrate the interrelation of these multilayered aspects, are needed.
Competitor analysis is continuously made, but competitors in some contexts may be partners in
others, making the execution and derived outcomes subtle.
Finally, ambiguities in customer analysis may as well be the case, when customers on the B2B
market in other contexts are competitors or complementors in a third. However, several useful
aspects are present in regard of segmentation of customers and possible segments, as strategic
implications in regards of directing attention to more profitable customers, may be derived by
conducting a thorough analysis. Nevertheless, although some aspects of the environmental analysis
negates IMP views, it may still be sensible to conduct these analyses in order to take precautions for
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developments in the environment, which could affect the firm both in a positive or negative
direction. As outlined, contradictions occur, but addition may still be rather useful in regard of a
variety of aspects. Furthermore, identifying developments becomes a necessity, when having to
delineate e.g. future technological development, as it enables a specific firm to move in that
direction by scrutinizing opportunities in present or other possible collaborating relationships.
Hence, it is suggested on the basis of the examination conducted, that the revised environmental
analysis consists of the following steps outlined below:
1. Environmental basics
2. Degree of turbulence
3. Analysis of the macro-environment (PESTEL)
4. Analysis of stages of market growth (ILC)
5. Analysis of key factors for success (KFS)
6. Competitor analysis (focus on aspects of push)
7. Customer analysis (focus on aspects of pull)
4.2.2 Resource analysis
On a corporate level, resources are normally divided into three broad categories, which consist of
tangible and intangible resources and organizational capabilities. The tangible resources refer to the
physical resources of the organization, whereas intangible resources are resources with no physical
presence such as brand, service levels and technology (Lynch 2009:123). Finally, skills,
management and leadership of the organization are represented in the organizational capabilities.
The analysis of resources is, in accordance with the suggested framework by Lynch (2009:119),
constituted by two separate routes in which analysis is conducted in extension of, both initially
directed by a firm’s decision of internalize or externalize (i.e. to outsource).
In the first “value added” route, the value chain and system is the unit of analysis. The value added
approach explores how the firm operates and shape inputs from its suppliers, adds value and turns
them into finished goods and services sold to end-customers. AV is usually defined as the
difference between the outputs of the firms’ market value and the costs of operating the inputs
(Lynch 2009). The value chain can be utilized as a framework for identifying competitive
advantages. The nine categories of activity derived all contributes to a firm’s ability to create value
(margin). A firm must consider how to allocate these activities in the value chain in order to obtain
as much value as possible. This includes moving activities and functions to the locations, where the
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competences are the highest and where the cost-efficiency is best. The value system links how an
organizations’ value chain can create AV in collaboration with suppliers’, distributors’ and
customers’ value chains. Thus, the wider system of value chains creates a value system which may
be unique to each organization, creating SCA and AV for the successful ones (Lynch 2009:135). As
aforementioned, instead of seeing the value creation process as being linear, the IMP view
emphasizes that value is mutually created by working interactively with, through, against and in
spite relationships (Ford et al. 2003:6). However, in isolation resources are passive, “but the way in
which these resources interact with other resources enables them to develop value” (Håkansson et
al. 2009:65). This implies a perspective, in which e.g. components from suppliers are not merely
being processed, but rather that a mutual co-creational process in which supplier and buyer may be
equally important, as market transactions as these and relations over time and place become
interconnected (Wilkinson 2008:257). Furthermore, what becomes interesting to investigate is how
resources are affected by the consequential interplay of resources by being embedded with
resources of other companies, rather than focusing on the more static value chains (cf. Håkansson et
al. 2009:68). Thus, an emphasis of how resources interplay and connect with other actors’ resources
rather than an investigation of distinct resources gives the specific firm an advantage towards others
is sought for. Therefore, the analysis of how other actors in the network can utilize and combine a
given resource of the firm with their own resources is essential (Håkansson et al. 2009: page 69).
The second ”SCA” route consists of 2 methods for outlining uniqueness of resources, namely “the 7
main concepts of SCA”, and “the hierarchy of resources”. The first method; the 7 main concepts is
derived from the RBV and is constituted of (Lynch 2009:149):
1) Prior or acquired resources: Value creation is more likely to be successful if it builds on the
strengths that are already available to the organization. Path dependency.
2) Innovative capability: Some organizations are better able to innovate than others.
3) Being truly competitive: must be comparatively better than the competition.
4) Substitutability: more likely to be competitive if they cannot be substituted.
5) Appropriability: must deliver the results of their advantage to the individual firm and not be
forced to distribute at least a part of it to others.
6) Durability: Useful resources must have some longevity in accordance with brand name and
creative destruction.
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7) Imitability: Resources must not be easy to imitate if they are to have competitive advantage.
The copying process can be delayed if they posses tangible uniqueness, causal ambiguity
and investment deterrence.
The hierarchy of resources consists of four categories of resources, which deliver competitive
advantage in a continuum ranging from low to high. These are, starting with the highest
contributors; “breakthrough resources” which will bring a major strategic shift in an industry; “core
resources” which are unique to the firm and the basis for its SCA; “base resources” which are
common to many companies but useful to keep inside the firm; and finally “peripheral resources”
often bought in but can occasionally give competitive advantage (Lynch 2009:151). RBV, which as
aforementioned concur with the IMP tradition in regards of the assessment of resources. Thus
resources are seen as vital factors for the outlining of the direction of strategic behavior. Hence, the
RBV approach explores the special resources that enable the organization to compete (Lynch
2009:144). Additionally, the underlying reasons for why some resources deliver SCA are
scrutinized, by identifying those attributes that give an individual organization its particular
strengths (Lynch 2009:147).
However, viewpoints of the IMP and RBV perspectives differ
remarkably in regards of what constitutes resources, which form the basis of IMP criticism of the
RBV perspectives, which perceive resources to be distinctive and exclusive features of
organizations which are in fierce competition with other actors. Furthermore, although some
resources deliver on all parameters of the RBV’s seven elements, it is sometimes the unique
combination of the resource structure, which leads to SCA. Therefore, when defining the IMP
perspective, resources are not a matter of individual attributes, but rather of utility when combined
in relationships and networks. Furthermore, the IMP view negates the linear view of the value
chain, instead applying a network view, in which interactive value is created, as a result of full
exploitation of individual resources in innovative ways in conjunction with those of other
companies (Ford et al. 2003:29). However, resource analysis becomes a necessity, as companies in
order to thrive need to know which sustainable resources they can deliver in collaboration with
other actors presently as well as in the future. Therefore, a continuous analysis of the resource
portfolio will enable the firm to recognize where in the collaborating value creation process its
resources add distinctive value.
Finally, in regards of the resources, the IMP tradition recognizes the portfolio of relationships and
network position of a firm as the main foundation in which resources develops and is established,
via responsive and adaptive interaction (Baraldi et al. 2007). However, treating both the portfolio
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and network position as a resource poses difficulties, due to interdependencies with others in the
network. Therefore, much of the analysis in regards of resources needs to be regarded in extension
to the analysis of relationships and networks. Thus, coinciding or complementing perspectives
might be identified in regards of the outcome of both analyses conducted in relation to resources
and relationships and networks.
4.2.3 Interaction, relationship and network analysis
Interactions in relationships may provide a firm with collaborative advantages, as “success in
business markets comes from the recognition that the customer and marketer together create value
by exchange by each providing solutions to each others’ problems” (Brennan et al. 2007:52).
Consequently, AV and SCA may both be increased, as a result of collaborative advantages, thus
making it a vital reason to incorporate relationship management into the strategy processes.
Secondly, innovation is easier facilitated in relationships, as it is a process taken place within,
through and in spite of relationships, as knowledge flow backwards and forwards. Thus, “new ideas
arise as a result of the continuous combining (and re-combining) and adapting existing knowledge
and ideas in new ways” (Wilkinson 2008:76). Therefore, collaboration facilitates that both tacit and
no-tacit knowledge is enhanced and adapted continuously in the relationship (Wilkinson 2008:79).
Finally, as a result of this iterate combining of knowledge and collaboration, synergies may be
formed, thus increasing the final output by more than what the individual companies would be
capable of (Wilkinson 2008:62).
In regards of the three levels of interaction, relationships and networks, methods are related to each
level. Thus the three levels (see figure 7) are extended to the five levels delineated by Ritter et al.
(2004). Thus, initially analysis at the level of actor is focused on by employing the model at the
interaction level by Holmlund (2004) involving sequences, episodes and actions. The analysis of the
next level, the dyadic, is contemplated by deploying the 4 stage model. The Portfolio level is
covered by applying the contributions from Ford et al (2002) and Ford and Mouzas (2007). When
analyzing the connected relations or subnetwork level, both the 4R model and the value net are
applied. In the final level, constituting network, the contribution of Henneberg et al. (2006)
facilitates the analysis.
The analysis in the interaction level is directed at identifying the layers, in which the firm interacts.
Holmlund (2004), distinguish the important layers in a distinct relationship to consist of sequences,
episodes, actions. The hierarchy follows the delineated structure just outlined. Thus, the levels of
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analysis are partner base, relationship, sequence, episode and action. The lowest level consists of
the single actions concerning exchange elements, such as a phone call or a visit, made by the
individual actors within the distinct relationship. As these single actions are interconnected, these
constitute the higher level of episodes which could be a negotiation process or a shipment. The
episode, when being seen as a process, thus consists of lower-level action such as meetings or a
contract signing. These episodes have a defining feature in regards of defining the individual
sequences, which all together define the overall relationship, as they represent a minor natural
entity. Sequences consist of interrelated episodes, and correspond with the concept of assignments,
related departments of two different companies or other significant interrelated episodes of actions,
which all jointly constitute a relationship. In these sequences, a variety of episodes take place
defined in terms of a time period, a product, a project, all pertinent to the distinct sequence
individually or in combination, thus determining the boundaries for analysis. In a relationship,
several sequences may simultaneously be overlapping, thus mutually defining the relationship.
