Understanding Relationships of Cooperation and Competition, Essay Example

Background

Air traffic management (ATM) is a key issue for research and innovation nowadays, since air transport demand is growing much more quickly than the airport systems’ capacity does, which creates a crisis in the modern commercial aviation in Europe (Wu & Caves, 2002). As Amadeo and Odoni (2013) indicated, ATM increases its role in the airport operations, since mastering the ATM fundamentals promises the decrease of traffic overloads, excessive congestion, and extra costs caused by delays in scheduling. The problems of ATC nature in Europe were related to the aviation infrastructure; the peak periods rose by three times above their norm in 1986 for only two subsequent years, and only in 1988, Europe experienced 330,000 hours of the ATC-related departure delays. The average cost of those delays was roughly estimated at the level of US $970 million for airlines involved; the losses of passengers equaled about US $ 540 million. Moreover, “routing network cost the airlines US $1.27 billion and the traveling public US $510 million, a combined total of US $1.8 billion in unnecessary cost in just one year alone” (Majumdar, 1994, p. 168).

The Collaborative Decision Making (CDM) initiative was created within the framework of the Single European Sky (SES) project aimed at reforming and improving the European aviation. CDM was aimed at optimizing scarce airport resources’ use, such as airport runways, terminal gates, the issues of Air Traffic Flow Management, and take-off slots (Martin, Hudgell, & Bouge, 1998). CDM implementation occurs in a network of European airports that act as actors, or stakeholders, of organizational change (as described by Marsolen and Friedkin, 1993). The study of CDM outcomes conducted by Martin, Hudgell, and Bouge (1998) revealed that CDM scenarios presuppose various levels of collaboration between stakeholders, such as enhanced distribution of information ensuring that all actors have the picture as clear as possible (being the lowest level of collaboration) and redistribution of decision-making responsibility with the delegation of responsibility for allocating scarce resources to users (being the highest level of collaboration). It is notable that multiple actors involved in the CDM implementation process are bound with the relationships of competition and cooperation at the same time, which makes the fabric of their interactions complex from the strategic management perspective. The interplay of competitive and cooperative efforts that unintentionally emerged among CDM actors deserves specific research attention, since these forces have been found to affect the organizational strategy and success profoundly; however, scarce research data are available on the ways in which such strategies are formed (Deutsch, 1949, 2006; Mariani, 2007; Rusko, 2011).

Theoretical Problem

As it was noted by Porter (1980), the competitive paradigm lies at the heart of strategic management, since any organization’s survival in the competitive environment depends on its ability to build and maintain a competitive advantage in relation to other firms. However, it is not the only type of behavior that can contribute to a successful firm’s existence – Dyer and Singh (1998), Astley and Fombrum (1983), Yami and Le Roy (2007), and other researchers have repeatedly underlined the ability of a firm to sustain a competitive advantage through building strategic alliance, i.e., by means of using cooperation as its strategy. The present paradigm is explained by the ability of a firm to establish and sustain relationships, which provides access to other firms’ resources, and helps to build a relational advantage (Yami, Castaldo, & Dagnino, 2010).

These two paradigms have been existing in an eternal contradiction, since none of them was ever granted the status of a beneficial or preferable strategy for any firm; the use of both strategies at certain periods and suitable to certain market situations in a combination has been credited with more efficiency and success. This combination allowing for the existence of both competitive and cooperative forces in one organization’s behavior has been termed “coopetition”; there are three milestones in the development of the coopetition paradigm. Nalebuff and Brandenburger (1995; 1996; 1997) were the pioneers of coopetition research; Lado et al. (1997) extended the paradigm further, and Bengtsson and Kock (2000) united the cooperation theory with network theory and the resource-based view of the firm.

Peng and Bourne (2009) admitted that the co-existence of cooperative and competitive forces among companies has come to the forefront of research attention recently, mainly due to the increasing recognition of their intricate interplay rather than exclusive manifestation of any of them in the organizational behavior and strategy. However, the authors admitted that the majority of studies were completed in the field of intra-organizational, inter-organizational, and triad levels of organizational functioning. Hence, the research evidence on the presence of cooperation and competition’s combination in the organizational networks is scarce up to date (Peng & Bourne, 2009).

The term “coopetition” was coined to denote the combination of competitive and cooperative forces united in one organizational strategy in a balanced and harmonious way and defining the organizational behavior with its rivals. According to Bergtsson and Kock (2000), coopetition represents “the dyadic and paradoxical relationship that emerges when two firms cooperate in some activities, such as in a strategic alliance, and at the same time compete with each other in other activities” (p. 412). Mariani (2007) agreed that the topic of coopetition is relatively under-researched in the modern strategic management theory, and no analysis of the coopetitive strategy formation has been undertaken so far. As the author noted, “in the strategy literature, however, coopetition has been sometimes downplayed to the mere sum of its competitive and cooperative components being dangerously misunderstood as the result of the simple linear coupling and juxtaposition of competition and cooperation issues” (Mariani, 2007, p. 98). Moreover, the concern of Mariani (2007) was about the absence of research on unintentional coopetitive strategy formation; the major part of studies were dedicated to the analysis of intentional coopetitive efforts, which contradicts the assumptions of Mintzberg (1977) about the formation of an organizational strategy in a natural, unintentional way, in response to the internal and external influences on it.

