Network mobilizer Stefanos Mouzas Lancaster University, Management School, Lancaster, UK, and

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1 Stefanos Mouzas Lancaster University, Management School, Lancaster, UK, and Pete Naudé Manchester Business School, Manchester, UK Abstract Purpose The aim of this paper is to identify how companies mobilize other companies in their surrounding network to work within the plans they develop Design/methodology/approach A conceptual model is developed and its applicability is illustrated by a case study involving a manufacturerretailer network within Europe Findings The study identifies five different challenges that managers need to consider when attempting to mobilize other actors in their networks: developing network insight; introducing new business propositions; concluding the deal; developing the social contract; and achieving sustained mobilization Research limitations/implications Although based on a manufacturer-retailer network, it is believed that the proposed model has far wider managerial implications, achieved through the identification of the different challenges Practical implications The model is explained in some depth, and its practical implications explained via the case study Originality/value The development of a theoretical model of network mobilization based on a network view of business-to-business relationships Keywords Organizations, Networking, Contracts Paper type Research paper An executive summary for managers and executive readers can be found at the end of this article Introduction Mobilizing other organizations within a network comes at a time when business reality is characterized by uncertainty Changing customer tastes and trends, shortening product life cycles, increasing global competition, price wars, and evolving technology have all combined to increase competitive pressure on companies To respond effectively to these developments, organizations are forced to increase their internal efficiency and to capitalize on the knowledge, technologies and resources of other organizations A company s relationships are prime assets in this process, and their effective utilization is critical to success in implementing new initiatives From a company s perspective, network mobilization is the outcome of utilizing their relationships to move other organizations such as customers, suppliers, agencies, partners or even competitors to work within their own plans Although any company s relationships might highlight significant potential deals, managers are aware that any attempt to introduce new initiatives such as a cost saving program or the launch of a new product can trigger strong network resistance and inherent conflict with other organizations Invariably, company s initiatives are confronted with the historically The current issue and full text archive of this journal is available at wwwemeraldinsightcom/ htm 22/1 (2007) q Emerald Group Publishing Limited [ISSN ] [DOI / ] situated practice within each business network This practice includes institutionalized forms of business processes such as electronic data interchange, standard terms of delivery and terms of payment, as well as the accountabilities and generally accepted norms Furthermore, the historically situated practice includes institutionalized forms of business interactions such as annual negotiations among companies Traditionally, annual negotiations take place between the retailer s purchasing department and the manufacturer s sales department in the annual trade negotiations that take place between September and December each year In order to identify how organizations mobilize other organizations, the following research questions are formulated: What are the different expectations of organizations in mobilizing other actors? To what extent are organizations cognizant of where certain capabilities reside in their network? In what ways do individual organizations enlist support from other actors? What is the role of business negotiation in enlisting support from other actors? How can business deals be used to mobilize other actors? How can companies achieve sustained network mobilization? These questions are tackled by taking a network perspective This is done in order to move on at a higher aggregation level and examine the impact of dyadic interactions on other business relationships The paper presents a theoretical foundation and provides a model for the study of network mobilization It then describes the applicability of the proposed model in an exemplary case in supplier-retailer networks and presents conclusions and implications for the analysis of how organizations mobilize other organizations 62

2 Networks and mobilization This section serves to briefly introduce the network approach, and to examine the forces that characterize business relationships The section then moves on to discuss the ways in which managers make sense of their environments in their search for network insights to gain competitive advantage while still necessarily cooperating with their counterparts Finally, the notion of the social contract between the interacting parties is introduced, which is then developed in subsequent section of the paper The network approach starts from the perspective that no firm is an island (Håkansson and Snehota, 1990), and that they can only achieve their objectives by working with other firms rather than in isolation The network approach is anchored in the acknowledgment of markets as networks of exchange relationships (Axelsson, 1992; Johanson and Mattsson, 1992; Anderson et al, 1994; Håkansson and Snehota, 1995; Easton and Araujo, 1997, Mouzas and Araujo, 2000; Gnyawali and Madhavan, 2001; Ford et al, 2003) The view of markets as interconnected networks of exchange relationships makes the network approach suitable for the purposes of investigating the mobilization of actors, because it allows us to operate at a higher level of aggregation than other research approaches It moves beyond dyadic relationships to examine whole networks of relationships as the unit of analysis The network approach is sensitive to developments over time; it assumes that organizations transform resources to carry out transactions linked by relationships, and that the cumulative effect of the developments in relationships influences both the position and the network in which