When outlining the hierarchical levels defined, the structure is delineated as a result of the different
unit size of interaction, “which implies that the span of a higher-level unit is more extensive
covering a longer time period than a unit on a lower level” (Holmlund 2004:281). However, despite
the significance of these 3 entities of interactions as indirect modules of a relationship, these lack to
be recognized from a theoretical and an empirical point of view (Holmlund 2004:282).
An interesting and enhancing feature of the analysis of the interaction level is to integrate Six Sigma
thinking into the analysis of the modules, by outlining process maps (SIPOC’s) in key relationships
(Bicheno & Catherwood 2005). Thus, the identification of process variations might be identified, in
order to recognize what causes the system to occasionally fail. Bicheno & Catherwood (2005)
identify two types of variations which exist in all processes, namely chance variations and specific
causes. Chance variations occur even though the configuration is optimal, due to flaws in systems.
Hence, the managerial challenge becomes to eliminate/decrease the existing flaws in the systems.
Secondly, Specific cause/assignable variation are e.g. when requirements are not meet sufficiently
or when employees not follow instructions etc. These causes are often easy to identify, but not
always easy to correct, as common practices may require being changed (Bicheno & Catherwood
2005).
The 4 Stage model (see figure 5) proposed by Ford et al. (2003:51) is an analytical tool utilized in
order to identify and assess relationships in regards of the progress of relationships. The analysis
conducted in this model may be applied in order to assess the growth and development of individual
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relationships in the portfolio. Four phases are normally identified in this model, including phases of
pre-relationship stage, exploratory stage, developing stage and finally a stable stage. Consequently,
a variety of opportunities and threats may be identified in the different stages. In the first phase, the
pre-relationship phase, which every relationship arises from, a lot of inertia is likely to be involved,
as both customer and supplier faces uncertainties in regards of evaluating each other. This
evaluation may be conducted on the basis of both the supplier and the customers’ capacity in regard
of matching the counterparts’ uncertainties by proving its ability in terms of what the other part
require (see figure 11). Secondly, the exploratory stage is defined by negotiations of a variety of
transactions and active learning is at its highest, as the two actors involved are bombarded with new
impressions. A lack of trust is naturally present due to uncertainties and hidden intentions of the
counterpart. Thus, commitment is the key facilitator for developing this stage, as trust is created,
which is vital for the development of collaborate advantages. However, as this phase primarily
consists of negotiations, difficulties arise in connection with showing commitment, making the
interactions and investments in management time of vital importance. The third, developing phase
is characterized by a growing volume of business and increasingly higher degrees of interaction.
Thus, growing actor bonds, activity links and resource ties are facilitated by the increased
commitment and trust created among the two counterparts. Adaptation in this stage is of particular
importance, as trust only to a specific degree facilitates business. This includes a willingness to
adapt through investments, as these informal adaptations are positively related to the development
of the business and commitment within the relationship. However, a variety of pitfalls exists
disabling the relationship to continue optimally, throwing it back to the initial stage. In the final
mature stage, a stable atmosphere is present in the relationship. Institutionalization is achieved
through a shared commitment. Positive advantages may include sound standard operating
procedures in transactions as well as the establishment of shared norms of conduct and trust, which
decreases uncertainties and enhances the performance of both actors. However, negative outcomes
may be derived as a result of this institutionalization, as a customer may expect the supplier to
increase the amount of discounts, or be more demanding in regards of product specificities. Thus,
what becomes vital is to ensure inter-dependencies by continuously examining new possibilities to
connect existing activity links in new ways, especially in relation to novel activity links.
Furthermore, a distinct characteristic of relationships is that not all reaches the maturity stage, due
to counterparts exploiting relationship in order to meet transitory needs, insufficient resources or
simply a mismatch in regards of abilities to meet uncertainties or develop expected outcomes. When
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assessing the portfolio of relationships, an important part, extending the 4 stage analysis, consists of
applying a holistic view in regards of whom: “to learn from; who to adapt to; who to trust and be
committed to; and who should it try to get closer to” (Ford et al. 2003:57). Thus, a firm is enabled
in assessing, where it is, where it wants to be, and how to get there.
Thus, tasks of managing relationships includes learning, investing, adapting, commitment and trust,
distance, power and dependence, conflict, communication and conflict.
In order to assess the entire relationship portfolio Ford et al. (2002:100) proposed a framework for
identifying types of relationships, the 5th of the 6 tasks aforementioned, utilized in the present
section. The framework consists of a simple categorization of 9 different categories of relationships
which has “proved useful for purposes of portfolio analysis” (Ford et al. 2002:99). The 9 categories
consist of the (customer) relationship types outlined below:
1. Today’s profits - these relations generate current profit and are based on previous
investments by both actors.
2. The cash cows – these relations contribute to the highest sales volume, but not necessarily
highest profits, as they may be rather demanding due to e.g. a skewed power relationship.
3. Yesterday’s profits – are those relations, which do not provide the same profits as earlier,
due to e.g. changed requirements or fierce competition.
4. The “old men” – is an extreme extension of the category above, in which offerings are based
on requirements that suited offerings conformed to long ago. They may be enacted by
individual actors within the firm, which have facilitated the maintenance of the relation.
5. Tomorrows profits – are those relations, which have future growth potential, and thus
require investments in order to optimize harvest, when matured.
6. New technical requirements – are those relations, which have demanding technical
requirements, and that often requires high degrees of adaptation. Therefore, unprofitability is
mostly the outcome of these relations, but experiences creating valuable knowledge might
be facilitated in connection with other relationships.
7. New commercial requirements – are equal relationships as above, but instead have
demanding commercial requirements.
8. Minor relationships – are often the largest category in the portfolio and most interactions are
characterized as being relatively transactional. These relations’ requirements may limited, so
creating sub-groups might enabled the given firm to process more business activity.
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9. The “fall-guys” – are those relations, which are ready be divested. For various reasons, these
relationships no longer provide any valuable inputs. An important task is to continuously
assess the portfolio and identify aspects, which may fall into this category.
This includes both customer and supplier relationships, as the firm itself is a customer to other
suppliers. Therefore, the firm may be allocated as a type of in all of the 9 categories in the variety of
relationships in which the firm itself is a customer rather than a supplier. Furthermore, in regards of
significance of relationships, dependence is a keyword, as it is a function of importance (Wilkinson
2008:105). This importance may be reflected in regards of revenue and costs to serve (Ford et al.
2002:225), which continuously ought to be monitored through a customer portfolio matrix (see
figure 3), which enable the firm to track patterns and changes over time, information that may turn
out valuable. Thus, a holistic picture of the collected relationships is pictured, as relationships
cannot be evaluated in isolation, or in relation to type. However, in regards of defining the portfolio
of suppliers, their types and importance Ford et al. (2002:228) propose a framework which captures
the essence of this predicament (see figure 12). Here, suppliers are evaluated in regards of value and
costs. Included in value, is both value of offering and value of the relationship, whereas costs
consist of fixed costs (i.e. allocated costs and relationship management costs) and variable costs
(fulfillment and usage costs and price), accordingly.
“The idea of strategy in business networks is built on the primacy of relationships as corporate
assets” (Ford & Mouzas 2007:37). Therefore, the portfolio of relationships together constitutes the
firm’s distinct relationship assets. Analyzing and developing these individually and in conjunction,
is thus a necessity.
Ford & Mouzas (2007:25) developed a matrix for analyzing in business networks, which
incorporates a holistic framework, for analyzing all relationships regardless of type (See figure 13).
Interaction in the matrix of 4 cells distinguished, takes place simultaneously in all business network.
The first cell consists of relationships, defined by relatively stability. Most of a firm’s relationships
will be situated in cell 1, often for a considerable time, regardless of whether the firm is occupied in
other relationships, which solve similar problems. Growth in relationship tends to be of an
equivalent character as the existing ones, rather than exploratory problem solving. Furthermore, a
given firm is continuously aware of decreasing fluctuations in these interactions. Thus, a trend
towards stability is facilitated, as a lack of investments of resources takes place in relationships, due
to a low degree of importance. This disables change as relationships have achieved a fixed state of
interdependence, or the network has reached a comfortable situation in which change is repelled.
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Strategy in business networks entails clarity, facilitated by analysis of existing position of
relationships in cell 1. In the second cell, a continuous assessment of present and new possible
relationships is made. This involves a situation in which companies add similar relationships to
existing ones and erase others as well as being deleted by others, thus facilitating an unstable
environment. An example of this phenomenon is seen when a marketing department of a firm
initiate to develop new customers for existing offerings, or when procurement inquire a wider range
of similar suppliers. Thus, problems addressed as well as interdependence of new relationships will
be equivalent of existing relationships in the portfolio, a scenario caused by limitations of
opportunities in existing relations. However, often desired relationships are unavailable or have
similar attributes as existing ones, requiring a firm to develop its skills in regards of management of
relations and the discipline of procurement. Thus, evaluations of which distinct or types of relations
to develop within the resource constraints, becomes a necessity, as initiations in new relations may
affect existing ones. Hence, conscious efforts are needed in regard of developing the existing
individual relationships in cell 1, thus anticipating and reacting to the aims of counterparts and in
cell 2. The third cell involves an active evaluation of which aspects of existing relationships to
confront and conform, by meticulously identifying and selecting them. Therefore, considerations
regarding potential costs, portfolio and network position and perceptions held by counterparts, are
essential. Thus, the process in this cell involves an element of indicating preferred level of
commitment and interdependence, simultaneously predicting actions and reactions by the
counterpart. In the final fourth cell, companies’ position in the network will evolve swiftly at a
given time, as a result of individual others’ initiations both directly as well as indirectly. These
changes can from interaction in call 2 or 3 emerge unconsciously, or by conscious efforts to change
position in cell 4. These conscious efforts include attempts to interact directly with those which
previously merely have been defined as indirect relationships, and when attempting to facilitate a
new position among existing relationships. Thus, these conscious efforts may change the network
position, which consequently will affect other actors as well as the configuration of the network.