Bengtsson and Kock (2000) regarded the relationship based on coopetition as the most advantageous relationship with rivals that an organization can develop, mainly because the organizations tend to help each other in some aspects, while in other aspects, the force each other towards innovation and performance boosts, thus contributing to each other’s development. The authors distinguished coopetitive relationships according to the proximity organizations take towards their customers, and proximity between different business units. As they noted, “the two different types of interaction are not divided between counterparts but between activities, as it is impossible to compete and cooperate with the same activity” (Bengtsson & Kock, 2000, p. 415).

The research on coopetition and its value for the organization is still at the germinal stage of development, though the value of coopetition for the business sustainability has already been acknowledged (Rusko, 2011), and the ability of the coopetition strategy to create value for the business (Luo, 2004) and for its customers (Walley, 2007) have been researched. Bengtsson and Kock (2000) conducted research in networks and assumed that their unique characteristic, i.e., heterogeneity of unique resources, enables them to involve in coopetition on a meaningful, mutually dependent, and mutually beneficial basis. The authors also hypothesized that firms compete in activities close to the customer (i.e., output activities), and cooperate in activities far from the customer (i.e., input activities). Since cooperation and competition cannot be performed simultaneously, the two logics can be either divided among different units, or can be controlled and coordinated by an intermediate organization (Begtsson & Kock, 2000).

Empirical Problem

ATC problems started to reveal themselves since the earliest stages of the European air space liberalization, and were then confined to delays, congestion problems, non-alignment of ATM systems, outdated technology, fragmented and/or uncoordinated air flow control, etc. (Majumdar, 1994). Grushka-Cockayne and De Reyck (2009) provided evidence that not much has changed within 15 years in the European aviation, and the airport congestion is still a grave problem in many European airports. Moreover, the modern context of aviation operations is complicated by the focus on environmental concerns that preclude the promotion of capacity without the fundamental changes in the ATM systems (Grushka-Cockayne and De Reyck, 2009). Therefore, the solution to financial and infrastructural problems in the European aviation is now seen in the organizational change towards an optimal, more effective information sharing.

The new instrument seen as capable of ensuring this progress towards enhancing the information sharing processes in the airport networks is the Collaborative Decision Making (CDM) initiative seen by many researchers and aviation change activists as a viable tool for improving the ATM quality and increasing the situational awareness in the European airports (Amadeo & Odoni, 2013; CDM Policy Dialogue, 2012; EUROCONTROL, 2012; Martin, Hudgell, & Bouge, 1998). Various levels of collaboration contribute to various levels of CDM implementation success; moreover, airports and even various authorities within one airport represent stakeholders of the CDM implementation process. CDM involves the interaction of many actors some of which compete directly, while others compete indirectly on assigning time for data sharing. However, they are all urged to collaborate as well to enact the overall collaborative network of data sharing and ATM improvement in the European air space. Hence, the CDM initiative represents a network characterized by the coopetition relationships between its members, and it can be researched from the coopetition perspective to understand the intricate interplay between competitive and cooperative forces enabling the CDM functioning.

The current problem with CDM implementation is that not all stakeholders are involved into, and committed to, the design of an optimal turnaround process based on efficient data sharing. The reason for low commitment to CDM is in the financial problems or different prioritization of projects in the European airports (Petersson, n.d.). Hence, the approach to CDM implementation should be based on a more strategically balanced consideration of the forces of competition and cooperation existing among European airports. Thus, the “coopetition” approach can be taken to the CDM implementation and accomplishment, which is likely to give a clearer understanding regarding the ways in which interplay between various CDM actors can be optimized, improved, and enhanced for better CDM outcomes.

Research Questions and Hypotheses

Taking into account the existing empirical problem and its theoretical underpinnings, the researcher has decided to focus on the following hypothesis:

The competition and cooperation forces existing among CDM actors define the CDM processes and outcomes depending on the extent of collaboration and/or competition involved

Deriving the research focus from the elicited hypothesis, the major research question guiding the present research is:

How do competition and cooperation forces interplay within the CDM network and govern the interrelationships of CDM participants to form the coopetition paradigm?

Some minor research questions chosen for revealing specific aspects of the targeted research problem include:

1. How do networks with different structures interact with each other within the CDM initiative?
2. What forces drive cooperative and competitive forces within CDM as a network of networks?
3. What structures enable coopetition to exist in the CDM initiative?

References

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Bengtsson, M., & Kock, S. (2000). “Coopetition” in Business Networks – To Cooperate and Compete Simultaneously. Industrial Marketing Management, 29, 411-426.

CDM Policy Dialogue (2012). CDM Policy Dialogue Research Programme Research Area: Governance. Retrieved from http://www.cdmpolicydialogue.org/research/1030_governance.pdf

De Amadeo, R., & Odoni, R. (2013). Airport Systems Planning, Design, and Management.

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