Networks as a source of competitive

Networks as a source of competitiveness
The view of networks as reflected in recent research by the Swedish school of networks (Håkansson and Snehota, 1995; Gadde and Håkansson, 2001; Blankenburg-Holm et al., 1998) is of individual relationships as parts of a larger whole – a network of interdependent relationships. Relationships are connected since what happens in one relationship affects positively or negatively the interaction in others. Hence, what happens in a relationship between two companies does not only depend on the two parties involved in the relationship, but also on a number of other direct or indirect relationships in which the two parties are involved. This approach to networks, as advocated by the Industrial Marketing and Purchasing Group (IMP), e.g. Ford et al. (1998), suggests that as a result of the complex interdependencies of networks, organisations may only manage, rather than control or co-ordinate in networks. This view contrasts with that of proponents of strategic networks (Jarillo, 1988; Lorenzoni and Baden-Fuller, 1995) where a strategic centre or “hub” of a network attempts to strategically direct the activities of firms in the network.
The strategic view of networks maintains that organised, co-ordinated networks sustain inter-firm collaboration and may contribute to the competitiveness of network members (Romano and Vinelli, 2001). Cunningham and Culligan (2000) made a study focussed on competition and the competitive process within industrial markets by investigating the way in which firms both create and sustain competitive advantage. They argued that despite the co-operative nature of many business relationships the predominant force behind these relationships is the search for competitive advantage. Taking this competitive view of relationships implies that companies need to possess and offer competitive advantages superior to those of competitors. Being part of a network may enhance the capabilities of a company, through gaining access to others firms’ resources and capabilities, thus broadening the scope of services offered. Kanter (1989) states that organisations see an opportunity to gain an immediate (but perhaps temporary) competitive advantage through alliances and partnerships and that these relationships may provide collaborative advantages. In developing and sustaining collaborative relationships, firms may develop a critical resource for internationalisation and inter-firm learning. Collaborative relationships open up possibilities that would not exist for firms acting alone (Kanter, 1994). Co-operative arrangements between firms can help small firms compete with larger firms, as through these collaborative relationships firms may gain flexibility and speed of access to new capabilities, accruing the benefits of the resources and skills of another organisation, but without the concomitant risks and responsibilities that come from ownership. Blankenburg (1995) suggests that within business networks, the emergence of mutual commitment in relationships over time leads to the development of interdependent activities and resources, increasing the level of productivity across the network. Business networks may, therefore, be considered a valuable source of capabilities, resources and possible competitive advantages. Through involvement in networks of business activity, firms may develop new business opportunities and gain access to stronger support structures of resources and capabilities against competitors and thus potential sources of international competitive advantage to leverage in relationships with customers.
A research situation: networks in the freight forwarding industry
Recent collaborative trends in the freight forwarding industry have been centred around strategic alliances which have the aim of developing access to worldwide networks (Krause, 1999). Indeed, a number of alliances between airlines and freight forwarders have recently been announced, such as the case of Deutsche Post, which has either acquired or developed alliances with many companies in the last two years, including major international forwarders such as Switzerland’s Danzas and Air Express International (the largest US-based international freight forwarder). The new company known as Danzas-AEI will be the largest freight forwarder in Europe and the world’s largest air forwarder (Sowinski, 2000). However, according to Gooley (2000), these alliances may be beneficial for large firms but small- and medium-sized forwarders will continue to have an important role in international supply networks. Despite all the technical advances, freight forwarding remains a “people business” and shippers seek out the personal service provided by many small- and medium-sized forwarders.
Bradley (1999) states that several years ago researchers predicted failure in the freight forwarding industry as a result of many forwarders being unable to compete with integrated carriers that controlled every step of the transportation process. However, more recent research shows that freight forwarders are in a growth position, relying on specialist areas of expertise which are enabling the forwarding industry to grow and succeed (Bradley, 1999). Forwarders have an advantage in their variable cost structure, as they do not own or operate fixed transportation assets (like aircraft), they can react quickly to changing market conditions, for example through purchasing less space from their carrier partners. The flexibility of the forwarders’ service offerings through doing business with many different carriers, enables them to offer a wide range of transportation modes. Recent technological developments in Internet-based communications are allowing even small