Thus, compromises are a necessity, as benefits gained will mean costs elsewhere. As the cell 4 is
often occupied by unfamiliar relations, change and conflict may be associated within the structure
of the current constitution of the network. Cell 4 implies the firm to challenge the existing network
picture, by looking outside the normal operated constitution, accordingly with intervention of others
who might try to change their position, thus having an influence on existing constitution. Thus, a
firm’s direction is facilitated by multiple factors and multiple interactions in Cell 4.
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The analysis will need to examine the weaknesses and strengths and relationship, which becomes
vital in regard of an assessment of the opportunities present in relationships and networks.
Furthermore, in regards of the iterate analysis conducted of all relationships, an allocation of all
relations in the portfolio in regards of the 4 cells is needed in order to outline a snapshot of the
current situation, importance of relations, balance of composition and possible developmental
options.
This section includes connected relations, utilizing an emphasis on the analytical units of resources
and relationships, accordingly. Initially, analyzing a specific firm’s distinct resources and how these
are related to others’ in the network are considered, exploiting the 4R framework. Another
important element of networks and embedded relationships is to investigate how interrelated
resources are connected. The 4R model (see figure 14) adopted from Håkansson et al. (2009) is
directed at scrutinizing both direct and indirect resources and how they are affected by being
connected to different actors in the network, related or not to the focal firm. A basic assumption of
the model regards how a single resource is defined by the interplay with other resources in the
network.
Four types of resources are distinguished in the 4R model; “products, production facilities,
organizational units and organizational relationships” (Håkansson et al. 2009:68). Normally,
products constitute a unique combination of tangible resources and may be related to a variety of
resource structures, as they are not distinct to a specific actor in the network. Production facilities
are tangible, but more distinct to an actor, as control normally is pertinent to one actor only.
Organizational units include intangible resources constituting the idiosyncratic knowledge and
experience of both individuals and groups. Finally, organizational relationships include a complex
blend of tangible and intangible resources, which are mixed through different actors’ boundaries,
thus creating both problems and opportunities. A distinct effect of relationships, when crossing
borders, is their influence on both distinct intangible resources, such as systems or practices, and
tangible resources, e.g. offerings and facilities. Thus, a single resource is defined from the context
in which it is seen from and from, how it relates to other resources in those contexts and its relation
to the wider network. Hence, the usefulness of a resource is determined by its interaction and
conjunction with the resources of other actors in the network. Hence, how other nodes may utilize
and combine the single resource of the focal firm with their own resources, becomes essential.
Thus, a resource needs to function to accommodate with other internal resources, function in
relation to specific counterparts (i.e. suppliers, customers and other nodes interacted with) and
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finally fit with into the larger resource constellations it is related to within the network. A single
resource acquires its value from the combinations it is a part of and adopts features of these
contexts, such as identities and value. Consequently, a resource has several identities and value and
the usefulness should be analyzed and evaluated on the following criteria; firstly, functionality with
other internal resources; secondly, functionality in relation to and in collaboration of specific
relationships, such as suppliers, customers, or other related actors; and finally, fit of the single
resource relative to larger resource constellations interconnected to, such as supply and distribution
networks, technological networks and environmental networks.
Hence, the purpose of the analysis is to analyze and evaluate single resources on these four levels,
thus helping the firm to identify which distinct resources are most vital separately and in
conjunction with other actors’ resources in the web.
The value net is additionally proposed as a way to allocate significance of relationships embedded
in the network (Wilkinson 2008:15). This includes an analysis of processes of transformation of e.g.
a product, ranging from raw material to end product. Utilizing this approach, the firm might identify
“weak links”, bottlenecks or similar relationships, which holds a unique place in the value creation,
which would not have been identified using economic portfolios or such proxies. Thus, the value
net might be a good idea to incorporate, as this enables the analysis to scrutinize the value creation
processes, in which a given firm participates within. E.g. in international banking, it is the strength
of the networks, which provide competitive advantage for those involved and exclude those who are
not (Lynch 2009:104). Ritter et al. (2004) propose a framework for identifying and analyzing the
distinct relationships and connection in regards of the value net (see figure 15). On average
companies have 10 important business relationships (Ritter et al. 2004:176), which include a mixed
variety of relations in regards of type, which may be conceptualized in regards of the firm’s value
net. On the basis of this framework four different types of relationships are identified; with
customers, suppliers, complementors and competitors accordingly. In connection with customers,
functional relationships are needed, as an understanding of customer needs and a shared product
development is facilitated. Integrated relationships with suppliers may provide the focal firm with
competitive and strategic advantages by providing key components, products or services.
Complementors include a variety of different actors in the network, which functions increase value
or outputs of the specific firm, by having a cohesive focus. Examples of this include joint marketing
schemes, innovation partnering with suppliers or complementary offerings and finally governmental
agencies enhancing new market opportunities. Lastly, having cooperative associations with
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competitors may be cultivated for several reasons, such as developing product and technology
standards and entering new international markets mutually. Thus, the collection of relationships
which the specific firm is an active participant in constitutes the value net. However, as these other
individual relationships have a unique value net, interrelated overlapping connections of
relationships are formed. The framework may be seen as an opposition or a complement to Porter’s
Five Forces (Brandenburger & Nalebuff 1996), as the basic supplier - firm - customer relationships
are included. Furthermore, additionally competitor and complementors’ relationships with the
traditional cluster of supplier, firm and customer, are included. Thus, a competitor may win over
suppliers or buyers from the focal firm, whereas complementors may add suppliers and customers.
Thus, the analysis is employed in order to evaluate the relationships in the value net, allocate
significance - in terms of weakness and strength - and identify vital relationships for the value
creational processes.
Having considered connected relations or subnetworks, a final analytical extension is made by
focusing on the wider network, in which all relationships that the focal firm interacts directly as
well as indirectly with are included. No empirical model in regards of delineating a common
network structure has been clearly articulated (Baraldi et al. 2007:881), as all networks differ both
objectively and in regards of the individual actors’ network pictures in relation to the network. This
permits an analysis of the focal firm’s subjective picture of network reality, in which network
position may be identified as well as facilitating guidelines for navigation in accordance with the
network map (Håkansson et al. 2009). The derived picture will be pertinent to the contextual
realities of the specific outlined network. Therefore, utilization of 8 building blocks, adopted from
Henneberg et al. (2006), for development of the firm’s perceived picture of the network is
employed (see figure 16). These building blocks, constituting an integration of a diversity of
theoretical IMP contributions, includes the following facets; boundaries, centre/periphery,
actors/activities/resources, focus, directionality of interactions, time/task, power and environment.
These sets of interrelated dimensions constitute the units of analysis in regards of defining network
pictures of the focal firm as well as directly and indirectly related companies. The first building of a
network, boundaries, is defined in regards of depth and width. Depth is a measure of relationships,
in which direct exchanges occurs, both forward (customers) and backwards (suppliers), whereas
width refer to the relationships in which direct exchanges do not occur. As relations may include
both aspects of width and depth, the two measures are mutually exclusive, but network picture of
the focal firm is mainly facilitated by depth i.e. the value net. As only simulated boundaries exist, a
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necessity of the focal firm is to consciously settle on where to place them in regard of the network
picture, as too broad a picture may create more uncertainties than facilitate an overview. Thus, a
balanced outcome is required, enabling the focal firm to optimally navigate. The second block,
centre/periphery, consider that the specific firm may have a manifested relationship, firm, value
chain or a subnetwork of integrated companies, which the network picture is centered on with an
inbuilt periphery surrounding the network picture. Actors/activities/resources – the dimensions of
the ARA model - constitute the third block, and the different types are implicitly incorporated into
the network picture. Actors can be illustrated as individuals, groups of individuals, or entire
companies. Activities refer to explicit functions or activities within an organization, single
individuals such as a manager or non-identifiable future activities facilitated by combinations of
resources. Finally, resource ties exist in situations, where specific resources in e.g. an EDI system
play a vital role in shaping a network. The fourth block, focus, is concerned with what companies
regard as focal point of departure. Thus, a distinction is made in regard of networks being
constituted as “sets of connected firms [actors]” or as “sets of connected relationships between
firms” (Henneberg et al. 2006:418). Furthermore, technology which integrates activities of
organizations, like ERP and JIT systems, might candidate as being an additional focal point of
departure. Directionality of interactions is the next block, in which an acknowledgment of
interaction as a central linking activity in networks is made in regards of two distinct aspects. The
first aspect recognized, the main directionality of the interaction, constitutes one-way flows of
transactions or similar entities. Included in this aspect is whether interactions are purely
transactional or integrated with a focus on increasing collaborative advantages. The second aspect,
concerns interdependencies including an analysis of primary relationships are influential on
secondary ones and by which positive or negative impact. These impacts are differentiated “in
terms of six generic modes of interconnectedness constituting of being neutral, assisting, hindering,
synergizing, lacking, or competing” (Henneberg et al. 2006:418). These generic modes’ effects on
other relationships are additionally included. The sixth block, time/task refer to the time horizon
involved in relationships, constituting a continuum where, at the one extreme, relationships
constitute a single interactional event, and in another where continuing adaptive interactions occur
over a long timeline. Considerations in the second last building block include the aspects of how
distributed power in relationships has a moderating effect. Thus, an analysis of the perceived
interdependencies and dependencies of actors, activities and resources (ARA) of each other within
the relationships embedded in the network, is employed. Additionally, potency of relationships is
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also considered in the power dimension, in regard of strong and weak ties and commitment, as
interdependence might facilitate mutual obligations, “which is a vital mediator for actors not to
exercise too much power in the relationships” (Ford et al. 2003:8). In the final block, environment,
external and partly known sources influence the shaping of the network picture, and involve actors
outside the conscious boundary aforementioned, which posses a role in which it may affect or alter
the evolution of the distinct perceived network picture. The analysis of this last block can be
compared to that of the PESTEL abovementioned, although the facets of this and that may be
distinguished differently.
