Managing Coopetition in Supplier Networks – A Paradox Perspective

• DOI: http://doi.org/10.1111/jscm.12167
• Author: Jörg Sydow,Miriam Wilhelm
• Date: 01 July 2018
• Published date: 01 July 2018

MANAGING COOPETITION IN SUPPLIER NETWORKS –A

PARADOX PERSPECTIVE

MIRIAM WILHELM

University of Gr€

oningen

J€

ORG SYDOW

Free University Berlin

Scholars in the field of supply chain management have started to embrace

the idea of simultaneous cooperation and competition (“coopetition”)in

supplier networks but have mainly looked at coopetition from a structural

perspective. In this article, we complement the structural view with a para-

dox perspective to investigate the competitive tensions that evolve when

buying firms are trying to engage both forces simultaneously in their rela-

tions with core suppliers. Our comparative case study of four major car-

makers reveals different strategies buying firms use to manage coopetition

in their supplier networks, the responses they trigger from their suppliers,

and the resulting paradoxical tensions. Our inductive analysis reveals that

irrespective of the managing approach chosen, the “coopetition capabili-

ties”of the buying firm determines whether negative tension dynamics

can be avoided. At the core of such coopetition capabilities are “evaluative

capabilities”allowing the buyer to provide cost improvement suggestions

to suppliers for the sake of joint value creation and to control the division

of value appropriation through a deeper understanding of the supplier’s

cost structures. By highlighting the nature of coopetition capabilities as

organizational capabilities, we also contribute to paradox research, going

beyond its current focus on the individual cognitions of managers.

Keywords: supplier management; partnering (alliances); general management

issues

INTRODUCTION

Recent debates on the dark side of buyer–supplier

relations (Anderson & Jap, 2005; Fang, Chang & Peng,

2011; Kim & Choi, 2015; Noordhoff, Kyriakopoulos,

Moorman, Pauwels & Dellaert, 2011) challenge the

positive view on collaboration with suppliers in sup-

ply chain management theory and practice. These

debates highlight the necessity of having both rela-

tional and transactional mechanisms (Liu, Luo & Liu,

2009) in order to generate value and overcome the

relational inertia that inhibits partners’ capacity to

meet changing market demands (Villena, Revilla &

Choi, 2011). This increasingly questions the tradi-

tional cooperative–competitive dichotomy that is

commonly used to describe buyer–supplier relation-

ships (Karatzas, Johnson & Bastl, 2016; Wu & Choi,

2005). This faces buying firms with the paradox when

they structure relationships to derive the greatest

benefit from cooperation and collaboration, while

keeping the supplier competitive in terms of market

price (Terpend et al., 2008, p. 41).

Supply chain scholars have started to embrace the

idea of simultaneous cooperation and competition—

coopetition—in supplier networks but have mainly

looked at the phenomenon from a structural perspec-

tive (Choi & Wu, 2009; Pathak, Wu & Johnston, 2014;

Schmoltzi & Wallenburg, 2012). By viewing the small-

est analytic unit of coopetition in networks—a triadic

relationship between a buyer and two suppliers—schol-

ars have advanced our understanding of the buying

firm’s strategic role in orchestrating the degree of coope-

tition in the network by creating structural holes

(Pathak et al., 2014), or closing them (Wilhelm, 2011).

In this article, we complement the structural network

perspective with a paradox perspective (Lewis, 2000;

Lewis & Smith, 2014), providing an in-depth account

Volume 54, Number 322

Journal of Supply Chain Management

2018, 54(3), 22–41

©2018 Wiley Periodicals, Inc.

of the tensions that evolve from structural changes in

the composition of the network and how they can be

successfully managed by supply chain managers.

A paradox is understood as contradictory yet interre-

lated elements that seem logical in isolation but seem

absurd and irrational when they appear simultane-

ously (Lewis, 2000, p. 760). Two core characteristics

describe a paradox: contradictions and interrelatedness

(Schad, Lewis, Raisch & Smith, 2016). Thinking in

terms of paradoxes demands that supply chain man-

agers accept and work with contradictory elements

instead of suppressing one of the elements (Lewis &

Smith, 2014; Stadtler & Van Wassenhove, 2016).

Against this theoretical background and in a multiple-

case study in the global automotive industry, we

explore how buying firms manage the paradox of

coopetition. We seek an answer to the following ques-

tion: How do buying firms manage the paradox of coopeti-

tion in their supplier networks?

