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European Journal of Purchasing & Supply Management 7 (2001) 29}37

The dyadic capabilities concept: examining the processes of key


supplier involvement in collaborative product development
Simon R. Croom*
Warwick Business School, University of Warwick, Coventry CV4 7AL, UK
Received 20 January 1999; received in revised form 3 April 2000; accepted 4 April 2000

Abstract

The increased use of suppliers in the new product development process has important implications for the strategic performance of
organisations. In this paper an analysis of supplier collaboration in the development process is deployed to support the development
of a dyadic (or two-level) capabilities analysis of the strategic management of the innovation process. By setting an organisation's
competencies within the context of their customer or supplier interactions this paper supports the view posited by Ford et al. (1986)
that interaction de"nes the value of assets and resources. In a study of collaboration in the UK auto industry, it was found that both
operational and relational competences are critical factors in the performance of the new product development process. Thus, the
ability of customers and suppliers to develop both structured and ad hoc processes of interaction is shown to be important to the
development process from early supplier selection process.  2000 Elsevier Science Ltd. All rights reserved.

Keywords: Strategic capability; Purchasing and supply; Product development

1. Introduction ment process in order to develop an understanding of the


nature of strategic capability and the management of
The strategic role of suppliers is one that has been customer}supplier interaction.
facing some changes as a result of increasing use of In the "rst section of the paper, following a brief
suppliers in innovation, more speci"cally in the new discussion of the competency theory of strategy, consid-
product development process (Burt and Soukup, 1985; eration is given to the nature and in#uence of governance
Helper, 1991; Clark and Fujimoto, 1991; Ha kansson and structures at the level of a dyad, that is a two-actor chain.
Eriksson, 1993; Lamming, 1993; Hines, 1994). This role is This paper is primarily concerned with dyadic interac-
one typi"ed by increased responsibility for the design tion at the customer}supplier level. A discussion of ante-
process, and increased autonomy in the development cedent literature is utilised to support a contention that
process. It has also long been recognised that innovation capabilities possessed by one party must be contex-
is a critical strategic process central to the development tualised within the speci"c dyad to which they are ap-
of competitive advantage (Penrose, 1959; Hamel and plied in order to yield strategic value.
Prahalad, 1994). Therefore, the management of supplier Following the conceptual discussion the research
involvement in design and development can be posited analysis from a series of in-depth studies of two
as being a major and increasingly important strategic new product development programmes in the UK auto
process. industry is presented, focusing on supplier selection
This paper presents an analysis of research conducted and the management of supplier involvement. Implica-
into supplier involvement in the new product develop- tions for a dyadic level analysis are presented in this
section.
The "nal section of the paper presents the preliminary
framework for a dyadic capabilities approach. Three
* Corresponding author. Tel.: #44-1203-528222; fax: #44-1203- dimensions of dyadic capability are presented, and a brief
572583. report of initial development of an operationalised form
E-mail address: simon.croom@warwick.ac.uk (S.R. Croom). of the framework is introduced.

0969-7012/00/$ - see front matter  2000 Elsevier Science Ltd. All rights reserved.
PII: S 0 9 6 9 - 7 0 1 2 ( 0 0 ) 0 0 0 1 9 - 8
30 S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37