By utilizing these 8 different building blocks of network pictures, individually perceived network
pictures are created in order to determine network position. Hence, examining the network position
in the portfolios of others (consciously planned or not) as well as the portfolios and position of
parties interacted indirectly with, is of vital importance. Thus, the “concept of business strategy in a
network can usefully be interpreted as attempts to develop or change a firm’s network position
relative to others in the moving world in which it is located” (Ford & Mouzas 2007:15).
This analytical section, integrated a variety of methods derived from IMP perspective by facilitating
an analysis situated at the five levels of; actor, dyad, portfolio, connected relations and network.
Initially, the actor level was targeted by incorporating Holmlund’s (2004) framework, in which
analysis of sequences, episodes and actions is conducted in regards of the focal firm’s existing
relationships.
Secondly, the dyadic level was included into the analysis by utilizing the 4 stage model, which
assists in outlining an overview in which options regarding development in distinct relationships are
delineated.
Two complementing methods were utilized on the portfolio level, in order to outline the position of
the firm in conjunction with its existing relationships seen as a portfolio.
In the fourth level, resource interplay and value nets were scrutinized in order to acquire
intelligence of; how both internal and external resources of the focal firm and its collaborating
relationships in conjunction create value for both parties; and how the value net might assist in
evaluating relationships, allocating significance and identify key actors in the creating of value in
offerings.
Finally, in the fifth network level the framework of Henneberg et al. (2006) was employed in order
to derive the perceived picture and thus the subjective network position of the focal firm as well as
those of interrelated relationships. In order to determine, evaluate and develop network position, the
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network picture plays a vital role by providing an individual perceived map of the position, both
that of the focal firm but additionally also that of other actors’.
Consequently, a holistic view is required in strategic analysis and connected development and
implementation processes, as whatever changes a firm might initiate as a result of the strategic
processes will instigate reactions and counteractions from the external environment. As Håkansson
et al (2009:19) articulates it: “relatedness means that any greater or lesser change in the business
landscape produces reactions”. These can be particularly difficult to predict, thus creating
uncertainty and the possibly need for developing counteractions. Thus, the process of developing
relationships is not deterministic, as no “ideal” relationship state can be achieved (Ford et al. 2003).
4.2.4 Purpose of the organization
Subsequent to the three analytical parts, the process of defining the purpose of the focal firm is
focused on, by addressing vision, mission and objectives accordingly. This process is an integral
part of the main analytical process, but may be seen as an extension of the three parts covered above
by utilizing an emergent approach. The process of discerning purpose provides a vital link between
strategic analysis and development, by delineating aspects of future desired states (Lynch 2009).
However, of vital importance is to reckon that vision, mission and objectives are not firmly fixed.
By employing an emergent approach, a continual experimenting, learning and adjusting takes place,
thus negating an approach where a fixed future state is delineated and pursued rigorously on the
basis of e.g. financial objectives.
Hence, in accordance with IMP views, Tikkanen & Halinen (2003:16) propose three interrelated
activities, which are vital to the strategic creation of purpose of a focal firm both individually and
collectively, by aligning purposes. Network visioning, positioning and mobilizing constitute the
three activities according. Visioning refers to the focal firm’s obligation to construct visions of how
to influence the potential network evolution, enhancing collaborating advantages in the network
(Tikkanen & Halinen 2003:16). However, a “firm’s or an individual’s network picture may show
the width or restrictions of its vision” (Ford & Mouzas 2007:23). Furthermore, an extension is to
identify the scopes for shared goals or visions by utilizing a strategic management perspective of
positioning in relationships and networks, may improve “the effectiveness and competitiveness of
both individual partnerships and the total network, which is in competition with others” (Tikkanen
& Halinen 2003:12). Thus, the purpose of these shared visions is to enable shared drivers by
46
network mobilizing. This include delineating commitment of actors’ by sharing objectives, which
two or more related relationships are pursuing accordingly.
More explicitly, in order to facilitate the three aspects of visioning, positioning and mobilizing,
Lynch’ (2009:261) emergent framework to purpose is utilized (see figure 17). The process
delineated consists initially of three aspects all influencing in determining the purpose, namely
knowledge creation, technology development and innovation (Lynch 2009:261). Knowledge
creation regards tacit vs. explicit knowledge and knowledge audit and management, whereas
technology development relates to the mutual combining of resources and consists of two phases –
survey of existing technology and development of technology strategy. Of vital importance in
regard of technology is how demand is derived. Consequently, is demand derived from technology
push - new technology offered to the market and often co-created among several actors, or from
technology pull - as narrow solutions to particularly problems? Finally, innovation is made as a
result of the two main sources abovementioned. Customer needs analysis is required in regard of
market pull and technology development analysis for market push, accordingly. Therefore,
innovation is a process taken place through relationships, as knowledge flow backwards and
forwards. Thus, new ideas are facilitated through a continuous combining (and re-combining) and
adapting of existing knowledge and ideas in new ways (Wilkinson 2008:76). Evidently, the three
aspects of knowledge, technology and innovation provide the foundation for the creation of the
firm’s individual as well as collective vision, mission and objectives. However, these are not firmly
fixed, as an iterating strategic process of experimenting, learning and adjusting takes place. Finally,
by incorporating this framework, outcomes in regards of increased revenues, enhanced AV and
stronger SCA, are collectively anticipated. Purpose is normally perceived to consist of vision,
mission and objectives, which in accordance with emergent strategic views not are firmly fixed,
thus enabling the focal firm to adapt and react fast to changes. Vision is a challenging and inspiring
picture of the prospected role of a firm, transcending existing positions (Lynch 2009). An outline of
the broad course a firm should and will pursue, followed by reasoning as well as underlying values
of the firm, constitutes a mission (Lynch 2009). Finally, objectives are operational goals, which are
aligned and derived by the vision and mission of the firm.
4.3 Strategic development
As a starting point for the framework of strategic development, outlined below, the interdependence
of purposes is crucial to the specific parts of an individual strategy (Lynch 2009:302). This reflects
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that desired purposes are evident for the directions pursued as well as ranking of priorities.
Furthermore, a rational outline of existent opportunities and threats for the firm in question, on the
macro, meso and micro-level, is accordingly carried out. Thus, an outline of the external
opportunities and threats as well as the strength and weaknesses internal within the firm (microlevel) and in conjunction with relationships (meso-level) embedded in network (macro), is made in
the SWOT-analysis. On the basis of the SWOT-analysis, environment-based, resource-based and
relationship and network-based options are identified, developed and selected among utilizing an
emergent approach on the business strategy level. Thus, the strategic development framework is
outlined below (integrated from Lynch 2009):
4.3.1 SWOT-analysis
In order to outline the results from the analysis, a SWOT-analysis is utilized, and should be
regarded as providing an overview, rather than an analytical tool (Lynch 2009). In order to conduct
strategic development, the SWOT is summarizing the current and future strength and opportunities
as well as weaknesses and threats on the micro, meso and macro level accordingly:
(Integrated from Lynch 2009 and Baraldi et al. 2007)
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Thus, the SWOT identifies the current position of the firm in regards of both relationship and
network. The aim of SWOT analysis is thus to; build upon strengths, eliminate weaknesses, exploit
opportunities and mitigate the effects of threats. Thus, the aim of the consecutive strategy
development and implementation is to proactively facilitate and reactively managing relationships
within the network, accordingly.
4.3.2 Strategy development – environment-based options
In accordance with the framework outlined above, the identification of strategic options is enabled
by utilizing tools in regards of environment, resource and relationships and networks. The methods
delineated in relation to the environment and resource-based options, are intuitively integrated
employing Lynch’s (2009) contributions in regards of the two distinct aspects. Therefore, a
superficial focus is initially deployed, emphasizing more thoroughly on the novel contributions of
the IMP tradition in regards of identifying relationship and network-based options.
Lynch (2009) identifies environment-based options, utilizing three distinct methods; Market options
(adopted from Ansoff), generic strategies (adopted from Porter) and finally expansion methods.
Ansoff’s market options matrix (see figure 18) is employed in order to identify the possible growth
options for a given firm. In extension of this, a given firm may choose the most optimal strategy on
the basis of the possibilities. 8 different market options are identified in the model, namely; market
penetration, product development, market development, diversification into related markets
(forward, backward and horizontal integration), diversification into unrelated markets, withdrawal,
demerger and privatization. 2 dimensions are present in the model, consisting of the market and the
product, either categorized as being present or new. In accordance with Porter’s theory regarding
generic strategies (see figure 19) every organization needs to choose direction in order to compete
and gain SCA. Three different directions are distinguished, namely cost leadership, differentiation
and focus strategy. The cost leader in an industry operates by delivering the lowest costs in the
industry in respect of labor, production and processes, distribution networks, plant and maintenance
and other working practices. Holding a differentiation view entails a given firm’s products meet the
needs of the customers in the market place better than others. By offering a differentiated product, a
higher price charged becomes possible, as customers perceive the value of the products as being
high. In a focus strategy, the organization focuses on a specific niche in the market, thus creating a
competitive advantage as offerings are customized to serve that specific niche, utilizing a niche
differentiation or a niche cost-leadership. The expansion method matrix (see figure 20) explores the
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methods by which the market opportunities associated with strategy options might be achieved in a
structured way, by identifying national and international options inside and outside the firm. The
national options inside the firm include internal development, whereas those externally to the firm
comprise mergers, acquisitions, joint ventures, alliances and franchises. When designing the
international market expansion strategy considerations regarding whether to enter markets
incrementally or simultaneously, and whether entry is to be concentrated or diversified across
international market, i.e. utilizing a waterfall approach (incrementally) or shower approach
(simultaneously). The options at hand internally include exporting, overseas office and/or
manufacturing and finally multinational or global operations. Those outside the firm’s boundaries
contains comprise mergers, acquisitions, joint ventures, alliances and franchises, turnkey or
licensing.
4.3.3 Strategy development – resource-based options
The strategic development in regards of resource-based is according to Lynch (2009), addressed by
utilizing three distinct approaches; the value chain/system, the RBV and cost reduction.
