Management of business relationships and

networks -
cooperation, competition and adaptation in
relationships

Åsa Hagberg-Andersson
Jetflite
Wihuri Aviation AB
PhD (Econ) from
Department of Management and Organization

Hanken – Hanken School of Economics/

Svenska handelshögskolan
Vasa, Finland
 Background
Working with Finnish companies entering in to a new market

Work places Finnish – Swedish Chamber of Commerce FIN-SVE and Jetflite in Stockholm

• Have also worked as project manager for business development in – Sweden – Finland and Croatia,
Portugal, Slovenia. Building industrial networks in the academic world – business world, doing
research

• Master of Economics, Åbo Academy, Åbo/Turku

• Dr.Sc. (Econ) Hanken – Hanken School of Economics - teaching - strategy, international business,
business networks and strategy, supervisor for master thesis writing and doctoral students

• Worked in USA (NY) + High School education, worked in France (Avignon)

• Sales & marketing at Parisiana AB and Unidisc A/S, Norway

• Wärtsilä, change management project within services and personel department (HR).
Previous work areas in Sweden – with
channels and networks
• Working with companies with plans to export to
Sweden or globally
• Worked as partner and resourse
• Especially small and medium-sized companies in focus
• Helping out with starting business activities on the
Swedish market. We provided resources and
cooperation networks for development with the
customers business goals and growth in focus
• Identifying suitable entry modes, sales channels and
existing business networks
 My current job at Jetflite 2023
• Responsible for the Swedish market & Nordics
• Product and services – private jets & flight ambulances and logistical solutions divided on three
companies (from year 2022 - )
• Customers: corporate & government - insurance companies, municipalities, royalties etc.
• Working with market entry, clubs and with business networks
• Identifying marketing - sales channels, suitable ways of entering
• Identifying hubs
• Markets – Sweden, Nordic countries and globally
• Also working with competitors in our industrial network – brokers providing complementing
resourses on the global market – using each others limited physical resources
• Cooperation with competitors 2023 – physical resources, planes, human resources, staff , public
procurement
• Competition 2023 – physical resources, prices, service, market knowledge
• Cooperation improves the productivity and innovativeness
• Sustainability 2023 – for ex from 2022 bio fuel for our planes, limiting food waste and suitability
of packages within catering
• Studying adaptation and competition on the market where we work
• www.jetflite.se
 You?
• Level?
• Job ambitions – area, goals?
• Why this course?
 Literature
Literature
• Bengtsson and Kock (1999)
• Medlin (2004)
• Tidström & Hagberg-Andersson (2012)
 Cooperation within industrial
marketing literature
• Exchange and cooperation in networks is
recognized within industrial marketing
research
• Def. cooperation – ”when two or more parties
have objectives, which are mutually
dependent” (Easton and Araujo, 1992:76)
 Coooperation within industrial
marketing literature
• Horizontal cooperation – the relation between
companies on the same level in the supply
chain (Nalebuff and Brandenburger, 1996)
• Vertical cooperation – the relationship
between the buyer/customer and supplier
• Some researchers choose to talk about roles
(Bengtsson and Kock 2000)
 Competition within industrial
marketing literature
• A situation when someone is trying to win
something or is trying to be more successful than
someone else
• A structural logic where firms seek the same
customers or goal
• One actor achieving a goal forecloses another
from gaining the objective
• Structural competition is known to lead to change
in business networks
• (Tidström and Hagberg-Andersson 2012)
When cooperation turns into competition
within industrial marketing literature
• It has been stated that business relationships
consist of both cooperation and competition
(Bengtsson and Kock 1999)
• Gap has been in research about the processes of
critical events in time and space that lead
cooperation to competition in dyadic business
relationships
• Filling a gap in research within the business
network approach – combining time and
competition novel (Tidström and Hagberg-
Andersson 2012)
 Tidström and Hagberg-Andersson
(2012)
• Events – based on social interpretations
• Space – mental constructions, mental maps
• Four qualitative cases
• Improves our understanding of time and process in
business networks
• Cooperation may evolve to competition through
chronological events involving information sharing,
sales related and opportunistic activities.
• In space these events mostly relate to the focal
business relationships, the individual companies and
third parties – such as customers
 Why?
• Why cooperate with competitors?
• +
• -
• Your practical examples of why / why not?
• Have you worked somwhere where there was
cooperation with competitors?
 Thesis
• ”Adaptation in a business network
cooperation context”
• a study of adaptation and cooperation in a
whole supply network in the metal industry
• Case Wartsilä and its supply network
• Suppliers 279 worldwide
 Definition of adaptation
• “Buyer-seller adaptations are defined as
behavioural or structural modifications, at
the individual, group or corporate level,
carried out by one organization, which are
initially designed to meet the specific needs of
one other organization” (Brennan and
Turnbull, 1998:31).
 Why adapt?
* Most business relationships are based on some kind of
match between the operations of two firms
• By analyzing the motives for adaptation, both
practitioners and academic researchers can learn more
about activities in business networks, and what
consequences the chosen behaviour will have for the
involved companies.
• Adaptation is also connected to time – adaptation is
based upon past history and the present situation and
past interaction create a motivation to adapt (Medlin
2004)
 Adaptation and motivation
• The motivation for adaptive behaviour is more
significant if the difference between the parties is
large, the adaptation will be in a direct proportion to
the differences that exist between the parties.
• Adaptation to demanding customers can also
strengthen the suppliers' competitive position since
the result is superior products or production systems.
• It is possible for the supplier to reach higher profits by
maintaining long-term relationships. Adaptations
make companies more dependent on each other and
they strengthen the bonds between the companies.
 Different kinds of adaptations
• Technical, logistical, administrative, financial,
and knowledge adaptations.
• legal adaptations
• Fang (2001) adds the cultural one.
• purchasing and the environment
• based on Johanson and Mattsson (1987), Gadde
and Håkansson (1993)
• formal (conditioned by technology or market)
and informal adaptation (mental side)
 Adaptations as metaphors
• One can also analyze adaptation as five
metaphors, i.e. as an investment process, a
decision-making process, a political process,
a socialization process, and as an
evolutionary process in the process of
adaptation (Brennan and Turnbull, 1996).
 The thesis – research gap
• Adaptation has been dealt with in previous literature, but
the focus of the studies has mainly been outside this
phenomena, and it has mainly had a supporting role.
• If the concept of adaptation is to be generalized, it is
necessary to study it in different industrial contexts
(Brennan and Turnbull and Wilson 2003, Canning and
Hanmer-Lloyd 2002).
• Most literature has described the buyers' point of view in
studied supply networks, whereas much less attention has
been paid to the suppliers' view on them (Holmen and
Pedersen, 2006). This study also focuses on the suppliers’
view.
Unit of analysis and focus of the study
• The unit of analysis and the focus is on the
suppliers existing adaptive behaviour , the
degree of adaptation and the consequences of
adaptation in cooperation in the dyad of the
business network.
• provides a descriptive and analytical study of
how, why and to which extent the companies
adapt and cooperate.
Positioning and tradition – relation to
existing knowledge
• The study was done within the business
network approach, the IMP-school of
thought.
• The study was carried out mainly from the
supplier’s point of view.
 A study of interorganizational
relationships
• Inter-organizational theory focuses on activities and
processes, which take place between organizations,
and it also forms the theoretical framework and base
for the work of the IMP-group, i.e. the Industrial
Marketing and Purchasing Group (Håkansson, 1982).