1.1. Competence and governance The study of interorganisational relationships (IORs) is


an established area of organisational theory, being
Recent literature in the "eld of strategic management founded upon studies in established disciplines such as
re#ects a move away from the structural determinism of sociology and psychology (which explains the conse-
theorists such as Porter (1980) who emphasise product} quent focus upon behavioural issues), although many
market position as a key competitive concern, towards authors commented upon the lack of an integrated, uni-
a competence theory as expounded by Prahalad and "ed theoretical base. (Negandhi, 1980; Pfe!er, 1982) The
Hamel (1990) and Wernerfelt (1995) for whom competi- contribution of the area of IOR to the concerns of pro-
tive advantage results from the way in which "rms allo- curement is that writers who view the environment as
cate their resources and develop new products through a collection of interacting parties examine the compara-
their innovative processes. Whittington (1993) contrasts tive and relational properties of an interaction network.
between the externally opportunistic approach of deter- An organisation's environment is viewed as constituted
ministic theory, and the inward, more developmental by subsystems of interorganisational collectivities (Van de
approach of the competency theory. Two complement- Ven and Walker, 1984) which are de"ned as distinct
ary streams of development in the competency literature units. The argument here is that collectivities act e!ec-
being the resource-based (Wernerfelt, 1984: Kay, 1993; tively when their constituent organisations behave in
Montgomery, 1995) and knowledge-based (Nonaka and a goal-directed manner, recognising that the primary
Takeuchi, 1995) views. Scarbrough (1998) notes that goals of the interorganisational collectivity are such that
common to both of these streams of literature is the no single organisation can achieve them individually.
recognition that organisational knowledge is `2central Van de Ven and Walker found in their research that the
to a proper understanding of the nature of resources, relationships between members of a collectivity are very
competencies and capabilities within the "rma. distinctive and almost gains legitimacy in its own right.
Major elements of the deterministic view and a large This distinctiveness of an IOR has been acknowledged in
segment of the competency view assume that the strategy numerous other quarters, often being referred to as con-
process is fundamentally concerned with an organisa- stituting a &quasi-autonomous organisation' (Blois, 1972;
tion's response to its environmental conditions. Conse- Monteverde and Teece, 1982; Aoki, 1984; Levy et al.,
quently, there is a tendency to attempt to analyse the 1993). Lamming (1993) saw this as being of vital signi"-
environment as a set of interactions between di!erent cance, stating that &&2[the challenge] is for collabor-
organisations that are treated as if they were single, ators to view the relationship [as a distinct] &third
perceiving and interpreting human actors. To counter party'2[and that] the cost of resourcing the quasi-"rm
this perspective, Knorr (1979) questioned the productiv- must be justi"ed by the value it adds, the cost and time
ity of the dualism of system and environment that under- savings it achieves, and the mutual competitive advant-
lies most theories of organisation. She argued that age which it provides''.
organisational action and relationships are subject to
inherent contextuality, which challenges the mainstream
prescriptive approaches to strategic management 2. Forms of governance structure
(Charan, 1991) She presented an analysis predicated on
the view that it is the organisation which should be Concern for the way in which "rms organise the pro-
viewed as the environment for interorganisational or duction and delivery of their goods and services is central
transorganisational relationships, since contextuality is to both economic and social theories of the "rm. Trans-
inherent in the organisation. Her contention is that the action cost economics (TCE) concentrates on the degree
organisation does NOT represent an appropriate level of of dedication of assets by one "rm to another under
analysis for understanding intra-organisational (or in- di!ering exchange conditions with a view to maximising
terorganisational) behaviour. Many writers reinforce the e$ciency of the transaction (Williamson, 1994; Die-
Knorr's view that in order to understand the nature of trich, 1994), whilst social network theory emphasises
strategic action it is necessary to recognise the socially inter"rm co-ordination, emphasising the informal social
constructed nature of networks of interacting individuals, systems that are linked through a network of relations
groups and organisations which emphasises the signi"- (Granovetter, 1992; Alter and Hage, 1993). These entities
cance of perception and interpretation to the analysis of are involved in continuous exchange relationships with
interorganisational relationships. the organisation, with each party exerting considerable
Ford et al. (1986) argue that a primary focus for stra- in#uence on the organisation. Such forms of governance
tegic analysis is to view companies in the context of their have been observed in a wide range of industries (Jones
network of interactions with others, whilst as far back as et al., 1997) with several empirical studies (including
Hall and Fagen (1956) it was argued that the de"nition of Turnbull and Valla, 1986; Ha kansson, 1989) suggest-
a boundary in any social system was quite arbitrary, ing that this type of situation may be the rule rather
largely dependent upon the intentions of the observer. than the exception for a wider population of business
S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37 31

organisations in general. It is useful at this stage to organisation could be considered to be developed


