The leveraging of interfirm relationships as a distinctive organizational capability: a longitudinal study

TLDR

The study aims to examine how lead firms structure their networks over time and to enrich resource‑ and knowledge‑based theories of interfirm cooperation. The authors analyze three lead‑firm network structures at two time points using packaging‑machine industry data, focusing on vertical disintegration and the coordination of competencies across corporate boundaries. The results demonstrate that relational capability accelerates knowledge access and transfer, fostering growth and innovation, and that managers can deliberately shape interfirm networks to narrow core competencies and create a distinctive organizational capability. © 1999 John Wiley & Sons, Ltd.

Abstract

In this paper we present a study of the structure of three lead firm-network relationships at two points in time. Using data on companies in the packaging machine industry, we study the process of vertical disintegration and focus on the ability to coordinate competencies and combine knowledge across corporate boundaries. We argue that the capability to interact with other companies—which we call relational capability—accelerates the lead firm's knowledge access and transfer with relevant effects on company growth and innovativeness. This study provides evidence that interfirm networks can be shaped and deliberately designed: over time managers develop a specialized supplier network and build a narrower and more competitive set of core competencies. The ability to integrate knowledge residing both inside and outside the firm's boundaries emerges as a distinctive organizational capability. Our main goal is to contribute to the current discussion of cooperative ties and dynamic aspects of interfirm networks, adding new dimensions to resource-based and knowledge-based interpretations of company performance. Copyright © 1999 John Wiley & Sons, Ltd.