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Explaining How Companies Interact Effectively

How inter-firm relationships are organized through discursive processes in order to achieve coordinated action

Published: Jan 17, 2014 07:00:12 AM IST
Updated: Jan 27, 2014 03:51:20 PM IST
Explaining How Companies Interact Effectively
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Companies and other organizations have traditionally been seen as acting on behalf of a group of individuals. However, the view that individuals act on behalf of organizations has been neglected. As a result we know very little about the interpersonal communication that supports collective action at the critical interfaces between firms. This is surprising as companies depend on relationships with many organizations (e.g., suppliers, distributors, government agencies, media organizations, and recruitment agencies) to make their businesses work. Without effective collaboration at these levels a company is at risk. It makes no sense to put a great deal of effort into creating great products, for example, if the interface between distributors and retailers regularly fails. Retailers will seek other more reliable sources for their merchandise.

As researchers we were attracted to these so-called ‘interfirm interfaces.’ The effectiveness of these interfaces rests on staff interacting to create a system of collective action despite having different employers and therefore different work conditions, employment contracts, levels of supervision and skills.

Based on a two-year inquiry within the French furniture industry, the purpose of our research was to understand how inter-firm relationships are organized through discursive processes in order to achieve coordinated action. The French furniture industry emerged as an industry in the 1960s only to face considerable competition due to a significant influx of furniture from foreign manufacturers. French furniture manufacturers were forced to update their production facilities and rethink their distribution processes. New ways of organizing work, including the personalizing of logistics services, were required. The precondition for such development was the establishment of more intense collaboration - a densification of the interfirm interface between manufacturer and distribution provider. Today, this interface provides an ideal site for studying interfirm collective action.

Our analysis, based on verbal exchanges between staff working at the interface between furniture manufacturers, retailers and the logistic firms in the furniture industry revealed shared patterns of thought, behavior and taste. These shared patterns resulted from internalising an inter-organisational culture which produced a collective competence that stabilised the interfirm interface. This collective competence allows interface workers to develop symbolic (e.g., instructive stories from past experience) and physical resources (e.g., ways of using the electronic information system) that ensure a high level of operational efficiency.

By analysing workers’ conversations it was possible to reveal how successful collaborations are founded on collective competence that emerges through repeated interaction across time. This collective competence was shown to be a product of both the autonomy given to employees and of management actions aimed at organizing interfirm relationships. These two elements weave together objects, in particular information and communication technologies, with human action at all levels of the collaborating organizations.

The research revealed that adaptability, quality resources, and job security are vital for achieving this collective competence because they produce the trust required to sustain positive engagement. It also became clear that it takes time to generate a sound interfirm environment. This is because a shared history among staff from the different firms is what ensures that the right conversational resources are in place to sustain the collaborative interfirm culture. In other words, shared past experiences provide commonly understood terminology and stories that can act as tools that ensure all parties can communicate efficiently about the tasks that need to be done.

These findings have important implications for recruiting and managing those who work in interfirm settings and when introducing tools such as electronic tracking and invoicing systems. The research suggests that changing either personnel or physical or digital resources often, or without, due consideration of the unique culture that exists at an interfirm interface can adversely affect the quality of the collective action and weaken one or more of the firms’ business  operations at a fundamental level.

Our conclusion is that interfirm interfaces are complex integrated systems and the achievement of this integration requires both time and stable resourcing.

Nicolas Arnaud, Audencia Nantes School of Management, France, and Colleen Mills, University of Canterbury, Christchurch, New Zealand

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