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Inter-firm Cooperation among Manufacturing Firms

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As global competition increases, producers are searching for new business models to improve their competitiveness and profitability. In situations which do not allow them to achieve these goals on their own, they seek to join forces with other firms. In fact, interfirm cooperation is widely believed to make strategic sense due to possible cost reductions, demand pooling effects, market expansion, capacity utilization benefits and improved flexibility against uncertainty in the business environment. However, there are a number of questions that need to be answered for a successful implementation. What are the characteristics of producers that will benefit from cooperation? How can a firm choose other firms to cooperate for a beneficial cooperation? What should be the business model to share the benefits among the member? In this study, four cooperation models are investigated: cooperation on production capacity, cooperation on logistics activities, cooperation on product assortments, and cooperation on procurement. By using analytical modeling, the characteristics of a beneficial cooperation are determined and questions regarding the design and the operation of the models are answered. Finally, implementation of the cooperation-based business models in different industries in Turkey is discussed and the results obtained are reported. It is observed that when the conditions for a beneficial cooperation are met and it is implemented properly, cooperation is an effective competitive strategy. Therefore, cooperation-based business models are recommended to improve the competitiveness of producers.

This talk is part of the Manufacturing Research Forum series.

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