Marita Haas The Formation Process of SME Networks - Springer

Marita Haas The Formation Process of SME Networks

WIRTSCHAFTSWISSENSCHAFT

Marita Haas

The Formation Process of SME Networks A comparative case analysis of social processes in Austria, Belgium and Turkey

With a foreword by Prof. Rudolf Vetschera

Deutscher Universitäts-Verlag

Bibliografische Information Der Deutschen Nationalbibliothek Die Deutsche Nationalbibliothek verzeichnet diese Publikation in der Deutschen Nationalbibliografie; detaillierte bibliografische Daten sind im Internet über abrufbar.

Dissertation Universität Wien, 2006 Gedruckt mit Unterstützung durch die Österreichische Forschungsgemeinschaft

1. Auflage September 2007 Alle Rechte vorbehalten © Deutscher Universitäts-Verlag | GWV Fachverlage GmbH, Wiesbaden 2007 Lektorat: Frauke Schindler / Anita Wilke Der Deutsche Universitäts-Verlag ist ein Unternehmen von Springer Science+Business Media. www.duv.de Das Werk einschließlich aller seiner Teile ist urheberrechtlich geschützt. Jede Verwertung außerhalb der engen Grenzen des Urheberrechtsgesetzes ist ohne Zustimmung des Verlags unzulässig und strafbar. Das gilt insbesondere für Vervielfältigungen, Übersetzungen, Mikroverfilmungen und die Einspeicherung und Verarbeitung in elektronischen Systemen. Die Wiedergabe von Gebrauchsnamen, Handelsnamen, Warenbezeichnungen usw. in diesem Werk berechtigt auch ohne besondere Kennzeichnung nicht zu der Annahme, dass solche Namen im Sinne der Warenzeichen- und Markenschutz-Gesetzgebung als frei zu betrachten wären und daher von jedermann benutzt werden dürften. Umschlaggestaltung: Regine Zimmer, Dipl.-Designerin, Frankfurt/Main Gedruckt auf säurefreiem und chlorfrei gebleichtem Papier Printed in Germany ISBN 978-3-8350-0854-0

Foreword Virtual Organizations (VOs) and other forms of cooperation among firms are gaining popularity in particular among SMEs as a way to strengthen their position in an era of global competition. Consequently, public institutions at the regional, national and supranational level like the European Union are actively promoting and supporting the formation of networks and virtual organizations. But despite all the efforts spent on promoting cooperation and the numerous projects aimed at supporting the development of virtual organizations, our understanding of the success factors for the development of VOs is still rather limited. While the ultimate goal of virtual organizations is to improve economic performance, economic factors alone are not sufficient to explain success or failure in establishing a VO. In her thesis, Marita Haas has introduced a new perspective on the formation process of virtual organizations by interpreting the formation of a virtual organization as a group development process between the key actors in each participating company. This person-centered approach is particularly valid when considering SMEs, which in many cases are strongly influenced by the personality of the founder. Applying phase models from small group research enables Marita Haas to identify critical phases and transitions in the formation process and develop adequate intervention strategies to support the VO members in their efforts. The research presented in this thesis not only offers new insights into the formation of virtual organizations. It is also an excellent example of methodologically sound casebased research. By integrating data from various sources, Marita Haas offers deep insights into the VO formation processes that took place during the EU-funded research project VERITAS, which enables her to draw conclusions that reach far beyond the scope of this specific project. Her work therefore provides a solid basis for the better understanding and successful guidance of virtual organizations during their critical initial stages. Prof. Dr. Rudolf Vetschera

Preface Cooperation as a reasonable form to strengthen SME’s business was the main driver for the research project VERITAS1 that aimed to create stable SME Networks in Austria, Belgium and Turkey within a 19 months’ research period. As a scientific member of the University of Vienna, I was part of the consortium that managed the project. By establishing these networks, we followed a comprehensive time schedule in order to reach this goal within project time. Soon, we realized that establishing cooperation is far from being easy: informative workshops were characterized by high absenteeism and fluctuation; most participants and potential cooperation partners asked for the concrete benefit of their organization, or seemed to be simply not interested in working with each other. Well-known explanations of synergy effects in production, or better market force because of size only led to moderate enthusiasm. Thus, in particular the first months of the network formation process was characterized by low interest and low commitment of involved companies. We looked at other projects and networks for helpful insights in order to find a way to deal with the situation and to anticipate problems. However, the websites of former research projects that aimed at establishing networks often did not remain for longer than a few months after finishing a project and some of the previous networks disappeared or became part of large corporate groups. This means that those entrepreneurs that could report on critical success factors, problems and challenges were to a large extent not available: only successful cooperation survives, cooperation that failed and reasons for failure are not reported in any literature. Based on the above mentioned experiences during the first months of the project and the difficulties to find best-practice examples, I gained the impression that economic concepts might not be appropriate to explain the difficulties properly. Whenever I talked to members of successful networks or VOs, including the Virtuelle Fabrik Nordwestschweiz-Mittelland2 or Swiss Microtech Network3, it was mentioned that the crucial factor in the networks are people, not technology or resources, but the commitment and active involvement of all parties. Some explanations went even further and highlighted the need for friendship between partners. In every successful 1 2 3

VERITAS, IST 2004-511013, Contract for Specific Support Action, Annex 1- Description of Work. For more information cf. http://www.veritas-eu.com, accessed in October, 2006. http://www.virtuelle-fabrik.ch, accessed in October, 2006. http://www.swissmicrotech.ch, accessed on 23rd of October, 2006.