the organizations find themselves Building on the network approach, mobilization is seen as the outcome of dynamic processes, where organizations interactively shape and develop the rules that constitute and govern their business relationships This alternate conceptual lens is based on the ontological assumption that each business relationship is determined by three elementary forces (Araujo and Mouzas, 1994): 1 domain consensus; 2 goal incompatibility; and 3 interdependent symbiosis Domain consensus refers to the degree of agreement over functions and roles in the relationship Domains reflect the right to operate and perform within specific areas, for instance in the production or advertisement of goods, or in selling to consumers, and is related to the definition of boundaries, role sets and expectations in the relationship (Ford, 1978) Domains and boundaries are often disputed and redefined over time, demonstrated vividly in the aggressive delisting of manufacturers brands and the engagement of retailers in boosting own labels (Mouzas and Ford, 2003) This tendency can be regarded as an attempt by the trade to invade domains that are traditionally the preserve of manufacturers, to redefine role-sets and to redraw the boundaries of the network in which both trade and manufacturers are embedded Goal incompatibility is related to the extent of incongruities in values and premises between companies, and is deeply rooted in the fight to increase the share of activities portrayed by the value chain As in the actors-resources-activities model (Håkansson and Johanson, 1992), it is assumed that a quest for control is an important factor influencing network mobilization The distribution of power in a network is assumed to be unevenly scattered and to change over time In a view that is perhaps more porterian than that sometimes implied by the network approach, this distribution of power is the momentary outcome of a struggle in which actors try to increase their power, ie their control over activities or resources The driving forces behind this struggle are human attributes such as greed and lust for power in combination with the fact that many resources are scarce (Håkansson and Johanson, 1992) The struggle for control includes both cooperative and competitive elements in inter-organizational relationships By mobilizing other companies in their surrounding network, organizations not only gain access to the resources of these other companies, but they implicitly seek control over other organizations and through those, they seek control over the environment The latter implication allows us to move beyond the concept of dyadic relations and assess the quality of relationships in the context of other business relationships (Naudé and Buttle, 2000) Interdependent symbiosis reflects the need for mutuality and co-operation Network mobilization presupposes the existence of complementarity in resources or activities Complementarity can lead to network mobilization, but this has its price: mutual dependence Cunningham (1993) has argued that the dependence of R on C is directly proportional to R s motivational investment in goals mediated by C and is inversely proportional to the availability of those goals to R outside the R-C relation The customer s goals mediated by the supplier might include low cost, flexible credits, technical advice etc Again dependence brings with it the problem of power If firms are mutually dependent, then mobilization will affect an existing business relationship The sensitivity of the network approach to developments over time is demonstrated by Johanson and Mattsson s (1992) network theory concept that shares many features with Weick s (1995) notion of sense-making and Ford et al s (2003) concept of network pictures All three conceptual tools are retrospective in nature and contribute actively to the process of constructing a firm s identity They are the ongoing product of inter-organizational interactions and provide a credible depiction for past events and current positions They are inferred from a variety of cues rather than objectively given and they are enacted in the sense that existing networks are interpreted and constructed by the organizations own initiatives Therefore, the concepts of network theory, sense-making and network pictures do not necessarily represent the context of a firm in an objective or appropriate way They are general framing constructs that allow organizations to cope with contextual circumstances and to pursue desired outcomes, but they do not describe an organization s unique and differential knowledge or network insight for the niche it occupies Such network insight can lead to a differential advantage that is crucial for the growth and survival of an organization As Alderson (1957, pp 52-60) argues, an organized system will tend to survive as long as the niche it occupies endures 63

3 Following the work of Alderson (1957) as well as Stern (1971), Easton (1990) and Easton and Araujo (1992) argue that both vertical and horizontal relationships need to be included in network analysis Easton (1990) explains that customers provide a primary, if indirect link between competitors Horizontal competitive interactions are thus mediated via vertical co-operative relationships between buyers and suppliers In a similar way, Lazzarini et al (2001) argue that in a netchain which comprises horizontal ties between companies within a particular network as well as vertical ties between companies in the different layers of the chain, a change in one business relationship may influence other relationships There is, however, no compelling evidence of any research identifying supply chain actors awareness and understanding of the other actors of the chain (Storer et al, 2003) Snehota (1993, p 39) provides a wider approach: Competition within a market is not exercised unless co-operative behavior is elicited from some other parties If we assume that there is an interest for an exchange between two organizations, there is, indeed, a basis for co-operation Nevertheless, given that the exchange will take place, each party will try to capture the maximum value through that exchange A business deal may mean different things to the actors involved Organizations can have different expectations from a deal, which might be acknowledged or implicit For example, an actor might expect