Block II: "Resources"

The second group of theories emphasizes resources as the main element necessary for the functioning of entities. In order to maintain a certain logical continuity of the argument and to avoid a radical jump between the first group of theories in the perspective of which cooperation was considered (including cooperation within COs) - the dominance of the structure/sector over the entities operating within them - and the next group (placing resources at the center of attention), it seems appropriate to arrange the theories presented in this context. The concept that in some way continues the direction of thoughts from the “Structure/ Sector” theory group is RDT due to a very clear emphasis on the role of the external environment of the organization for the success of its functioning. Similar in tone, but with the balance transferred to the “inside” of the organization, is resource-based theory (RBT). The last two presented concepts - transaction cost theory and organizational learning theory - focus on generating and developing certain types of resources, respectively: economic resources preserved for the use of the organization as a result of reduced transaction costs as well as knowledge generated and internalized by the organization using various mechanisms of its acquisition.

RDT was established in 1978 by Pfeffer and Salancik (1978) in an attempt to convince the scientific community of the need for a broader view of inter-organizational cooperation. The core of this concept is best conveyed by a quote from Pfeffer (albeit from a later publication than the one mentioned above): “[...] because organizations are not internally self-sufficient, they require resources from the environment and, thus, become interdependent with those elements of the environment with which they transact ... Thus, resource dependence theory suggests that organizational behavior becomes externally influence because the focal organization must attend to the demands of those in its environment that provide resources necessary and important for its continued survival” (Pfeffer, 1982, pp. 192-193). The very definition of the essence of RDT allows to understand why it was with this concept that the discussion of “resource” theories of cooperation began - just like theories from the “Structure/Sector” group, strongly emphasizes the relationship between the organization and its environment. However, this relationship is not dynamic and negotiable - the dependence of entities on resources remaining outside their “borders” is an absolute dogma.

The organization is under constant influence of its wider environment

- this includes other organizations (e.g. enterprises) occupying a similar position in the value chain as well as entities located elsewhere in the chain (e.g. suppliers) and entities such as political authorities (representing central and local governments), business environment institutions, etc. - which has certain consequences for the organization under consideration. The most important of them is the need to act in the mode of constant analysis of one’s status (“superiority-inferiority”) in relations with other entities. The relations of “superiority” and “inferiority” are not related here to the commonly understood higher position in a hierarchy, but to the extent to which an organization in relation to another specific entity is a “donor” and to what “acceptor” of resources necessary for their functioning. The advantage of being a “donor” in such cooperation is greater autonomy for a given organization - the advantage of being a “acceptor” is the primacy of being dependent on others. A more desirable arrangement is, of course, to be a source of resources attractive to other entities, as this strengthens the competitive position of the organization. Being, in turn, mostly in relations of dependence on others, makes difficult to think about an independent management of the organization, because it will have to pursue not only its own interests. The key game is therefore that an organization takes control of both its critical resources (which would make it independent from other players) and critical resources for other organizations (which would make other organizations dependent on it) - the balance of the “inter-dependence” variable in relations with other entities should strive towards the “autonomy” pole.

A different approach to the issue of resources has the RBT - this theoretical concept shifts the burden of significance towards the “interior” of the organization and the search for its strength - and thus the ways to improve its competitive position - in tangible and intangible assets, the specificity of which prevents or at least makes it difficult for other organizations to copy and imitate them. Rumelt’s idea reflects this well: “In essence, the concept is that a firm’s competitive position is defined by a bundle of unique resources and relationships, and that the task of general management is to adjust and renew these resources and relationships as time, competition, and change erode their value” (Rumelt, 1997, p. 132). As Rumelt himself wrote, his proposal was not a theory but “a set of constructs that have proved useful in describing and summarizing the empirical studies of the firm behavior that form the core of the business policy literature” (Rumelt, 1997, p. 132) and was in opposition to the neoclassical theory of the firm. Each of the resources that a given organization would like to take care of should meet four essential conditions so that it can be considered as a real source for strengthening the competitive advantage - the desirable features of these resources are:

  • 1 value - resources are of great value to a potential buyer and their use will bring results greater than the cost of obtaining these resources;
  • 2 rarity - resources are difficult to obtain (limited possibility of obtaining them from other entities);
  • 3 inimitability - difficult to follow; and
  • 4 non-substitutability - no substitutes available for these resources (Barney, 1991, p. 106).

