Bartosz Marcinkowski
Risk management in the process
of enterprise cooperation
Summary of doctoral thesis
Supervisor: dr hab. Dariusz Nowak,
prof. nadzw. UEP
Poznań 2017
Faculty of Management
Department of Management
and Corporate Resource Analysis
TABLE OF CONTENTS
JUSTIFICATION OF THE CHOICE OF THE SUBJECT ....................................................... 3
RESEARCH SUBJECT............................................................................................................. 5
RESEARCH OBJECTIVES ...................................................................................................... 5
RESEARCH QUESTIONS ....................................................................................................... 6
RESEARCH HYPOTHESES .................................................................................................... 7
RESEARCH SOURCES AND METHODS.............................................................................. 7
THE LAYOUT AND CONTENT OF THE DISSERTATION ................................................ 8
COGNITIVE RESULTS OF THE DISSERTATION ............................................................... 9
BIBLIOGRAPHY .................................................................................................................... 11
2
JUSTIFICATION OF THE CHOICE OF THE SUBJECT
In the last decades a clear tendency in the behavior of enterprises can be observed.
It involve a shift from the confrontation-conflict orientation to consistent and common
achievement of the assumed goals. There have been a noticeable change in attitude of the
organization, from the implementation of short-term plans, to the use of long-term ones,
which help to improve the effectiveness and efficiency of operations. Entities recognize, that
the previously used strategies, based on standard management tools, such as price, quality,
distribution, product or location are no longer sufficient competitive potential. Entrepreneurs
realized that solitary and autonomous action is doomed to fail, since it limits access to new
technologies, financial resources, cheap and skilled labor force, as well as to knowledge
and experience.
It becomes necessary to search for new, distinctive features, resources, methods
and activities that will enable the effective implementation of complex goals. To achieve this,
entities must create various types of dynamic and multi-dimensional relations based
on cooperation. It should be noted, that those inter-organizational relationships are a source
of the necessary materials and services, they allow to overcome the difficulties, conquer new
markets and deploy new technologies, which help to build a sustainable competitive
advantage [Flint et al. 1997, p. 163–175; Jacobs et al. 2001, p. 353–363; Ulaga 2001, p. 315–
319].
It is worth noting, that by creating inter-organizational relations based on the
cooperation, each organization expects it will bring the tangible benefits. Through
cooperation entrepreneurs seek to increase profitability, reduce costs, optimize the use
of production potential, as well as access to scarce resources of knowledge, technology
and new markets [Aldrich 2008, p. 106–134; Bengtsson and Kock 2000, p. 411–426;
Buchanan 1992, p. 65–75; Dembińska-Cyran et al. 2004; Dudzik 2005, p. 2–8; Finkelstein
1997, p. 787–808; Gołębiowski and Prokop 2003, p. 166–167; Gordon and Górska 2001;
Lenz–Cesar and Heshmati 2009, p. 1–25; Logsdon 1991, p. 23–35; Pfeffer and Salancik
2003, p. 257–288].
But it should be noted, that companies, which choose to interact with other actors
on the market, at the same time take the additional risk, that in the light of the interorganizational relationships should be seen primarily as a threat that must be avoided. The
risk in the process of cooperation is most often associated with danger, uncertainty of results,
the probability of failure, damage or incurring losses [Małkowska-Borowczyk 2012, p. 9–10;
3
Urbanowska-Sojkin 2012, p. 35–36]. It can therefore be concluded, that the risks associated
with the process of inter-organizational cooperation is a significant barrier to the expansion
and development of cooperative relations [Nowak 2015, p. 61]. Various, specific sources
of risk are associated with a wide range of possible forms of cooperation, that take
the dynamic and evolutionary character – relations transform over time, depending
on the current needs of the entities, their level of development, the market situation
or strategy. They extend from simple occasional transactions, through long-term relations,
close cooperation within the framework of the strategic partnership, to full vertical
integration [Jaźwiński and Kiernożycka-Sobejko 2006; Kaczmarek 2000; Lichtarski 1992;
Rangan and Yoshino 1996; Webster 1992]. It should also be noted, that the cooperation can
be considered as an extremely complex, multifaceted, consisting of a series of stages cycle.
In the literature of the subject the concepts describing the process of cooperation
of undertakings differ from each other in the number of phases found in it - they extend from
the schemes that contain two basic, general steps to theories distinguishing many steps
and sub-steps that describe in detail the relation since the early moments of its planning,
through starting cooperation, to phases of full maturity, or even the breakdown. At this point
it should be stressed that different, specific threats emerge at each of these stages [Dwyer
et al. 1987, p. 15–21; Kaczmarek 2000, p. 166–186; Kapcia 1994, p. 18; Marxt and Link
2002, p. 220–223; Olsen and Ellram 1997, p. 103–110; Ujwary-Gil and Choroszczak 2003,
p. 2–3; Urbaniak 2008, p. 28–29].
