Organizational Change, Literature Review Example

Abstract

The present literature review is dedicated to the analysis of organizational change, forces of competition and cooperation, the new form of partnership (coopetition), and the dynamic forces manifested in network alliances as a part of the strategic management research. The forces of organizational change and scholarly approaches to viewing and analyzing it are discussed, and definitions of cooperation and competition, as well as their manifestations in inter-firm relationships are identified. The emergent phenomenon of coopetition, which is the presence of inter-competitor cooperation for mutual empowerment and achievement of common goals, is also analyzed. Finally, the dynamics of modern inter-organizational alliances and networks is presented, with the analysis of coopetitive strategies used in them to achieve short-term and long-term objectives and balance the divergent goals of network participants. The literature review ends with formulation of research questions stemming from the identified literature gaps in coopetition research.

Introduction

The 21^st-century business context dictates new market existence and functioning rules, and the forms in which business entities exist evolve as well. Classical organizational forms are seen as being gradually ousted by the new form of a networked organization that can meet the need to provide multi-optional, high-quality, complex services and products to customers (Zehrer & Raich, 2010). In contrast to the traditional vision of firms as urged to compete to win a strategic advantage in the market, the new trends at the global scale present the firms with a new challenge – to be able to collaborate with competitors in an optimal, effective way to gain added value and increase performance. The conventional opposition of competition and cooperation has been substituted by a new phenomenon encompassing both – coopetition; this trend towards seeking a collaborative advantage, coupled with the new networking trends in the existing and emerging markets, dictates new rules of the market participation and success. Hence, both public and private sector organizations face the need to incorporate the new market trends in their modes of functioning. Research on coopetition and networking is booming at present; however, there are still many methodological and approach issues to be solved to make the body of knowledge in these strategic management fields coherent and satisfactory.

Search Methodology

Taking into account that the major research interest lies within the field of coopetition forces acting during organizational change within networks, the need to review a wide variety of management resources to identify the needed body of literature. Hence, to cover the maximum quantity of scholarly publications on the topic, a variety of scholarly databases was chosen for literature search: Web of Knowledge (WoK), ScienceDirect, SAGE Knowledge, Scopus (Document Search), JSTOR, EBSCO Host (Complete, Elite, and Premier), ProQuest, Questia (Your Online Research Library), IEEE Xplore, and Ingentaconnect.

For ease of literature sorting, the following keywords were used for each of the mentioned databases: “organizational change”, “organizational change in networks”, “competition and cooperation forces”, “coopetition”, and “coopetition forces in networks”. The research also included the search in the 5^th Workshop on Coopetition Strategy database access to which was specifically requested for the purposes of the present study. Here, the search included only the articles on coopetition because of the database’s specificity, and no additional keywords were used.

The overall literature search process in the mentioned sources resulted in 3 PhD dissertations on coopetition, 2 textbooks, and 152 scholarly articles on the topic of interest. After the preliminary literature search process was over, a closer investigation of the obtained sources was conducted, and the articles published within more than past ten years, and articles not relating directly to the topic of research were eliminated from the search results. As a result of the described search process, 8 articles on the organizational change, 19 articles on networks, 24 articles on competition and cooperation forces, and 48 articles on coopetition were left for the present literature review.

Discussion

Organizational Change

With the fundamental change of the organizational vision as a machine to the “New Age” view of organizational systems as living systems and subsystems intricately interrelated with the external environment pressures has brought the concept of organizational change to the forefront of research attention (Goostein & Burke, 1991; Raineri, 2011; By, 2005). Hence, at present, the notion of change is considered pervasive in the contemporary organizational discourse, both at the operational and strategic level (Gay & Vikkelso, 2012; By, 2005). It cannot be seen separately from the organizational strategy, thus producing a multi-faceted, diverse, and intense impact on organizations through redesign, restructuring, mergers, acquisitions, and change management practices (By, 2005; Raineri, 2011; Gay & Vikkelso, 2012).

