How networking can create a competitive advantage ?

Abstract

Nowadays, the environment in which companies operate is changing more and more rapidly. Therefore a new type of organizational structure, disaggregated and decentralized, has emerged in order to overcome this difficulty: interorganizational collaboration, commonly called network.

Through our study, we wanted to establish if being part of a network can contribute to the creation or the improvement of a competitive advantage for the firm. To reach this aim, the keys concepts of network and competitive advantages have been defined with the help of scientific literature. Moreover, we have decided to establish, thanks to several authors, some categories to standardize the type of competitive advantages in which firms can overcome its competitors: product, corporate reputation, human resources, technology and innovation, financial performance, organizational structure and finally, business model.

Our research has taken place in a well-established company of Liège’s surroundings, FN Herstal. The main purpose was to observe how being part of a network can influence the types of competitive advantages highlighted in our review of literature. In addition, we have also focused on the difficulties which could occur in the setting up of a network.

Our findings have highlighted that the company could improve some categories or sub-categories of competitive advantages through partnerships. Nevertheless, some obstacles regarding the use of networks have also been found. Our study shows that they can reduce the gains obtained from this arrangement.

Based on our findings on the case of FN Herstal we can say that, in this specific example, networks are made in order to improve one or several competitive advantages that the company already has instead of creating a new one. Indeed, all the networks used in our case study are made in order to improve the company’s forces rather than to create new ones.

Nevertheless, lots of issues can occur inside the company itself due to this practice and moreover, also with partners. Therefore, before implementing this new manner of doing business, a company needs to establish carefully the pros and cons.