Co-opetition in logistics and supply chain management research

Citation

Kovacs, G. and Spens, K. (2013), "Co-opetition in logistics and supply chain management research", International Journal of Physical Distribution & Logistics Management, Vol. 43 No. 7. https://doi.org/10.1108/IJPDLM-05-2013-0091

Co-opetition in logistics and supply chain management research

Article Type: Editorial From: International Journal of Physical Distribution & Logistics Management, Volume 43, Issue 7

About the Editors

Gyöngyi Kovács is Professor of Supply Chain Management and Corporate Geography at the Hanken School of Economics in Helsinki, Finland, and the Director of the Humanitarian Logistics and Supply Chain Research Institute (HUMLOG Institute). Dr Kovács has received her PhD from the Hanken School of Economics in 2006. She has published in the Journal of Business Logistics, International Journal of Physical Distribution and Logistics Management, International Journal of Production Economics, among others. She has edited a book on Relief Supply Chain Management for Disasters (IGI Global, 2012), and contributed to many others. Her research interests include logistics research and teaching methods, corporate responsibility in supply chains, reverse logistics, supply chain collaboration, and humanitarian logistics. She is a Regional Editor of the International Journal of Physical Distribution and Logistics Management and Co-Editor-in-Chief of the Journal of Humanitarian Logistics and Supply Chain Management.

Karen M. Spens is the Dean of Education and Professor of Supply Chain Management and Corporate Geography at Hanken School of Economics in Helsinki, Finland. She earned her PhD from Hanken in 2001, and has since published articles in numerous logistics journals such as the International Journal of Logistics Management, International Journal of Physical Distribution and Logistics Management, and disaster management journals such as Disasters, and Disaster Prevention and Management. She is a Regional Editor of the International Journal of Physical Distribution & Logistics Management and Co-Editor-in-Chief of the Journal of Humanitarian Logistics and Supply Chain Management. She has also edited several special issues for different journals. Her research interests include humanitarian logistics, health care-related research and methodological issues in logistics and supply chain management.

Supply chain management (SCM) research frequently emphasizes the importance of concepts such as trust, dependence, and collaboration. The main argument for various levels of co-ordination, co-operation, collaboration and even the notion of seamless integration is to enhance performance. In a review of the book, The New Supply Chain Agenda, Stank et al. (2011) suggest areas for future academic research to aid scholars and managers improve SCM performance. The areas the authors identify for future research lie within the broad topics of talent management, technology, internal integration, external collaboration, and change management. However, showing improved performance through collaboration may be an elusive “holy grail” since even from a contingency theoretical perspective, Chavez et al.’s (2012) research does not show a positive impact for integration on performance. In fact, the study findings indicate that increased supplier integration results in negative effects on performance suggesting that supplier integration introduces rigidity within the supply chain that works against competitive, flexible resource configurations.

Despite all the focus on collaboration, competition between firms and – as Christopher (1992) points out – between supply chains, is not to be forgotten. In fact, the notion of supply chain vs supply chain competition highlights the importance of leveraging within- and between-firm integration to organize supply chain resources to enhance firm as well as overall supply chain competitiveness. Thus, collaboration and competition are not exclusive opposites. Rather, the issue becomes one of co-opetition, i.e. simultaneous co-operation and competition between organisations.

The papers included in this issue provide an opportunity to review the concept of co-opetition, which has increasingly attracted attention in other fields, though not so much in the field of logistics and SCM. Co-opetition or coopetition, as it is sometimes spelled, is a concept coined in the mid-1990s, connoting simultaneous competition and co-operation (Bengtsson et al., 2010). A quick look at the keywords of competition and co-operation (search in all fields) together with logistics and SCM reveals that the concept of competition is used in close to 40,000 articles, and that co-operation has approximately half of the number of hits (22,000). However, the number of papers on co-opetition is on the rise, in fact exponentially so. Wojciech et al.’s (2012) study identifies around 160 papers on co-opetition (through May 2011), and replicating the search, we found 277 two years later. Yet, the increasing attention devoted to co-opetition still pales in comparison to the vast number of studies that examine competition and co-operation as separate topics.

