Competitive Dynamics in Electronic Networks: A Model and the Case of Interorganizational Systems

Lei Chi, Clyde W. Holsapple, and Cidambi Srinivasan
International Journal of Electronic Commerce,
Volume 11, Number 3, Spring 2007, pp. 007.

Abstract: Interorganizational systems (IOS)—distributed computing systems that support processes shared by two or more firms—have become fundamental to business operations, opening avenues to unprecedented collaborative linkages, even among competitors, and to growing “co-opetition.” As the role of IOS expands, electronic networks have become more complex and dense. This paper introduces competitive dynamics research and social network analysis into the study of IOS. A model of the associations between the constructs of IOS use, competitive action, and network structure is developed, and hypotheses are advanced about the relationships among the constructs. As a step toward external validation, measures are devised for operationalizing the constructs and examining the linkages suggested by the hypotheses in the context of an IOS-intensive network consisting of sports car makers and their value/supply-chain partners. The study (1) addresses interactive firm behaviors in e-business and highlights the value of competitor analysis, (2) provides new operational measures that can be generalized and thus enables systematic analysis of IOS use, and (3) identifies new roles of IOS in influencing firm behavior and performance beyond its traditional focus on efficiency and power functions.

Key Words and Phrases
: Competitive action, competitive dynamics, co-opetition network, interorganizational systems, IOS, network structure, social networks.