Mechanisms for Resource Integration in Business

Networks

Dr Linda D PetersNottingham

University Business School

Dr Andrew D PresseyLancaster University Management School

Purpose

The purpose of this research is to understand how operant resources, such as knowledge, are developed and shared in business-to-business networks.

In particular, we examine how contingent factors such as social integration mechanisms, power, and regimes of appropriability influence the networks’ willingness and ability to generate operant resources.

Typical Construction Network Relationships?

Project Design

RIBA Stages

A Appraisal. B Strategic briefing. C Outline proposals. D Detailed proposals.

E Final proposals. F Production information.

G Tender documentation.

H Tender action. J Mobilisation.

K Construction to practical completion. L After practical completion.

Contractor comes in

Building starts

Develop and Construct Design and Build

Contractor comes in and

building starts

Data

The data collected for this study consists of 27 in-depth semi-structured interviews conducted with members of two UK develop and construct construction project teams.

Vargo and Lusch (2004) view the translation of learning processes into organisational capabilities as a defining feature of marketing as an operant resource.

Organisational Learning

Capabilities in Resource Networks

Morgan (2004) emphasises that aspiring to be a learning organisation is not sufficient, but that organisations must attempt to translate learning processes into organisational capabilities.

What are these capabilities?

The key organisational capabilities of interest to marketers, those core competences which may enhance the value propositions of the firm, would include the coordination of cross-functional, intra, and inter organisational network partners so as to gain competitive advantage by performing specialised marketing functions (Vargo and Lusch, 2004).

Knowledge and Learning It is explicitly stated in their first foundation premise:

“The application of specialized skill(s) and knowledge is the fundamental basis of exchange” (Vargo and Lusch, 2008a).

The insights of Polanyi (1958) a half century ago established a foundation for this school of thought. He stated that processes of tacit integration - where tacit knowledge (the hidden experiences and skills we possess) and the human cognitive processes we engage in - are the root of what we know and what we do.

Providing a managerial perspective, Schlegelmilch and Penz (2002:6) define knowledge as “…the tangible creations of human intellect which include technical expertise, problem-solving capability, creativity and managerial skills which are embodied in the employees of the organization.”

Moderators of Learning Processes

regimes of appropriability

social integration mechanisms

power relationships

Cognitive Consistency Theory and Network Learning

Traditionally, cognitive theoretical approaches seek to understand the structures of cognitions in individuals, but this can be applied to networks.

Cognitive Consistency Theory seeks to explain the mechanism by which individuals’ fulfil their aspirations for consistency in their cognitions, and is seen as a prime motivation for changes in beliefs, attitudes, and/or behaviours if these are not psychologically consistent.

Regimes of Appropriability

Acquisition = they have a wider knowledge base and can recognise new knowledge value better.

Assimilation: they have a wider experience base and can develop more effective working practices.

Transformation: they have to opportunity to develop a more effective corporate culture through interactions with high quality partners.

Exploitation: Can enhance personal value of the individual to their company/industry. Project B would be a great achievement for the companies involved, only 3 such power plants in the UK.

Social Integration Mechanisms

Social integration mechanisms help build connectedness and shared meanings.

Communication Practices Novation and Network Structure

Communication Practices

The importance of face-to-face communication, even though there are detailed plans and drawings:

“It helps link understandings between people, and the lack of it is one reason why the project is so late.”

He termed it a “lack of intimate design review process” and felt that it made them vulnerable.

Forming an Interpretive Scheme

“For the price of a plane ticket we were able to go up and see what they were doing and thus reduce risk. We then sat down in a café nearby and redesigned the interior layout to work better.”

Network Picture Project A

Architect

Novation and Network Structures

Novation is a legal term and refers to the act of replacing either an obligation or a party to an agreement with a new obligation or party.

Pre & Post Novation

Novated Team Member

Power Relations

Firstly, respondents recognised that there can be problems regarding “defending your expertise” on projects.

One stated that: “… you can only go so far as a team, but on site and at a greater level of detail decisions may be made by individuals”.

Torn in Two

One novated member commented that they sometimes felt they were being asked to exercise the “wisdom of Solomon”.

Just as Solomon tested the legitimacy of two women (both of whom claimed they were the mother of a child) by observing their response when he judged that the child be divided in half, the novated individual had to judge the legitimacy of both client and contractor wishes.

Power as Network Structure

Researchers such as Burt (1992) have argued that network linkages enable and constrain the flexibility, autonomy, and consequently the effectiveness of organizational members.

Network Pictures Project A

Main Contractor

Project Manager

Project Administrator

Client

Findings

We find evidence that the phenomenological nature of value creation and the sense-making activities of network members have important implications for resource integration in the network.

In addition, such resource integration may be moderated by important contingent factors.

Any Questions?