Buying firms can either accept this paradox and cre-

ate synergies between them, or separate the conflicting

elements, temporally or spatially (Cameron & Quinn,

1988; Lewis & Smith, 2014). Our case study suggests

that buying firms’ attempts to manage coopetition

one way or the other triggers responses from their

suppliers, which relate, positively or negatively, to ten-

sion dynamics. Our findings also show that irrespec-

tive of the actual strategy chosen by the buying firm,

specific organizational capabilities, that we term

“coopetition capabilities,” are important to avoid

unproductive conflict and the escalation of competi-

tive tensions. Considering these insights, we engage in

an iterative theory-building process (Gioia, Corley &

Hamilton, 2013) by answering a second research

question: Which coopetition capabilities does the buying

firm need in order to trigger positive responses from suppli-

ers and avoid negative tension dynamics?

Our study offers two main theoretical contributions:

By studying practices of carmakers and their suppliers

in a dyadic and processual fashion, as responses and

counter-responses, we complement the structural, buy-

ing firm-centric perspective of coopetition taken thus

far. Furthermore, we specify the concept of “coopeti-

tion capabilities” (Bengtsson et al. 2016) for buyer–

supplier relations. Coopetition capabilities have been

defined as the ability of a firm to manage competitive

tensions in interfirm collaborations in order to attain

and maintain a moderate level of tension, regardless

of the intensity of the coopetition paradox (Bengtsson

et al., 2016, p. 19). So far, this concept has mainly

been analyzed at the level of individual managers and

their ability to “think paradoxically” and embrace

contradictions (Smith & Tushman, 2005). Thus, by

moving beyond this narrow focus, we also con-

tribute to emerging paradox theory by shedding

light on the role of organization-level capabilities of

the buying firm for managing the paradox of

coopetition.

In the following, we first summarize current research

on coopetition in supply chain management and

delineate the paradox perspective with a particular

focus on different practices of managing coopetition.

Then, we introduce our research design and method-

ology, before presenting the empirical findings from

the global automotive industry. Finally, we discuss the

novel contributions of our study to research on

coopetition and organizational paradoxes.

THEORETICAL BACKGROUND

Coopetition in Buyer–Supplier Relations

Traditional supply chain management was based on

the belief that maximum competition, under the disci-

pline of a free market, would promote a healthy supply

base which secures low prices and on-time delivery.

The focus on open-market negotiations that are heavily

based on price competition was eventually replaced by

a new paradigm that shifted the focus of competition

from the dyadic buyer–supplier level to a network of

co-operating firms competing against other supply

chains (Dyer & Hatch, 2006; Dyer & Nobeoka, 2000;

Spekman, Kamauff & Myhr, 1998). This collaborative

paradigm

1

is still prevalent in the supply chain manage-

ment literature today (Chen & Paulraj, 2004; Terpend

& Krause, 2015); only recently scholars started to shift

attention to the dangers of overembedded supplier rela-

tions. Among them, Villena et al. (2011) revealed an

inverted curvilinear relationship between social capital

and a buying firm’s performance, indicating that too lit-

tle social capital (i.e., an overemphasis on competition)

and too much social capital (i.e., an overemphasis on

cooperation and a lack of competitive tensions) are

both equally detrimental for performance. Their study

points to the dangers of overembeddedness that can

reduce the buyer’s ability to make objective decisions

and lead to an increase of supplier opportunism. For

example, Nissan’s strong relations with its long-stand-

ing suppliers, once a source of competitive advantage,

turned into a disadvantage in the 1990s. Nissan’s pur-

chasing prices were 20–25 percent higher than market

levels on average (see also Stevens, MacDuffie & Helper,

2015).

Supply chain scholars have thus started to embrace

the idea that the parallel existence of competition and

cooperation is actually desirable to the buyer–supplier

relationship (Klein, Rai & Straub, 2007; Nair, Narasim-

han & Elliot, 2011). A simplified depiction of

1

Note that some authors explicitly differentiate between coopera-

tion and collaboration in order to show the evolution of buyer–

supplier relationships (e.g., Spekman et al., 1998). In line with

the coopetition literature, we do not draw such a distinction

here and use collaboration and cooperation interchangeably.

July 2018

Managing Coopetition in Supplier Networks

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