Espacios. Espacios. Vol. 31 (4) 2010. Pág. 25

El lado oscuro de la relación interinstitucional: ¿por qué las empresas salen de los procesos cooperativos?

The obscure side of the interorganizational relations: why do enterprises leave cooperative processes?

O lado obscuro dos relacionamentos interorganizacionais: por que as empresas saem dos processos cooperativos?

Breno Augusto Diniz Pereira*, Juliano Nunes Alves** y Patricia Ennes Silva

Recibido: 15-02-2010 - Aprobado: 02-07-2010


Descubrir las razones que una empresa decide salir de la red, además de ser el objetivo de este estudio exploratorio cualitativo, puede ser una alternativa para minimizar los proble-mas surgen en el curso del proceso asociativo y se oponen a la consecución de los objetivos establecidos. A partir de entrevistas, se puede comparar y contrastar diferentes percep-ciones de las empresas y redes, llegando a datos analíticos sobre los problemas de las redes, el perfil de las empresas asociadas, el proceso de selección se practica en el movimiento asociativo y las razones que las empresas llevan a salir de las redes.
Palabras clave: Redes interinstitucionales; Problemas de red, Gestión de red, la Asimetría de información.

Finding out the motives which lead the enterprise to the decision of leaving the network, besides being the objective of this exploratory study, basically of qualitative character, may be an alternative of minimizing the problems that emerge during the associative process and prevent the stipulated objectives from being achieved. From the interviews, it was possible to compare and confront different perceptions of enterprises and networks, coming to pertinent analyses concerning the network problems, the profile of the associated enterprises, the selective process practiced in the associative movement and the reasons that cause the enterprises to leave the networks.
Keywords: Inter-organizational networks; Problems in networks; Management in net-works; Asymmetry of information.

Descobrir os motivos que levam à decisão da empresa de sair da rede, além de ser o objetivo deste estudo exploratório, de caráter qualitativo, pode ser uma alternativa de minimizar os problemas que surgem no decorrer do processo associativo e impossibilitam o alcance dos objetivos estipulados. A partir de entrevistas pôde-se comparar e confrontar diferentes percepções, de empresas e de redes, chegando a análises pertinentes a respeito dos problemas das redes, do perfil das empresas associadas, do processo seletivo praticado no movimento associativista e das razões que levam as empresas a saírem das redes.
Palavras-Chaves: Redes Interorganizacionais; Problemas em Redes; Gestão em Redes; Assimetria de Informação

1. Introduction

To the extent that small businesses cannot compete isolated and the major structures have no satisfactory solutions to deal with the current economic complexity, the interorganizational networks emerge as the best alternative to the actual needs of the produc-tive activities and more prominently, to the future (Wincent, 2008).

Within this perspective, and sensitized to the role of strengthening local and regional development, the state government of Rio Grande do Sul (a province located on south of Brazil), through the Department of Development and International Affairs (SEDAI), create in December 2000, the Program of Interorganizational Networks, of horizontal type, in order to promote and strengthen cooperation between Small and Medium Enterprises.

One of the more established sectors in the province of Rio Grande do Sul, in this context, refers to pharmaceutical companies, which is the unit of analysis in this study. Nowadays, there are about 4900 pharmacies distributed in all regions of the province, and the networking in this sector is composed by 900 establishments in the province and had as the great pioneer, the “Agafarma” Network of Pharmacies. (SINPROFAR - Association of Retail Trade of Pharmaceutical Products in Rio Grande do Sul).

The fact is that the networks can get only big benefits and advantages if a large number of interrelated conditions are met, which makes the process even more difficult. Companies with focus on cost reduction, for example, based on joint purchasing, produc-tion and marketing together, and, therefore, need to achieve a minimum number of members. The supplier can only give a price significantly attractive, if the volume of the order permits (Agndal, Nilsson, 2009).