Unique resources, i.e. those that to the greatest extent determine the competitive position of an organization, may be both tangible and intangible (e.g. skills and experience of key employees). It is natural - under the assumptions described above - that companies that do not have such resources are more willing to enter into cooperation relations (transaction costs of such cooperation would be lower than the profits resulting from acquiring resources considered to be crucial), and less willing to cooperate with companies having an abundance of these resources (these companies, in turn, will be focused on constant increase of the value of their resources).

The specificity of functioning of COs allows member entities to implement their visions, regardless of whether they would be closer to RDT or RBT in terms of their ideology. There is no such organization nowadays (including companies) that would undermine the importance of having or at least disposing of resources considered essential by that organization. Thus, the difference could only result from where a given organization locates the “source of power” - in the environment (RDT) or in the organization itself (RBT). But even this path discrepancy is only apparent: contemporary organizations have probably internalized the requirement to have reliable knowledge both about themselves and about their environment, so it should be assumed that they are largely aware of the profitability of following both paths at once - strengthening their assets and transforming them into factors determining the competitive position and filling the gaps through effective processes of cooperation with other entities. COs are a useful platform for entities that strongly emphasize the issue of accessibility to resources and crucial for their functioning: they group many organizations under one “umbrella” (CO), making them a natural resource base, offer certain resources (both products and services) to all members (and their administrator is CO), and they provide an excellent opportunity to strengthen the competitive position for entities involved, for example, in cooperation on a new, common product or service.

Both RDT and RBT did not distinguish any particular type of resource - they concerned the general attitude of an organization towards ensuring the appropriate amount of resources in order to meet its goals (and to improve its competitive position). In contrast to these theories, the next two concepts - transaction cost theory and organizational learning theory

- focus on a certain segment of the organization’s activity, i.e. minimizing the costs of transactions and learning mechanisms of the organization - obtaining knowledge from the environment, respectively.

Transaction cost theory is combined with cooperation in a variant of reality where an entity operating in an economic field makes a decision to conduct a specific transaction (e.g. exchange of resources of various kinds) with another entity or entities. Alternatively, individual actions may be performed “inside” an enterprise (e.g. as a result of abandoning the outsourcing of certain services). A detailed description of the designatum of the term “transaction costs” may be found in the following extract: “Transaction costs are those costs incurred in arranging, managing, and monitoring transactions across markets, such as the costs of negotiation, drawing up contracts, managing the necessary logistics, and monitoring accounts receivable. Transaction cost theory regards the basic choice in organizing economic transactions as being between affecting these through market exchange and internalizing them within a single firm, where they are governed by hierarchical relationships embedded in organization structures” (Faulkner & de Rond, 2000, p. 7). Williamson, the creator of the contemporary form of this concept, pointed to several key factors affecting the selection of how to deal with transactions to be made by a specific organization - they are presented from the hierarchical point of view, i.e. from the perspective of conducting transactions within a given entity:

  • 1 opportunism - hierarchy protects against unpredictable behavior of an external partner;
  • 2 bounded rationality - hierarchy counteracts the limitations of rationality (due to, for example, permitting specialization);
  • 3 small numbers - “hierarchy permits small-numbers bargaining indeterminacies to be resolved by fiat” (Williamson, 1975, p. 257);
  • 4 uncertainty - hierarchy reduces uncertainty;
  • 5 atmosphere - “as compared with market modes of exchange, hierarchy provides, for some purposes at least, a less calculative exchange atmosphere” (Williamson, 1975, p. 258), and
  • 6 information impactedness - “hierarchy extends the constitutional powers to perform an audit, thereby narrowing (prospectively at least) the information gap that obtains between autonomous agents” (Williamson, 1975, p. 257).

Each organization is forced to make decisions based on the information at its disposal and choose the transaction path that will generate the least amount of ex-ante (preparatory) and ex-post (post-transaction) costs. Generally speaking, it is easier to carry out a transaction outside the company (on the market) when it concerns common resources; this transaction would be one-off, with a low risk of failure.