examine the propositions of the social network model through its interactions in the relationships it maintains
which have been summarised as follows (Ha kansson and with other parties * in other words the so-called `ident-
Snehota, 1989) itya of the organisation is created through its relations
with others. Since the other parties to the interaction also
E Business organisations often operate in a context in
operate under similar conditions, an organisation's per-
which their behaviour is conditioned by a limited
formance is conditioned by the totality of the network as
number of counterparts, each of which is unique and
a context, i.e. even by interdependencies among third
engaged in pursuing its own goals.
parties. In examining the impact of interaction upon
E In relation to these entities, an organisation engages in
"rm's capabilities, Ford et al. (1986) and Anderson et al.
continuous interactions that constitute a framework
(1994) make a critical claim for the development of
for exchange processes. Relationships make it possible
a dyadic capabilities view * that resources possessed by
to access and exploit the resources of other parties and
an organisation may be considered to be inert (passive)
to link the partiesa activities together.
and of no competitive value until activated by interaction
E The distinctive capabilities of an organisation are de-
with others. This is an important point, and is similar to
veloped through its interactions in the relationships it
Teece's (1987) contention that competitive advantage is
maintains with other parties. The identity of the organ-
gained through the development of distinctive capabili-
isation is thus created through relations with others.
ties supported by `complementary assetsa through the
E Since the other parties to the interaction also operate
network. Cox (1997) has also considered the nature of
under similar conditions, an organisation`s perfor-
core and complementary competencies located within
mance is conditioned by the totality of the network as
other "rms in the network (the central point in his thesis
a context, i.e. even by interdependencies among third
being that "rms access capabilities through various forms
parties.
of contractual arrangements). The interdependence of
It has been claimed that in#uence (or power) is the enterprises and processes is clearly a major issue in the
`central concepta in network analysis (Thorelli, 1986) development of strategic competency.
and is often couched in predominantly unilateral terms Croom and Batchelor (1997) have argued that within
(dependence), whilst the more typical phenomenon is this interactive environment strategic capability is
that of interdependence. Further, `a radical shifta is seen founded on two forms of capability: operational and
as emerging `2in the nature of relationships between relational. The former refers to the technical and eco-
organisations. In particular there is a move away from nomic capabilities of the "rm such as superior manufac-
what might be termed &power-based' relationships in turing process design or rapid delivery systems; the latter
which there is some hierarchical dependence, towards category of capability relates to institutional and social
more of a network model in which there is a sense of dimensions that constitute an as organisation's `architec-
mutual development within a partnershipa (Bessant, turea (Kay, 1993), namely the formal and informal ties
1990) The positioning of a "rm in the network in terms of within and between individuals, groups and functions.
its relative power and in#uence is seen as a matter of Advantage from operational capability may be relatively
`2as great strategic signi"cance as positioning its prod- transitory in nature. Firstly, such capabilities are often
uct in the marketplacea. (Ha kansson, 1989). imitable (Teece et al., 1992), and secondly an increasing
Jones et al. (1997) synthesise the network literature rate of technical change increases the threat of substituta-
around two `clustersa, one pertaining to patterns of bility by industry rivals and new entrants (Porter, 1980).
interaction, the other to #ows of resources between inde- Imitability is a major concern when it is `creatively
pendent units. This clustering can be seen to accommod- destructivea, resulting in a new source of strategic ad-
ate much of the supply chain management literature vantage for a competing "rm. Many of these operational
which generally considers that competitive advantage is capabilities impact on the performance characteristics of
derived from the physical and social processes that sup- the product or system under development (Cooper,
ply products and goods through the chain's constituent 1984).
organisations. (Christopher, 1992; Bowersox and Thus, whatever an organisation may see as its core
Closs, 1996; Gattorna and Walters, 1996; Houlihan, competence is only so because of its strategic contribu-
1987; Poirer and Reiter, 1996; Stevens, 1989; Saunders, tion within the context of the resources and relationships
1997). that exists in its network. As Knorr argued, an important
issue for organisational studies is the contextualisation of
resources and assets within an interactive environment,
3. Towards a dyadic model of capability which Granovetter (1992) de"nes as `structural embed-
dednessa recognising the in#uence on economic action
By adopting an inter-organisational approach to strat- and outcomes at the dyadic and overall network level
egy it can be argued that the distinctive capabilities of an con"guration of relations.
32 S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37

