The inter-firm networks have a strong impact on the firm capabilities of the business systems. In the following paragraphs we introduce the main concepts, identifying the main inter-firm types among the different advanced business systems. We also show two examples of contrasting countries, where inter-firm networks have shaped the way capabilities are developed.
To start with, in order to analyse how inter-firm networks affect firm capabilities, we will discuss the context in which we will use each of those concepts:
Inter-firm relationships differ among the diverse advanced business systems, so following are the main alternatives of advanced business systems and their characteristics:
• Compartmentalised business systems have strong legal …show more content…
To understand how inter-firm networks affect firm capabilities, we will analyse two institutionally contrasting countries: the UK and Japan.
In the UK, similar to its peer compartmentalised peers, the US, the market is the more common ownership structure. Companies are not seen as community, but as property. Companies have a profit objective and are conceived in a way that firms belong to the shareholders, and managers have the obligation to act in the shareholders’ interests.
According to the study made by Sako (1992), the UK has relations with low transactional interdependence and the most used supplier selection procedures are blind bidding, which are mainly price based. Trading commitment between customers and suppliers is limited to contract and it highly formalises many procedures and contingencies. The contractual and competence trust depends on written orders and thorough inspection by buyers, respectively. In the UK, the communication among firms is narrow and rare, and risk sharing is low or stated beforehand.
In the UK, a rare form of collaboration was experienced between competitors. Some companies shared non-executive directors, maintaining the allowed limits of relationship between rivals, however this is not a generalised …show more content…
It is normal to have long term trading commitments and the formalisation of procedures and contingencies is low. Contractual trust depends on verbal agreements and there is high trust on the supplier’s competence, with little or no inspection. In Japan, firms have extensive, recurring, and wide ranging communication between them. Risk sharing is considerable and often and there is a strong leverage on the knowledge of the partners.
The Japanese automobile industry, with companies such as Toyota, Nissan and Honda, is a clear example of the strong inter-firm relationship between customers and suppliers. Those relationship were the basis of the development of ´just-in-time’ supply chain and ‘lean’ manufacturing. In Toyota’s case, the trust in the quality of the products of their suppliers was strong because sub-contractors developed in the same geographical areas, and often as a spun-off where a foreman or middle manager was allowed to make a component independently, with the commitment to supply their former
To start with, in order to analyse how inter-firm networks affect firm capabilities, we will discuss the context in which we will use each of those concepts:
Inter-firm relationships differ among the diverse advanced business systems, so following are the main alternatives of advanced business systems and their characteristics:
• Compartmentalised business systems have strong legal …show more content…
To understand how inter-firm networks affect firm capabilities, we will analyse two institutionally contrasting countries: the UK and Japan.
In the UK, similar to its peer compartmentalised peers, the US, the market is the more common ownership structure. Companies are not seen as community, but as property. Companies have a profit objective and are conceived in a way that firms belong to the shareholders, and managers have the obligation to act in the shareholders’ interests.
According to the study made by Sako (1992), the UK has relations with low transactional interdependence and the most used supplier selection procedures are blind bidding, which are mainly price based. Trading commitment between customers and suppliers is limited to contract and it highly formalises many procedures and contingencies. The contractual and competence trust depends on written orders and thorough inspection by buyers, respectively. In the UK, the communication among firms is narrow and rare, and risk sharing is low or stated beforehand.
In the UK, a rare form of collaboration was experienced between competitors. Some companies shared non-executive directors, maintaining the allowed limits of relationship between rivals, however this is not a generalised …show more content…
It is normal to have long term trading commitments and the formalisation of procedures and contingencies is low. Contractual trust depends on verbal agreements and there is high trust on the supplier’s competence, with little or no inspection. In Japan, firms have extensive, recurring, and wide ranging communication between them. Risk sharing is considerable and often and there is a strong leverage on the knowledge of the partners.
The Japanese automobile industry, with companies such as Toyota, Nissan and Honda, is a clear example of the strong inter-firm relationship between customers and suppliers. Those relationship were the basis of the development of ´just-in-time’ supply chain and ‘lean’ manufacturing. In Toyota’s case, the trust in the quality of the products of their suppliers was strong because sub-contractors developed in the same geographical areas, and often as a spun-off where a foreman or middle manager was allowed to make a component independently, with the commitment to supply their former