Other authors emphasize that the companys technical environment can have a

Other authors emphasize that the companys technical

This preview shows page 11 - 13 out of 18 pages.

Other authors emphasize that the company’s technical environment can have a significant impact on the development of a network among companies and its composition (Madhavan et al. 1998 ), and compacted networks are not beneficial for companies operating in a turbulent technical environment (Rowley et al. 2000 ). The company’s position within a network may differ. Basically, its role and importance depend on assets possessed, know-how, patents and market position, etc. An interesting case in point would be the passenger transport industry. The- oretically, each airline in the network has the same rights and obligations. In practice, however, things are different, and the role and place of the individual airlines within the network are varied. Large, global airlines, which are mostly the 1 Alliance Network Structure 39
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founding entities of the network, are the leaders. In the middle of the group, there are full members, which cooperate closely with each other and play a major role. Agreements between them are multilateral and exclusive, as in the case of Star Alliance. They are supported by the second level members, which usually have strict and close ties with one of the full members of the group. Any differentiation between them has a hierarchical structure, i.e., full members have more power than the second rank of members, but the latter benefit from a depth of network con- nections and global scope. The carriers that cooperate with the network on a ‘‘from connection to connection’’ basis are the third group. They can also cooperate with airlines belonging to other networks because the principle of exclusivity does not apply to them. They are usually long distance carriers from relatively distant locations which are seeking optimal connections between their major airports. Small regional carriers which are engaged to serve one or more specific routes can also belong to this group. In other words, a dominant position in the network is held by full members, and airlines that cooperate on the ‘‘from connection to connection’’ basis are the least important. The latter do not have the full rights of the other members, but the principle of exclusivity does not apply to them. Although alliance networks are created to generate group-based advantage, they must show benefits at the individual company level in order to attract and retain new members. Therefore, the question arises: if the network generates profits, how much can an individual member receive? Authors taking a structural approach argue that the position of the company in the network shapes its power over partners (Nohria and Garcia Pont 1991 ; Lorenzoni and Baden-Fuller 1995 ). Others emphasize that scarce resources brought to the network by each company shapes its ability to extract profits from partners. In business practice, these approaches are equally important, and a company with unique and value-added assets can often bargain for a central position in the network. Table 1 presents the factors affecting the company’s position within the network.
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