Initially, the value chain and system approach is employed, as investigating where and how value
can be added by the firm’s resources, will generate strategic options. In regard of the value chain,
upstream and downstream are identified and analyzed. Upstream activities are those that add value
early in the value chain. To add value here, Lynch (2009) argue the usefulness of e.g. buying in
bulks and making few changes to the production process, thus keeping cost low and throughput
constant. This is assisted if the organization produces standardized items. Upstream value is added
by low-cost production processes and process innovations. Value is also added by efficient purchase
of raw materials and other forms of procurements. Thus, upstream resource options may include;
increase standardization of products, investment to lower cost of production, operations innovation
to lower the cost of production or improve quality, capital investments that add value and seeking
many customers from a wide range of industries that require a common product without variation.
Downstream activities are those that add value later in the value chain. These activities may rely on
differentiated products for which a higher price can be charged. Such products variations may mean
stopping the production line and making changes, which incurs extra cost. The options identified
may include; varied products targeted at particular market segments, R&D and product innovation
to add more value, advertising investment and branding and increase services to add value.
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The RBV argues that identifying and developing key resources of the organization, which deliver
AV and SCA, is vital, as some distinctiveness relatively to the competitors is vital in order to thrive.
One method, for identifying options, is to test the resource of the firm against the criteria of
architecture, reputation and innovation. By doing this, both current resources as well as future
needed resources are identified. Thus, architecture refers to organizational structure, HQ and
subsidiaries, range and other areas which generate advantageous assets. Reputation refers to image,
brand, marketing and history, whereas innovation concerns ability and capacity to deliver new
products and services.
Finally, strategic options are not only concerned with expansion into new resource capabilities and
core competencies. The organization may also need to consider cutting back its current operations
in order to reduce cost. Thus Lynch (2009) identifies six routes to cost reduction:
-
Designing in cost reduction by carefully preliminary designing of product – fewer parts,
Lean philosophies etc.
-
By having strong supplier relationships utilizing e.g. ERP, EDI, or SCM systems. Thus,
cost reductions may be achieved by having a supplier who is willing and able to maintain
quality and reduce costs.
-
Utilizing economies of scale and scope (e.g. a cohesive R&D and marketing department,
inventory management and warehousing)
-
Facilitating an experience curve
-
By capacity utilisation
-
Utilizing synergy e.g. that created within partnerships or from deploying SCM systems.
Hence, the approach utilizing the value chain, the RBV and cost reduction methods, constitutes the
identification of resource-based options. However, in regards of the value chain organizations
interact in the both the buying and value creation process, facilitating interdependencies of
relationships (Brennan et al. 2007). Thus, the value chain is focused on adding value of components
internally, thus neglecting external actors’ vital importance in regards of co-creation in the value
process, which is directly invalidated by IMP views, as Ford et al. (2003:2) defines this as “the myth
of action”. In accordance with the RBV, a distinction is made in regards the individual resources of
a firm comprise its competitive advantage towards other actors, which accordingly is negated by
Ford et al. (2003:9) which defines this view, as the “myth of completeness”. Finally, the viewpoint
regarding cost reductions of suppliers, becomes problematic as the network picture will be affected,
thus possibly creating harmful scenarios for the focal firm (Ford & Mouzas 2007). However, useful
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contributions may be identified, especially in regards of designing in cost, economies of scale or
scope, facilitating. Additionally, equally for these contributions, is the need to emphasis on these
aspects in conjunction with other actors collaborated with. Thus, it is proposed that the value chain,
the methods of RBV as well as the suppler relationship focus all are excluded from the analytical
ESIM framework.
4.3.4 Strategy development – relationship and network-based options
When strategic options are identified and pursued, action need consider the network so a balance is
maintained. This includes an emphasis on continuously moderating and balancing within the three
network paradoxes. Furthermore, the methods for identifying options are related to the five levels,
in which the analysis of relationships and network had its foundation.
On, the basis of the analysis conducted utilizing the framework by Holmlund (2004), a number of
options may be identified in regards of interaction at the actor levels of sequence, episodes and
actions. Patterns of efficient and inefficient processes outlined from the analysis might constitute
the feasible collection of options at hand. Furthermore, the outlined overview provided by the
SWOT delineates options at other levels, which undeniably include considerations regarding
interactions at the actor level. Therefore, when pursuing these juxtaposed options, the three levels of
interaction may play a vital part in these. Particularly, in the structure of the strategy developed, as
this may be executed on several levels simultaneously. Thus, on the basis of the analysis conducted
of interaction in the relationships and the SWOT, the focal firm will identify options, which build
upon strengths, eliminate weaknesses, exploit opportunities and mitigate the effects of threats
presently in the existing relationships.
Applying the analysis of the 4 stage model, on the dyadic level, as an indicator of history, current
status and future state of relationships, options regarding the enhancement of relationships may be
outlined in the SWOT. Generally, a necessity of the options generated is to enhance relationships on
a collective basis. Thus, in order to conform to the overall enhancement, alternatives regarding
exploiting opportunities, advancements of current strengths, eliminating weaknesses and diminish
the extent of threats may be chosen and further strategically developed. In order to explicitly
develop strategy in connection with the options outlined, the first of the three facets of relationships
proposed by Ford et al. (2003:42) is employed in order to strategize in relationships. The three
facets include seeing relationships as devices, assets and problems. The asset dimension is confined
within the 4 stage model, whereas the problem dimension covers the possible negative aspects of
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relationships. By emphasizing that these are not tools which may be useful for all problems, but
instead a necessary tool utilized with precautions, the problematical aspects of relationships are
outlined. In strategy development seeing relationships as a device is useful, as achieving efficiency
and innovation as well as influencing others, may become the associated outcomes, when integrated
successfully. Of vital importance in this connection is to develop initiatives where conscious efforts
are made in regards of exploiting and facilitating relationships as devices, in which a variety of
concerns in relation to influencing other actors optimally are considered. Options in this in regards
of influencing others include the manipulation of customer uncertainty and applying its ability (see
figure 11). In extension of this, the focal firm is obligated to consider a variety of tactics in regards
of the opposition and consciously developed these tactics concurrently with counteracts for
counterparts reactions.
Portfolio level:
From the outlined analytical outcomes, derived from the matrix for analyzing in business networks,
in the SWOT, the focal firm’s current situation is ultimately characterized by an involvement in a
number of relationships; which are relatively stable (see figure 13, cell 1); where relationships
similar to existing ones are added and others deleted, parallel with being deleted by others itself (see
figure 13, cell 2); in which the confrontation of a variety of aspects of some relationships are
instigated (see figure 13, cell 3); and finally, where the positions of all actors in the network will be
evolving at different velocities in certain times (see figure 13, cell 4). When developing strategy in
the network context, no single relationship can be enhanced or changed in isolation from others, as
an individual relationship will interact with other and effectuate these changes further into the
network. Therefore, when developing strategies, the portfolio of relationships which are
collaborated with must be considered as a cohesive entity. Thus, holistic strategy development is
subject to several variables which may impede the change or stabilization of the network position,
which is the critical purpose. Included are also factors which the focal firm has no influence on external variables - which consist of the network picture of other relationship actors, their conscious
efforts to develop it and the heterogeneity in a network, which is reflected by all conscious and
desired actions and altering as well as perceived realities of individual actors, imposed on the
network. “Strategy in a business network is a multifaceted activity” (Ford & Mouzas 2007:33),
requiring the focal firm to consider other aspects regarding existing relationships, when developing
strategy. These aspects include the perceived and unconscious history of relationships, delineated in
the 4 stage model, regarding previous investments, interdependencies and interactions. As
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counterparts distinct perceived history will vary, the evolving strategic outcome becomes a function
of these separate views. Thus, developing a conscious strategic approach to evolvement in business
networks (Ford & Mouzas 2007:33) involves intended efforts of relating current relationships in
cell 1 to progression in cell 2 engaging more relationships, evaluating and altering in cell 3 within
existing relationships and cognitively repositioning in cell 4.
Subsequently, in connected relations or subnetworks – in regards of the 4R model and the value net
- the analysis of processes of resource combination, transformation and value creation might
identify scarcity of resource combinations, weak links, bottlenecks or other relationships, which
possess a unique position in the system. Thus, the intention in the strategic development process is
to enhance the strength of well-functioning relations, eliminate or decrease weak links and
bottlenecks, exploit opportunities of unique resource combinations and diminish threats by
proactively enhancing features, resources or relationships, which might facilitate this.
In regards of network, the focal firm’s position is based on the total set of relationships. The options
identified in the SWOT may be strategically developed in regards of evolving the network position.
These options are made taken the network pictures into consideration. Thus the network position is
evidently tried to be changed, by a toolbox, which include five distinct, but not mutually exclusive,
ways of deliberately strategizing in networks adopted from Harrison et al. (2010). By incorporating
SAP and IMP approaches, scopes for deliberate strategizing are defined in regards of these 5 types.
By employing the five types, the co-existence of the three strategizing processes of cognitive,
positioning and adaptive (Harrison & Prenkert 2009) is logically accepted. Thus, every actor
cognitively employ network pictures in attempts to develop the existing position, by conducting
mobilizing or influencing activities within existing relationships, alongside adapting resources and
activities in ongoing interactions. Accordingly, the process delineates a co-existence of conscious
strategizing (cognitive and positioning) and adaptations. The five ways of strategizing includes; i)
strategizing based on network pictures in the absence of direct interaction; ii) strategizing in the
presence of a network audience; iii) strategizing among deliberate equals; iv) strategizing among
imaginative equals; and v) strategizing as open and absorptive bystander.
Firstly, strategizing based on network pictures in the absence of direct interaction, involves a
consideration of counterparts, but not a direct involvement in the strategic development. By a
thorough understanding of the desired counterpart and its fit into the strategic challenge pursued,
development is initiated on this basis. However, two infeasible types of scenarios might prevail.
