Investigating the effect of horizontal coopetition on supply chain resilience in complex and turbulent environments

Abstract

Today supply chain operations are continuously threatened by frequent and unpredictable disruptions. To survive in such complex and fast-changing environments, firms need to develop resilient strategies for their supply chains. To this regard, previous studies in literature have shown that cooperative relationships play a relevant role. However, there are evidence that firms more often prefer a coopetition strategy, where both cooperative and competitive relationships are simultaneously adopted to manage supply chain relationships. Despite the relevance of this topic, how coopetitive relationships influence resilience has been less investigated so far. In this paper, we use a complex adaptive system approach to conceptualize horizontal coopetition in supply chains and develop a novel agent-based model to simulate its effect on supply chain resilient performance in different environmental conditions, characterized by increasing level of complexity and frequency of disruptions. Results show that coopetition can be beneficial for supply chain resilience and that environmental complexity (turbulence) positively (negatively) moderates this relation. Theoretical contributions and managerial implications are finally discussed.

Introduction

Nowadays, supply chains increasingly operate in complex and fast-changing environments characterized by recurrent and unpredictable disruptions, which constantly threaten their performance. Natural and/or economic disruptions, such as earthquakes, political turmoil, fuel crises, diseases and terrorism attacks have become more and more frequent with negative effects on supply chain operations (Sawik 2013; Mandal 2012a, 2012b; Sodhi et al., 2012; Singhal et al., 2011; Chen et al., 2013). Based on data published by the Centre for Research on the Epidemiology of Disasters (CRED), natural disasters have multiplied more than six-fold over the last three decades (CRED, 2007, 2015) and are expected to increase over the next five ones (Thomas and Kopczak, 2007). The earthquake and tsunami in Japan, the volcano eruption in Iceland, the hurricane Maria and Harvey in US, and the COVID-19 outbreak are just some examples of recent disruptions which have globally hurt supply chains, because of unavailability of some sites (factories, warehouses, and transportation carriers) and supply shortages. For instance, with regard to the COVID-19 pandemics emerged in Wuhan in the early 2020, the lockdown measures imposed by the Chinese government to limit the epidemic spreading affected not only the companies source materials or products from China but also those whose suppliers do, because of the ripple effect (Ivanov et al., 2014; Ivanov, 2020a, b). This has led companies to concern more about how industrial systems can improve resilience against such unpredicted shocks.

In literature, resilience is recognized as a multidimensional construct, including a static and a dynamic perspective (Annarelli and Nonnino 2016; Giannoccaro et al., 2018a, b). As to the static perspective, resilience is related to the system's ability to absorb disturbance and bounce back to the original equilibrium state maintaining its core functions when shocked (Bhamra et al., 2011). As to the dynamic perspective, resilience is viewed as the ability to adapt to a disturbance by moving towards the original but even new, more favourable equilibrium states (Vogus and Sutcliffe, 2007; Carvalho et al., 2012). A wide number of studies have investigated proper strategies to design resilient supply chains (Lee and Wolfe 2003; Kleindorfer and Saad 2005; Christopher and Lee 2001; Sheffi and Rice 2005; Starr et al., 2003; Tang 2006a, 2006b; Rice and Caniato 2003; Ivanov 2020a, b; Ivanov and Dolgui 2020; Ivanov and Das, 2020). To this regard, complexity science has been demonstrated to be a suitable theoretical framework to investigate on the dynamic perspective of resilience viewed as a property of complex systems that emerges in a non-linear and dynamic fashion from the evolving behaviours of interacting entities and from their relationships (Day, 2014; Goldstein 1999). This is in line with earlier works (Bozarth et al., 2009; Choi et al., 2001; Pathak et al., 2007; Surana et al., 2005), which framed supply chains as complex adaptive systems (CASs) i.e., groups of interconnected agents able to self-organize into new structures because of a network of complex interactions (Holland, 1995; Holland and Powell 1998; Kauffman, 1993; Giannoccaro 2015, 2018). The CAS-based studies on supply chain resilience have mainly investigated how the network features (Craighead et al., 2007; Falasca et al., 2008; Blackhurst et al., 2011; Brandon-Jones et al., 2014; Ivanov et al., 2014; Kim et al., 2015; Giannoccaro and Ifthikar, 2020) and inter-firm managerial practices (Wieland and Wallenburg, 2013; Giannoccaro, 2015; Jain et al., 2017) influence the system resilient outcome. To this regard, collaborative relationships are demonstrated to increase resilience (Tukamuhabwa et al., 2015).

