L5: Relational

Question 1

Dyer & Singh (1998): Realtional view

Answer 1

The relational view posits that firms can achieve and sustain competitive advantage through relationships and strategic alliances. Unlike the industry-based view, which focuses on external forces shaping competition, and the resource-based view, which focuses on internal resources, the relational view underscores the strategic importance of cooperation between firms to unlock unique advantages (E.g. VISA is dependent on partnerships).

Question 2

Relationship-specific assets

Answer 2

Partnership that make investments in specialized tool/tech for a joint project. Dependency and mutual benefit.

Partnerships should 1) have a certain length of a safeguard and 2) the volume of transactions

Question 3

Knowledge-sharing routines

Answer 3

Effective knowledge-sharing mechanisms enable firms to exchange valuable information –> innovation and efficiency.

The greater the commitment in knowledge sharing, the greater potential (+ transparency and absoption)

Question 4

Complementary resources and capabilities

Answer 4

The combination of diffrent but complementary resources (tech, market acces, expertise) –> joint creation of unique

The greater the synergi resources (VRIN), the greater potential

Question 5

Effective governance

Answer 5

Effective governance will lower transaction costs or make them realize opputunities through a combination of assts, knowledge or capabilities.

The greater ability to align (transaction costs minimizing and value maximizing) + trust in each other, the greater potential

Question 6

Relational competitive advantage (advantage=rents)

Answer 6

1. Relationship-specific assets
2. Knowledge-sharing routines
3. Complementary resources and capabilities
4. Effective governance

Question 7

Mechanisms that Preserve Relational Advantages (Advantages=Rents)

Answer 7

Other firms can not just do partnerships and get the same competitive advantage. Due to: Causal ambiguity and time compression.

Furthermore these also makes it harder for competitors:
Interorganizational Asset Interconnectedness: dependency of co-developed assets between partners

Partner Scarcity: limited availability of equally capable partners

Institutional Environment: External factors can impact partnerships.

Question 8

Grant (chapter 10): Vertical Integration

Answer 8

It is driven by the desire to reduce transaction costs associated with outsourcing with independent suppliers.
When a firm does vertical integration –> control over inputs, better technology, and it can minimize costs.
However may involve increased operational complexity –> higher costs and less flexible

Question 9

Grant (chapter 10): Designing Vertical Relationships

Answer 9

Long term contracts:
stabil og forudsigelig forsyning af varer eller tjenester mellem virksomheder over længere tid –> reducerer usikkerhed

Vertical partnerships:
samarbejdsorienterede relationer, hvor virksomheder arbejder tæt sammen for at optimere deres operationer og dele ressourcer –> fleksibelt

Franchising:
Franchise –> kombinerer fordelene ved en strømlinet struktur og decentraliseret drift

Question 10

Grant (chapter 10): Diversification motives

Answer 10

Growth: Companies seek to outgrow their primary industries, particularly in low-growth sectors

Risk Reduction: This diversification can reduce the variance in cash flows, but it does not necessarily translate into shareholder value due to systematic risk.

Value creation: Porter’s “Essential Tests”: The new unit must gain competitive advantage itself or give the big company a advantage (Sony Music)

Question 11

Grant (chapter 10): Competitive Advantage from Diversification

Answer 11

Economies of SCOPE: Sharing resources across multiple products can create cost savings –> competitive advantage.

Internalizing Transactions: Reducing reliance on external partners by integrating capabilities internally –> less price sensitive + better control

Parenting Advantage: The diversified company can facilitate better resource allocation (allocation of labour or money)

Question 12

Slides: Boundaries of the firm

Answer 12

Our “New” Corporate Theory might impact other resources/capa/compe.
This triggers the question about boundaries (what is part of the firm and not).

Vertical boundaries: appears through transaction costs (search costs (finding the right partner), contracting, monitoring).

Horizontal boundaries:
Horizontal integration (increasing control over a firm’s competitors: M&A), Diversification strategy (extended product scope), geographic expansion