Essay about Strategic Management and Capability

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NETWORK CAPABILITY – EMERGING AS PART OF AN INDUSTRIAL
FIRMS COMPETENCE CONFIGURATION
Jukka Vesalainen,
University of Vaasa, Department of Management jukka.vesalainen@uva.fi Henri Hakala,
University of Vaasa, Department of Management henri.hakala@uva.fi Abstract:

The network capability refers to the firm’s ability to build, handle and exploit relationships.
These capabilities are interwoven in the complex configuration with other capabilities and competencies of the firm and are, in practice, very difficult to separate from them. Rather than assuming that firms inherently possess network capability, our aim is to discover if this actually naturally occurs in the discourse of the top management teams. In order to understand how managers perceive, process and interpret network capability, the management teams of six industrial subcontractors were guided through a five-step process of introducing, identifying, critical screening, challenging and verifying the capabilities of the firm. The paper introduces strategic capability architecture and investigates how network capability emerges within the configuration of other capabilities in these firms. We found that in customer oriented capability sets, network capabilities are central to the formation this kind of capabilities. In other types of capability sets, networking capabilities play an important role as assets in the formation of the capability sets. Furthermore, we identified that the networking capabilities act in unison with other capabilities through three different logics, termed partnering, value streaming and horizontal allying.

Keywords: network capability, relational capabilities, cooperative competencies, competence and capability configurations

Competitive paper
1

NETWORK CAPABILITY – EMERGING AS PART OF AN INDUSTRIAL
FIRMS COMPETENCE CONFIGURATION

INTRODUCTION
The challenges of developing an organizational “ability to handle individual relationships”
(Håkansson, 1987), “close relationships with external parties” (Mascarenhas, Baveja, & Jamil,
1998), “capability to interact with other companies” (Lorenzoni and Lipparini, 1999) and
“organizational ability to find, develop and manage relationships” (Lambe, Spekman, & Hunt,
2002) has attracted a lot of scholarly interest in recent decades. This phenomena has been labeled variously network competences ( Human & Naude, 2009; Ritter, Wilkinson, & Johnston, 2002;), network capabilities ( Human & Naude, 2009; Mort & Weerawardena, 2006; Ritter &
Gemünden, 2003; Tyler, 2001), relational capability (Lorenzoni & Lipparini, 1999), cooperative competency, (Sivadas & Dwyer, 2000), alliance capability (Heimeriks & Duysters, 2007; Kale &
Singh, 2007), cooperative competences (Tyler, 2001), collaboration capability (Blomqvist &
Levy, 2006) and alliance management capability (Schreiner, Kale, & Corsten, 2009). In addition, such organizational qualifications as supply chain management capabilities (Tracey,
Lim, & Vonderembse, 2005) and CRM capabilities (Plakoyiannaki & Tzokas, 2002) that are inherently close to the above terminology describing various boundary-spanning capabilities have been reported (Day, 1994; Tracey et al., 2005). While each term obviously has its individual connotations, for the purposes of this research, we refer to the main idea, the ability to build, handle and exploit relationships as network capability (Ritter & Gemünden, 2003; Tyler,
2001)
The resource or competence view of the firm describes a firm as a bundle or configuration of related resources, capabilities or competencies often described as a “differentiated set of skills, complementary assets, and organization routines which together allow a firm to coordinate a particular set of activities in a way that provides the basis for competitive advantage in a particular market or markets” (Dosi & Teece, 1998, p. 284) In this mesh of different capabilities the role of network capability may be difficult to isolate from other internal factors affecting
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