Another problem arising from the attempt to get attractive prices, is the opportunistic behavior of members who may also bargain prices out of the network. The same opportunism can lead to distrust among the members of the network, which may hinder the exchange of information and generation of knowledge and learning.

Anyway, most of the studies, with some exceptions, claim this to be an excellent opportunity to stay, and even growth in the market where they operate. However, by the empirical point of view, there is a significant number of companies leaving the cooperative process. Many networks are unable to consolidate its structures and management models. So, if the networks actually provide benefits and competitiveness, why some companies release themselves from them? What are the reasons that lead to this withdrawal? Why do they leave? The answer to these questions is precisely the object that motivates this study and challenge the research on this topic.

In recent years, increasingly, the phenomenon of interorganizational networks has emerged as a mechanism for coordination of organizational activities. It’s considered an alternative structure, which emerge in response to the demands of the current marketing context, being able to solve practical problems, which affect companies. The networks take their forms in an attempt to reduce the vulnerability of these firms, increasing their bargaining power in relation to its competitors and establishing position on the market in which they operate.

Discover the reasons why the decision of leave the network, can be an alternative to minimize the problems that arise in the course of history and preclude the achievement of objectives, and improve the process of network management, making each stage of its development. Moreover, the consequences arising from that decision, both for companies and for the networks to which they belonged, could be avoided, or at least mitigated.

In general, diagnosing the reasons why a company leave the network to which it belonged could contribute in all stages of development of interorganizational networks. Involve, since the creation of their status, formalizing contracts and selection of its members, reaching even the possibility of making the withdrawal of dissatisfaction by some company or otherwise, in a less turbulent and traumatic for both sides.

As the main objective of this study, the diagnosis of the reasons that lead the entrepreneurs to get out of interorganizational networks in which they participate.

2. Theoretical foundation

Seeking support to this study and the development of an adequate theoretical basis to the problems of this work, this segment offers a set of concepts, theories and ideas, ranging from the formation of interorganizational networks, the question of relationships, possible problems, and arrive at last, the variables that lead firms to leave the networks in which they participate, the subject of this research

2.1. The Formation of Interorganizational Networks

The decision of create a strategic alliance, according to Keil (2000), is viewed from two main issues: the factors affecting the rate of formation of alliances and strategic motives for forming alliances. Among the factors studied are the firm size, age, competitive position and diversity of product and financial resources. The size of the firm receives special attention, because it argues that large firms, compared to their direct competitors and market segment, have less incentive to seek strategic alliances.

On the question of motivation for strategic alliances, Keil (2000) presents five groups of motivation: training required, reducing costs, access to resources, learning, strategic positioning. The first - training required - is related to the formation of alliances to meet its legal requirements and regulations. Minimizing costs can be a motivational aspect, because the firms participating in alliances save the combination of the cost of production and transaction. Access to resources - the third group - is discussed in the Theory of Resource Dependence, and suggests that firms need to relate because they can’t generate all the necessary resources internally, creating a relationship of interdependence between firms. Learning can also be a motivation for firms belonging to alliances because they can acquire new skills or technologies of the new members of the association. The last group - strategic positioning - can be explained by several aspects, including: gain information from emerging markets, reduce uncertainty and competitive pressure, keep out or corrode positions competitor, setting the standard of the alliance.

Anyway, the process of formation of interorganizational networks requires, in most cases, the implementation of some early devices, but no less important, that legally con-trols the creation and consolidation. According to Janowicz-Panjaitan, Noorderhaven (2009), these legal provisions are intended to punish opportunistic behavior, and refers to the status of the network, the rules, code of ethics, and also an ethics commission which oversees compliance with the rules . These rules have important implications for the question regarding the selection of members of the network and mutual assistance between members, which may develop into relationships of trust and reciprocity (social capital), which will promote the learning in network, facilitated by adopting mechanisms to enhance internal communication.