This line of reasoning predicates the study of compet- cess and the subsequent collaboration of the suppliers
encies founded on suppliers' and customers' resources and customer over the duration of the development pro-
and activities in the domain of the customer}supplier grammes studied.
dyad. The research theme here was thus to examine the
impact of the supplier management process on strategic
performance at a dyadic level of analysis (Ellram and 5. Supplier selection
Hendrick, 1995).
Supplier selection for speci"ed goods and services is
a critical decision for many purchasing organisations,
4. Research methodology since supply performance can have a direct "nancial and
operational impact on the business. (Baily et al., 1994). In
In order to explore dyadic processes research was collaborative design the selection of suppliers becomes of
conducted into the process of collaborative new product increased signi"cance since suppliers are involved in the
development, an important change process which was speci"cation of goods and services, and therefore the
deemed to be the most appropriate domain within which commitment to a particular source of supply may be
to examine the impact on the performance of core com- embedded in the product/service design. It has thus been
petencies (Hamel and Prahalad, 1994p. 202). The re- argued that in such circumstances organisations are buy-
search process involved document analysis, interviews, ing the supplier's capabilities (Croom, 1992). Study of the
site visits, observation and detailed performance data supplier selection process is thus useful to test the in#u-
analysis over the duration of two development pro- ence of operational and relational criteria on the selec-
grammes by one major player in the automotive industry tion decision.
conducted over an eight-year period. The research pro- The sourcing decisions behind supplier selection for
grammes concentrated on analysing the development of a range of vehicle systems including steering, interior
purchasing strategy and identi"cation of strategic com- trim, wiring harnesses, climate control, braking systems
petency within a number of customer}supplier dyads. and fuel tank systems were examined. Supplier selection
The main concern of the research was with human was seen by the customer organisations as a critical
perceptions of competitive criteria, and the physical con- process, and documented sourcing procedures, or proto-
"guration of resources and procedures adopted to man- col, were set out to codify these capabilities in a struc-
age interaction. Given the interest in both subjective and tured manner. To support the protocol, the sourcing
objective variables and constructs a mixed-methodology decisions were undertaken by a team representing design
case study approach was therefore taken. Broadly speak- engineering, "nancial analysis, manufacturing, logistics
ing, a principally qualitative methodology was con- and purchasing.
sidered appropriate in the observation of behaviours and Ceteris paribus, the formal sourcing protocol relied
perceptions informing decisions using primarily semi- heavily on the supplier's ability to meet cost targets.
structured interviews as the research method. It was also However, from the research analysis it was clear that in
possible to engage in participant observation for the practice a wider set of concerns were involved. These
development of the case studies. In the observation and included concerns for carry-over of components to other
examination of more objective elements of the study programmes; warranty and productivity performance,
(such as vendor rating pro"les, process capability and design system compatibility, availability of key project
facilities layout), the use of archives, reports, and perfor- management skills and personnel and R & D resources.
mance measurement were key methods of data collec- In addition, the perceptions of the sourcing team were
tion. In particular, a longitudinal content analyses of noted and in some cases were seen to be the determining
a series of customer}seller team meetings between the factors.
buying company and three of their suppliers over In presenting the summary analysis of the sourcing
a three-year period provided an insight into the concerns decisions it was clear that major and signi"cant di!er-
addressed during formalised interactions. However, many ences existed between the decision process relating to
of the interactions between actors in the dyads studied totally new suppliers and the decision relating to existing
were of an informal nature and here contemporaneous suppliers.
notes and post event interviews were employed within The summary analysis is presented in Table 1.
the customer organisation and six suppliers. It is felt that The signi"cance of the di!erence between existing and
by the adoption of a multi-method approach in the new suppliers lies predominantly in the emphasis placed
examination of speci"c customer}supplier interaction, on relational capabilities when considering existing
the concern for triangulation and methodological plural- suppliers.
ism has been addressed. Following this analysis a paired investigation of sup-
The analysis of the "eld research presented in this pliers' perceptions of the sourcing selection decision was
paper concentrates on the initial supplier selection pro- undertaken in order to identify the degree of congruence
S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37 33

