Establishing intercompany relationships: Motives and methods for successful collaborative engagement

Abstract

This study explores the early phases of intercompany relationship building, which is a very important topic for purchasing and business development practitioners as well as for companies' upper management. There is a lot ofevidence that a proper engagement with markets increases a company's potential for achieving business success. Taking full advantage of the market possibilities requires, however, a holistic view of managing related decision-making chain. Most literature as well as the business processes of companies are lacking this holism. Typically they observe the process from the perspective of individual stages and thus lead to discontinuity and sub-optimization. This study contains a comprehensive introduction to and evaluation of literature related to various steps of the decision-making process. It is studied from a holistic perspective ofdetermining a company's vertical integration position within its demand/ supplynetwork context; translating the vertical integration objectives to feasible strategies and objectives; and operationalizing the decisions made through engagement with collaborative intercompany relationships. The empirical part of the research has been conducted in two sections. First the phenomenon of intercompany engagement is studied using two complementary case studies. Secondly a survey hasbeen conducted among the purchasing and business development managers of several electronics manufacturing companies, to analyze the processes, decision-makingcriteria and success factors of engagement for collaboration. The aim has been to identify the reasons why companies and their management act the way they do. As a combination of theoretical and empirical research an analysis has been produced of what would be an ideal way of engaging with markets. Based on the respective findings the study concludes by proposing a holistic framework for successful engagement. The evidence presented throughout the study demonstrates clear gaps, discontinuities and limitations in both current research and in practical purchasing decision-making chains. The most significant discontinuity is the identified disconnection between the supplier selection process and related criteria and the relationship success factors.