The cooperation between the companies is certainly linked to the Economy of Transaction Costs, and the approach used for the analysis of business cooperation. Williamson (1985) based on central tenets, such as bounded rationality and opportunism resume a course of conduct such as lying, stealing, deception, subtle forms of deception, to reveal information in a distorted or incomplete form. It should be noted that there are people who behave opportunistically all the time, but to some, and sometimes, and even in this way can be a big problem for the development of networks.

Another theory widely used in the focus of interorganizational networks is called the Theory of Collective Action, already discussed in section 2.1 of this chapter. Distributed by Olson, the term was used to discuss the typical behavior of an individual utilitarian, that is, acting according to his own interest, always seeking to maximize their personal benefit inside of organized associations. For Olson (1999), the goal of associations, whether they be residents of a neighborhood, be it unions or clubs, is always to promote the common interests of its members. All are treated equally by the organization, which means that when a result is achieved by the association, none of its members may be excluded from the benefits brought by it.

As seen, the main theories that underpin the process of interorganizational networks have clearly listed the variables that influence, and should be worked so that a network reach and maintain its success. Even so, these variables don’t always be completely dominated by managers, creating major problems for the network and the discontent of the companies belonging to it. Thus, other variables must appear in the course of this study, as influencers of the main problems, and jointly assist in the analysis of the management process of interorganizational networks, the emergence of other problems and possible solutions to these.

2.2. The Problems of Interorganizational Networks

Despite the many benefits provided, justifying and praising the formation of interorganizational networks, some problems may occur during this process. Williamson (1985), in the Theory of Transaction Costs, cites at least four: a bounded rationality, opportunism, uncertainty and asset specificity. According to this theory, under unrealistic assumptions, in which there is opportunism and the actors have all the information at a given moment (perfect rationality), the possibility of the transaction fail (or operation), would be zero. If the agents don’t have all the information and opportunistic behavior is likely, which causes the network to establish strong mechanisms of control, complexity and uncertainty of the trade situation is greatest, and increasingly difficult to make a decision "right".

Regarding to uncertainty, the greater their degree in a transaction, harder it will be the use of contracts and, most probably, the hierarchical structures of governance will be adopted, allowing a third party to decide how to solve the unforeseen problems (Barney, Hesterly, 1996). Already, the existence of specific investments increases the threat of op-portunism and the greater is threat, less likely the market governance effectively reduce this threat, it’s more likely that the hierarchical governance structures are chosen - despite its additional costs (Barney, Hesterly, 1996).

Another problem raised in strategic alliances is the difference among strategical orientation of partner, which means that the partners have different reasons for entering in a strategic alliance, and this may be the cause of waste and failure of the alliance. Hitt, Dancin argued "An understanding of patterns of partner selection and compatibility can enhance alliance performance and thus increase the competitive advantage of a firm in international markets." (1998:13).

Other problems also arise during this process. According to Messner, Meyer-Stamer (2000), the increase in the number of players increases the risk of negative positions that can paralyze the network. In addition, networks are designed to establish long-term interests against short-term interests, and, therefore, use the following mechanisms: preventing conflict, cooperation and development of social cohesion. The problem of institution building can result in: logical impediment to compromise the network, blocking cognitive, social and political action path-dependent, internal consolidation, the attitudes of hostility or indifference vis-à-vis to the network environment - tendency to consciously, outsourcing costs. The institutional strengthening is a condition for its operation, it generates stable cooperative relationships through the development of common identities and the transformation of weak links in strong ties.

Messner, Meyer-Stamer (2000) also quote as problems arising from cooperation in networks, the dilemma of the bargain and the tensions between conflict and cooperation. The dilemma of the bargain is about trust-based relationship between the network actors - a condition for the success of coordination - but sometimes, especially loyal players can easily be cheated in the bargaining process guided by strategic models of bargaining, promoting the success short term, but undermining confidence. Already, cooperation in networks allows the direct search of goals and learning processes of the actors involved. The applications of the relationship between conflict and cooperation are the following: networking, there are rules of cooperation and conflict; to conduct exaggeratedly harmony can undermine the effort to innovation, potential conflicts are productive forces, cooperation and conflict can operate in networks as a link and a solvent.