Table 1 Table 2
Sourcing criteria * a comparison of existing vs. new suppliers Ranked paired analysis of customer and supplier perceptions of sourc-
ing criteria
Existing Supplier New Supplier
Perception of key sourcing criteria
Operational Quality audit Quality audit
Production process Production process Case example Customer Supplier
analysis analysis
Existing product design Existing product design A &Brand reputation' Design capability
Design capability (e.g. Design capability (e.g. Experience (vicarious) Size
CAD) CAD) Respect and trust Market penetration and
Facilities location & Facilities location & layout scope
layout (e.g. Flowlines) (e.g. Flowlines) Attitudes
Quality assurance (SPC; Quality assurance (SPC;
FMEA etc) FMEA etc) B Adapted relationship Attitudes
Product complexity Product complexity Empathy Responsiveness
Familiarity Service #exibility
Relational Interpersonal relations Team structures Trust Developement capability
Friendships Dedicated individuals Corporate technical
Shared experiences Communication channels support
(internal & external) Attitudes
Team structures Quality management
Quality management Reputation C Familiarity Dedicated production
Responsiveness Recommendation facility
Communication channels Corporate product Attitudes
(Internal & external) capability
Dedicated individuals Process capability Responsiveness
Personal competensies Experience Closeness
Trust Trust
Familiarity Customer focus
Empathy Empathy
Attitudes

D Familiarity Quality focus


between suppliers' and purchasers' views. The process Empathy Attitudes
employed for this analysis was to interview all members Process capability Service responsiveness
of the relevant sourcing teams in order to identify and Reputation Process capability
rank selection criteria. Once the preliminary ranking had Trust
been identi"ed, respondents were invited to evaluate and Customer focus
Attitudes
amend the ranking. The same process was repeated with
the main contacts in each of the six suppliers chosen for E Technical developement Design capability
this analysis (representing both new and existing sup- capability
pliers, and a representative range of systems). This analy- &Brand' Reputation Responsiveness
sis is presented in Table 2. Customer focus Process capability
Attitudes Market penetration and
For the customer, the importance of familiarity, empa- scope
thy and the ability of the supplier to demonstrate adapta-
tion to the customer were dominant criteria, re#ecting F Familiarity Attitudes
the recognition that interaction is a critical development Empathy Design
process. Suppliers, on the other hand, were less aware of Adapted relationship Responsiveness
Materials technology Materials expertise
interaction and relational capabilities than technical ex- Attitudes Closeness
pertise. This was not surprising given the emphasis of the Process capability Process capability
sourcing protocol on operational capabilities such as
quality assurance systems, design software and skills and
production tooling capabilities.
As a result of this analysis, the buying organisation 6. Supplier involvement
expanded their sourcing protocol to incorporate more
subjective and relational elements in the analysis. This Throughout the duration of each of the development
re#ected their recognition that supplier selection needed programmes the progress of supplier involvement in the
to re#ect the supplier's strategic capabilities (including process was studied. The progress of supplier involve-
their management of their customer interactions) rather ment involved varying degrees of interaction and com-
than merely concentrating on component/system-related munication between customer and suppliers, often
criteria. focused on the technical issues relating to design
34 S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37

