Inter organizational cooperation can be simply defined as the sharing of resources among various organizations. It can be further described as the practice of two or more organizations working together to achieve a common benefit or purpose. Usually inter organizational cooperation in all business activities and mostly this is in marketing, sales, manufacturing and research and development. At times this cooperation is formal and at times it is informal. Inter organizational cooperation can be said as formal when it is on the basis of a contractual agreement. Cooperation is informal when there is no contracts signed and the cooperation is on the basis of an unofficial communication between the employees of organization or is merely casual in form. Both these are equally important in the area of diffusion of knowledge (Weavers, 2007).
Inter organizational cooperation is considered as a network among organizations now days though it was viewed as a relation between two individual organizations. Inter organizational cooperation cannot be considered as simple exchange of information or technology between organizations but is the capability of various organizations to operate in union for achieving a particular goal that is common for all such organizations. Thus for achieving inter organizational cooperation it is necessary for organizations to have organizational compatibility along with various systems facilitating interoperability (Akin, 1979).
Importance or coordination and cooperation among organizations in the achievement of objectives are now given great emphasis by scholars and writers in the field of management. Coordination is considered as one of the five critical functions of management by Fayol (1949) who is considered to be the first classical writer on management. Now days inter organizational cooperation is considered as a critical factor determining the success of organization and its role will become more crucial in future. This is because organizations are now days becoming more complex and is not working alone. Emerging forms of organizations like self-managed task teams, virtual cooperation, network organization, joint ventures internationally and horizontal organization can operate successfully only if there is effective cooperation. It is also a well-known fact that no organisation can survive on its own but has to depend on other organisations surrounding them (Smith, Carroll, & Ashford, 1995). Analysing, recognising and promoting such relationships between organisations have become a key or prerequisite for organisations to gain knowledge, competitive advantage and resources that they need. Relationship between organisations are of various types from economics, emotion, culture, behaviour and psychology and thus no uniform definition can be given to inter organisational relations now. It has also become very important for organisations to study various relations between organisations for effectively managing its business relationships (Faerman, McCaffrey, & van Slyke, 2001). Thus inter organisational relationship has achieved more importance in today’s business world for effective management of business to achieve continuous competitive advantage in market.
Inter organisational relationships has not developed all of a sudden. It has evolved over years and is still a constantly evolving process (Faerman, McCaffrey, & van Slyke, 2001). Evolution of this particular aspect can be defined under three phases and they are based on deterrence, knowledge and trust. During the early stage of evolution inter organisational relations were based on the fear of punishment for violating trust and the rewards for preserving trust. Thus during early stages inter organisational relationships were based on deterrent. Later relationship between organisations began to grow on the basis of mutual trust rather than fear of punishment. Relationships were based in the knowledge of other party and the extent to which their behaviours were predictable. Relationships evolved over time and it was based on understanding between each other. Later this changed to relationships solely based on trust. Organisations that forms inter relations have common rules, values, and moral obligation to each other and thus the stage can be called as something based on identification (Huanrong, 2009). In the first stage there was risk and the relation was volatile and hence unstable. In the second stage based on knowledge there was common rules and values and in the third stage inter organisational relationships became stable. This is because at this stage relationship was based on trust and this strengthened the relationship.
How it can be applied?
Inter organisational cooperation is considered to be the best possible solution for several issues faced by organisations. Organisations functioning today are facing several issues like overlapping, duplicating, fragmentary social services. These can be considered as the result of gap in coordination between service agencies that are responsible to this. One of the methods through which such an issue can be solved is through interagency cooperation. Organisations are facing several challenges in today’s turbulent environment in which it is working. It is not possible for organisations to operate alone. Technological innovations also require organisations to cooperate with each other and adapt new changes which are very crucial in the success of organisations. It will be easy for organisations to successfully face global challenges together than alone (Harrigan, 1985).
One of the greatest success that can be found through inter organisational cooperation is the successful cooperation between Google and Samsung. Android operating system for mobile was developed by Google and this technology was applied by Samsung in its smart mobiles (Ding, Akoorie, & Pavlovich, 2009). It was the introduction of android operating system that made Samsung mobiles successful in market. Marketing of android by Samsung helped the operating system to overtake Symbian during late 2010. This is a typical example of technical cooperation between organisations and how it helped both the organisations to achieve success.
Inter organisational cooperation can be achieved by various companies having similar goals and values. For achieving inter organisational cooperation first thing to do is to have trust between organisations. Inter organisational cooperation is possible even in a partnership business. For that it is necessary for companies that enter into partnership to have a very successful communication between each other. This is because communication alone can help the company to coordinate each other and respond quickly to changes and demands (Smith, Carroll, & Ashford, 1995). It is also necessary for both organisations to understand the need for change and manage such change successfully. To understand whether it is possible to implement inter organisational cooperation among organisations it is better to have an understanding of its positive and negative aspects (Ding, Akoorie, & Pavlovich, 2009). It is possible through Swot analysis.
|– Increased tacitness of knowledge
– Value creation
– Decreased demarcation of processes that contribute
|– Adjust organisational functions
– Variety of configurations
– Difficulty to take independent decision
|– More structured representation
– More knowledge
– Standardization, flexibility, active management
– Lower cost of transaction
|– Increased transparency
– Resource combination
– Strategic misfits
– Loss of public support
– Resistance from stakeholders
Inter organisational relationship is having benefits and issues. By creating inter organisational relationship an organisation will lose its facility to act independently based on independent decisions. Though this facilitates value creation, knowledge gain and lower costs it at the same time can lead to resistance from stakeholder’s loss of support from public and resource combination. As there is more transparency in this system it won’t be possible to take independent decisions by the organisation. If decision is not taken wisely it will lead to strategic misfit and the whole organisation will suffer (Schermerhorn, 1975). But at the same time this method will ensure that the organisation is more flexible, standardized and will have an active management. Thus the system of inter organisational relationship has both benefits and issues associated to it and it can be used beneficially in certain areas with effective strategic application.
Inter organisational cooperation is helpful for organisations in present global scenario. This is because it is very difficult for organisations to remain successful alone in global market. Various new technologies and other advanced changes require organisations to co-operate each other and work for the benefit of all the organisations in such cooperation. But at the same time this dynamic also creates certain restrictions in the functioning of organisations. Under such co operations it is necessary for organisations to take decisions considering its effect on those organisations with which it has made cooperation. Further all the systems that are associated need to be transparent. But when considered all together this system is found to be very effective in the successful management of an organisation.
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Ding, Q., Akoorie, M. E., & Pavlovich, K. (2009). A Critical Review of Three Theoretical Approaches on Knowledge Transfer in Cooperative Alliances. International Journal of Business Management , 47-55.
Faerman, S. R., McCaffrey, D. P., & van Slyke, D. M. (2001). Understanding Interorganizational Cooperation: Public-Private Collaboration in Regulating Financial Market Innovation. Organization Science , 372-388.
Harrigan, K. R. (1985). Joint Ventures, Alliances, and Corporate Strategy Joint Ventures, Alliances, and Corporate Strategy. Washington: Beard Books.
Huanrong, L. (2009). Study on the Inter-organizational Relationship and Its Evolution. Retrieved April 23, 2013, from www.seiofbluemountain.com: http://www.seiofbluemountain.com/upload/product/200911/2007qyczhy1z2a9.pdf
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