Even from the perspective of the problems of interorganizational networks, the con-flict may be an essential component of the interorganizational development process, through which information is shared and surplus objectives and methods of dispute medi-ated. However, this conflict can cause a cycle of reactions that ultimately lead to the termi-nation of the relationship (Ariño, De La Torre, 1998). Lui (2009) argue that most relation-ships start with an inventory of resources, such as the previous trust, goodwill, financial resources and commitment, which can reduce the risk of dissolving the relationship even with unfavorable initial results. However, after an initial "honeymoon", this stock of re-sources may be insufficient and the probability of a breakup may increase.

Gareth (2005), in a survey conducted between the years 1996 and 2001, found that firms continued to rely on this strategy of cooperation networks as a way to increase their benefits, sometimes ignoring a serious problem: the close relationships not always are syn-onymous of good relationships. In addition, the partners highly dependent of each other and, over time, as each party learns what the other knows, the relationship became unsta-ble. In this instance, the growth of opportunism as the key factor that destabilizes close relationships between organizations.

Also in this study, the results suggested a disturbing phenomenon: the relationships that seem to do well are often the most vulnerable to the forces of destruction, that are be-ing built quietly beneath the surface of the relationship, in other words, close relationships that seem more stable, are also the most vulnerable to decline, and be destroyed. It relates to this phenomenon as the dark side of close relationships. Since any problem can’t be seen on the horizon, there is no apparent reason to change course, the strategy or tactics. The beginning of the dark side can be very subtle and in these cases is simply neglects the other, a relatively passive response to the disappointment. The specific investments (for ex-ample, equipment, human resources dedicated or specialized information systems) can make removal difficult. Trust, investment and social relationships developed with the in-tention of making a successful relationship can become the entrance to the dark side, and the abuse of these variables could generate opportunism.

Another important issue in the study of Gareth (2005), concerns the lack of incen-tive to innovate and prosper. Operating as a cartel, in example of Italian companies, the group members are protected from competitive pressures containing and controlling the competition between them. This partnership has worked very well for a time, with the entire network benefits from efficient business, but over time, some were produced negative returns for all involved. Isolating themselves from market pressures, companies removed the external pressure that encouraged companies to innovate and grow, and as a result, companies have gradually become inefficient. Close relationships have been carefully constructed to provide competitive advantage made the weaker links.

Still, in the case of research, create the network has improved the coordination, control and distribution of the resource while minimizing the risk, but the benefits didn’t persist in the long term. This question gains from short-term and long-term is a natural point of tension for many business relationships. In general, if the partners in a relationship are too oriented to short-term, both parties have an incentive to explore rapidly and thus withdraw from the cooperative process. However, if the partners are too oriented to long-term and not regularly experience the benefits, his motivation to stay and support the rela-tionship weakens.

According to Gareth (2005), the alliances that are too rigid or flexible can’t achieve success. The ideal is to develop a relationship in which partners can respond to market or environmental changes, and yet have enough stiffness or structure to create paths for both parties and to motivate them to act in the interest of their relationship. As always, preven-tion is the best medicine. The relationships based on regular assessment, for example, help to create relationships efficient, motivated and productive that allows partners to take risks, create new ideas and identify creative ways to expand common benefits. Assessing the performance, competitive advantages are achievable, the joint profits are higher, and the partners plan and expect a relationship. However, the value of interpersonal relationships falls when the problems start to appear. Many companies fail at this point waiting to begin sending troops attack: top management, lawyers, mediators arrive on the scene to investi-gate and repair the relationship. A more effective approach is to focus on the potential loss, rather than the loss that already exists.