In the context of an extremely complex issues of business relationship management,
a matter of risk becomes highly important. It seems necessary to separate the risk
of cooperation from the risks associated with general economic activity. This will allow
enterprises to choose a proper course of action, adapt the plan of cooperation
to the capabilities of unit, as well as to establish an optimal relationships with partners
in every aspect of business. It could be said, that the achievement of sustained success
by the company, in the way of building an effective development strategy, requires
the implementation of a system for the identification and evaluation of sources of risk
associated with the partnership.
It must also be noted, that despite the extensive literature referring to interorganizational relations, there is a lack of extensive and comprehensive studies on the risk
of cooperation. There is a clear and interesting research gap, because the literature focuses
mostly on relationship management, without taking into account the extremely important
and special significance of risk. In contrast, existing studies on the risk of enterprises
4
cooperation, focuse mainly on advanced, strict forms of cooperation, such as strategic
alliances [Światowiec-Szczepańska 2014, 2012], omitting risk management in relations with
looser nature, which are concluded more often in Polish economic reality [Nowak 2012].
RESEARCH SUBJECT
Based on the above issues, it was determined that the object of interest in this research
will be the risks associated with the creation, development and termination of cooperative
inter-organizational relationships of various forms and specifics. Analyzing the essence
of the problem, focused on determinants of the risk management in the process of enterprise
cooperation, including on the premises, which impel modern enterprises to comprehensively
manage risks and barriers that hinder, or even prevent entities from effective risk reduction.
Both from a scientific and a practical point of view, very interesting issue is the scope
and level of knowledge and awareness of entrepreneurs in the field of the problem. It should
be stressed that the considerations set out in the dissertation are to help in the recognition
of complex laws governing the risk of inter-organizational cooperative relations.
RESEARCH OBJECTIVES
Assuming that the risk occurring in the relationship on the buyer – supplier line may
be subject to management in the enterprise, the main goal of research was determined
as a presentation in theoretical, cognitive and application aspect of risk management
in the process of enterprise cooperation, in the context of the specific nature of the form
and development stage of the relationship. To the primary objective of the dissertation
were assigned specific objectives set out in three areas:
1. Theoretical, including:
-
conducting systematizing literature studies on issues of enterprise
cooperation in terms of static and dynamic point of view,
-
making a critical review of the theoretical and methodological achievements
in the field of enterprise risk management,
-
identifying potential sources of risk in the relationship between the supplier
and the buyer.
5
2. Empirical, including:
-
determining the nature of cooperation undertaken by companies in Poland,
with particular emphasis on the scope and the diversification of cooperation,
forms and the degree of formalization of the relationship,
-
identifying the barriers that make it difficult or even impossible to implement
the risk management system in the enterprise,
-
comprehensive examination of motives that impel entities to manage risk
in an integrated way,
-
evaluation of the awareness of Polish entrepreneurs in the field of risk
management,
-
analyzing the risk occurring in the process of enterprise cooperation,
particularly in the context of a dynamic and heterogeneous nature of interorganizational relationships.
3. Application, in which the attempt was made to develop a methodology for risk
management in the process of enterprise cooperation.
RESEARCH QUESTIONS
Risk in inter-organizational cooperation can be analyzed using a variety of approaches
and theories. The analysis itself can focus on different aspects and concepts related to risk
in inter-organizational cooperation. It is therefore necessary to examine the following
research questions:
1. What are the characteristics of inter-organizational relationships and which
collaboration strategies dominate the polish enterprise market?
2. What impact has the form and stage of relations on the level and nature of the risk
in the process of cooperation?
3. What are the barriers, motives and conditions, in both the internal and external
environment which shape cooperative inter-organizational relationships risk
management process?
4. Which tools enable enterprises to increase operational security and mitigate risks
in the process of cooperation?
6
RESEARCH HYPOTHESES
Based on theoretical considerations concerning risk management in the process
of enterprise cooperation, own observations and experiences, conducted empirical research
the main research hypothesis was formulated: inter-organizational cooperative relations risk
management is a complex, complicated and multi-faceted process, which enables
the company to achieve a number of benefits, including the development of cooperation.
The main hypothesis have been put on the following three specific hypotheses:
1. Polish companies have a low propensity for cooperation, which is reflected
in the limited scope of the development of relations, a low degree
of formalization of cooperation and the low level of advanced forms
of relationships.
2. The reluctance of Polish entrepreneurs to develop inter-organizational
cooperative relations is associated with above-average risk, occurring
in advanced forms of relationships and the lack of sufficient knowledge
and experience, in order to restrict the consequences of such threats.
3. Polish companies do not attach sufficient importance to the issue of risk
management, treating this problem in a limited and selective way.
RESEARCH SOURCES AND METHODS
Characteristics of conducted analyzes on issues of risk management in the process
of enterprise cooperation determined the choice of quantitative research as a primary method,
that in order to get a full picture of the problem has been complemented by qualitative
research. As part of the analysis of a quantitative nature, based on in-depth surveys, focused
on maximum use of measurable variables in nominal and ordinal scales, which allowed
to carry out a series of statistical surveys, using the methods of descriptive statistics,
correlation analysis and factor analysis. Qualitative research included participant observation
and direct interviews with selected entities, during which the author had the opportunity
to obtain further information and comments arising from experience and practice.
