Interfirm networks : organization and industrial by Anna Grandori

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By Anna Grandori

This e-book examines the character of interfirm networks and their position in selling commercial competitiveness. Drawing on various case experiences the members current a balanced theoretical and empirical approach.

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The foreman decides on the division of work even when the owners are not around; each worker has then to set up his own machine accordingly. We have a very open mentality with our workers; they are always involved if there is a concern related to the shop floor; they are usually not if it is an external matter. Although I am in charge of overseeing operations, each worker is responsible for his own accomplishments; it is the worker him/herself who feels he has to carry out the work with a professional attitude.

A production system entirely based on subcontracting and the availability within the district of complex and expensive machinery that can be utilized only for a fraction of their saturation time, lowers entry barriers. The low level of vertical integration and, paradoxically, the small dimensions highlight the competitive advantage of the adversaries. The comparative advantage of someone who produces a new product or explores a new market is always only temporary and is based on pure know-how as well as on a network of relationships.

Alliances among different firms have been shown to be superior to both an integrated firm and market contracting when there are contrasting production and transaction cost functions for all the parties involved, such as high coordination costs deriving from asset specificities and uncertainty favouring integration, and economies of specialization and scale favouring deverticalization (Eccles 1981; Mariotti and Cainarca 1986). Other studies have shed light on the advantages of alliances for pooling complementary and co-specialized resources and for generating successful innovations (Richardson 1971; Teece 1986; Ouchi and Bolton 1988).

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