the implementation of a series of discrete transactions, while the other side sees in the deal the start of a new partnership Fortgang et al (2003) metaphrase the different expectations of how an agreement will work in practice as the social contract or spirit of the deal They argue that a social contract has two sides While the underlying social contract answers the question of the nature, extent and duration of an agreement, the ongoing social contract answers questions concerning handling contingencies and resolving disputes Watkins and Bazerman (2003) present three steps as keys for disaster prevention that need to be incorporated into any such social contract: recognition, prioritization, and mobilization Failure of mobilization occurs when organizations recognize and give adequate priority to a looming problem but fail to respond effectively They claim that by focusing on technical and strategic problems, and not on the hard work of winning hearts and minds of other organizations, a company may ultimately lose substantial business This is in line with theoretical propositions that strong ties facilitate the mobilization of support and the transfer of complex knowledge (Wuyts et al 2004) Researching the mobilization of different interests and the development of collective action in the port wine industry, Araujo and Brito (1998) illustrate that interests are not fixed, but subject to negotiation with other actors (Sebenius, 1992) They conclude that collective action depends on the ability to aggregate and mobilize convergent interests Similarly, actors alternatives may change over time Situational changes such as the availability of new information or the culmination of ongoing processes can change the range of possible acceptable adaptations (Brennan and Turnbull, 1999) and business deals (Lax and Sebenius, 1986, 1991, 2002) The literature review above examined the forces that determine each business relationship and the impact of dyadic interactions on other business relationships The literature review was not an end in itself but a means to identifying worthy research issues that are chosen as the fields within which to search for concepts and gaps in the investigation of network mobilization The model of network mobilizer Following the theoretical review, this section constructs a conceptual framework for the study of how organizations mobilize other organizations in their surrounding network to work within the plans they develop The conceptual framework links the different perspectives together by considering relationships between concepts from a number of different sources It is argued that much can be gained from developing a clear and coherent framework that describes and explains the underlying dynamic and developmental processes of network mobilization Despite the general recognition of the importance of mobilization (Araujo and Brito, 1998; Watkins and Bazerman, 2003; Wuyts et al, 2004) no attempt has been made to investigate underlying processes of network mobilization The present model emphasizes two interrelated aspects First, organizations are embedded in an existing context that gives both impetus and resistance to the organization s initiatives For analytical purposes this context is classified into macro-level externalities, network level and dyadic level Second, there is a continuous struggle by organizations to increase their internal efficiency and exploit new business opportunities in their surrounding network The model is called network mobilizer and is shown in Figure 1 The model articulates five phases as organizational challenges The first challenge is related to the role of network insight It describes the organization s unique knowledge about the niche it occupies in the network Network insight may involve awareness about a supplier s existing concerns and available options, or may include the knowledge of where certain capabilities reside in a network It is a differential knowledge that contributes actively to the process of creating a differential advantage The second challenge sees the company s initiatives as the introduction of business propositions into existing business relationships In fact network mobilization starts at the time when the organizations introduce their business propositions to suppliers or customers Usually, the organizations present business propositions that bring concrete issues, which might refer to the product or service quality, prices, terms of payment or the launch of a new product Proposals may take the form of suggested co-operative projects for implementation or might involve intents for interorganizational exchange The third challenge refers to the organizations deals Organizations come to a deal when their agreement is better than their alternative options The deal, whether in the form of a written agreement or not, creates joint gains and might effectively mobilize other network actors to work within the organization s plans The fourth challenge is linked to a company s social contract Network actors may hold diametrically opposed expectations regarding their concurrence The social contract is about the actors expectation regarding the nature, extent and length of a jointly decided action It is also about the actors expectation 64

4 Figure 1 A model of a network mobilizer of how they will work together in practice Achieving sustained mobilization in a network is, however, a final challenge, and forms the fifth challenge, since without deals that create joint gains there is no genuine concurrence of others and without genuine concurrence there is no sustained network mobilization The model creates a vision of a stratified reality of network mobilization in which every phase provides impetus and resistance to the make-up of the next phase Even though the model articulates the network mobilization as a sequence of five organizational phases, the presented phases do not exist in isolation Instead, there is an inherent dynamic interplay among network insight, business propositions, deal, social contract, and sustained mobilization For example, the network insight affects the deal-making process and this is influenced by contextual circumstances and the different ways managers encounter the contextual developments The next section explains the research method adopted, culminating with an explanation of how the network mobilizer