Firstly, scenarios which the counterpart desire, but which are neglected as the focal firm’s focus is
54
elsewhere, and secondly, alternatives which the focal regard as feasible, but counterpart see as
infeasible caused by an initial lack of pre-understanding. Furthermore, the creation of innovation
and synergy is diminishing due to the lack of inclusion of the counterpart. Secondly, strategizing in
the presence of a network audience, is present in scenarios where the focal firm has conceived clear
objectives of the particular strategy trailed, followed by explicitly inviting single or several
counterparts to participate in a project. The intention of encouraging collaboration by inviting
counterparts is to communicate vision and goals, thus facilitating possibilities for counterparts to
align their own strategies with those of the focal firm, individually (by translation) or collectively
(specified). Consequently, the initiative is at the hand of the focal firm, which has outlined the
desired direction. However, if divergent of individual strategies occur, withdrawal or altering of
aspects might be the most feasible collective result. As the focal firm is in a state of control, jointly
created alternatives, visions and plans are primarily excluded. Thirdly, strategizing among
deliberate equals, involves the same initial dual process including the aspects of visions and inviting
counterparts. However, in this approach the distinct visions and plans of the counterpart are
acknowledged on an equal basis. Consequently, the focal firm may revise network picture, vision
and plans accordingly. Thus, facilitating synergy through modification or even convergence of
visions and plans is the main intention. Fourthly, strategizing among imaginative equals is similar
to the two above approaches in most regards. However, no tangible vision or plan is constructed
prior to the involvement. Thus, it evolves from being a combination of existing visions and plans to
a collective strategic initiative, in which visions and plans are made interactively by the two actors
involved. Therefore, through the interactive process of revising the network picture, a modification
of the focal firm’s individual visions and plans is expected. Hence, the facilitation of mutual
creation of new visions and plans – not the combining of the two actors’ predetermined visions – is
the main intention. Finally, strategizing as open and absorptive bystander constitutes scenarios in
which the focal firm mainly relies on strategizing initiations of counterparts. Here, the focal firm is
consciously or unconsciously fitted into the objectives of others. Thus, trouble may occur as the
focal firm relies on the visions of others, need to align vision to those of others and dependent on
the interaction with key counterparts. Consequently, applying the counterparts with individual
insights becomes a necessity for the focal firm, as the revising of the network picture of the
counterpart prospectively includes a strong relation with the focal firm.
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4.3.5 Identify major options
Action is accordingly based on the strategic options derived from the four areas of analysis;
environment, resources, relationships and network and finally the purpose of the organization.
Having analyzed and evaluated rigorously through the preceding steps, the choice of focus area(s)
for the focal firm should be somewhat intuitive (Lynch 2009). Strategy selection involves two
aspects that should be clearly distinguished. Content: the main actions of the proposed strategy.
Process: how the actions link together or interact with each other as the strategy unfolds against
what may be a changing environment. Process plays an important role. However, it is in this
connection often what causes troubles and difficulties, as context and content are somewhat easy to
distinguish and manage. Therefore, the strategic options in regards of the interaction, relationship
and network level are to be developed by utilizing the five types of strategizing, as the three levels
can be seen in conjunction. The ARA model may be utilized in established relationships, in the
wake of choosing a preferred type of strategizing, as an outline of vital activity links and resource
ties may be determined in regards of the collaboration with the specific actor bond. Thus, a holistic
framework is employed aligning the interrelatedness of strategies with the interconnectedness of the
interaction, relationship and network level accordingly. In the strategic hierarchy or priorities
delineated, the development of network position is regarded as the main objective, followed by the
wellbeing of key relationships. However, by prioritizing, the importance of the interaction in other
relationships is not neglected - on the contrary - as action on this level is the means to reach the
desired objectives on the network level. Thus, the selection of strategic options is incrementally
developed and implemented applying a holistic view in which the objective justifies the means.
This holistic view comprises two primary tasks delineated by the analysis in the SWOT. The first
task is to evolve and develop network position, primarily through further advances of strengths and
exploitation of opportunities in key relationships, both established as well as prospects (cell 1, 2, 3
and 4). That is, “the strategy of a firm is based on its interactive behavior with major counterparts,
which makes the individuals involved in key business relationships at least as important as the top
management in shaping a firm's strategies” (Baraldi et al. 2007:881). The second task is to diminish
the weaknesses and effects of threats which are constituted in relationships and the network, by
treating relationships as assets in accordance with the 4 stage model (Håkansson et al. 2009). Thus,
the primary intention is to sustain a continuous awareness of which relationships in the portfolio to
harvest and which to reduce in accordance with the relationships in cell 1 and 3 (Ford & Mouzas
2007). Another dimension of the second task is to utilize both the 4R model and the value net, in
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order to identify the weak links or bottlenecks which might facilitate weaknesses or threats, and
develop strategy which mitigates these effects. Furthermore, the five types of strategizing constitute
the choices of how to implement the options delineated in the strategic analysis. Hence, the holistic
development of strategic options is facilitated by evolving the network position and perceived
picture, utilizing the 5 ways of strategizing, the ARA-model, the matrix for analyzing in business
network and the 4 stage model accordingly. Subsequently, action-plans need to be constructed for
each of the selected options utilizing an emergent approach, in which emergent and changing
strategy survives by adapting as the environment itself changes (Lynch 2009:66). Thus,
responsiveness is rather important in relationship building and network strategizing. Business level
strategy therefore needs to be proactive and purposeful actions initiated by the firm and as-needed
reactions to unexpected developments and new circumstances in the market (Lynch 2009). Active
experimenting, learning and adjusting in the implementation phase are intrinsic parts of employing
the emergent strategic approach (Lynch 2009). It is here, in the implementation phase that
innovation and learning takes place. Strategic Management can thus be described as finding market
opportunities, experimenting and developing competitive advantage over time.
Finally, a number of considerations in regards of choosing among strategic options may be
regarded. Thus, the utilization of evaluative schemes and guidelines might enable a better selection
process. Lynch (200) proposes the application of the following methods in this regard: six selection
criteria, evaluation techniques and empirical evidence and guidelines. The proposed methods are
somewhat intuitively logical, so due to a lack of space, these only superficially mentioned.
4.4 Strategic implementation
In regards of implementation, interaction becomes a key word, as it is in this phase that most
interaction with external actors in the web is realized. Thus, interaction is seen as the basic business
process (Håkansson et al. 2009), which facilitates actors to be connected by activities in which
resources are combined in order to enhance the value creation process for the parties involved.
Thus, implementation is as such an active part of the strategy development, as a continual amount
of experimenting, learning and adjusting occurs. Additionally, this part of the process is rather
iterating, meaning that strategic developments continuously are being monitored, managed and
altered in order for the focal firm to quickly react to changes, thus ensuring that the firm constantly
is being flexible. The implementation will naturally diverge in accordance with the explicit needs of
strategic problems, in order to act feasible within a continuum ranging from urgent needs for change
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to ongoing strategic processes (Lynch 2009:491). Consequently, an emergent strategic approach is
sustained, supported by the utilization of the five deliberate SAP trajectories at the micro- and meso
level. This implies a focus on individual managers (and indeed non-managers) rather than
organizations as actors in industrial networks, as it is “how practitioners of strategy really act and
interact over organizational boundaries” (Baraldi et al. 2007:890) in the process if linking
activities of collaborating relationships. The five strategizing types, derived from SAP IMP and
perspectives mutually, involves active and responsive interaction elements in which strategies and
derived objectives continually may be revised and adjusted as a result of the reactions from the
specific external environment i.e. relationships and networks. Thus, a responsive and evolutionary
structure which captures dynamics and enable the firm to deal with change immediately (Håkansson
& Ford 2002:137), is facilitated.
However, as strategy development and implementation is an integrated process, a less degree of
prescriptive formality is present in regards of utilizing an emergent approach. However, the
implementation process needs to be formalized further, as general guidelines are needed in
extension of choice of internal strategies, relationship and network strategies and cross-relational
strategies. Therefore, the implementation process below proposed by Lynch (2009) is utilized in the
ESIM model:
This includes the processes of strategy choice, statement of the main strategy objectives,
formulation of plans, resource allocating and budgeting and monitoring and control procedures.
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4.4.1 Strategy choice
Subsequent to the selection of strategic options, several considerations arise, as the initiation of the
implementation process coincides with the choice of strategy. Although strategic choice includes a
desire to change network picture, implementation or management in business relationships and
networks are ultimately situated at “the individual, group and business unit/firm level and these are
interrelated” (Ritter et al. 2004:179). Strategy is therefore distinct to these levels, whatever they
may be. These levels are delineated in congruence with the strategic options identified at the levels
of interaction, relationships and network. Ritter et al. (2004:180) distinguish relationship-specific
and cross-relational tasks, as the main foundation in which strategy may be initiated. Thus,
“relationship-specific tasks are exchange and coordination aimed at initiating, using, developing,
routinizing, and dissolving the relationship…cross-relational tasks are planning, organizing,
staffing, and controlling aimed at dividing the overall value creation system into work packages
and coordinating and integrating those” (Ritter et al. 2004:180). In extension of this dual
foundation, the five types of strategizing will be applied in accordance with what is most feasible in
regards of value, commitment, risk and present as well as future synergy. Therefore, the five types
of strategizing – qualified as distinct SAP management tools - are adopted in the implementation
phase, in order to exploit these scopes for networking action, constituting of; the empirically
derived proactive “managing in” proposed by Harrison et al. (2009). Consequently, the
implementation is executed on the three levels proposed by Ritter et al. (2004) utilizing the five
type of strategizing individually or collectively.
4.4.2 Statement of the main strategy objectives and plans
Before initiating implementation considering the process is vital (Lynch 2009). This includes an
identification of who will contribute to the task, outline the mode of communication as well as
make the selection. Furthermore, this identification includes who are to develop the plan, how will
they undertake the task and where are they located in the organization. As such the strategies are
conducted in order to realize the vision or parts of it, as when a given strategic project is completed.
