Trust-building in a coopetitive multi-supplier network

Pages146-164
Date03 June 2019
Published date03 June 2019
DOIhttps://doi.org/10.1108/JOPP-02-2018-0003
AuthorMarkus Järvinen
Subject MatterPublic policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public finance/economics,Taxation/public revenue
Trust-building in a coopetitive
multi-supplier network
Markus Järvinen
Department of Leadership and Military Pedagogy,
Finnish National Defense University, Helsinki, Finland
Abstract
Purpose Alliances are an importantform of cooperation in the contemporary world. Although most of the
different alliances have been rigorously studied, one type of alliance has been neglected: a multi-supplier
network forcing potential competitorsto cooperate. The purpose of this kind of network is to develop and
maintain complextechnological systems, such as ICT systemsfor the public sector. The coopetitive natureof
the network poses numerous difcultiesfor productivity. This paper aims to explore how trust-buildingcan
mitigatesuch difculties.
Design/methodology/approach The data were gathered via 16 semi-structured interviews and analyzed
using data-driven content analysis. The respondents were representatives of the private and public sectors in
Finland, tasked with building an ICT system for the Finnish Defense Forces in a multi-supplier network.
Findings The paper found that trust-building is inuenced by structural and functional factors. For
example, roles and responsibilitiesemerged as an important structural factor, and communication was seen
as a crucial functionalfactor.
Practical implications The paper identies factors that have to be managed properly for a multi-
suppliernetwork to function effectively and efciently.
Originality/value The paper positionsthe multi-supplier network within the alliance framework. It also
contributesto the literature on trust by identifying factorsthat inuence trust-building.
Keywords Trust, Network, Collaboration, Efciency, Effectiveness, Relations
Paper type Research paper
1. Introduction
Alliances can help combine resources and reduce uncertainties (Doz and Hamel, 1998). The
problem is, however, that the respective partners may be simultaneously cooperating and
competing (Castiglioni, et al., 2015;Bengtsson and Kock, 2000). This kind of interpartner
competition, [orcoopetition], exists when a partnertries to maximize its private interestsat
the expense of thealliance or the other partner(Krishnan, et al., 2006,p. 896). In other words,
coopetition is dened as a partially convergent interest (and goal) structure where both
competitive and cooperative issues are simultaneously present and strictly interconnected
(Dagninoand Padula, 2002,p.9).Thisposesdifcultiesand potential pitfallsfor the alliance.
This article aims toexplore how these difculties can be mitigated by building trust.The
data were gathered by means of semi-structured interviews and analyzed using iterative
data-driven content analysis. The interviewees are working on a project aimed at
incorporating an agile development process into Finnish Defense Force ICT system
acquisitions, namelythe Fox (Kettu in Finnish) project.
The author would like to thank the Military Science Research Foundation and Werner Hacklins
Foundation for nancial support during my leave of absence.
JOPP
19,2
146
Journalof Public Procurement
Vol.19 No. 2, 2019
pp. 146-164
© Emerald Publishing Limited
1535-0118
DOI 10.1108/JOPP-02-2018-0003
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1535-0118.htm
The article focuses, rst, on positioningthe multi-supplier network in the current alliance
literature. Second, the concept of trust is dened and an overview of the literature on the
subject is provided. Third, the methodological choices are explained. Fourth, the results of
the analysis are described.Finally, the implications of the results are discussed.
1.1 Alliances
The type of alliance under study is a coopetitive multi-supplier network, which is an alliance
used by the public sector in many elds, particularlyin acquisition projects. As such, it has
not been recognized in the alliance literature.Hence, a denition is arrived at in the Findings
section because it relies on the interviews conducted for this article as well as unofcial
conversations.This section focuses on mapping out the alliance literature andon identifying
how the coopetitivemulti-supplier is positioned in respect of other alliances.
A vast amount of research has been conducted into the subject of alliances and most
types are well-documented.The research has mainly focused on the private sector or public-
private partnerships.However, these perspectives do not entirely describethe functioning of
a coopetitive multi-supplier network. Das and Teng (1998) separate alliances into three
categories, arguing that the most frequently used alliance structures are joint venture,
minority equity allianceand non-equity alliance. A joint venture is a separate but jointly run
entity; a minority equity alliance involves one or both parties taking an equity stake in the
other company, while non-equity alliances are merely contractual arrangements. All of the
above can involve two or more partners. Coopetitive multi-supplier networks are neither
separate entities nor do they involve equity arrangements. To some extent, they can be
categorized as non-equity alliances. However, as will be shown, the theory doesnot entirely
apply to the alliances used by the Finnish Defense Forces (FDF). Non-equity alliances are
heavily regulated by contracts (Das and Teng, 1998). Multi-supplier networks, on the other
hand, do not necessarily have extensive contracts. In other words, suppliers are forced to
cooperate and share informationwith each other while only having limited legal protection.
Therefore, some otherform of regulation needs to be considered.
Buyer-driven value chains are networks with characteristics similar to the coopetitive
multi-supplier network. They are commonly used in commodity chains where tiered
networks of contractors manufacture nished goods, such as sneakers, for the buyer
(Geref,1999). However, multi-supplier networks do not focus on manufacturing simple
goods but have a complex innovating purposeinstead, which fosters the view that the multi-
supplier network shouldbe regarded as a different entity. This aspect will also be elaborated
in the Findings section, as the notions are based on the interviewdata.
The literature discusses strategicalliances, multilateral alliances and hybrid networks. A
strategic alliance is an interrm cooperativearrangement aimed at achieving the strategic
objectives of the partners(Das and Teng, 1998, p. 491). In a multi-supplier network, every
actor has strategic objectives. The question is, however, the importance of the alliance for
the achievement of the goals. The alliance can be presumed to be crucial for the prime actor
because the latter cannot acquire the capabilities without it. On the other hand, most of the
goals of the suppliers can be achieved without the multi-supplier network. Naturally,
some companies, especially smaller ones, may have strategic objectives involving, for
example, growing market value through cooperation with the FDF. Nevertheless, on the
larger scale, strategic objectives involving multi-supplier networks are presumed to be
exceptions here. Hence, a multi-suppliernetwork cannot be identied as a strategic alliance.
In addition to strategic alliances, multilateral alliances are dened as strategic alliances
whose main function is to compete with other similar alliances or single actors (Das and
Teng, 2015). This notion does not apply to the kind of network in question either: the
Coopetitive
multi-supplier
network
147

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