model can be used to categorize, explore and explain what triggers network mobilization, showing why and how the inherent mechanisms of network mobilization operate within a set of contextual contingencies Research method The objective of this paper is to describe and explain how organizations mobilize their network, following the method of case study research (Eisenhardt, 1989; Tsoukas, 1989; Pettigrew, 1990; Yin, 1994; Easton, 1995; Halinen and Törnoos, 2005) Investigating manufacturer-retailer networks, the study has both theoretical and empirical ambitions At the theoretical level, the objective is to construct a conceptual framework, which can describe and explain the mobilization of network actors better than traditional network models At the empirical level, the objective is to gain rich empirical data that test, rework and validate the conceptual framework There is therefore a continuous interplay between theoretical notions and empirical findings: theory as a distillation of existing knowledge of managing in networks should contribute to an understanding of the new empirical findings, while the findings should refine and rework the existing theory Based on data from manufacturer-retailer networks, multiple case study research design has been used to collect, analyze and report on the empirical evidence The research reported here is the result of a longitudinal study in manufacturer-retailer networks that were selected as the empirical field to investigate inherent interdependencies between organizations selling and organizations buying A case study that describes concrete network mobilization episodes during the period is presented The names of the companies are disguised to ensure confidentiality Emphasis was based on multiple sources of information and triangulation of data in order to maintain a chain of evidence and develop converging lines of inquiry that increase the validity and reliability of research constructs The case study involved participant observation as well as interviews and research workshops with 44 senior managers, such as marketing directors, purchasing and supply directors, key account managers and controllers, as methods of data collection Participant observation was followed by additional data gathering through communication with members of the organization, visits to the organizations, semistructured interviews and a formal workshop to discuss the findings A field diary was also written periodically to supplement the formal material gathered and provided reflections on the research as a whole Further electronic 65

5 documents received via and pertaining to all aspects of the organization and its employees were retained for analysis Data analysis involved critical examination, evaluation, categorization, and recombination of the data collected to address the research phenomenon (Glaser and Strauss, 1967) The approach to data collection was empirically grounded and was focused on the dialectic relationship between necessary mechanisms of negotiating practices and contextual contingencies in manufacturer-retailer networks The iterative examination of interview statements, comments and observed negotiations led to the identification of a set of themes that reflected the contemporary challenges of organizations The analysis encouraged these themes to emerge from the data rather than imposing them on the data Applicability of the model An exemplary case is introduced below in order to discuss the applicability of the model of network mobilization to the empirical data Figure 2 presents a manufacturer-retailer network in the fast moving consumer goods (FMCG) market in Europe The network consists of the manufacturer FMCG, two retail chains (retailer F and retailer B), the packaging supplier (supplier A), a competitive packaging supplier (supplier B) and the final consumers Manufacturer FMCG supplier A FMCG is a major multinational consumer goods company committed to building long-term growth and profitability, while continuing to enhance its global position It is a leading global player with sales of some $10 billion a year, manufacturing in over 15 countries, and with a market presence in over 150 countries In order to retain its global positioning, a stated strategic aim is to integrate acquisitions and to focus on the purchasing of raw materials and services from the widest and best sources One of its largest non-food suppliers in Country X is supplier A, which in turn is a global, multi-billion pound company focusing on value-added paper-based products Like FMCG, it has a history stretching back many decades The company caters for the total packaging needs of its customers by offering a broad range of tailored products and services available in over 120 locations globally One of its major product lines is the conventional corrugated paper packaging Figure 2 The manufacturer-retailer network cases used throughout the food industry Some 70 percent of all transit packaging in Europe is made from corrugated board and supplier A offers a wide range of single, double and triple wall materials The company, therefore, operates in an industry in which achieving competitive advantage through the generic product is extremely difficult, and management at supplier A have traditionally kept a keen eye on all financial aspects of their operations Supplier A had been virtually the sole supplier to manufacturer FMCG for over nine years, the management of supplier A felt that they knew the company, although there were some major differences: FMCG was a 24 hours seven days operation, while supplier A was a 24 hours five days operation There were perceived problems with ensuring the continual operation of FMCG s plant, one of the biggest in Europe, and there had been an increase recently in line outages/missed delivery times Clearly any line stoppages within FMCG had disastrous financial consequences, and while none of these had been due to Supplier A, there had been some near misses Manufacturer FMCG accounted for some 60 percent of the output of supplier A s local factory, with supplier A accounting for about 99 percent of this type of packaging used by FMCG Consequently, they had increased the level of interconnectedness between the firms by installing a SMART information system and also a vendor managed inventory (VMI) ordering process The FMCG retailer F relationship Within