A Critical Review
Sanou, F. H., Le Roy, F. & Gnyawali, D. R. (2016) ‘How Does Centrality in Coopetition Networks Matter? An Empirical Investigation in the Mobile Telephone Industry’. British Journal of Management, 27 (1), 143-160.
By Andrew Hill
P17056400
This critical review of ‘How Does Centrality in Coopetition Networks Matter? An Empirical Investigation in the Mobile Telephone Industry’ by Sanou, F. H., Le Roy, F. and Gnyawali, D. R aims to outline the rationale and hypotheses of the authors, how they conduct their studies, their conclusions, as well as the strengths and limitations of the article.
The research considers how an organisations position within a coopetive network influences the competitive advantages an organisation has. A coopetive network is where two or more competing businesses cooperate with each other, in other words, the “simultaneous rivalry and cooperation between parties” (Sanou, Le Roy & Gnywali, 2016).
The authors examine the question posed in the title of their article by studying the coopetive and competitive actions of organisations between 2000 and 2006 using secondary data gathered by structured content methods. Previously, the authors say, gains in market share or overall turnover was used to measure the performance of competitive and cooperative actions but this didn’t cater for proportionate differences in size between organisations so a small organisation turning over £50’000 a year increasing to £100’000 a year is an increase of 100% whereas a large organisation turning over £2million a year increasing their turnover to £3million per year would be an increase of just 50%, the anomaly is that the smaller organisation has performed better than the much larger organisation based on the percentage value but not in regards to the monetary value – as such, the authors decided to measure market performance by comparing the relative performance within each organisations relative country with other organisations respective to the market performance in their own country. This will eliminate anomalies caused by differences in organisational size and capacity, cultural or country-specific restrictions and economic differences between the individual countries (a network operator in a sub-Saharan African country, for example, whose customers may suffer from extreme poverty, may not have as high a turnover as a network operator operating out of Hong Kong or New York, as such it would be unreasonable to compare the two organisations based solely on turnover).
They suggest that “the more central an organisation’s position in a coopetive network, the better access it will have to the resources contained in the network, and such access enables the organisation to be more aggressive in its competitive actions and, in turn, to achieve superior performance.” (Sanou, Le Roy & Gnywali, 2016) and that cooperation with competing organisation has risks, including hidden agendas and a focus on individual value gained rather than the mutual benefit of the network; this is highlighted by the many organisations who are part of coopetive networks and have a “winner takes all” structure coupled with “68% of companies think that they will be involved in more joint-ventures in the coming five years” (Reeves, 2015). BMW and Toyota worked together to develop a new sports car which they’d each sell under their own brand names – the hidden agenda for each was to gain access to their competitor’s technology and data whilst working together towards the same goal of bringing a new product to market (Reeves, 2015). Samworth Brothers play an important central role in the supply chain for Ginsters and Tesco (Gribben, 2009. Samworthbrothers.co.uk, n.d.). Samworth Brothers own a factory, Bradgate Bakery, in Leicester which makes the sandwiches for both Tesco and Ginsters (same sandwiches, different packaging) and therefore Samworth Brothers are a central part of the coopetive network between the trio; if Samworth Brothers limited their labour supply of the manufacturing of sandwiches for Tesco in favour of providing more labour supply to Ginsters, Tesco will be unable to sell as many sandwiches under their own brand however, being a retailer, they are in a position to restrict the sales of Ginsters by restricting the shelf space available for their competitor’s sandwiches in their own stores. One thing that wasn’t highlighted in the article was the possibility of organisations taking advantage of a central position within the coopetive network at the expense of their competitors; if an organisation strategically placed themselves in a central position within a network where another member relies on the fluidity of resources within the network for their business to function, the central organisation can restrict resources potentially forcing other member organisations into insolvency should the resources not be readily available elsewhere. In other words, the more central you are in the network, the more influence you will have as well as a better competitive advantage because of having the ability to restrict resources or information and data. If Organisation A was central to the coopetive network with Organisation B and Organisation C not having a coopetive agreement between them, Organisation A could take resources from Organisation B to give to Organisation C, however, as Organisation A is central to the network, they could restrict the amount of resources that they give to Organisation C therefore having an impact on their ability to function.
