Chapter 9

• as “a long-term collaboration with joint use of resources between legally independent companies”

• companies remain legally independent and have equal rights, in contrast to the acquisition or merger of companies

• In most cases, the term “bilateral cooperation” is used when there are two partners, whereas “network” is used

  when there are three or more partners.

• Transaction theory explains that every exchange process between market participants leads to transaction costs, and these should be minimized. Cooperations are suitable for this purpose if the costs of in-house production are higher than those of external procurement, the market partners have largely the same information, and the transaction-specific investments are not very high.

• Market-oriented explanations argue that the success of companies is based on positioning, building up, and defending competitive advantages in the market. In highly competitive markets, this is easier through cooperation. In addition, cooperations can also influence the market structure.

• Resource-oriented declarations assume that if the partners have different resource endowments, the joint use of resources represents a significant advantage of a cooperation. This is especially true when resources are difficult to substitute or imitate.

• pursue a common strategy to improve their competitive position

• aim: compensate for their own weaknesses with the strengths of other partners. This involves entering into a formalized, longer-term relationship, which is much less firm than a joint venture

• often involve cooperation with competitors from the same industry

• represent a loose form of cooperation, but are based on agreements and contracts

• behavior and strategy are coordinated

• This form of cooperation has gained in importance in times of globalization and more intense competition

• economic cooperation between companies in which a legally independent company is jointly established or acquired

• To set up the enterprise, a new company can be founded, an investment in an existing company or the joint takeover of another company can be carried out.

• Often (but not always) a form is chosen where both partners own half of the shares in the joint venture, so that hierarchical control is excluded

  • the management is then carried out jointly

• increased in recent years as a result of globalization, especially when a regional partner is needed in foreign markets.

  • can act as a domestic company, and the regional partner can contribute its market-specific know-how and reduce the need for capital

• not very successful empirically. Conflicts of objectives often arise between the partners, personnel policy inconsistencies occur, and problems with knowledge loss and cultural integration develop

• process by which competing organizations work together to achieve common goals

• focus is on the mutual benefits how the cooperation can be developed.

• must be clearly distinguished from the competitive strategy, which is aimed at achieving advantages over the competition

• The partner must have the necessary size, technology, market access, or other contribution to give the cooperation a competitive advantage that none of the partners has alone.

• The partners should complement each other in their contributions, but be of similar size or strength, so that they meet on an equal footing without one dominating the action.

• It must be acceptable to both sides if one of the partners wants to focus on a specific market. Likewise, the interests regarding an international orientation should be congruent in a joint venture.

• There must be only a small risk that one of the partners will later become a competitor.

• In addition, the cooperation was intended to limit the range of competitors’ strategies.

• The compatibility of the two partner organizations must be so great that cultural conflicts are unlikely.

• does the new common value chain lead to a sustainable competitive advantage for the partners

• is the cooperation needed by both partners

• are the two partners approximately equal in size or strength

• is there compensation for deficits in the partner's resources, skills, or qualities

• are the long-term goals of the partners in agreement

• similar corporate culture is not a necessary precondition

• “chemistry” between the partners should be suitable, bc if not:

  • The two corporate cultures are lived side by side

  • Over a period of time, a new, common culture develops

  • The stronger culture of a partner, or the culture that is more appropriate to the competitive environment, prevails

  • Constant resistance leads to a permanent impairment of cooperation

• employees, skills, and overall goals should match

• Structures, rituals and routines, and control mechanisms should also be considered

• extend over various stages of the value chain and are formed by partners who are related as suppliers or buyers

• based on the idea of optimizing the interfaces, e.g., between automobile manufacturers and their suppliers in product development

• companies at the same level of the value chain join forces in order to pool their competitive strengths; for example, the automobile manufacturers in the development of hybrid drive systems.

• companies work together that are neither in a value-added relationship nor in competition with one another

• Complementary products are offered whose joint marketing or development makes sense, e.g., for joint training and further education, or for the operation of canteens.

• easy to implement

• can also quickly become unstable

• is secured by contracts, such as in the form of supply contracts for the duration of a product life cycle.

Cooperation is understood to be the long-term collaboration of legally independent companies with a joint use of resources. If there are two partners, it is called bilateral cooperation, while three or more partners form a network.

Strategic alliances are those cooperations that are based on a common strategy. Joint ventures are characterized by the fact that a joint company is established.

Strategy and culture should be examined in order to select suitable partners. If the strategic and the cultural fit are right, then a cooperation seems to be favorable. The form of cooperation can range from loose cooperation to the establishment of a joint company.