concerns, but also frequently involving discussion of rela- Investigations found a number of critical causal
tional issues pertaining to the degree of on site repres- factors.
entation, the #ow of information through the supplier
1. The supplier was not aware of the peculiarities of the
organisation, and demonstration of commitment
customer's operations processes and the particular
through dedicated project management teams. In Table
technical requirements of the new project.
3 the format of interaction is categorised according to the
2. Design engineers were not used to delegating so much
content and focus of the interaction. The use of general
responsibility to their suppliers, and were conse-
processes of interaction such as team meetings and de-
quently resolving minor problems without including
ployment of resident engineers served to provide the
the supplier in the process.
formal and pre-determined channels of interaction (cf.
3. Many of the design, quality and production engineers
communication channels). These were found to be pres-
felt a strong loyalty to the previous, displaced,
ent across the supply base. The less formal or reactive
supplier.
interactions arose as a consequence either of operational
di$culties (such as design or manufacturing problems) or Analysis of the management of this supplier's involve-
in response to relational issues (for examples open sup- ment illustrated a lack of any ad hoc interactions, and
plier events or social events). consequently a lack of real empathy between the parties.
The signi"cance of categorisation of customer supplier This focused the failure recovery on greater interpersonal
interaction is to focus attention on the nature of interac- involvement and also the need for this supplier to place
tion channels. This was of particular use in analysing the a resident engineer in the customer design facility.
mechanisms employed to manage supplier involvement,
in which a critical incident approach was utilised to
explore a number of events during the development pro- 7. Summarising the management of supplier involvement
grammes.
One such critical incident was encountered with a new In presenting the summary analysis of the manage-
supplier of electrical distribution systems. The customer ment of supplier involvement during collaborative devel-
had no previous experience of dealing directly with this opment three main elements of the customers' formal
company but was well aware of their reputation and development protocol were identi"ed. These represent
ability from their various sources within the industry. the signi"cant strategic elements of the new product
Problems and delays began to arise during the develop- development protocol adopted by the client organisa-
ment, which had serious repercussions across the whole tion, and relate to a. the deployment of structured con-
project. Whilst the product (electrical distribution sys- current engineering, b. the emphasis of quality in the
tem) was to speci"cation, delivery was often late, or programmes studied, and c. the impact of supplier in-
components needed modi"cation in order to integrate volvement in the process. These dimensions were re-
fully with other components. The main source of prob- garded as common to the programmes studied, and
lems seemed to be related to logistics, "tting and integra- also subject to review as part of the organisation's
tion with other components. product development strategy process. The analysis
of the research data collected over the duration of
the study has been concentrated into common and domi-
Table 3 nant factors through axial and subsequently selective,
Classi"cation of buyer}seller interactions
coding of the research narrative analysis. (Punch, 1998,
Speci"c General p. 214-218).
The elements identi"ed in Table 4 represent the key
Programmed Pre-scheduled team More general supplier drivers of e!ective collaborative development and are
meetings and interactions suh at intended to summarise the collaborative process
negotiations convened attenance at open days
to address matters or deploymen of
design.
relating to supplier's resident engineers The use of clear project management and quality man-
involvement, (e.g. agement approaches have been recognised widely as
project team meetings critical to product development performance, and such
during new product capabilities are widely acknowledged as essential in prac-
development
Ad Hoc Supply related, un- Casual, social interactions
tice and the literature (Wheelwright and Clark, 1992).
scheduled. Such between individuals and From this research the development of cross-functional
episodes are reactive groups outside of the and inter-organisational mechanisms for the manage-
* e.g. response to an operating environment ment of supplier involvement are regarded as important
unforeseen event such of the relationships (e.g. process structures for the facilitation of collaborative
as a quality problem or dining out, playing
delivery failure a round of golf )
product development performance. However, in addition
to the formal structures laid down, this research has
S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37 35