the context of manufacturer-retailer networks, it is clear that there are huge pressures on food retailers operating within Europe Over-capacity among producers, economic uncertainty, and increasing consolidation at the retailer level are all combining to put retailers under pressure to cut their purchasing costs In this competitive environment, retailer F had a publicly declared policy of low price Nevertheless, increasing pressure to defend market shares against competitor retailer B, meant that retailer F had to search for both internal efficiencies and external sources of cost advantages Historically, such manufacturer-retailer networks are typified by regular rounds of price increases Price increases were usually initiated by the FMCG producers and followed by other manufacturers of branded products Price increases were often presented by FMCG s key account managers to retailers as a new or revised price list Retailers such as Retailer F were in turn concerned with the increasing cost of goods bought, because they have to pass on higher prices to consumers In the stagnant fast moving consumer goods market, manufacturers such as FMCG justified the price increases as a necessary mechanism to generate funds for advertising and promotions in a process that is known as price up and spend back This business is not only one of the most advertising intensive businesses in the world, it is also top in running below-the-line promotions such as trade promotions which include per-case discounts to retailers, buyone-get-one-free-offers, special pack promotions, in-store promotions or co-operative advertising The pricepromotion spiral drives consumer prices up, and prompts retailers to launch retailer brands produced by third-party manufacturers Retailer brands not only offer lower prices to 66

6 consumers, but also better trade margins to retailers Therefore, retailers show resistance towards the higher prices of branded products and enthusiastically promote their own retailer brands As a result of these competitive pressures, retailer F contacted FMCG, requesting a significant cut in product costs The relationship between retailer F and FMCG was a long-term one, stretching back many decades, characterized by an ongoing social contract based upon the expectation of co-operation and mutuality The outcome of this request was that manufacturer FMCG urgently started to look for innovative ways to cut costs Their cost accountants closely examined the company s cost structure, and concluded that internal efficiencies had probably been optimized given current production technologies and the operating environment, and hence that they had to seek increased efficiencies from their own suppliers FMCG s cost of paper trays to hold the product during transportation amounts to about 15 percent of the total product cost, and they sought to reduce this with supplier A As the contract between FMCG and supplier A was about to come to an end, both parties were willing to discuss its continuation, but the cards lay more with FMCG, given the low switching costs, and the fact that supplier A operated in an industry characterized by overcapacity How the story unfolded During a regular meeting between FMCG and supplier A in 2002, FMCG introduced a business proposition, aimed at reducing purchasing costs via packaging reduction Their stance was initially a relatively hard one, in which they tried to dictate the terms, demanding that supplier A be more innovative in finding ways to reduce their costs Supplier A s response was that increasing research and development (R&D) expenditure in their highly competitive market was not an easy option, given prevailing costs in the marketplace and the financial returns demanded by their global headquarters The current contract between FMCG and supplier A had been in place for five years, and was nearing its end According to the existing deal, the price paid by FMCG was based on two components: a price paid for the amount of raw material used, ie paper, and a price paid for the conversion of the paper into usable cartons The former is dictated by global commodity prices, and the second is essentially a processing cost paid per unit of paper processed Based on the existing arrangement, FMCG calculated that if both sides could reduce the amount of board used, they would in effect save on both the raw material and the processing costs The lack of willingness and ability of supplier A to modify their production processes or to offer innovative solutions to FMCG put the relationship under renewed pressure While supplier A had traditionally accounted for 99 percent of FMCG s packaging requirements, this had recently been reduced to about 90 percent, with FMCG very visibly allocating some of their packaging requirements to the supplier B in order to keep supplier A on their toes After several months of agonizing negotiations, pressure from FMCG forced supplier A to redesign their offering, resulting in less paper being used in the outer packaging, thereby giving FMCG significant cost savings This was in line with the business proposition put by FMCG, which was that supplier A should find ways in which to reduce the amount of paper used Moreover, the agreement was clearly of interest to retailer F, since it would involve less packaging, less packaging waste, less labor, and less handling costs Retailer F s estimate was that if the changes were undertaken by FMCG, they would generate some $ in savings on material, allowing Retailer F a significant reduction in price The stance of retailer F who were familiar enough with the FMCG-supplier A relationship to recognize how much FMCG would be saving by adopting the new packaging meant that the lion s share of this saving were negotiated back by retailer F Limitations As with all case-based research methodologies, there are obvious limitations regarding the generality of research findings In case-based research generality is ascribed to the operation of causal mechanisms and not regularities (Tsoukas, 1989) Causal mechanisms differ from the deterministic or stochastic association of events Casual mechanisms act in their normal way even when expected regularities do not occur They are necessary ways of acting in a set of circumstances The model of network mobilizer (see Figure 1) aims to explain and test network mobilization within its real-life