New research suggests collaboration may turn the traditional view of competition on its head. “Firms are recognizing the tremendous advantage of collaborating with supplier networks and competing as teams rather than as individual enterprises,” said Jeff Dyer, a professor at BYU’s Marriott School and author of an eight-year study on competitive advantage.
“Major firms like Toyota and Chrysler have achieved staggering performance advantages relative to their competitors during the past decade in large part because they have created more effective enterprises. These automakers were among the first to recognize that the fundamental unit of competition has changed from the individual firm to the extended enterprise,” Dyer claims.
Aside from analyzing mounds of automotive industry data, Dyer interviewed more than 200executives and surveyed 500 suppliers. His research focused on the changing nature of competition and competitive advantage. The automotive industry was chosen for the study because of its immense impact on the U.S. and other national economies, history of pioneering technology, ability to adapt to organizational change and its competitiveness.
Despite competitors’ adoption of the Toyota production system and Chrysler’s relatively small size, Dyer found these two firms lead the industry in time-to-market, productivity and profits. Toyota is also the industry’s quality leader and, according to Dyer, Chrysler has improved its quality substantially since adopting the “extended enterprise” approach. He attributes their success to the efficiency with which they collaborate with and manage supplier networks.
“Collaboration processes are created with firms making relationship specific investments, sharing knowledge within the extended enterprise and building trust between organizations,” Dyer said. “When implementing these processes, extended enterprises will be able to respond swiftly and flexibly to opportunities and threats while maintaining significantly lower transaction costs.”
Dyer cautions businesses who are slow to adopt collaboration processes. “Not only are firms in danger of becoming less profitable, but their very survival is at stake,” he said.
Released last week, Dyer’s findings are published in a new book, Collaborative Advantage: Winning Through Extended Enterprise Supplier Networks. The book, published by Oxford University Press, is available at major bookstores and through online booksellers.
Jeff Dyer joined the Marriott School in 1999 and holds the Donald Staheli Term/Chair in International Strategy. Previously, he taught at the University of Pennsylvania’s Wharton School, where he was recognized with Excellence in Teaching awards in 1996, 1997, 1998 and the Undergraduate Teaching Award in 1998. Hewas also awarded the McKinsey/Strategic Management Society Best Paper Prize in 1998 for his paper, “Interorganizational Learning, Barriers to Knowledge Transfers and Competitive Advantage.” His research and expertise includes competitive advantage through strategic alliances, effective supply-chain management and international strategy. Dyer earned a PhD in management strategy and organization from the University of California-Los Angeles and an MBA and BS in organizational psychology from Brigham Young University.
The Marriott School is located at Brigham Young University, the largest privately owned, church-sponsored university in the United States. The school has nationally and internationally ranked programs in accountancy, business management, information systems, organizational behavior and entrepreneurship. The mission of the Marriott School is to educate men and women of faith, character and professional ability who will become outstanding managers and leaders throughout the world. Approximately 3,000 students are enrolled in the Marriott School’s graduate and undergraduate programs.
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Writer: Carrie Beckstead