• Within inter-organizational theory, the organization is

seen as dependent upon other organizations. The
focus lies on relationships between organizations,
instead of on a focus within them (Håkansson and
Snehota, 1995).
 Methodology
• Personal semi-structured interviews with 17
suppliers in the metal industry (prestudy)
• 8 interviews in procurement and technology
department at Wärtsilä
• Survey with 279 suppliers of Wärtsilä – 54 %
response rate
• 7 interviews for article on collective
adaptation (the calibration case – Hagberg-
Andersson 2006)
 Wärtsilä
• Wärtsilä is a global leader in complete lifecycle
power solutions for the marine and energy markets.
By emphasizing technological innovation and total
efficiency, Wärtsilä maximizes the environmental and
economic performance of the vessels and power
plants of its customers.
Wärtsilä är en världsledande leverantör av kompletta kraftlösningar för marin- och
energimarknaderna. Lösningarna stöder kunden under produktens hela livscykel. Med betoning
på teknisk innovation och total verkningsgrad maximerar Wärtsilä både den miljömässiga och den
ekonomiska prestandan för sina kunders fartyg och kraftverk. https://www.wartsila.com/sv

SHIP POWER
Wärtsilä is the leading provider of ship power solutions including engines, generating sets, reduction gears,
propulsion equipment, automation and power distribution systems as well as sealing solutions for the marine
industry. Our customer are the global or local leading companies within the merchant, offshore, cruise and ferry,
navy and special vessel segments. We command a strong position in all main marine segments as a supplier of
highly rated ship machinery and systems.

POWER PLANTS
Wärtsilä is a leading supplier of flexible power plants for the decentralised power generation market. We offer
solutions for baseload power generation, grid stability & peaking, industrial self-generation as well as for the oil
and gas industry. Technology leadership, a strong and broad product portfolio, high efficiency and fuel flexibility,
plus the ability to offer complete turnkey deliveries worldwide puts us in a unique position in the power plants
markets.

