Jyotirmoyee Bhattacharjya

Advances in information and communication technologies, the growth of global markets and globally distributed suppliers have given rise to new business models and complex value chain networks. Business processes in these networks are increasingly dependent on information and knowledge sharing interactions across enterprise boundaries. This raises the need for a better understanding of how such interactions can be used effectively to meet the strategic objectives of various network participants.

This paper combines transaction cost economics (TCE) (Williamson, 1985; 1991), the knowledge based view (KBV) of the firm (Grant, 1996) and sociological (Cook, 1977; Emerson, 1962; Granovetter, 1973; Uzzi, 1997) perspectives in presenting a framework of interorganizational interactions in a value chain network. The framework recognizes both the formal and the social nature of these interactions. Three types of interactions have been identified: transactional, transformational and knowledge integration interactions. On the strategic level transactional interactions involve ex ante searching, information exchange and negotiations as well as ex post monitoring. On the operational level transactional interactions involve clerical work, order processing, tracking of goods and payments. Strategic transformational interactions involve information exchange facilitating the ability of network participants to adapt their products and processes to each other. On the operational level transformational interactions involve production scheduling, process improvement and productivity improvement related information sharing. Knowledge integration interactions at strategic and/or operational levels are important for firms undertaking joint design and development activities.

Johanson and Mattson (1987) suggested that interactions in the network influence and are influenced by strategic market considerations, interfirm relationships and intra-organizational industrial activities. Strategic market considerations are important for creating fee cash flow and shareholder value. Standardizing value-driver-based management decision making processes may have important implications for interactions between network participants.

The importance of standardization of both internal and supply chain processes have been highlighted by a number of authors (Hammer and Stanton, 1999, Davenport, 2005; Hammer, 2007). Hagel et al. (2008) present the idea of a shaping platform that provides value through a set of standardized protocols and practices that facilitate interactions by reducing the cost and effort required by participants in a business network to coordinate their activities. They cite various examples such as protocols associated with Google's AdSense platform which facilitate the submission, pricing, presentation and payment for advertisements and Visa's governance structure which allows a large number of banks to work together while maintaining Visa's flexibility. In this paper a shaping platform is conceptualized as a set of standardized protocols and practices for management decision-making based on key value drivers such as market response, cost management, fixed asset productivity and working capital productivity.

This paper explores how such a shaping platform effects inter-enterprise relationships in a value chain network through its influence on the framework of interactions described earlier.