Transaction cost theory covers, of course, numerous other topics - the elements briefly described above are just a fraction of the theory. However, even this amount of information can be used to understand its meaning and, thus, to try to relate it to cluster reality. In the context of transaction cost theory, a CO becomes an additional option for the entities creating it, breaking the dualism of hierarchy and market. A CO becomes a certain “extension” for its members, so cluster partners obtain a slightly different status compared to anonymous entities operating on the market even though they are not naturally regarded as an integral part of the entity considering a specific transaction. Entities forming a CO are informally obliged not to cause harm to their partners - due to their joint membership in one superior organization, the willingness to cooperate rather than hinder the functioning of partners may be assumed. Therefore, it could be concluded that COs are particularly useful for entities focused on minimizing their transaction costs (and for researchers interested in this topic).

Organizational learning theory focuses on different resources. The area of interest of this concept (or rather a research perspective because this subject of research and analysis involves many different topics) includes the processes of creating, acquiring, distributing, and internalizing knowledge. The range of knowledge that may attract organization’s interest is extremely broad and may include: (1) learning about the partner, (2) learning from the partner (Doz &c Hamel, 1998; Inkpen & Currall, 2004) - referring to the most common topics raised within Organizational Learning Theory - and (3) learning about the joint venture environment, and (4) learning about how to collaborate (Inkpen &c Currall, 2004). Unlike learning from the partner, aiming to expand the possibilities of a given organization in terms of both cooperation and other strategic areas for this organization, learning about the partner aims to obtain knowledge about the entity with which another enters into cooperation; however, this knowledge does not necessarily have to be applied to the activities of the learning organization. A slightly different distinction between learning processes was proposed by Child and Faulkner, who classified them into three levels: (1) technical, (2) systemic, and (3) strategic learning (Child & Faulkner, 1998). It is also worth remembering the distinction between the goals to be achieved through a specific organizational learning process: (1) exploration or (2) exploitation (March, 1991) - exploration is used to discover new areas, solutions, and possibilities, while exploitation serves to make a better use of what is currently possessed and to reduce operational costs. However, regardless of which division of organizational learning is considered most accurate, this will not change the fact that without seeking knowledge outside one’s own organization, significant breakthroughs or simply making progress cannor be expected: “Knowledge creation occurs in the context of a community, one that is fluid and evolving rather than rightly bound or static. The canonical formal organization with its bureaucratic rigidities is a poor vehicle for learning. Sources of innovation do not reside exclusively inside firms; instead they are commonly found in the interstices between firms, universities, research laboratories, suppliers and customers” (Powell et al., 1996, p. 118). Even though there is no consensus about the number of entities in order to obtain the best results of cooperation focused on knowledge generation, absorption, or distribution, it is clear that “[...] the number of alliances that a firm participates in (i.e. degree of connectivity) and the extent to which a firm can place itself in the center of a network of relationships (i.e. degree of centrality) have a bearing on the degree of learning that results” (Barringer & Harrison, 2000, p. 379).

COs are constructs that favor the performance of learning processes at each of the four levels identified by Inkpen and Curall. Learning not only about cluster partners and from them, but also about cooperation in general and particularly about cooperation within a CO is of importance. This makes it possible to follow both paths identified by March: exploration and exploitation - depending on the current needs of entities and the arrangement of cooperation relations, in which the entity is involved at a given time. COs favor the generation and distribution of knowledge among member entities due to the natural (geographical, sectoral, and cultural) proximity of their members. In addition to its unarguably positive effect, this proximity may, however, have more negative overtones associated with uncontrolled knowledge spillover within a CO: sharing one geographical location, frequent contacts resulting from various events within a CO and involving its members, and establishing personal relations between persons representing individual cluster entities are conductive to the flow of information as well as to the uncontrolled flow of information concerning knowledge crucial from the point of view of maintaining the competitive position of its owner. It should also be added that, according to the research described in detail in Chapter 5, member entities have different expectations as to what information and knowledge they seek in a CO. In addition, the potential of organizations to generate new knowledge, distribute the knowledge already gained, and absorb existing knowledge from outside varies.

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