In the organizational research, several topics clearly stand out: the levels of change, strategies of change, models, and methods of change (Goodstein & Burke, 1991; Nasim & Sushil, 2011). Managing change is an indispensible element of organizational functioning (Gay & Vikkelso, 2012; Raineri, 2011). According to Raineri (2011), the change management practices (CMPs) include the organizational interventions that have to be aligned with the internal and external environment of the organization, and may facilitate the organizational change considerably. By (2005) and Goodstein and Burke (1991) recommended managing change flexibly according to its rate of occurrence (discontinuous, incremental, and continuous), the way in which it occurs (planned or emergent), and its scale (scale characteristics include fine-tuning, incremental adjustment, modular transformation, and corporate transformation. Nasim and Sushil (2011) also added that static vs. dynamic model of change application, piecemeal vs. holistic view of the organizational change, and the decision about macro- or micro-level of change are among the key variables in change management. Strategies of change currently known in the management practice include individual change strategies, technostructural strategies, data-based strategies, organization development, violent and coercive strategies, and direct action strategies (Goostein & Burke, 1991).

Various contributors to successful performance of change management have been researched by a realm of authors (Weick, 2011; Gay & Vikkelso, 2012; Goodstein & Burke, 1991). For instance, Goodman and Loh (2011) have proposed to look at the organizational change from the HR viewpoint, applying the team management models and strategies to mitigate change resistance, uncertainty, and other proactive change behaviors. The authors offered to use the Kubler-Ross change curve, the Lean/Six Sigma approach, and the Dilts model of logical levels of change to make the organizational change smoother (Goodman & Loh, 2011). Lewin’s three-stage change model, though being criticized for lack of depth, still remains the basis of organizational change methodology. Change management is also seen as involving the process of reconnecting continuous perceptions and discrete concepts (Weick, 2011). The paradigm shift towards approaching change from the perspective of not trade-offs, but paradoxical thinking is what distinguishes the modern organizational change literature (Pogner et al., 2013; Nasim & Sushil, 2011). Thus, the modern vision of change is characterized by the growing acceptance of change’s incorporation of seemingly controversial characteristics – continuity and stability – which calls for a new methodological approach to redefining the image of change, forces guiding it, and its outcomes (Nasim & Sushil, 2011).

Competition and Cooperation

The forces of competition and cooperation occupy a significant place in strategic management research and practice (Battista Dagnino, 2012). Competitive success is viewed as possible for achievement by the creation of firm-specific factors, favorable market positions, or the use of unique resources (Chen, 1997); competition is characterized as mitigating cooperativeness (Canegallo et al., 2006), while the real long-term success of a business entity is primarily attributed to not only competing within the company’s industry, but also being an active participant shaping the industry’s future, i.e., a cooperator (Brandenburger & Nalebuff, 1998). In the present-day business context, a new form of distribution of competition and cooperation has developed – inter-competitor cooperation (Tidström, 2009; Wen et al., 2010; Pasquinelli, 2013; Hooks & Palakshappa, 2009). This trend is highly popular in many industries including airlines industry (Tidström, 2009), energy industry (Wen, Zhaoxi & Gaobang, 2010), place branding and tourism (Pasquinelli, 2013; Sauermann, 1956), intercultural business dyads (Matsumoto & Hwang, 2011), electricity industry (Hooks & Palakshappa, 2009), and other sectors that require close network alliances and cooperation.

The pioneers of competition versus cooperation research are Deutsch (1949), May and Doob (1937), and Mead (1937). May and Doob (1937) were among the first researchers who noted that both competition and cooperation are directed toward the same desired outcome by at least two individuals. The outcome of cooperation is that all contenders receive some positive results of their effort, while the outcome of competition presupposes some individuals to win, while others will inevitably lose and acquire nothing. Mead (1937) studied the cooperative and competitive behaviors of primitive people and inferred that cooperation in plain terms refers to the act of working together, while competition relates to trying to obtain something that another person is also trying to obtain. Deutsch (2006) worked more extensively on generating a formal theory of competition and cooperation, and based on his characteristics of an effective cooperative process, the researcher elicited the following definition:

“Cooperation induces or is induced by perceived similarity in beliefs and attitudes, readiness to be helpful, openness in communication, trusting and friendly attitudes, sensitivity to common interests and deemphasis of opposed interests, orientation toward enhancing mutual power rather than power differences” (Deutsch, 2006, p. 30).