The co-existence of collaboration and competition

In academic as well as practitioner literature, many have been credited with inventing the term co-opetition, however, its principles and practices were only fully articulated in the 1996 book, Co-opetition, by Harvard and Yale Business Professors, Adam M. Brandenburger and Barry J. Nalebuff. Co-opetition entails sharing of knowledge in order to gain competitive advantage, but the paradox is that the knowledge shared might also be used for competition (Loebbecke et al., 1999). Co-opetition, as defined by Brandenburger and Nalebuff (1996), is a business strategy based on a combination of cooperation and competition, derived from an understanding that business competitors can benefit when they work together. The co-opetitive business model is based on game theory a scientific approach for understanding various strategies and outcomes through specifically designed games.

Brandenburger and Nalebuff’s (1996) co-opetition model starts with a diagramming process called the “value net”. The value net is represented as a diamond shape, with four defined player designations at the corners: customers, suppliers, competitors and what they call “complementors”. Complementors are players whose product adds value to the business under scrutiny. For example, software products gain value because hardware products co-exist with them and vice versa. The co-opetition model defines a competitor as a player whose product makes the focal product less valued. Interestingly, the concept of complementors is less evident in supply chain research where the focus has shifted to describing co-opetition as being between competitors that simultaneously compete and collaborate (Bengtsson and Kock, 2000).

Rather, the growing body of co-opetition literature provides, on the one hand, theoretical insights into the co-opetition concept and, on the other hand, a critical link between co-opetition and financial performance and market share. Wojciech et al.’s (2012) research study contends that the concept of co-opetition has developed taking two main directional paths:

a positive sum market game; and

the value network perspective.

The value network perspective has quite different foundations and flavour from the dominant body of research on co-opetition that is rooted solely in economics. Thus, according to Tsai (2002) multi-directional learning and benefiting from one another, while simultaneously competing for internal resources and external market share is possible.

More recently, Bengtsson et al. (2010) show how the interaction in more stable co-opetitive contexts differs from the interaction in complex and dynamic business contexts. Co-opetition in stable contexts is described as the combination of a competitive regime, where businesses strive for a dominant position and related competitive advantages, and a co-operative regime with well-established co-operative relationships and strong ties between partners. Co-opetition in the complex and dynamic context was on the other hand strongly circumscribed by other network relationships as powerful customers affected, directed or defined the competitive part of the relationship.

A supply chain view on co-opetition

In one of the few logistics and SCM articles that uses the term co-opetition in its title, Kotzab and Teller (2003) state that co-opetition is “a revolutionary mindset that combines competition and cooperation”. In contrast to value-adding partnerships, co-opetition includes horizontal collaborative relations as well as competitive relations in vertical and horizontal directions at the same time. Overall, the paradox or “schizophrenic” notion of collaborating with competitors has been regarded as a vivid form of competition and a “win-proposal” (Kotzab and Teller, 2003).

Strategic alliances with competitors often centre on infrastructure or technology development with horizontal collaboration built around oligopolies (Cetindamar et al., 2005; Gurnani et al., 2007; Zhang and Frazier, 2011). Zhang and Frazier’s (2011) co-opetetion model follows Brandenburger and Nalebuff’s (1996) original articulation of the concept that is based on the assumptions of game theory. Similarly, Bakshi and Kleindorfer (2009) apply game theory to illustrate co-opetition to mitigate supply chain disruptions due to terrorist attacks and natural hazards. Importantly, however, Zhang and Frazier (2011) suggest that only “weak” activities should be outsourced to a competitor. A similar divide between competitive and collaborative forces is found in Fernie’s (2004) discussion of co-opetition that uses examples of Benetton and Zara to illustrate the concept. Fernie suggests a division whereby capital-intensive parts of operations should be kept in-house – these are the elements the supply chain would compete on – while collaboration should be targeted to labour-intensive parts of production.