VIII

Preface

case involved people mentioned the ”network of heads and hearts“. These informal talks led me to the conclusion that a network of companies is only able to work if a stable network of the people behind it is working as well. This insight reflected a turning point in my research process. First of all, my personal background is very much related to social structures, teams and human resource aspects, as this was my main focus during business studies and during three and a half years of professional experience. Relationships and social structures have ever been important to my work and me. I finally decided to investigate what happened on a relational level during the formation process of a network in order to i) have an explanation for the behavior of potential partners in our research project and ii) provide implications how to deal with such challenges in the future. Having explained how I happened to select the area of my research, I would like to put in words how much motivation was given to me from other people to continuously work on the topic and to finalize it. This work would not have been possible without the support of my supervisors and many other people. First of all, I want to thank the assessors and evaluators of this work. By at the same time appreciating and critically discussing my work, Univ.-Prof. Dr. Rudolf Vetschera and Ao. Univ.-Prof. Dr. Sabine Köszegi allowed me to cut my own path in research. Both of them played a decisive role for my future professional activities. Ao. Univ.-Prof. Dr. Christine Strauss, my second tutor, pushed me to work when I thought it would take me another couple of years to finalize this PhD (thank you Christine, it was the right way!), and the working atmosphere at the University of Vienna as well as at the Research Institute EC3 gave me enough freedom and time to develop my own ideas. I would also like to thank Astrid Schmidtchen, M.A., who proofread this work and delivered the new version in a very short time frame. Special thanks goes to Michel Pouly from EPFL Lausanne who was the first person who discussed the concept and problems of networking with me in a very open way. The same holds for Dr. Adrian Plüss from the University of Applied Sciences Northwestern Switzerland who introduced me to the whole community of VOresearchers at the IFIP World Computer Congress in Toulouse in summer 2004, and who gave me a lot more information than I had asked for or even expected. I additionally had a lot of interesting discussions with Charles Huber and Guido Besimo about their work at Virtual Factory Nordwestschweiz-Mittelland. I also want to thank Prof. Dr. Patrick N. Kenis and Prof. Dr. Leon A.G. Oerlemans from the University of

Preface

IX

Tilburg for offering me the participation in the Tilburg Summer School 2005. During this time I had the possibility to reconsider my research approach and benefited a lot from the discussions with other students and teachers. Regarding the VERITAS team, I owe thanks to my project colleagues Sonja and Nicole who showed a lot of commitment and always brought up interesting and critical aspects of cooperation. I especially would like to thank Serdar for his helpful contribution with the project – ranging from simultaneously translating a four-hoursmeeting of Turkish network participants to investigating cultural differences between Austria and Turkey in his diploma thesis. Furthermore I would like to thank Matthias who showed me that team work really produces better and more interesting results than working alone; Leyla, who became a really good friend (I will never forget the nice breakfast in your house, Leyla); Notis, who always told me that I had “too much energy” when I asked one of my critical questions or had another idea what we could do about the lethargic cooperation partners. Dirk, who brought out the best in me – especially while jogging in Athens; Yavuz, who was the best tour guide ever, and Thomas, who also supported this work with information after the project had already been finished. During the project, I have learned a lot from Sylvie’s professionalism and critical attitude. All of them supported me in my academic but also personal development during this time, but – most important – the idea to regard the network process as a group process arose during an intensive talk with Dr. Doris Weyer. Thank you, Doris! The message for my parents is simple: I would like to thank them for all their love and education that gave me the self-confidence I needed in order to reach my ambitious goal. I especially want to thank my mum for all the talks and reflections during the last years (and before). Thanks to my husband Max for being with me all the time. Last but not least I think that writing a PhD thesis is definitely not possible without having friends who encourage you during the difficult phases. I would like to thank Eva for her support during the whole PhD process; Lea, who provided me with citation guidelines and formal hints especially during the last weeks of writing; and Sandrine for her helpful comments on my work, discussed in night working sessions via Skype. Enjoy reading. Marita Haas

Index 1

Introduction ........................................................................................................... 1 1.1

Objectives and Research Contribution............................................................. 1

1.1.1 Background of the VO Concept for SMEs.................................................... 2 1.1.2 Research Approach ...................................................................................... 6 1.2 Structure of Work........................................................................................... 11 2

State of the Art..................................................................................................... 15 2.1