Following the pattern of defining cooperation, Deutsch (2006) also formulated the definition of competition based on the reactive, ineffective features of the competitive process:

“Competition induces or is induced by use of tactics of coercion, threat, or deception; attempts to enhance the power differences between oneself and the other; poor communication; minimization of awareness of similarities in values and increased sensitivity to opposed interests; suspicious and hostile attitudes; the importance, rigidity, and size of issues of conflict” (Deutsch, 2006, p. 30).

There is mounting research evidence of the fact that the cooperative or competitive orientation of market participants is primarily predetermined by the type of interdependence they have (positive or negative), and the types of actions they can conduct within their market environment (effective or bungling) (Deutsch, 2006). According to the type of interdependence, Easton and Araujo (1992) distinguished five types of inter-competitor relationships: conflict, competition, coexistence, cooperation, collusion, while Bengtsson and Kock (1999) recognized only four of them, except for collusion. The sources of inter-competitor conflict are also a vital component to consider when estimating the inter-firm relationships; they are commonly related to the organizational, relational, and external domains (Bengtsson & Kock, 1999; Tidström, 2009).

The contemporary business context is characterized with the overall tendency to alliance formation among firms, thus establishing strategic alliances (Bengtsson, Hinttu, & Kock, 2003; Hong, Shao-jie, & Yu, 2010; Semlinger, 2008; van Wijk et al., 2012). The reason for such trends is the embedded nature of firms – they are involved in various network formations and inter-firm relationships to co-create and appropriate value (Johansson, 2012). Stability is a critical factor for developing a strategic alliance; it is influenced by such outside factors as cooperation and relationship of companies in the alliance (Hong et al., 2010; Semlinger, 2008), while the internal factors include the ability to innovate (Hong et al., 2010; van Wijk et al., 2012) and the quality of social relationships they employ (Bengtsson et al., 2003).

The new concept of a collaborative competition industry is emerging in the context of the increasing interdependence of firms and the growing frequency of strategic alliance creation (Dyer & Singh, 1998; Gang & Zhi-tao, 2009; Meng & Layton, 2010). Gang and Zhi-tao (2009) offered a Strength of Competition-Cooperation Relationship (SCCR) paradigm for the analysis of the best ways to ensure firms’ painless integration with retention of a competitive advantage. Dyer and Singh (1998) emphasized the fact that a firm’s critical resources now can span firm boundaries, and be embedded in inter-firm resources and routines. Hence, the co-existence of cooperation and competition at various sub-fields of organizational structure has been proven as possible, and has even been estimated as a much more proactive, effective, and optimal structure of inter-firm relationships in the highly competitive market environment (Nalebuff & Brandenburger, 1996; Meng & Layton, 2010).

Coopetition

The term ‘coopetition’ emerged in the strategic management literature in the 1990s as a shift from the inevitable win-lose to win-win competitive interactions strategy (Mina, 2011; Dyer & Singh, 1998), with its official introduction into research literature by Brandenburger and Nalebuff (1996). However, these researchers did not coin the term; though Albert (1999) claimed to have coined the term in 1991, Dowling et al. (1996), Bagshaw and Bagshaw (2001), Dagnino and Padula (2002), Padula and Dagnino (2007), Abdallah (2011), and many other researchers attribute its creation to Ray Noorda, the CEO of Novell, who intensely used ‘coopetition’ to denote the simultaneous competitive and cooperative behavior of firms.

Coopetition as a management construct acquired its legitimacy mainly due to the studies of Nalebuff and Brandenburger (1996) and Brandenburger and Stuart (1996). Nevertheless, Bonel and Rocco (2007) saw much older roots of coopetition in the work of game theorists Von Neumann and Morgenstern (1944) who spoke about the simultaneous fusion of cooperative and competitive strategies in inter-firm alliances and networks. At present, coopetition is mostly focused on integrating both competitive and cooperative relationships in the value creation phase (Bengtsson & Kock, 2000; Dagnino, 2009). Hence, though there is an increasing body of research on coopetition, it is still considered a “quasi-illegitimate word” and a “liquid construct” (Dagnino, 2007; Dagnino & Rocco, 2009).