However, nowadays firms more and more often manage the interfirm relationships by adopting a simultaneous combination of two opposite logics of interactions i.e., cooperation and competition: a powerful concept known as coopetition. Nevertheless, the effect of coopetition on supply chain resilience has been almost neglected so far, except for rare studies (Bakshi 2009; Durach et al., 2020). Coopetition has been mainly investigated with respect to knowledge creation (Wilhelm, 2011), knowledge management (Li et al., 2011; Ho and Ganesan 2013), and logistics (Spens and Kovacs 2006; Bouncken et al., 2013). This strategy can characterize either buyer-supplier (vertical) relationships or supplier-supplier (horizontal) relationships (Wilhelm 2011; Wilhelm and Sydow 2018). However, even though equally spread in practice, the latter has received less attention from scholars.

In this paper we overcome these gaps by exploring the relationship between horizontal coopetition and supply chain resilience. To the best of our knowledge, no study has analyzed whether and why the adoption of cooperative relationships among competitive suppliers can improve supply chain resilience. In particular, we argue that horizontal coopetition has a positive effect on supply chain resilience, because the concurrent adoption of cooperative and competitive relationships improves the ability of the system, as a whole, to adapt to disruptions. This is also suggested by empirical evidence. For instance, consider the crisis occurring in 1997 involving Toyota and its supplier network. A fire threatened the production operations of Aisin Seiki and this caused a shutdown of the Toyota-group plants. In that case, the disaster was timely recovered through the cooperative effort by multiple supplier firms that, although competing each other, set up alternative production sites outside of the disrupted supplier (Nishiguchi and Beaudet, 1998).

Furthermore, we highlight that supply chains operate and co-evolve with environments characterized by increasing complexity and turbulence (Giannoccaro, 2015). Complexity is mainly related to the interdependence existing among supply chain firms, while the environmental turbulence is associated with the frequency of disruptions (Giannoccaro 2015; Giannoccaro et al., 2018a, b; Siggelkow and Rivkin 2005). Drawing from CAS theory, arguing that environmental factors affect system evolution and adaptive outcome, we are interested in investigating the moderating role played by the complexity and the turbulence of the environment on the relationship between coopetition and supply chain resilience. This contributes to clarify in which environmental scenarios horizontal coopetition is most beneficial in terms of resilience, an open question of the referred literature.

Therefore, the specific research questions we pose are: 1) Is horizontal coopetition beneficial for supply chain resilience? 2) Do the complexity and turbulence of the environment play a moderating role on the relationship between coopetition and resilience?

To address these research questions, we use Agent-Based Simulation (ABS) as research methodology. This methodology is novel with respect to the literature on coopetition since previous studies have preferred case studies, regression models, and structural equation models (see Bouncken et al., 2015 for a review). Further, ABS permits to explore the dynamics of supply chains as CASs from the bottom and to capture large-scale effects (i.e., resilient outcome) emerging from the local decisions of autonomous interacting agents (i.e., firms) (Giannoccaro, 2015).

In particular, we develop an ABM to simulate the dynamics of a two-stage supply chain, where interacting suppliers coopete among each other while suppling a buyer. The NK Kauffman framework is used to model the adaptive search process accomplished by supply chain firms adopting a coopetition strategy, thus following a consolidate tradition of studies adopting this approach to model adaptive behaviour of single organizations (Siggelkow and Rivkin 2005, 2006; Levinthal and Workiewicz 2018) and supply chains (Giannoccaro and Iftikhar 2019; Giannoccaro, 2015, 2018, Giannoccaro et al., 2018a, b; Giannoccaro and Capaldo 2015a, 2015b).

The model is used to carry out a simulation analysis that investigates the effect of horizontal coopetition on supply chain resilient performance in different scenarios, characterized by increasing levels of complexity and turbulence. Our results show that horizontal coopetition improves supply chain resilience. The suppliers adopting a coopetition strategy can access to information they do not possess by cooperating with interacting firms, thus discovering improved configurations and, simultaneously, they can refine the configurations through their own individual competences, thus gradually adapting to the environment. Furthermore, we find that both environmental complexity and turbulence play a moderating role on the relationship between horizontal coopetition and supply chain resilience.

This paper contributes to both the literature on supply chain resilience and coopetition. We show that horizontal coopetition can be beneficial in terms of improved supply chain resilience and we identify the scenarios where this occurs at most. We also provide one among the few CAS-based theoretical frameworks, thus conceptualizing horizontal coopetition in supply chains and giving an advance from a methodological point of view to the literature.

The paper is organized as follows. In Section 2, we briefly review the literature concerning the supply chains as CASs, the supply chain resilience, and the coopetition strategy. Then, in Section 3 we present our theory concerning the positive effect that horizontal coopetition has on supply chain resilience. In Section 4, we develop a novel agent-based model of a coopetitive supply chain. In Section 5, we describe the simulation analysis and present the achieved results. Section 6 provides theoretical and managerial implications. We end with limitations and further research of our study.