Table 4 8. Conclusion: a dyadic capabilities framework


Signi"cant elements of the collaborative development process
A distinction has been made in this paper between
Concurrent Quality planning Supplier involvement
engineering operational and relational competencies (Croom and
Batchelor, 1997). Operational competencies are typically
Cross functional Integration of Acess to supplier by the related to the process capabilities obtaining to design,
team dedicated to decision making customer manufacture and delivery. Relational competencies are
the project both cross- those competencies obtaining to the processes of com-
functionally and
cross- munication, interaction, problem resolution and rela-
organisationally tionship development. This paper has set out to
Deconstruction of Clearly prescribed, Suppliers viewed as demonstrate that in the management of supplier interac-
a complex project established centres of excellence tion, management concerns need to recognise that in-
into clear, short- methodologies such creased emphasis upon relational competency has
term tasks and as FMEA, QFD and
targets VA/VE as a signi"cant impact on collaborative product develop-
a common, ment performance. In this "nal section, an interpretation
comparable system of the research analysis is presented that sets out a con-
of control ceptual framework for understanding the nature of
Identi"cation of Customer's primary role dyadic capabilities. Further research is on-going to re"ne
development time, one of co-ordination
quality performance rather than operation this framework, so this section presents the initial devel-
and product cost as opment of this model.
critical performance As we saw earlier, advantage from operational capabil-
criteria ity may be relatively transitory in nature. One set of
Customer's able to focus operational capabilities may be classed as a product-
on core competencies.
based dimension of the dyadic capabilities framework, an
example of which would be the technical function of
identi"ed the existence of ad hoc interaction within the a component (weight, hardness, output, etc.,). As much of
collaborative process. It is thus contended that given the the strategic management and operations management
importance of interaction for the management of supplier literature acknowledges, (Slack et al., 1998) the strategic
involvement (see also Ellram and Hendrick, 1995), analy- performance of an organisation is heavily in#uenced by
sis of the nature of interaction has enabled us to posit the the structures employed to transform resources of the
view that interaction is constructed by both formal and organisation or network. These structures may process
ad hoc interactions. Formal interactions may be pre- materials or components (as in production processes) or
scribed through standard operating procedures and pro- they may facilitate control, co-ordination and commun-
cesses. As this research has found, ad hoc interactions ication through organisational and interorganisational
pose more of a challenge. systems. Thus, a second dimension may be classed as
The performance of the supplier involvement process structure-based capabilities, examples here including
may depend on personalities, proximity, and familiarity manufacturing process cells, just-in-time delivery systems
of the parties, but in addition the process of ad hoc and the institutional characteristics of the formal and ad
interaction is often seen by the more e!ective suppliers to hoc interaction structures
be an integral element of their account management When attention is given to the relational dimensions of
processes. In some ways traditional sales practices of collaborative performance, the exploitation of new tech-
building close working and personal relations are very nological developments or improved operational capa-
supportive of this process. The di$culty arises where bilities is founded on the e!ectiveness of the interaction
such processes are frowned upon as `unethicala or seen process. The e!ectiveness of supplier and customer inter-
as non-commensurate with proactive purchasing behav- action has been shown to be a signi"cant factor in the
iour. It is here that there is an important role for the performance of collaborating suppliers, and the nature of
purchaser in the management of interaction and relation- interaction to be strongly in#uenced by both formal and
ships with suppliers. ad hoc processes of interaction. Thus, it is argued that
From the analysis of supplier involvement it is claimed a third dimension of dyadic capability is interaction-based
that since interaction is a dyadic process, e!ective collab- capabilities, examples of which would include familiarity
orative performance is dependent on the management of and empathy between the parties.
relationships by both the supplier and the customer. In The dyadic capability framework thus sees capability
the cases where there was evidence of a lack of ad hoc as founded on the appropriate combination of product-,
interaction, or evidence of unitary management of the structure- and interaction-based capabilities. This builds
relationships, di$culties and examples of failure were on the operational/relational dichotomy espoused
typically encountered. earlier, and has been found to have a conceptual utility,
36 S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37

and interestingly a clear, practical application outside of Baily, P., Farmer, D., Jessop, D., Jones, D., 1994. Purchasing Principles
the auto industry. A brief case example demonstrates and Management, 7th edition. Pitman, London.
some of the issues raised through its application. Bessant, J., 1990. Managing Advanced Manufacturing Technology
*The Challenge of the Fifth Wave. Basil Blackwell, Oxford.
The recognition that strategic capability is dependent Blois, K.J., 1972. Vertical quasi-integration. Journal of Industrial
upon interorganisational relationships is not particularly Economics 20 (3), 253}272.
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