The major part of modern coopetition research is focused on defining the concept, identifying its typology, and determining the coopetition dynamics in inter-firm relationships. The range of fields in which coopetition can be applied as a research construct is also a matter of contemporary research concern. For understanding the commonly used set of coopetition definitions, see Figure 1. Brandenburger and Nalebuff (1996) initially defined coopetition as many relationships in a value network of customers, suppliers, substitutes, and complementors, while Bengtsson and Kock (2000) characterized the coopetition concept as depending on the position in the industry structure that a firm occupies – firms choose among competition, co-existence, cooperation, and coopetition. As one can see from Figure 1, three major directions in defining coopetition can be traced; Brandenburger and Nalebuff (1996) approached it as the firm’s conduct with the purpose of value creation and appropriation, implying that these processes traditionally seen as incompatible are interrelated. Dagnino and Padula (2002) approached coopetition as inter-firm dependence based on the duality of interests varying between convergence and divergence, which means that the interests of coopeting firms are not perfectly aligned, and which relates coopetition to the alliance strategy research field in strategic management (Wassmer, 2008; Levie, 2007; Hoffman, 2007). Breznitz (2007), in contrast, took an institutional stance towards coopetition.

Figure 1. Definitions of Coopetition

Depending on the view of coopetition, the fields of scholarly research in which coopetition as a meaningful construct are defined. The works of Brandenburger and Nalebuff (1996) introduced the use of coopetition in game theory, while Lado et al. (1997), Chin et al. (2008), Bengtsson and Kock (2000), and other researchers used coopetition in management research. The relational view of coopetition is traced in the works of Das and Teng (2002), Gnyawali and Madhavan (2001), Gnyawali et al. (2006), etc. Another focus of research related to coopetition is its typology; there are varying opinions on this issue, and their schematic summary can be seen in Figure 2.

Figure 2. Typology of Coopetition

There is much theoretical consideration given to the drivers of coopetition; various researchers emphasize varying rationales behind the decision of firms to involve in coopetitive relationships. Some of them include:

• Common interest (Zeldin, 2004; Dyer et al., 2008; Dagnino & Padula, 2002)
• Common and private profits (Dyer et al., 2008; Khanna et al., 1998; Luo, 2007; Padula & Dagnino, 2007)
• Collective competitive threat (Luo, 2007)
• Access to resources (Garrette et al., 2009; Zeldin, 2004; Bengtsson & Kock, 2000; Gnyawali & Park, 2009; Peng & Bourne, 2009)
• Mobilization and leverage of resources (Padula & Dagnino, 2007; Ritala, 2012)
• Similarities of technological base and market understanding (Gnyawali et al., 2006; Dyer & Singh, 1998)
• Technological uncertainty and change (Tushman & Anderson, 1986)
• Innovation (Nelson & Winter, 1982, Nonaka, 1994; Ritala, 2012).

Specific attention is paid in the coopetition research to its dynamics. The researchers approaching coopetition from the viewpoint of process view of the firm consider it dynamic (e.g., the studies of Lou, 2007; Padula & Dagnino, 2007). The authors who consider coopetition the result of high similarities in resources and market commonality among competitors include Chen (1996), Dussage et al. (2000), Harrison et al. (2001), and Chen et al. (2007). The opinion that diverse and complementary resources strengthen the cooperation element in inter-competitor relationships is attributed to Dussage et al. (2000), Sarkar et al. (2001), Das and Teng (2002), and Gnyawali and Park (2009).

Outcomes of coopetitive relationships have proved to be both positive and negative. Among the benefits of coopetition, increase market performance (Lou et al., 2007), innovation output (Faems et al., 2010), new market creation (Fjelstad et al., 2004; Lou, 2007; Ritala, 2012); protection of market shares and support of technical base (Gnyawali et al., 2006; Ritala, 2012; Lavie, 2007) were named. As for dangers of coopetition, Dussauge et al. (2000) and Lou et al. (2007) warned against the risk to lose the proprietary knowledge of the firm, Heiman and Nickerson (2004) – against the leakage of critical knowledge, and Rothaermel and Deeds (2004) – against the risk of control loss.