In relation to this various important management issues, including communication in regards of
strategic change (Lynch 2009:586) and enhancement of commitment in areas of people activity
(Lynch 2009:586), must jointly successfully be accomplished. By utilizing the five types of
strategizing, scopes for deliberate action in the active processes of implementing and managing, the
objectives of the strategy are identified. This implies that responsibility and alignment of strategies
59
is delegated throughout the organization to those, who perform the actual strategizing. Scopes for
action within existing and potential relationships and networks are incrementally built upon
(Harrison & Prenkert 2009:663). In regards of the actual corporate objectives, both quantifiable and
non-quantifiable, these are directed at the individual, group and business unit/firm level
accordingly. Subsequently, the translating of these objectives is delineated to the departments which
are related to the chosen strategy (Lynch 2009:497). If the strategy chosen include crossdepartmental issues, then project groups are normally created in order to facilitate the strategy
optimally. The considerations regarding cross-departmental scenarios might be assisted by the use
of communications matrices (Ford et al. 2002:113), in which the interaction of individuals or
departments with the equivalents of counterparts is identified. Consequently, these departments or
project groups individually constructs specific plans, in which tasks, deadlines and responsibility
are delineated.
However, the construction of the plans is dependent on the mode of strategizing type found
appropriate. Thus, whether plans and to some degree objectives are delineated in collaboration
within relationships with counterparts, vary according to the mode selected. Therefore,
implementation is just not conducting what has been planned, but can be seen as an active
development of the strategic directions which have been outlined. Thus, as responsibility is
delegated, room for and the identification of scopes to strategize is acknowledged by topmanagement down to the actors lower in the hierarchy of the firm. Thus, by active use of SAP, a
proxy for the five types of strategizing, the focal firm is able to align strategies and desired direction
at the both corporate as well as functional level. As Baraldi et al. (2007) points out, the SAP
perspectives are particularly valuable in relation to align the conducted behavior on the macro and
meso levels to those which are situated on the micro levels. Thus, in order to apply SAP optimally
on the micro and meso level, the levels of interactions are utilized in order to derive the scope for
strategizing as well as outlining how to align strategies and behaviors of individual actors. By
employing an emergent business level strategy, the focal firm is enabled in regards of exercising a
large degree of flexibility towards a dynamic external environment.
4.4.3 Resource allocation and budgeting
Resources are usually allocated from a central body, in which an overview of the portfolio of
strategies selected is monitored. Three criteria regarding the resource allocation is considered in this
section, utilizing the perspectives of Lynch (2009:502). First of all, when allocating resources the
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focal firm needs to consider the expected return on investment (ROI), both short-term and longterm. Finally, the allocation of funds must be supportive of key strategies, and the risk associated
must be considered in regards of both the return on investment as well as the opportunity costs
associated with allocating funds for the specific proposal.
4.4.4 Monitoring and control procedures
Many strategies are expected to deliver prime benefits in the medium term. However, many
strategies rely on complicated interacting projects to deliver anticipated benefits. It is such factors
that cause even the best defined strategies to deliver results later than expected. Lack of attention to
delivery indicates that benefits are diminished and arrive later than expected. Thus, a vital task of
the focal firm is to continuously monitor and control. “Management control will be simpler and
clearer where the basis of the actions to be undertaken has been planned in advance” (Lynch
2009:45). Thus, having a system which provides feedback and the modification crucial for
emergent strategy implementation is vital. Furthermore, the process of monitoring and control has
an iterate nature, which becomes vital as interaction, single relationships as well as the portfolio is
measured and monitored, but also in order to facilitate the continual strategic analysis (conducted in
first part). The units of monitoring and control may include several aspects. However, in regards of
the ESIM model, the units delineated include the portfolio of relationships, the perceived network
position and in relation to specific strategies. The interaction level might qualify as a candidate, but
in regards of the ESIM model, the analysis would be too wide-ranging.
In regards of the portfolio of relationships the three-dimensional customer classification matrix is
integrated and applied in order to monitor relationships in the portfolio (Ford et al. 2002:85).
Incorporated are three dimensions; relationship value, net price achieved and relationship costs.
Current relationship profitability equals the net-price achieved minus relationship costs, whereas
relationship value is connected with long-term potential, which may be expresses in terms of
volume, profitability, technological development or network access. This model is concentrated on
the aspects of monitoring the portfolio of customers. However, it may still be applied to the other
relationships in the portfolio, by integrating the dimensions accordingly. Thus, in regards of the
supplier portfolio current relationship profitability equals relationship value minus net price given.
Consequently, relationship value is in regards of the supplier dimension connected with long-term
potential expressed in more or less quantifiable terms (Ford et al. 2002:114); volume, number of
innovative ideas, cycle time, responsiveness, and improvements shown (i.e. adaptability), technical
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support, ability to communicate effectively, flexibility, inclination to collaborate and level of trust
(derived from the 4 stage model). Furthermore, other relationships may diverge highly to customer
and supplier relationships. However, monitoring them is still important, and performance indicators
may be rather similar to those of customers and supplier relationships. Thus, these indicators might
include in more or less quantifiable terms volume, number of innovative ideas, adaptability,
technical support, communication skills, flexibility, inclination to collaborate and level of trust
(derived from the 4 stage model). Finally, in regards of monitoring strategic initiatives, many of
these aspects might already be included in the monitoring of the relationship portfolio.
Nevertheless, focusing on vital performance indicators and key factors for success in relation to a
specific strategy is vital in order to monitor the wellbeing of the strategic initiative. These indicators
and key factors are distinct to the specific strategy, but are important to include in order to monitor
the progress of implementation.
5. Discussion
The idea of strategy is very important in the IMP tradition. However, no tangible IMP contributions
have so far integrated strategic management thinking by constructing a sound framework for
planned strategizing and management in B2B markets on the business strategy level. Three reasons
for this absence may be discerned in the outlined LR. Firstly, the IMP tradition proposes an
alternative view of strategy in opposition with that suggested by traditional strategic management
traditions. The IMP’s distinction to strategy varies, as the degree of control over key resources is
questionable due to interdependencies, both enabling and constraining the focal firm’s ability to
strategize (Baraldi et al. 2007:889). Secondly, the emphasis of IMP research has so far
differentiated from what the business practice demands (Brennan et al. 2008). Finally, the IMP
contributions in regards of strategy has primarily been located at the functional strategy level
(Baraldi et al. 2007:880), mainly due to its origin as an opposition to the traditional marketing
perspectives (Ford et al. 2003).
The aim of the ESIM model was to integrate strategic IMP contributions by utilizing and overall
emergent strategy approach, assisted by SAP practices in the development and implementation
phases. By proposing the ESIM model an alignment with proposals made in previous theoretical
work is made. The linkage between integrating IMP views and strategic management has thus
previously been proposed in the existing IMP literature (Ford et al. 2002; Ford et al. 2003; Gadde et
al. 2003; Tikkanen & Halinen 2003; Ritter et al. 2004; Baraldi et al. 2007; Baraldi 2008; Harrison et
62
al 2009; Harrison and Prenkert 2009; Harrison et al. 2010; and Zaefarian et al. 2010). Hence, by
proposing the ESIM model new theoretical developments are suggested by integrating IMP and
SAP perspectives applying an emergent strategic approach. Furthermore, the initiative of
constructing the ESIM model is based on the increasing amount of empirical research within the
IMP tradition, which identify discrepancy between how business are conducted in practice and the
strategic tools theoretically constructed for strategic purposes in practice. IMP concurs by empirical
evidence that a common mistake in B2B practice is to utilize one-way stimulus-response schemes in
which to external environment is targeted in accordance with specific variables, internally derived.
Instead a focus on both the constraints and opportunities derived applying a network perspective of
the B2B context is sustained. Novel contributions include the particular focus on strategic analysis,
development and implementation in regards of the five levels of actor, dyad, portfolio, connected
relations and network. These additionally entails delineating the consequences of the analysis on
these five levels and align the business level strategy to consider all the five aspects individually as
well as collectively (in regards of network picture and position). Finally, by incorporating a sound
implementation framework, an iterate process of development and implementation of strategic
initiatives is facilitated, which enable the focal firm to manage, initiate and react optimally and fast
to interaction in relationships embedded in the network.
5.1 Implications of the ESIM model
The theoretical implications of proposing the ESIM model are primarily related to the validity of
the model in regards of proposed relationships, hypotheses and variables. The ESIM model
proposed is not valid, as it has not been methodically validated and tested. In order to make the
ESIM model operational, the practical implications include a delineating of possible avenues for
further research. Initially the relationship between the variables included in the ESIM model needs
to be further validated. Particularly in regards of the provision of measurements of both degrees of
causal effects of the constructs and the strength of correlated relationships among the constructs.
Furthermore, identifying both moderating and mediating variables is also a necessity. In order to
derive these results, proper hypothesis testing is needed. In order to research these quantitative or
qualitative methodologies might be applied individually or in triangulation (Flick 2009).
Furthermore, by adopting IMP views into the strategic process of the ESIM model, an ambiguous
main implication which restricts the firm is derived. If: “relationships provide the context for all of
a firm’s external dealings, then this means that the firm is very restricted in its ability to develop
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independent strategy” (Håkansson et al. 2004:109). This reflects the challenges of integrating
relationship management and business level strategy with a focus on collaborative advantages, as
application thus becomes restricted due to the embeddedness of relationships in networks.
5.2 Limitations and remarks
Initially, in the wake of utilizing IMP views, deficiencies might be identified in the ESIM model,
due to the IMP approach dearth of managerial relevance, which it previously has been accused of
(Golfetto et al. 2007). Furthermore, IMP’s strategic perspectives have to date been criticized for
being “complex to conceptualize, neglecting intra-firm perspective and problematic in terms of
managerial guidance” (Baraldi 2007:889). Furthermore, in the construction of the ESIM model, the
lack of IMP literature - in regards of tangible conceptualization, corporate and business strategy
levels contribution – may have an influence in relation to compatibility of IMP and strategy in the
ESIM model. Another limitation includes the enduring re-assessment of the network position,
which poses practical difficulties exists in regards of obtaining and outlining the perceived network
picture a continual basis due to complexity, dynamic nature, restrained scope and magnitude.