SERVICES
Wärtsilä supports its customers throughout the lifecycle of their installations by optimizing efficiency and
performance. We provide the broadest portfolio and best services in the industry for both ship power and power
plants. We offer expertise, proximity and responsiveness for all customers regardless of their equipment make in
the most environmentally sound way.

http://www.wartsila.com/,en,aboutus,0,generalcontent,57FDA3AE-A342-4D95-A732-
D4C4D9B1A320,92D82833-AB87-4136-8EEB-57206C6F0DCF,,7000.htm
 Why are adaptations important to
study?
• are needed for maintaining a relationship
• Important to know the consequences of
adaptations
• important to analyze motives of adaptations
• analyze benefits for a company to adapt
 Consequences of adaptations
• What are the consequences for companies
which chooses to adapt?
• What are the consequences for those that
choose not to adapt?
• Importance of trust stressed
 Risks with adaptation
• The dependence on the buyer increases. The
possibilities of finding new counterparts
decrease if a company invests extensively in
adaptations.
• From the buyer’s point of view, it is not
recommendable to control the supplier too
tightly. Binding up a supplier too much limits both
creativity and innovation. The investments
connected to adaptations can be considerable
and they may not be possible to transfer.
Results from the adaptation study
• The results showed that adaptation within this particular supply
network was mostly within product related areas.
• 45.2 % report product development
• 44.2% report product adaptation
• 41.7 % report personnel training
• 38.6 % report quality work
• 32.2 % report production
• least adaptations are found for adaptations of administrative
routines (8.6 %)
• adaptations to environmental requirements (6.6 %)
• a will to adjust more if the supplier was dependent on the customer.

• The adaptation can be compared to a value chain in a value

system
Product 44.2
Product development 45.2
Logistics and distr. 21.0
Production 34.2
Stock keeping 26.8
Adm. routines 8.6
Purchasing 24.2
Marketing 10.9
Payment routines 18.8
Quality of work 38.6
Information exchange 26.7
Personal training 41.7
Environmental requirement 6.6

Table 1. Major adaptations

 Conclusions
• The results of the study stress that adaptation should
be included to a greater extent in the strategy work of
companies.
• Adaptations may be seen as defensive or offensive, but
most of all they can be seen as investments.
• The adaptations should be carefully planned and, as
far as possible, made consciously. Conscious, well-
planned adaptations can be seen as investments into
present and future relationships, and resources
should be invested into something that does not
increase the company’s dependence, but divides the
power in the relationship between the companies.
 Conclusions
• The perception of the same activity, adapting or
investing, can be viewed differently depending
on how the power-dependence balance is
perceived. The same activity can also be viewed
differently depending on from whose view it is
seen.
• collective adaptation can change the power
dimension and make companies less dependent.
When adaptations are made as active
investments, they make the company stronger
(Hagberg-Andersson 2007)
 Conclusions
• Forced adaptations are a result of the
unequal power-dependence structure
between the companies in the relationship.
Environmental requirements can, for
example, be seen as an area where companies
are forced to adapt. But many companies
today use environmental progress as a
strategic tool in their communication with
customer and society.
• It is impossible to know about the future,
when you plan your company strategy. Often
it is suggested that companies should focus on
their core competence, but it is difficult,
though, to know what will be a profitable
“core” or business in a few years' time.
• Strategy work in focus – strategy work in
business networks – conscious adaptation and
cooperation with selected partners
 Cooperation & Competition - projects
• Project 1
• EU, geographical areas, program
• Sweden - Finland
• Cooperation & competition – universities, schools, companies
• Cooperation with knowledge sharing – exchange of new ideas for development of competive
strength between the companies in the project. Also business exchange.

• Project 2
• EU, geographical areas, program
• Croatia, Portugal, Slovenia, Finland
• Cooperation & competition – universities, schools, companies
• Cooperation with knowledge sharing – exchange of new ideas for development of competive
strength. One result of the project – networks between companies and students, job applications

• Projects in Norway – interesting examples?

• Cooperation & competition – universities, schools, companies

• Cooperation – competition within private jet industry – competing locally, but also cooperation
between countries because of scarce resources – example ambulances and specific equipment
 Literature
• Easton, G. and Araujo, L. (1992) None econmic
exchange in industrial networks, in Axelsson, B.
And Easton, G. (eds), Industrial Networks. A new
View of Reality, Routledge, London, pp. 62-88
• Nalebuff, B. and Brandenburger, A. (1996) Co-
opetition, Göteborg, ISL Förlag
• Tidström, A. and Hagberg-Andersson, Å (2012)
Critical events in time and space when
cooperation turns into competition in business
relationships, Industrial Marketing Management,
41 (2), pp. 333-343
Questions?
 Definitions
• Business networks/industrial networks: Over the
years, the term “networks” has been studied and
defined in many contexts and in many ways. Business
networks and industrial networks are used as
synonyms in the study as in accordance with earlier
studies (Kock 1991). Business networks can be defined
as “a structure where a number of nodes are related to
each other by specific threads” (Håkansson and Ford,
2002:133), and the interaction taking place in them.
Within this definition the nodes can be described as
the firms and the threads as relationships.