Within the past couple of years, research on coopetition has intensified and significantly broadened (Johansson, 2012; Abdallah, 2011, Mina, 2011). Lacoste (2012) examined the concept of vertical coopetition, a new hybrid form of supplier relationships; Osarenkhoe (2010) researched coopetition prevalence in channel systems, while Okura (2012) designed a game-theory model of effects of market demand uncertainty in the coopetitive insurance market. Rusko (2011) undertook a comprehensive study of the coopetition’s contribution to the success and sustainability of the Finnish forestry industry, and Ghobadi and D’Ambra (2012) generated a model to predict effective knowledge sharing (coopetitive) behaviors in cross-functional project teams. These and other studies are undertaken in the coopetition research field to understand the ways in which firms manage short- and long-term relationships with their rivals, and how they seek balance between their and their rivals’ interests in coopetitive alliances.

Networks

Scholarly research of coopetition is indispensably connected with studying networks; the antecedent of networking was globalization accompanied with shortening of markets’ life cycles, inter-disciplinarity of technologies, (Klimas, 2012; Nucciarelli & Gastaldi, 2009; Lavie, 2009; Zehrer & Raich, 2010). At present, networking is commonly seen as the source of above-average profits and competitive advantage (Klimas, 2012). Their benefits for companies are associated with access to resources, trust, power, status, and innovation (Bergenholtz & Waldstrom, 2011; Ojasolo, 2008). However, there is a need for building the initial understanding about the definition of networks, theoretical approaches to network alliances’ research, and clarification of characteristics business networks possess.

Baker, Kan, and Teo (2011) called networks “fluid constructs dependent on ongoing social relations established between members to build the shared values, trust, and mutuality necessary for collective action”, estimating it a successful option for building a “collaborative advantage” (p. 853). In the socio-metric understanding, networks denote any form of linkage between nodes, while other researchers insist on the absence of any hierarchical business relationships between firms for them to constitute a network (Powell, 1990; White, 2001). Mitchell (1969) was among the pioneers of network research; the researcher defined networks as “a specific set of linkages among a defined set of actors, with the additional property that the characteristics of these linkages as a whole may be used to interpret social behavior of the actors involved” (p. 2). The topic of relationships within a network is also a separate subject of intense research nowadays; for instance, Ross and Robertson (2007) distinguished simple and compound relationships among companies, Goerzen (2007) took an active interest in the incentives to enter repeated relationships with prior partners, and Eng (2005) analyzed the importance of the company’s network of relationships in influencing its competitive position within the network.

Characteristics of networks occupy another meaningful segment of the modern network research; the most extensive list of characteristics can be found in Powell (1990): degree of hierarchy, internal structure, content, symmetrical structure, functions, institutional form, and styles of learning. Theories studying networks include the rational choice theory, learning theory, and principal agent or actor theory (Zehrer & Raich, 2010). Another field of interest lies within network dynamics; Lavie (2009) indicated that many companies have begun to rely on alliances for their operations and long-term success as compared to previous preferences for more short-term cooperative alliances. Abrahamsen, Henneberg, and Naude (2012) studied network dynamics and interdependency, and found our that these concepts cannot be understood well without comprehension of the ways in which network participants try to affect change based on their perceptions of positions and roles in the network environment.

It is noteworthy that there are borderline concepts that are often mixed with, or used interchangeably with networks. In this context, Bell (2005) and Lin et al. (2012) researched the concept of industry clusters, i.e., group of geographically proximate firms in the same industry. However, Semlinger (2008) noted that co-location of entrepreneurial entities has to be supplemented by intentional cooperation for networks to emerge; in other way, clusters will not become networks.