An interesting way to address the concept of co-opetition is to follow a front-office – back-office divide. Thus, Zineldin (2004) proposes that while companies compete in the market place, they collaborate at least upstream in their supply chain. Others see co-opetitive forces within the supply chain as a way to increase the competitiveness of an entire industry or an industry cluster. For example, Cetindamar et al. (2005) suggest that horizontal collaboration in technology development and technology diffusion leads to more research and development in the industry – in their case the Turkish textile industry – overall. Similar endeavours exist in the co-opetition of ports. For example, the Port of Brisbane co-ordinated the refitting of their port infrastructure and capacity expansion with other Australian ports in order to promote Australian ports as a destination for newer and larger container ships in the ULCS category. Without this co-ordination of efforts, these vessels may not have considered Australia as a potential destination. Currently the Port of Melbourne is being refitted and the expectation is that, once that project is finished, the competitiveness of the Port of Brisbane will be favourably impacted (Ship-Technology.com, 2012).

The concept of co-opetition is also applied to due diligence processes and (environmental) audits in SCM (Wild and Zhou, 2011). Although Wild and Zhou’s study examines the application of due diligence in pooling efforts between NGOs, joint third party audits are becoming the norm in business for the assessment of environmental and social criteria at supplier sites. Again, two aspects of co-opetition are accentuated: that co-opetition leads to lower overall costs, and that only non-critical activities are collaborated upon.

An interesting and contrasting application of the co-opetition concept is in humanitarian supply chains where humanitarian organizations co-ordinate with each other on the critical activities to disaster relief but may also compete for media attention and funding (Kovács and Spens, 2010). Humanitarian organisations have started to share needs knowledge, have established a number of co-ordination mechanisms, common processes and so forth. For example, there is a joint template for needs assessment put forward by The Chartered Institute of Logistics and Transport in the UK (CILT UK) together with The Humanitarian and Emergency Logistics Professionals (HELP). Co-ordination mechanisms include the United Nations Joint Logistics Centre that was later absorbed by the Logistics Cluster, to communities of practice such as the Humanitarian Logistics Association. The establishment of such organisations, co-ordination mechanisms and platforms, and as of late, also common standards, answers the call for more co-ordination in disaster relief. There are even endeavours to establish purchasing consortia for humanitarian organisations. Another recent co-ordination mechanism is the consolidated appeal process (CAP) that is overseen by OCHA and brings humanitarian organisations together in their funding appeals for major disasters. Notwithstanding these developments, competitive forces still exist in the bid for public awareness and funding. Generally speaking, however, co-opetition in the humanitarian sector follows a front-office – back-office divide, with logistics and SCM falling under back-office, more collaborative activities.

The papers in this issue

Co-opetition per se is not the topic of any of the papers in this issue. However, the two forces of co-operation and competition are found, which prompted the idea of re-introducing and highlighting the notion of co-opetition as a potentially fruitful area for theory development in strategic logistics and SCM research.

Although the supply chain competition concept has emerged during the past decade as the way firms will compete in future, there is limited academic research on mechanisms through which such competition can occur. Most of the extant research on supply chain vs supply chain competition focuses on theoretical conceptualizations without providing a corresponding practical platform through which such conceptualizations may be operationalized. The paper “Interaction: a new focus for supply chain vs supply chain competition” by Antai and Olson uses the ecological niche theory and presents an operationalization through which the concept of supply chain vs supply chain competition may be realized. The paper proposes interaction as the means by which competition between supply chains may be undertaken. One important point stressed by the authors is that even though these interaction points form the basis of the competition, it is important to understand that the supply chains that take part in the competition are independent entities and are therefore capable of deciding whether or not compete. Building on Antai and Olson’s study research by investigating the general predisposition of supply chains to compete and the conditions under which such competition is chosen represents an intriguing possibility for future research.

Based on the continued high failure rate of logistics alliances, the second paper by Brekalo, Albers, and Delfmann proposes that the dynamic capabilities approach can be incorporated to explicate logistics alliance performance. Alliances have been widely studied in the logistics field, however, only a few studies have attempted to link logistics alliance performance to the existence of specific organizational capabilities of the involved firms. In order to reveal the complex and evolving nature of the dynamic alliance routines, the authors suggest that future data collection should focus on gaining a deeper and more comprehensive understanding with regard to the specific logistics alliance context under investigation. The authors’ suggestion regarding the use of longitudinal studies might also be useful for researchers interested in further developing of this line of thought.