context, focusing on manufacturer-retailer networks The term manufacturer-retailer network is used as a metaphor to explore and describe the inherent interdependencies between organizations selling and organizations buying in the markets of fast-moving consumer goods Although the research is based upon a manufacturer-retailer network, the proposed model has far wider managerial implications The efficiency of the model is achieved through the reduction of the complexity of network mobilization into five managerial challenges This has a distinct advantage over theoretical discussions of the general importance of mobilization because it provides managers with a practical tool that can be used in mobilization other organizations Managerial implications In this section the five managerial challenges of the model, presented in Figure 1, are discussed and conclusions about their implications are drawn The model recognizes that these challenges usually arise from the dual attempt to either increase internal operating efficiency, or else to find new business opportunities Before these challenges can be acted on, managers need to operate from a certain knowledge base, which can be usefully divided into dyadic level and network level insights, both of which are affected by macro-level externalities These externalities, such as socio-economic developments or technological changes, network changes, such as price competition or trade concentration, as well as dyadic business relationships, constitute a set of contextual contingencies that provides an impetus and resistance to individual companies to scrutinize their own business to increase internal efficiency and to capitalize on the knowledge, technologies and resources of others 67

7 The first challenge of any mobilization effort within a business network is inextricably linked with the availability of network insight The empirical data demonstrate a considerable lack of network insight Without sufficient knowledge of their supplier s concerns and options, companies were preoccupied with their own problems Consider the case of the FMCG s manufacturer Although the percentage of packaging costs was low, FMCG s concern centered on the gains to be made from selective purchasing Any cost reduction in packaging would improve their operating margin, and reduced inventory meant better cash flow and hence repayment of existing debt incurred during acquisitions Any innovation in packaging would give them a competitive edge with the retailers While FMCG were trying to coerce supplier A to become more innovative in finding ways to reduce packaging costs, they underestimated the broader network structure, and overestimated the importance that supplier A might attach to keeping this one factory open to supply predominantly one client Supplier A is a global multi-billion pound company operating under strict financial guidelines, and would seriously consider closing this factory if the appropriate return on assets could not be achieved The second managerial challenge has to do with the organizations choices to introduce new business proposals into their existing relationships Through the introduction of business proposals, companies bring concrete issues to the negotiation table whilst accepting that others remain unchanged Issues might refer to the product or service quality, prices, terms of payment, the launch of a new product or ways of sharing tasks between them Business proposals can take the form of suggested co-operation, exchange, demands, requests or offers In the case, retailer F was concerned with increasing internal efficiency Given the price positioning of retailer F in the retail market, they felt the competitive pressure that was exercised by retailer B This provided the impetus to retailer F to contact FMCG, requesting a significant cut in product costs Notwithstanding the price pressure that was coming from retailer brands, FMCG s marketing competence depended on the company s ability to generate cash and to secure contribution margins that allow a high level of advertising and promotion spending Therefore, instead of negotiating the current status quo of prices and margins, they agreed to look at their cost structure and to come back with solutions In order to fulfill retailer F s request, FMCG had to mobilize supplier A to cut packaging costs Therefore, the challenge of introducing Proposals confirms and reinforces the embeddedness of business initiatives within a wide range of pre-existing business relationships The third challenge is associated with the business deal A deal is a manifestation of agreement and imposes a number of duties or rights on organizations Whether in the form of a legal document or not, the deal refers to an exchange that creates joint gains and might effectively mobilize other network actors to a work within the organization s plans The empirical data demonstrate that the deals between companies are not fixed but in a process of an ongoing negotiation and modification over time, hence the existence of the feedback loops in Figure 1 These modifications are not the result of an explicit agreement or promise but the outcome of day-to-day construction and negotiation as manufacturers and retailers interact with each other The fourth managerial challenge refers to the social contract among organizations As demonstrated by the case, the social contract is about actors expectation regarding the nature, extent and length of their business relationships In the case, the need to conduct relationships according the social contract of the FMCG-retailer F interface, obliged FMCG to show a co-operative attitude to look at their cost structures In contrast, the existing social contract between FMCG and supplier A was largely characterized by a series of transactional episodes FMCG saw supplier A as basically a supplier keen to keep their costs as low as possible, and as a supplier with a very banal offering The packaging industry is beset by low entry barriers in producing paperboard, and there is a significant excess capacity throughout Europe Consequently, while FMCG have stayed with supplier A in order to minimize complexity and disruption at the plant, there was very little in the way of switching costs if they changed to another supplier The fifth managerial challenge is refers to the relevance of achieving a sustained mobilization While