Экономические науки/6.Маркетинг и менеджмент.

Associate professor Pozhidaev R. G.

Voronezh State University, Russia

Inter-firm networks’ development process:

theories and models

The expansion of inter-firm networks is an indefeasible feature of the contemporary economy. On the global and regional markets, in different branches and business spheres, legally independent companies consolidate assets, coordinate resource flows, interchange information about current and estimated activity.

The progress of inter-firm networks are compound and multilateral process, includes variety of causality and sequential relations and mechanisms, which go beyond of the framework a single firm business practice. One of the key aspects of inter-firm network comprehension – search of models allows describe the process of its development in detail. Complex character of the considered object and existence of different standpoints on its essence, have led to forming three different theoretical approaches to explanation of the process of inter-firm networks development: stages theory, states theory and joinings theory.

Stages theory. Stages theory includes two hugely resembling conceptions: life cycle and growth-stages. Life cycle concept is determines the change process as consists of a number of invariable stages of birth, growth, maturity and fall (Quinn, Easton). Growth-stages concept is also examine the process of inter-firm relationships and interdependences development as sequence of incremental and irreversible stages. Growth-stages models were developed actively by various authors in 1980-1990^th (Ford, Dwyer et. al, Larson, Kanter, Wilson and others). They are similar and differ only in a number of stages and description each of them.

Although majority of the models reflect multidimensional character of inter-firm network, they have a limitations, mainly as effect of analysis only dyad relationship between partners. At the same time, researchers accept themselves with prevalence of multilateral relationships, especially in international inter-firm networks.

Moreover, is criticized central idea of the theory – about comprehension the process of networks development as consistency of predetermined stages. Recent researches (for example Batonda and Perry [1]) are shown that change process highly sophisticated and abrupt. Inter-firm relations rarely go trough a definite step-by-step development process. The main reasons of this incompatibility consist in complex character of inter-firm networks organization and management where changes there are a result variety of reasons and effects.

States theory. States theory formed in 1990^th and in its emergence taken part authors, which earlier worked out peculiar growth-stages models (Ford, Van de Ven and others). Taken into consideration limitations of stages theory mentioned above, they made an effort to discover another explanation the process of inter-firm networks development. States theory presents the change process as strategically determined, but unpredictable evolution of states.

However that theory also criticized. States theory recognizes existence of the stages too, but defines the change process as contingent, but not as consequent and predetermined. In other words, if stages theory presents the process of inter-firm network development as linear, states theory postulate disorderly motion from one stage to other. Leaving from logic of stages theory, states theory only ascertaining substantial business practice but does not explain reasons, factors and conditions of the progress or decay of inter-firm network.

Joinings theory. This theory is founded on principal other approach to understanding of inter-firm network development process. The main idea author of this theory – Thorelli [2], is follows: entry in network extends major influence on the dynamics of its business activity. As a whole the change process in network organizations includes three phases: positioning, repositioning and exit of partners.

When new partner is entering in network he faces strategic challenges of positioning themselves in the partnership. The position is shaped by time of entrance and commitments, which assume new partner. In further, the measure of commitments fulfillment and aptitude to develop of interrelation within and outward the network, led to repositioning, which can signify both – strengthening of power (emplacement in strategic nodes of network) and diminution of significance in inter-firm network. The exit process is a cost-benefit analysis of leaving or joining another network.

Thereby each of theory possesses own logic of understanding the process of development but does not give its exhausting explanation. As a result by way of base for the further theoretical and empirical studies of inter-firm network majority of authors fix upon stages theory, recognize, nevertheless, its limitations.

Taking into consideration significant number of the growth-stages designed models, two directions become the logical continuation of their study:

- empirical researches of distinct growth-stages models;

- elaboration generalizing growth-stages model and its empirical affirmation.

The empirical researches have confirmed that distinct growth-stages models justified only as simplistic description of networks development process. Researchers also noted variety of factors which determine change process in inter-firm networks (for example Batonda and Perry, Johnston and Hausman [3], Miller et. al [4]).

In regard to elaboration of generalizing growth-stages model arisen intricacies with determination of the key feature of inter-firm network activity and selection of base for finding the stages. Take into consideration the limitations mentioned above, the universal model may include only key specifications, which describe idiosyncratic features of partners’ behavior on the different stage of networks development and might presented as sequence of the following stages:

1. Search and selection. Finding and evaluation of potential partners based on previous collaborations, reputation and experience uncertainty. Preliminary adaptation efforts and setting of the first ground rules for the collaboration.

2. Configuration of the network. Selective entry based on abilities and long-term goal compatibility of partners. Determining set of mutual goals and objectives. Set the foundations of the governance structure of the network.

3. Inter-firm adaptation development. Inter-organizational planning of activities, responsibilities and relationships. Partners establish mechanisms of coordination and control. Increased commitment of resources and recognition of mutual benefits through institutionalized conflict resolution processes.

4. Stabilization (Integration of operations and strategies). Adjustment based on mutual agreement, negotiation and self-control. Synergistic combination of partners' strengths. Long-term rewards based on mutual behavior and trust. Internal scorecard and monitoring systems.

5. Transformation or termination.

Transformation: the efforts of partners are refocused toward mutual development and acquisition of new technologies, skills, etc., for the network.

Termination: costs of continuation or modification outweigh the benefits. Termination based on extent of mutual interest and cost-benefit analysis of continuing in the network.

Certainly, presented model is not completed. Furthermore, perhaps, disputes about contents of the model are not so important at the present phase of inter-firm network studies. Take into account complex nature of the considered object, obviously that necessary further wide-scale investigations of the inter-firm network with analysis for possible greater number of factors and conditions of their development.

Literature

1. Batonda G. Approaches to relationship development processes in inter-firm networks / G. Batonda, Ch. Perry // European Journal of Marketing. – 2003. – Vol. 37, N. 10. – P. 1457-1484.

2. Thorelli H. B. Networks: between markets and hierarchies / H. B.Thorelli // Strategic Management Journal. – 1986. – Vol. 7, N. 1. – P. 37-51.

3. Johnston J. Expanding the marriage metaphor in understanding long-term business relationships / W. J. Johnston, A. Hausman // Journal of Business & Industrial Marketing. – 2006. – Vol. 21. N. 7. – P. 446-452.

4. Miller N. J. Networking as marketing strategy: a case-study of small community business / N. J. Miller, T. L. Besser, S. S. Weber // Qualitative Market Research: An International Journal. – 2010. – Vol. 13. N. 3 – P. 253-270.