The cost-benefit is another important issue in this associative process. According to Pereira (2005) and Ahola (2009), the decrease of this relation is from the inability of the network to generate new benefits to its members. In their study, was not found none more structured attempt to create new knowledge, aiming at the collective benefit. In this case, companies seek strategic alternatives to exit the network, minimizing costs while maintain-ing the benefits of belonging to a network. They seek sustainable growth and development outside the networks, increasing the risk associated with your business, competing now in isolation with other systems, and also with his old network.

Last but not intended to exhaust the subject, it can be said that many problems oc-cur in networks from the observation that the initial objectives weren’t met. The companies are united by common goals, which are mainly focused on access to knowledge and learn-ing, on reducing costs, the expansion of the scale, adapt to changes in risk reduction, com-plementation of assets and the development of skills (Ebers, 1997). If any of these goals, or others are not matched, conflicts can occur and lead to dissatisfaction and misunderstanding between partners, which may thus be one of the reasons that cause the company's exit from the network. Frame 01 shows, so brief, the problems presented in this study.

Frame 01: Problems in interorganizational networks

Problem Meaning Premise
Restricted Racionality Lack of information. Increasing complexity and uncertainty, most likely the transaction will fail.
Opportunism Which acts as its own convenience, only in defense of their interests Bad reputation and difficulties of partnership; strong mechanisms of control by the network, limiting its development.
Uncertainty Questions about the likely progress of negotiations. Greater likelihood of hierarchical structures adoption of governance.
Asset Specificity Loss of value of the assets involved in a particular transaction, in case this isn’t achieved, or in the case of contractual breach. Increase opportunism; low probability of market governance.
Different strategic guideline of the Partners Different reasons for entering in a strategic alliance Conflicting relationships; wear and failure of the alliance.
Excessive Increase in the Number of Actors Increased risk of veto position (opposi-tion, impediment). Network paralyzation.
Dilemma of Bargain Cheating in the process of bargaining, negotiation. Promoting success in the short term, but undermining confidence.
Tensions between conflict and cooperation Overrated cooperation (1) versus exag-gerated conflict (2). (1) a threat to the effort of innovation, (2) causes the cycle of reactions that lead to the termination of the relationship.
Dependency and Mutual Learning One learns what the other knows. Instability in the relationship, an in-crease in opportunistic behavior.
Relationships too stable Relationships that seem to do well, no reason to change strategy or tactics or suspicious. (1) targets of attacks by forces of destruction, imperceptible, (2) feed oppor-tunistic behavior.
Lack of incentive to innovate and prosper Excessive protections against pressure from competitors, and containment and control of competition between them. Isolation, removal of external pressure that encourages innovation and progress, inefficient companies.
Unbalance between short and long time gains Guidance too much for short-term gains (1), versus guidance for too long-term gains (2). (1) Withdrawal of the cooperation pro-cess with greater speed, (2) Motivation weakened.
Lack of Periodic Performance Reviews No examination of risks, creating new ideas and the determination of creative ways to expand the common goals. Late attack the problem, focus on already existing loss, rather than the potential loss.
Decreased cost x benefit Inability to generate new benefits for members of the network. Strategic alternatives to exit the net-work.

Source: Designed by authors.

As seen above, the interorganizational networks can provide great advantages and many benefits to their partners. On the other hand, also support a variety of problems that plague the lives of companies and cause other problems, more and more serious. The issues of relationships, mistrust, dependence, opportunism, pointed out several times during this study, and can delay the development of interorganizational networks, but will be the cause of the companies leaves their networks? Are these problems or variables that motivate companies to withdraw from the networks?

In view of what was presented, the intention of this work, based on the develop-ment of this framework, is to understand the reasons why companies go out of interorgani-zational networks to which they belonged. Your contribution will be to diagnose the profile of these companies in an attempt to avoid some problems listed above. Next is presented the research method to be developed for this study.

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* Universidade Federal de Santa Maria, Brasil. Email=
**Universidade Federal de Santa Maria, Brasil. Email=

Vol. 31 (4) 2010