Collaboration in the telecommunications industry: a case study

It is argued that for organisations to truly achieve high and consistent levels of performance in their dealings with other firms they must move from contract based models predicated on the pursuit of cost efficiencies and the exploitation of bargaining power to more collaborative or partner based models. These new exchange relationships pursue greater organisational value through the development of cooperative working practices and the nurturing of trusted relationships. It is proposed that this type of approach to other firms can reduce transaction costs and increase productivity as well as improve innovation and learning which, it is further argued, is more important than contract and cost efficiencies in creating sustainable competitive advantage in a dynamic and uncertain environment. This study examines inter-firm relationships from a practitioner’s perspective. The goals of the study were to develop the author’s knowledge of collaborations to assist in his role as Account Director for a major Network Systems Integrator and to add to the academic research on inter-firm collaboration. This thesis documents the findings from the study. It examines the collaborative literature and introduces an integrated model of academic research and theoretical principles which collectively are proposed to predict successful collaborations. The thesis charts a case study of an inter-firm relationship in the UK telecommunications sector over 8 years, recording and analysing the main purchasing and collaborative episodes over that period and providing a unique insight into the dynamics of an inter-firm relationship in a highly competitive and highly uncertain industry. The thesis includes a significant examination of the literature on research methods and services science. The services science review was conducted through a collaborative lens, with the literature analysed in terms of its contribution to collaboration theory and practice. The findings from the study illustrate that the literature on alliances and collaborations is extremely fragmented with no universal theory to guide the practitioner. A pervasive theme from the literature was that firms in a highly competitive and uncertain environment are more likely to seek value through collaborations. The study examines the extent to which a collaborative approach is being pursued in the case of a firm in the UK telecommunications sector. The case investigates the veracity of the literature and highlights the practical challenges associated with creating value through collaborative initiatives. The findings indicate that inter-firm relationships are extremely complex economic, social and political arrangements requiring significant management effort and consequently attracting significant costs. The case charts the evolution of a relationship from a traditional customer-supplier exchange model to a more complex arrangement characterised by portfolio relationships and competitive collaborations underpinned by reciprocity. Creating collaborative value in this environment is subject to successfully navigating an array of organisational and cultural barriers significantly under represented in the literature with exchange behaviours relating to lack of leadership, moral hazard, opportunism, hold-up and competitive learning being at the core. In the case examined, these behaviours existed within a culture of institutionalised antipathy towards outside firms which ultimately led to the failure of their collaborative initiatives. The implications of this study are significant. The economies of the future are projected to be predominantly knowledge based and services led. Industrial and state competition is predicted to be founded on knowledge management and services innovation. The unit of management for this innovation is said to be the service system as opposed to the firm. Services systems are conceptualised as complex networks of firms, capabilities processes and technologies which are predicated on knowledge collaborations and effective service exchanges. The dominant industrial and academic approaches to explaining and directing management practice in these services collaborations assume an open and productive flow of knowledge across firm and state boundaries. The stated pre-requisite for a firm operating in this environment is that it possesses a collaborative capability, i.e. the ability to work effectively with other firms in a culture of openness and honesty. A capability and culture not found to be prevalent in this study. However, despite the challenges found in case study, the researcher’s closing argument is simple. When competitive performance depends on the firm’s relationships with other firms, managers need to pay attention to the following sets of actions: (1) Building a collaborative intent with the business (i.e. educating stakeholders on the value of collaboration in the context of their business goals and gaining senior management sponsorship and commitment to the process); (2) Developing a collaborative architecture (i.e. a structure (team or function) within the firm which has responsibility for activities at the boundary of the organisation and which is tasked with setting collaborative goals and strategies); (3) Identifying and crafting collaborative arrangements with other firms that support the firm’s strategy (i.e. firm selection, ensuring collaborative fit and developing value propositions in the context of the industry segment); (4) Managing collaborations (i.e. operationalising the relationship, setting joint goals, activities and measures, building relationships, and making joint decisions); and (5) building the appropriate levels of collaborative capital that energise the flow of resources and knowledge across the firm boundaries and create organisational and collaborative value. These activities are proposed to help build a collaborative capability. Although, the findings of this study indicate that the development of this capability and the management of a collaborative environment is a significant challenge and one that potentially requires significant commitment and change on the part of participating firms in order to have any real probability of success