companies are able to confront the status quo in their networks and able to coerce other organizations to work for a while within the plans they have developed, sustained mobilization can only be reached by continuous negotiations and the realization of genuine agreements that are better than the actors alternative options In the case, the FMCG s perspective that supplier A needed them was a relatively myopic one They took, indeed, about 60 percent of the plant s output and hence if they switched to another supplier, supplier A would have to close the plant This may well be true; nonetheless the extent to which this would be a real problem at supplier A s headquarters given the size of this plant relative to the one plant s turnover, is a moot point Without crafting new deals that create joint gains for both FMCG and supplier A, it is hard to expect a genuine agreement from the latter, and without genuine agreement it is hard to expect mobilization that is sustainable Contribution The contribution of this study is demonstrated in the proposal of a model of network mobilizer that consists of a parsimonious set of five aspects that managers need to consider in mobilizing their networks, and these have general implications rather than being specific to a manufacturerretailer network It needs to be recognized that a company s relationships are not only prime assets in this process, but also that and the effective mobilization of other organizations is critical to success in initiating changes Applying the model of network mobilizer, mobilization of other organizations is not explained as the result of an individual program or the organizations plans, but as the outcome of a continuous construction among organizations, where the relationship between causal mechanisms and events is not fixed but contingent The case demonstrates that while the proposed model with its specified phases does work, certain contingencies kick in and lead to different events One of the most intriguing points in the study, and which deserves further investigation, is the attempt of organizations to 68

8 approach their problems by initiating backward mobilization The study shows that with their introduction of new business proposals to other network actors, organizations pass on problems backwards to their suppliers without affecting the basic offering to customers Researchers can look at our proposed mechanisms of network mobilization and investigate how organizations try to capture value through various forms of mobilization The present study is a contribution to the understanding of business-to-business networks in that it enables a more detailed explanation of how companies interact in their process of trying to find a differential advantage Further research in the area of network mobilization could create a better understanding of how mechanisms of mobilization interact with contextual parameters to generate the rich range of phenomena we have observed in this study References Network mobilizer Alderson, W (1957), Marketing Behavior and Executive Action: A Functionalist Approach to Marketing, Irwin, Homewood, IL Anderson, JC, Håkansson, H and Johanson, J (1994), Dyadic business relationships within a business network context, Journal of Marketing, Vol 58, January, pp 1-15 Araujo, L and Brito, C (1998), Agency and constitutional orders in networks, International Studies of Management & Organization, Vol 27 No 4, pp 22-5 Araujo, L and Mouzas, S (1994), Key account business development, in Biemans, W and Ghauri, P (Eds), Meeting the Challenges of New Frontiers, Proceedings of the 10th Annual IMP Conference, Groningen, Holland, pp Axelsson, B (1992), Corporate strategy models and networks diverging perspectives, in Axelsson, B and Easton, G (Eds), Industrial Networks: A New View of Reality, Routledge, London, pp Brennan, R and Turnbull, PW (1999), Adaptive behavior in buyer-supplier relationships, Industrial Marketing Management, Vol 28 No 5, pp Cunningham, MT (1993), The power game paper - a study of power within supplier-customer relationships, paper presented at the 9th IMP Conference, University of Bath, Bath, September Easton, G (1990), Relationships among competitors, in Day, GS, Weitz, B and Wensley, R (Eds), The Interface of Marketing and Strategy, JAI Press, Greenwich, CT Easton, G (1995), Methodology and industrial networks, in Möller, K and Wilson, DT (Eds), Business Marketing: An Interaction and Network Perspective, Kluwer Academic Publishing, Norwell, MA, pp Easton, G and Araujo, L (1992), Non-economic exchange in industrial networks, in Axelsson, B and Easton, G (Eds), Industrial Networks: A New View of Reality, Routledge, London Easton, G and Araujo, L (1997), Interfirm responses to heterogeneity of demand over time, in Ebers, M (Ed), The Formation of Interorganizational Networks, Oxford University Press, Oxford, pp Eisenhardt, KM (1989), Building theories from case study research, Academy of Management Review, Vol 14 No 4, pp Ford, D (1978), Stability factors in industrial marketing channels, Industrial Marketing Management, Vol 7 No 4, pp Ford, ID, Gadde, LE, Hakansson, H and Snehota, I (2003), Managing Business Networks, John Wiley & Sons, Chichester Fortgang, RS, Lax, DA and Sebenius, JK (2003), Negotiating the spirit of the deal, Harvard Business Review, Vol 81 No 2, pp Glaser, BG and Strauss, AL (1967), The Discovery of Grounded Theory: Strategies for Qualitative Research, Aldine de Gruyter, New York, NY Gnyawali, DR and Madhavan, R (2001), Cooperative networks and competitive dynamics: structural embeddedness perspective, Academy of Management Review, Vol 26 No 3, pp Halinen, A and Törnoos, JA (2005), Using case methods in the study of contemporary business networks, Journal of Business Research, Vol 58 No 9, pp Håkansson, H and Johanson, J (1992), A model of industrial networks, in Axelsson, B and Easton, G (Eds), Industrial Networks: A New View of Reality, Routledge, London Håkansson, H and Snehota, I (1990), No business is an island: the network concept of network strategy, Scadinavian Journal of Management, Vol 4 No 3, pp Håkansson, H and Snehota, I (1995), Developing Relationships in Business Networks, Routledge, London Johanson, J and Mattsson, L-G (1992), Network positions and strategic action an analytic framework, in Axelsson, B and Easton, G (Eds), Industrial Networks: A New View of