In the third paper, Zhang and Huo investigate the joint influence of dependence and trust in supply chain relationships on supply chain integration (SCI) and financial performance. The study develops a dependence-trust-SCI-performance model and tests it using structural equation modelling with empirical data from 617 manufacturers in China. The study proposes, based on the results, that manufacturers should manage dependence and trust in supply chain relationships simultaneously to enable SCI. In addition, the study highlights the unique national culture of China with high power distance, collectivism, long-term orientation and Guanxi networks in which the concept of inter-organizational relationships may be unique. Testing Western theories of dependence, trust, and integration in a Chinese context thereby provides a valuable contribution to the academic literature.

The final two papers in the issue by Turrisi, Bruccoleri, and Cannella and by Bernon, Upperton, Bastl, and Cullen examine the impact of reverse logistics on supply chain performance and the of SCI on retail product returns, respectively. Turrisi et al.’s analyses the impact of reverse logistics on order and inventory variance amplification in a single-echelon supply chain and to propose a new order policy for dampening such amplification. The authors use a difference equation math approach for modelling and analysing a closed supply chain and use data collected from the European Union statistics to validate the obtained results. The most significant contribution of this paper concerns developing and testing a novel order policy model that explicitly includes products collected by reverse logistics. Since these issues have not received attention in the extant literature, this research provides implications and contributions to the green SCM and reverse logistics literatures. However, the authors also point out that due to the fact that no empirical analysis is provided, future research should evaluate the impact of the proposed R-APIOBPCS on more realistic closed loop supply chain models. Bernon et al.’s single case study draws upon in-depth structured interviews to provide insight on how initiatives that improve SCI can impact retail roduct returns processes. Empirical validation of the authors’ conclusions would seem a logical next step and co-opetition may represent an appropriate and informative theoretical lens for doing so.

Conclusions and future research

The simultaneous application of competition and co-operation is a fast-growing area of business research. Nevertheless, although the simultaneous consideration of competitive and co-operative forces has the potential to add value to the field, applications of co-opetition are relatively rare in SCM research. Wojciech et al. (2012) point out that co-opetition has been addressed more from the perspective of creating win-win situations and far less from the value network development perspective. Focusing on the value network development perspective could therefore generate a stream of novel research and contributions.

Such research bodes well for advancing theory and practice in the field of logistics and SCM. We therefore encourage more contributions to IJPDLM that incorporate this interesting and exciting concept of co-opetition in supply chains. In addition, we want to encourage those in the burgeoning field of humanitarian logistics to devote more interest to this concept as co-operation is a key issue for bringing relief to beneficiaries. Co-operation is needed during operations as well as before and after a disaster strikes. However, a much-neglected hindrance for the co-operation of relief supply chains is the competition between humanitarian organisations. Although humanitarian organizations share the same goals of delivering aid to vulnerable people (the beneficiaries), saving lives and alleviating suffering, humanitarian organisations compete for donations, i.e. their financial resources. Therefore, co-operation and competition impact simultaneously on the incentive to transfer knowledge among actors in and between supply chains. Further studies therefore need to be conducted on if and how intentionally created communities of practice could be introduced to increase knowledge sharing and transfer in and between supply chains. However, how the twin forces of co-operation and competition affect supply chain performance is an unexplored area for empirical studies. von Friedrichs Grängsjö (2003) points out that the focus has either been on competition or on co-operation between competitors, suggesting that “co-opetition” may, in fact, represent the most mutually advantageous relationship for competitors.

Gyöngyi Kovács, Karen Spens

European Regional Editors

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Further Reading

Kotzab, H., Grant, D.B. and Friis, A. (2006), “Supply chain management implementation and priority strategies in Danish organizations”, Journal of Business Logistics, Vol. 27 No. 2, pp. 273–300