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A Study of Network Forms of Business Organization

Department: Laboratory of Network Organizational Forms
The project has been carried out as part of the HSE Program of Fundamental Studies.

In research devoted to network forms of organization, business relationships between organizations are seen as intangible assets and sources of a competitive advantage. Studies that identify patterns of the dynamics of network forms reveal the key characteristics of the most common types of networks and suggest the techniques available to assess how the results of a network’s operation contribute to the implementation of competitive advantages. This abstract reveals the most significant results of a study of network forms of business organization, conducted in 2011 on the basis of Russian companies.

Research Object: Inter-company interaction

Research Purpose: To study customer orientation as a basis for inter-firm coordination and the influence of external conditions on the formation of innovation-active, inter-firm networks. In particular, the following tasks are considered:

  • The analysis and systematization of existing approaches toward managing "supplier-buyer" relationships;
  • Selecting and ordering the factors that determine the importance of customer orientation as a source of a sustainable competitive advantage for the companies within the network;
  • An analysis of models to strengthen the focus on the client, and further development of instruments for the purpose of assessing the performance of network inter-firm relations;
  • A study of the external environment of potential participants in inter-firm innovation networks; innovative business organizations; and verification of the model of innovative business development using statistical data;
  • Testing individual findings in the theoretical analysis on the basis of material taken from a pilot survey of Russian companies by using a survey-structured questionnaire and a case study method.

A range of methods, including inductive and deductive methods, case studies, in-depth interviews with experts, and interviews with a structured questionnaire, statistical methods of analysis, and modeling were employed in the research. The logic of dyadic analysis of the relationships between supplier and buyer was implemented in the context of modern marketing with a focus on customer orientation as a basis of coordinating complex chains of inter-firm relationships.

Empirical Base of the Research: The results of field studies conducted by the authors in 2009-2011, Russian and international official statistical data, and materials about companies and organizations published in the press and online.

Research Results: For all the aforementioned points, meaningful results were obtained.

The concept of "customer orientation" is analysed in detail and represented by the variety of its interpretations. Meaningful customer orientation is considered in the context of its impact on company performance and on the process of new product development. Based on an analysis of the existing approaches to the definition of customer orientation, a generalizing concept of customer orientation is proposed. It is concluded that significant restrictions can be established for investigating customer orientation outside of the scope of chain interactions.

The analysis of the structure and agents of interactions highlights current approaches to defining the relationship system of a company, identifies the role and place of client interactions in the system of relationships and the influence of others agents on the company’s client orientation. The study compares the characteristics of the system of relationships in b2b and b2c markets, and identifies the key issues and tools used in these areas. It is shown that, in addition to the structural elements of the relationship system, the dynamic component of the interactions is extremely important as it reflects the development of relations between actors. A universal model of relationship development, consisting of four phases, is proposed.

In order to make operational the concept of customer orientation in the framework of this process model, a comprehensive analysis of the measurement indicators of customer orientation (a customer-orientation scale assessment) is developed. As a result of this analysis, it is concluded that the existing tools do not match practical management tasks, and a new approach must be developed to evaluate customer orientation based on the interaction between companies in the relationship network (a relational approach).

With regard to the shortcomings of existing approaches, a new model is developed. It includes the regulatory orientation to the client in the process of building and developing relationships. In the proposed model, the basic elements of the concept of customer orientation that were previously developed (gathering and processing information and coordination mechanisms of adaptation, etc) are combined with the proposed model of relationship development. The level of customer orientation in this case can be interpreted as the result of company activity, the company's ability to effectively develop and maintain relationships with customers, creating added value, and specifically manage the transition from one level of customer orientation to a higher level.

The proposed model was tested on three applied research projects studying management practices of developing relationships with customers. Researchers of the scientific laboratory of network forms of organization from the Faculty of Management were involved in these projects.

A study is conducted of companies operating at different levels regarding the integration of their activities, and guidelines are developed for the organizations to monitor the indicators to measure activity on an inter-organizational level. The main result of the study – from a theoretical and methodological perspective of inter-organizational interactions of companies in inter-firm networks – is clarification of evidence of a network organization in the inter-organizational activities of companies and development of the system of indicators for assessing evidence of a network organization, which includes 50 indicators combined into four groups on the network’s grounds.

Based on the methodology and results of the pilot survey of iterative inter-organizational activities, an approach is developed that specifies the networks as objects for research on the inter-organizational level of a company that in the future will exploit the potential of inter-firm linkages for the development of network competition.

A system of performance planning and evaluation activities at the inter-organizational level is developed. It includes 123 indicators divided into four groups (economic, indicators of interaction with partners (suppliers and customers), indicators of the organization of internal business processes, and measures of human capital) for the three systems of business organizations (informational, operational, and management system). On the basis of organized monitoring, a statistical base of indicators is collected for the enterprise at various levels of management, and guidelines are developed for the organization regarding the monitoring of indicator performance at different levels.

A pilot field study was completed in 2011 on the environment of potential participants of inter-firm networks—innovative business organizations, an in-depth analysis of the conditions and results of inter-firm networks and clusters, both in Russia and in other countries. On the basis of the World Economic Forum (WEF), reports on indicators that collectively define the evaluation of the global competitiveness of the countries these indicators and relationships between them were analyzed, directly or indirectly associated with the estimates of the conditions and results of inter-firm networks and clusters. The correlation matrix, which characterizes the indicator relationships, confirmed the hypothesis of a close correlation of indicators. The two most closely related indicators that characterize the economy's competitiveness – and to a large extent determine the results of inter-firm networks and clusters – were highlighted: (1) the nature of competitive advantage, (2) the degree to which exporting companies participate in the value chain.

For the modeling of changes in conditions and results of inter-firm networks, a verification and refinement of the parameters of the previously proposed and tested model was conducted. The model was originally designed to analyze the impact of environmental factors, in particular, the owners of the perceived probability of loss of ownership of the results of the development of innovative businesses. The final report presents the results of model calculations made in 2011 using the updated results of a pilot study on the environment for business development, varying initial data with the possibility of mitigating adverse factors.

The results of the study 2011 of network forms of business organization provide opportunities for the development of future directions for research in this area, including more in-depth study of network coordination mechanism, which can be analysed on the basis of actual constructed chains of interaction, emerging in the market in the process of creating value for the customer.


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