Therefore, Henneberg et al. (2006:425) propose that “network pictures need to be collected in a
more systematic and possibly longitudinal fashion”.
As aforementioned IMP literature addressing the compatibility of the relationship between the IMP
tradition and business level strategy, is present in large numbers. Therefore, the ESIM
conceptualization utilizing the IMP traditions many valuable insights are needed in order to add
operational concepts for usage in companies operating on B2B markets.
Furthermore, in regards of utilizing the emergent approach to strategy, real companies often treat
this approach as limitations to the prescriptive approach. Although, the emergent approach might
facilitate good structures for adapting to fast changing environments, it may not allow companies to
fully incorporate a central strategic overview, where unified visions and resources are allocated on
beforehand in order to reach objectives. Therefore, in companies, where large investment decisions
based on sound analysis and historic events occurs, predefined structures are needed in order to
manage and control the process optimally (Lynch 2009). Accordingly, in regards of SAP, which
may be defined as an undeveloped tradition (Harrison et al. 2009) several inconsistencies may
affect the validity of the ESIM model. Initially, the SAP need to maintain substance by “bridging
the content-process dichotomy in the strategy literature, to link practices to the organization,
industry and environmental levels, and to consider the role of actors outside firm boundaries”
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(Baraldi et al. 2007:888). SAP’s validity or compatibility is yet to be proven in regards of these
challenges, thus imposing uncertainties to the constructing ESIM model.
In regards of the applied approach of the ESIM model, modest amounts of evidence exist in regards
of how the interplay between business strategy and relationship strategy fits and impacts on
performance. Furthermore, proper testing of the constructs, as well as value of the relationship and
network analysis in regards of appropriateness and fit with strategic development has not been
conducted. The framework of “practitioner, praxis and practice” proposed by Benson-Rae (2007)
was initially considered to constitute the main body of the implementation framework, as very
insightful considerations are made in regards of connecting strategic thinking within the three levels
of interaction to a responsive and dynamic emergent foundation. However, this was deselected as a
more tangible process of planned iterating activities was sought for.
Finally, collaborative advantages are enhancing SCA and AV, but the processes of how these
develop and may be consciously managed accordingly are due to complexity of systems difficult to
comprehend (Wilkinson 2008:269). The conscious use of agent based models (ABM) may be
applied the ESIM model. ABM’s are simulation models for managing complex systems and
providing a framework for understanding the systems (Wilkinson 2008:265). Additionally, Brennan
et al. (2009) discuss strategizing in industrial networks, by the assistance of computer assisted
approaches, i.e. primarily simulation models (categorize quantitative vs. qualitative models at
hand). The theoretical magnitude in relation to the usage of these models is limited. However, an
increasing attention is addressing is contemporarily present, as these models are particularly useful
when creating collaborative advantages (Wilkinson 2008:267). Thus, possibilities exist in regards of
consciously manage and monitor relationships effectively. Wilkinson et al. (2011) argue that the
dynamics and evolution of relationships and networks are not well understood. Thus, through agentbased simulating of business relationships and networks, their distinct nature may be delineated.
ABM models may therefore assist in the processes of analysis and implementation of the ESIM
model, as complex mathematical derivatives are used in order to explain and predict behavior.
6. Conclusion
With the increasing importance of business relationships and networks in B2B contexts, the need
for tangible tools for strategic management which take these aspects into consideration, are
becoming increasingly important. On the basis of these developments, the present thesis is initiated.
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In order to answer the first threefold research question, a LR was conducted in order to outline IMP
contributions. The first fraction of the question addressed the IMP traditions compatibility with
strategic thinking. The compatibility was scrutinized in regards of the two traditional strategic
approaches. It was concurred that the IMP and the prescriptive tradition of strategy differed highly
due to different assumptions, whereas the emergent tradition and tradition in contrary
complemented each other rather well. Due to several shared assumptions and viewpoints, numerous
IMP contributions have adopted emergent strategic thoughts. Furthermore, the integration of the
emergent tradition and the IMP tradition in regards of developing tacit strategic management
frameworks have been suggested on several occasions within the IMP tradition.
The second fraction of the first posed question regarded how IMP thinking addresses the issue of
strategy. In this connection IMP was deemed as being an alternative strategic tradition, as the focus
of the IMP view is on interactions in relationships, which are embedded in networks. Thus, as
traditional strategic thinking consider the firm as the main unit of analysis, IMP consider
relationships as the main unit. This affects how the value creational processes are assessed. The
IMP tradition therefore considers all actors influenced in this process as important players.
Directing activity and combining resources with counterparts in the network is then a necessity.
However, additionally consequences for the focal firm are derived using IMP views, as both
enabling and constraining factors are outcomes of being embedded in networks. This, imply that a
focal firm, in order to strategize, must identify the scopes for action within these constraints.
The final fraction of the first question, which concludes the LR, regarded an outline of IMP
contributions, which might be utilized for strategic purposes. The investigated were initiated by
categorizing the contributions into the three levels of interaction, relationship and network
accordingly. Thus, the purpose was to outline contributions at the three interrelated levels, in order
to straightforwardly apply valuable methods into the proposed conceptual strategic management
model, the ESIM model. In the LR, a compatible threefold relationship between IMP, emergent and
SAP viewpoints were identified, complementing and extending each other. Consequently, these
three main aspects were considered applicable in regards of constituting the holistic foundation in a
synthesized conceptual strategic management framework at the business strategy level. In the wake
of having outlined possible methods and aspects for developing a framework, a skeleton for
answering the second research question were supplied.
The second research question entailed the proposal of the ESIM model, which is a conceptual
model for strategic management at the business strategy level. An integration of IMP and SAP
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views embodied by an emergent strategic foundation was suggested. The configuration of the ESIM
model included three main constructs, namely strategic analysis, development and implementation.
The three analytical parts provided the stimulus required in order to create the purpose of the
organization, which was considered as an intermediate process. In the strategic development, a
SWOT outlined the possible strategic options derived from the analysis. The development process
included the utilization of methods on the three levels of environment, resource and relationship and
network, in which options pertinent to each level was distinguished. In the implementation process,
which is holistically connected with the development process, a basic implementation framework
procedure was suggested in order to consciously manage the strategic options chosen.
In extension of the framework, a thorough discussion of the implications of the suggested ESIM
model - both for future research and for managerial practice - concludes the paper.
67
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Appendix
Figure 1:
(Adopted from Lynch 2009)
Figure 2:
72
(Adopted from Ford et al. 2003)
Figure 3:
(Adopted from Ford et al. 2002)
73
Figure 4:
(Adopted from Ford et al. 2002)
Figure 5:
74
(Adopted from Ford et al. 2003: p. 51)
Figure 6:
(Adopted from Ford et al. 2003)
Figure 7:
(Adopted from Ritter et al. 2004)
75
Figure 8:
(Adopted from Benson-Rae 2007)
Figure 9:
(Adapted from Lynch 2009: p.1)
76
Figure 10:
The nine basic steps:
1. Environmental basics – Three basic areas that need clarification before starting the
environmental analysis: Market definition and size (annual sale, substitutes and competition
important for attractiveness), market growth and market share.
2. Degree of turbulence - is a model directed at identifying the extent to which the dynamics of
the environment impacts the strategy of companies in a given industry.
3. Analysis of the macro-environment (PESTEL) - and is a framework utilized for analyzing
the external environments, although it should be regarded as a checklist. It functions as a
tool utilized in order to get an overview of the competitive environment, thus being able to;
identify key influences, apprehend interconnections between entities as well as events
4. Analysis of stages of market growth (ILC) - is a model utilized in order to assess the growth
and development of an industry or a segment in the industry. Four phases are normally
identified in this model, including phases of introduction, growth, maturity and decline.
Thus a variety of opportunities and threats are allocated in the different phases.
5. Analysis of key factors for success (KFS) – are usually defined as the resources, skills and
attributes of a firm in an industry that are essential to deliver success in accordance with the
objectives of the firm (Lynch 2009:94). However, utilizing the analysis of KFS does not
necessarily differentiate the firm from other players in the market, as most KFS are highly
related to the industry. In order to identify the most vital elements of the environment for
further exploration, the KFS can be utilized, as these in a given industry, are identified
through an examination of the resources used and the way in which resources are employed.
To identify KFS’s, three areas are normally analyzed (Ohmae’s three C’s), consisting of
customers, competitors and corporation.
6. Analysis of industry structure (5-forces) - a framework for analyzing the competitive
structure in an industry. The model consists of all types of actors who have or might have an
influence on the structure. The goal of the framework is to find an optimal position in the
industry where the firm can, defend itself against, or influence the five forces. Furthermore,
the framework enable a firm to scrutinize the attractiveness of the industry operated in or
other possible industries, enabling it to determine how to form its strategies in order to
develop opportunities in the surrounding environment. The five forces consist of market
competitors, suppliers, buyers, substitutes and new entrants.
77
7. Analysis of co-operation in the industry (Lynch 4 links) - ) is utilized in order to assess;
primarily opportunities, but also threats, that arise as a result of the formal and informal cooperative linkages and networks, complementors and government links and network in
which the firm operates with and around. The analysis assists the firm in establishing the
strength and nature of the co-operation that exist between it and its environment. Thus, the
analysis derived can identify which network to harvest and further develop and which to
reduce.
8. Competitor analysis – continously made
9. Customer analysis - continously made
(Integrating from Lynch 2009)
Figure 11:
(Adopted from Ford et al. 2003)
78
Figure 12:
(Adapted from Ford et al. 2002)
Figure 13:
(Adapted from Ford and Mouzas 2007)
79
Figure 14:
(Adopted from Håkansson et al. 2009: p. 68)
Figure 15.
(Adopted from Ritter et al. 2004)
80
Figure 16:
(adopted from Henneberg et al. 2006)
Figure 17:
(Adopted from Lynch 2009)
81
Figure 18:
(Adapted from Holmlund 2004)
Figure 19:
(Adapted from Håkansson 2009)
82