Finally, the very subject of networking research is a significant aspect of the modern research; many scholars are targeting the assessment of progress already achieved in understanding networks and their dynamics, as well as identifying the future research prospects arising at the background of coopetition’s emergence in the strategic management field. Thus, Peng and Bourne (2009) estimated the need to research the ways in which two networks can collaborate, compete, and coopete; Chauvet et al. (2011) stated that the prior contribution of network research lies within the fields of facilitating knowledge circulation and creation, improving firms’ governance, boosting individual careers, facilitating success of entrepreneurial ventures, and composing and managing teams. Gulati, Nohria, and Zaheer (2000) estimated the key fields of strategic research in which networks can be embedded as follows: industry structure, positioning with an industry, inimitable firm resources and capabilities, contracting and coordination costs, and dynamic network constraints and benefits.

Gap Identification

After considering a large portion of recent research on organizational change, competition and cooperation forces, the emergent trend of coopetition, and the networking effects on the coopetitive strategies’ emergence, a number of research gaps stands out and needs highlighting. First, in terms of competition versus collaboration forces in the markets, Tidstrom (2009) admitted the need for more research on factors that weaken cooperative relationships. The author noted that existing studies are almost exclusively focused on the interaction and business network approach, and on cooperation between buyers and sellers, while conflict and intercompetitive cooperation have not been given sufficient attention (Bengtsson & Kock, 1999; Easton & Araujo, 1992). Pasquinelli (2013) also demarcated a significant gap in research on place branding as inter-territorial collaboration for place promotion as one of the forms of industrial clusters. Meng and Layton (2010) focused their attention on the need to understand the links between how managers perceive their cognitive relationships with rival partners and how they change a strategy depending on those perceptions (which refers to inter-personal versus inter-organizational alliances).

Speaking precisely about coopetition, Chen (2008) admitted that though the amount of coopetition-related literature and research is huge at present, the knowledge of coopetition is still fragmented and under-developed. This opinion was also supported by Klimas (2012) who emphasized the need to target methodological concerns in studying both coopetition and networks in a coherent, scientifically viable way. There is still no clarity about how firms balance the critical issues vital for alliances to exist in coopetition. The same issue was addressed by Bengtsson et al. (2010) who called for more longitudinal studies on the ways and resources of firms to balance coopetitive tensions.

One of the most valuable and at the same time under-researched fields of research interest on coopetition is the link between coopetition and firms’ performance. Abdallah (2011) underlined the lack of empirical research on this aspect, and clarified the complexity of receiving empirical data related to the complicated coopetitive behavior and the need to define metrics for coopetitive performance. Osarenkoe (2010) added that very little research was available on inter-organizational dynamics that entails coopetitive relationships, which proves that coopetitive relationships’ dynamics, especially within the newly adopted form of business relationships, networking, remain researched only at the conceptual, and not empirical level.

Following the research findings elicited by scholars within the past couple of decades, and taking into account the recent market and management trends, one has to note that there is an increasing interest in the research of coopetition as a deliberate and emergent strategy (since both types have been proven to exist, notwithstanding the widespread research opinion about coopetition as a deliberate, intentionally designed strategy). Moreover, there is a need to understand how coopetitive relationships are aligned with the concept of firm innovation, and to determine strategies and techniques firms employ to balance the managerial tension in coopetitive strategies, especially in long-term coopetitive relationships. Finally, as identified by Klimas (2012), one of the most interesting topics nowadays is in aligning the knowledge on coopetition with the body of research on networks, and understanding the impact that network structures have on the adoption of a coopetitive strategy.

Research Questions

Despite the fact that coopetition literature is growing in number at present, there are still pronounced gaps in the understanding of coopetition dynamics in certain industries and sectors, which narrows the understanding of the ways in which firms balance their goals and tensions with other network participants for the achievement of a mutually attractive goal. The European airline industry is one of the fields untapped with coopetition research; the new network incentive is Collaborative Decision Making (CDM) model urging European airlines and airports to unite and ensure the increase of service production and cost reduction. Hence, studying the inter-stakeholder coopetition forces within the CDM framework acquires strategic importance in determining the success of CDM in the long run. Bearing this purpose in mind, the following research questions have been formulated for the upcoming study:

1. What impact does the CDM network structure have on the adoption of a coopetition strategy between airlines and airports involved in the Single European Sky initiative?
2. How do CDM participants balance critical issues for alliances to exist on the long-term basis?
3. What is the link between coopetition and companies’ performance in the CDM alliance?

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