The authors found:
Cooperative networks are generally based on mutual trust and therefore members of cooperative networks must be willing share (Child, Faulkner and Tallman, 2005). An organisation that occupies a central position within a coopetive network is likely to have access to more resources than other members of the same network and as such, will have access to limited resources. In other words, resources are not evenly split amongst the network so the more central an organisation is to a coopetive network, the better a position they’ll be in to innovate, research, develop and implement new ideas and bring to market new products which is something those who aren’t central to the network may find limiting to their success, especially if those who are central to the network are growing their market share (and taking market share away from less-central organisations).
The data used spans from the year 2000 to 2006 and as such, is over a decade old and though it is likely the technology is now obsolete due to modern advances, the research may not be (Academia.stackexchange.com, 2016).
“Not all firms are in a coopetive relationship with each other” (Sanou, Le Roy and Gnyawali, 2016) meaning an organisation (A) can have a coopetive arrangement with a competing organisation (B) and a different organisation (C) whilst the two organisations (B and C) may not have a coopetive arrangement between themselves; whilst they are part of the same coopetive network, B and C do not form a dyad unless they had an arrangement between themselves as well as individual arrangements with organisation (A).
Whilst the article has many strengths, many of which have contributed to the findings above, the article does have some serious limitations. For example, the article doesn’t theorise at “a dyadic level of coopetition” (Sanou, Le Roy and Gnyawali, 2016) meaning networks of just two competing organisations haven’t been considered.
Another limitation which perhaps isn’t a fault of the author is that coopeting organisations are opposite sides of the same coin; two competing businesses must cooperate where cooperation and competition are “opposing forces” according to the article however, other studies have shown that cooperation is usually more advantageous than competition in every field tested including business and science (Buffington, n.d.) and competition and cooperation work together harmoniously (Mayer, 2015).
The authors took samples from 70 countries, the entire study lacks precision (Conflict.lshtm.ac.uk, n.d.) and cannot be reasonably applied to any individual country (Faber and Fonseca, 2018) and is therefore quite limiting in how the conclusions drawn from the study can be applied but it does set a strong foundation to expand on this research relative to individual countries.
They haven’t covered the use of “piggy backing” by Virtual Network Providers (such as GiffGaff who share the O2 network spectrum and Asda Mobile who operate on the EE spectrum) where smaller networks will use part of the mobile spectrum owned by larger operators (MoneySavingExpert.com, 2017) but this can be due to the relatively historic data (relative to the industry studied) and whether this kind of industry practice existed then. However, the article does indicate that, before the year 2000, telecommunication operations were controlled by the state but was deregulated allowing new organisations to enter the market, so it is likely that virtual mobile networks were in operation.
They haven’t covered regulatory restrictions caused by bodies like Ofcom, who limit the ability for new businesses to operate as network operators; in the UK, an organisation has to bid for part of the mobile spectrum (Ofcom, 2017) and typically always won by EE, Three, Vodaphone and O2 (Kavanagh, 2018); this forces smaller companies to become virtual mobile networks (Minihame, 2016) as they simply can’t afford to compete for spectrum space.
By not using primary data, “the original data [may not be] collected to answer the present research question” (Tripathy, 2018) as new data became available since 2006 but hasn’t been considered in the article.
In conclusion, the article shows that whilst members of a supply line, for example, may cooperate towards a common goal, competing organisations coopete to reach individual goals. The article also provides a strong foundation for further research into the subject of centrality and its importance not only within the mobile network industry throughout the world but also in general; the sources used throughout this review provide indication of the clear diversity of the importance of coopetition between industries as a whole but, as is highlighted within the article, more research needs to be done to understand the importance of centrality within coopetive networks.
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