Reality, Routledge, London, pp Lazzarini, SG, Chaddad, FR and Cook, ML (2001), Integrating supply chain and network analyses: the study of netchains, Chain and Network Science, Vol 1 No 1, pp 7-22 Lax, DA and Sebenius, JK (1986), The Manager as Negotiator: Bargaining for Cooperation and Competitive Gain, The Free Press, New York, NY Lax, DA and Sebenius, JK (1991), The power of alternatives or the limits to negotiation, in Breslin, JW and Rubin, JZ (Eds), Negotiation Theory and Practice, The Program on Negotiation at Harvard Law School, Cambridge, MA, pp Lax, D and Sebenius, J (2002), Dealcrafting: the substance of three-dimensional negotiations, Negotiation Journal, January, pp 5-28 Mouzas, S and Araujo, L (2000), Implementing programmatic initiatives in manufacturer-retailer networks, Industrial Marketing Management, Vol 29 No 4, pp Mouzas, S and Ford, ID (2003), Negotiating in networks: unleashing the power of options, paper presented at the 19th IMP Conference, Lugano, September 4-6 Naudé, P and Buttle, F (2000), Assessing relationship quality, Industrial Marketing Management, Vol 29 No 4, pp Pettigrew, AM (1990), Longitudinal field research on change: theory and practice, Organization Science, Vol 1 No 3, pp

9 Sebenius, JK (1992), Negotiation analysis: a characterization and review, Management Science, Vol 38 No 1, pp Snehota, I (1993), Markets as networks and the nature of the market process, in Sharma, D (Ed), Advances in International Marketing, Vol 5, Industrial Networks, JAI Press, Greenwich, CT Stern, LW (1971), Antitrust implications of a sociological interpretation of competition, conflict and cooperation in the marketplace, The Antitrust Bulletin, Vol 16, Fall, pp Storer, CE, Holmen, E and Pedersen, AC (2003), Exploration of customer horizons to measure understanding of netchains, Supply Chain Management, Vol 8 No 5, pp Tsoukas, H (1989), The validity of idiographic research explanations, Academy of Management Review, Vol 14 No 4, pp Watkins, MD and Bazerman, MH (2003), Predictable surprises: the disasters you should have seen coming, Harvard Business Review, Vol 81 No 3, pp Weick, KE (1995), Sensemaking in Organizations, Sage, Thousand Oaks, CA Wuyts, S, Stremersch, S, Van Den Bulte, C and Franses, PH (2004), Vertical marketing systems for complex products: a triadic perspective, Journal of Marketing Research, Vol 41 No 4, pp Yin, RK (1994), Case Study Research: Design and Methods, 2nd ed, Sage, Beverly Hills, CA Further reading Aldrich, H (1979), Organizations and Environments, Prentice- Hall, Englewood Cliffs, NJ Corresponding author Network mobilizer Stefanos Mouzas can be contacted at: smouzas@ lancasteracuk Executive summary and implications for managers and executives This summary has been provided to allow managers and executives a rapid appreciation of the content of this article Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present Network mobilizer The days when mobilization in an inter-business relationship merely consisted of annual trade negotiations between a manufacturer s sales department and a retailer s purchasing department belong to the history books In these more uncertain times, having to cope with changing customer tastes and trends, shortening product lifecycles, increasing global competition, and evolving technology, all combine to put pressure on companies to respond quickly and effectively to change Increasing their own internal efficiency is one way to respond; another is capitalizing on the knowledge, technologies and resources of other organizations In identifying challenges that managers need to consider when attempting to mobilize others within their networks, point out that a company s relationships are prime assets in this process and their effective utilization is critical to success in implementing new initiatives They say: From a company s perspective, network mobilization is the outcome of utilizing their relationships to move other organizations such as customers, suppliers, agencies, partners or even competitors to work within their own plans Failure of mobilization occurs when organizations recognize and give adequate priority to a looming problem but fail to respond effectively The challenges (which usually arise from trying to increase internal operating efficiency or finding new business opportunities) involve: developing network insight; introducing new business propositions; concluding the deal; developing the social contract; and achieving sustained mobilization Network insight is an organization s unique knowledge about the niche it occupies in the network It might involve awareness about a supplier s existing concerns and available options, or where certain capabilities reside It is a differential knowledge that contributes actively to the process of creating a differential advantage In the authors conceptual model, a multinational company (FMCG) tried to coerce a major supplier (supplier A) to become more innovative in finding ways to reduce packaging costs However, they underestimated the broader network structure, and overestimated the importance that supplier A might attach to keeping one particular factory open to supply predominantly one client What they did not know was that supplier A, a multi-million pound company operating under strict financial guidelines, would seriously consider closing the factory if the appropriate return on assets could not be achieved Network mobilization starts when organizations introduce their business propositions to suppliers or customers Usually, the organizations present business propositions that bring concrete issues, which might refer to the product or service quality, prices, terms of payment or the launch of a new product Proposals may take the form of suggested cooperative projects for implementation or might involve intents for inter-organizational exchange Faced with competitive pressure from a competitor, a retailer in the FMCG network requested a significant cut in costs FMCG s marketing competence depended on the company s ability to generate cash and to secure contribution margins that allow a high level of advertising and promotion spending Therefore, instead of negotiating the current status quo of prices and margins, they agreed to look at their cost structure and to come back with solutions In order to fulfill retailer F s request, FMCG had to mobilize supplier A to cut costs 70