Literature Analysis ......................................................................................... 15

2.1.1 Definition and Main Characteristics of Virtual Organizations ................. 15 2.1.2 Origin of Virtual Organizations ................................................................. 18 2.1.3 Evolution of the Virtual Organization Concept ......................................... 23 2.2 Empirical Investigation in Virtual Organization Practice.............................. 29 3

Framework Development ................................................................................... 41 3.1 Cooperative Network Concept and Implications........................................... 41 3.2 Life Cycle Concepts and Phases of Networks ............................................... 49 3.2.1 Corporate Life Cycle Models ..................................................................... 49 3.2.2 Virtual Life Cycle Models........................................................................... 52 3.3 5-Phases Model .............................................................................................. 54 3.3.1 Background: Groups and Group Formation Process................................ 55 3.3.2 Framework for Cooperative Networks....................................................... 59

4

Design of Analysis................................................................................................ 67 4.1 4.2

Sample: Veritas Project.................................................................................. 67 Research Method: Case Study Research........................................................ 73

4.2.1 General Aspects of Case Study Research................................................... 73 4.2.2 Application of Case Research .................................................................... 76 4.2.3 Instruments of Evaluation .......................................................................... 79

XII

5

Index

Empirical Data: Network Formation Processes ............................................... 89 5.1 The Austrian Case .......................................................................................... 89 5.1.1 Initiation ..................................................................................................... 93 5.1.2 Forming .................................................................................................... 103 5.1.3 Storming ................................................................................................... 110 5.1.4 Norming.................................................................................................... 123 5.1.5 Performing................................................................................................ 128 5.2

The Belgian Case ......................................................................................... 131

5.2.1 5.2.2 5.2.3 5.2.4 5.2.5 5.3

The Turkish Case ......................................................................................... 151

5.3.1 5.3.2 5.3.3 5.3.4 5.3.5 6

Initiation ................................................................................................... 133 Forming .................................................................................................... 142 Storming ................................................................................................... 148 Norming.................................................................................................... 149 Performing................................................................................................ 149

Initiation ................................................................................................... 155 Forming .................................................................................................... 163 Storming ................................................................................................... 171 Norming.................................................................................................... 189 Performing................................................................................................ 190

Comparative Analysis ....................................................................................... 193 6.1

Result of Network Formation ...................................................................... 193

6.1.1 Network Description and Visualization ................................................... 193 6.1.2 Planned Activities..................................................................................... 197 6.2 Comparison of Phases.................................................................................. 200 6.3 Country-specific Behavior ........................................................................... 211 7

Conclusions and Outlook on Further Work ................................................... 217

References.................................................................................................................. 225 Appendix.................................................................................................................... 241

Figures Figure 1: Research Framework..................................................................................... 12 Figure 2: Working Definition of Virtual Organizations ............................................... 18 Figure 3: Case Description Puma ................................................................................. 34 Figure 4: Case Description Virtual Factory Nordwestschweiz-Mittelland .................. 35 Figure 5: Definition of Cooperative Networks ............................................................. 42 Figure 6: Tuckman's Group Model............................................................................... 57 Figure 7: Formation Model of a Cooperative Network ................................................ 60 Figure 8: Virtual Factory ............................................................................................. 69 Figure 9: Research Design ............................................................................................ 78 Figure 10: Formation Process Austria ........................................................................ 129 Figure 11: Formation Process Belgium ...................................................................... 150 Figure 12: Turkish Network Initiatives ...................................................................... 172 Figure 13: Formation Process Turkey ........................................................................ 191 Figure 14: Model of the Austrian Network ................................................................ 194 Figure 15: Model of the Turkish Network(s).............................................................. 195 Figure 16: Comparison of Length of Phases .............................................................. 200

Tables Table 1: Development of VO-characteristics ............................................................... 28 Table 2: Virtual Profiles .............................................................................................. 33 Table 3: Comparison VO and Cooperative Network.................................................... 48 Table 4: Comparison of Models ................................................................................... 59 Table 5: Attributes of 5-Phases Model ......................................................................... 62 Table 6: Relevant Situations for Different Research Strategies ................................... 75 Table 7: Data Matrix..................................................................................................... 78 Table 8: Company Description Pre-Questionnaire....................................................... 81 Table 9: Interview Sample ............................................................................................ 82 Table 10: Material for 5-Phases Model ........................................................................ 87 Table 11: Trust Issues in Austrian Interviews ............................................................ 120 Table 12: Austria: Network Project Overview ........................................................... 123 Table 13: SWOT Analysis Network Belgium ............................................................ 146 Table 14: SWOT Analysis of the Turkish Manufacturers.......................................... 163 Table 15: Skill Matrix Super Structure Network........................................................ 173 Table 16: Product-market Matrix Super Structure Cooperators................................. 174 Table 17: CompressorNet Participants' Characteristics.............................................. 176 Table 18: Interview Description Turkey..................................................................... 187 Table 19: Network Description................................................................................... 199