Due to the numerous barriers to obtaining empirical data in Poland, qualifying
enterprises to research, it was decided to use the method of non-random and purposeful
selection of common units. Because of the geographical spread of cooperative relations,
it was assumed that the study will be attended by entities carrying out its activities throughout
the whole Poland. In addition, it was decided to apply the criterion of the date
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of establishment of the entity, which has ruled out from the research companies operating
in the market for less than a year. It was considered that such a period of time, on the one
hand, allows companies to develop inter-organizational relationships with the appropriate
character, on the other hand, however, does not ignore the new enterprises, which
by definition are exposed to higher risk [Korol 2010, p. 54]. In the process of surveys 312
questionnaires were collected, of which 244 were qualified for further analysis.
The remaining 68 questionnaires were discarded because the participants have performed
them partially and unreliable or did not meet the predefined criteria for the location or the age
of the company.
THE LAYOUT AND CONTENT OF THE DISSERTATION
The layout and structure of the dissertation were subordinated to the methodology
of implementation of the main and specific objectives. The dissertation consists of four
chapters, arranged so it can be divided into two parts - theoretical and empirical. The first
theoretical chapter, entitled: "The essence of the process of enterprise cooperation"
synthesized theoretical achievements concerning the nature
and the importance
of cooperation. It explains the differences and similarities between the concept of cooperation
and other terms, discuss place of cooperation in theories of management and characterizes
traditional and newly emerging trends and types of relations between enterprises from both
static and dynamic point of view.
The second theoretical chapter, entitled "Theoretical basics of risk" presents
the reflections on the importance of risk in the functioning of enterprises. It explains
the concept of risk, presents analysis of the most important theories of risk, describes
the differences in negative and neutral approach, characterizes the methods of risk
management in the enterprise and describes sources of risk associated with interorganizational cooperation.
The third, empirical chapter, entitled "Risk of cooperative relations in the light
of empirical research" characterizes the purpose and object of research and describes
the methodology and assumptions of empirical analyzes. In addition, it details the research
sample, taking into account a number of criteria, such as location, type of business, size, age,
legal and ownership status, etc. It also examines the specificity of concluded interorganizational relations and cooperation strategies. Furthermore it describes the methodology
of risk identification and measurement used in empirical research.
8
The last chapter, devoted to risk management in inter-organizational cooperative
relations, answered a series of research questions, and also allowed for verification of initial
assumptions related to the presented objectives and hypotheses. It explores conditions
of enterprise risk management, with particular emphasis on the barriers and motives
to the implementation of risk management systems. It also presents analyzes of the issue
of the risk in the context of the probability and consequences of the occurrence
of the cooperative events with particular emphasis on form and phase of the relationship.
Furthermore it proposes an original methodology of risk management in the process
of enterprise cooperation.
The summary of the dissertation contains conclusions and proposals for companies
wanting to develop inter-organizational relations with other actors in the market
and at the same time reduce the risk associated with the use of advanced forms
of cooperation. From a theoretical point of view, the dissertation not only systematizes
and expands look at the problem of risk in relations between the organizations, but also has
a practical application, making it easier to practice risk management in the process
of cooperation.
COGNITIVE RESULTS OF THE DISSERTATION
Empirical studies have shown that Polish companies have a low propensity
for cooperation, which is reflected in the limited scope of the development of relations, a low
degree of formalization of cooperation and the low level of advanced forms of relationships.
To prove it, the specificity of cooperation undertaken by companies in Poland
was determined, with particular emphasis on the plane of cooperation and diversification
of forms of interactions and relationships. It was noted that Polish companies have a low
degree of formalization and limited scope of cooperation. In addition, it was observed that:
-
an increase in the size of the company to a greater extent entails an increase in the
amount of active than passive cooperators,
-
increase in the number of active cooperators in a much greater extent
is associated with the stabilization of cooperation than with its formalization,
-
increase in the number of passive cooperators is clearly reflected in the increasing
stability of cooperation, which, however interesting, is associated with
a reduction in the degree of formalization of cooperation with buyers.
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It was also noted, that the surveyed companies developing their strategies
for cooperation with suppliers and buyers see the advantages of building and maintaining
relationships with long-term nature, associated not only with additional financial benefits,
but also with a high level of confidence in the partner and the realization of common, and not
only individual goals. Deeper analysis, however, has highlighted a strong reluctance
to further strengthen relations and to use of advanced forms of cooperation.
The study confirmed that the reluctance of Polish entrepreneurs to develop tight
cooperative inter-organizational relations is associated with above-average risk, occurring
in advanced forms of relationships and the lack of sufficient knowledge and experience,
in order to restrict the consequences of such threats. To prove it, the analysis of motives and
barriers to implementation of risk management systems in the enterprise was conducted.
It showed up, that enterprises see the many benefits of implementing this type
of management system, and the most important reasons have market, resource, operational
and predictive character. Therefore, it should be given the answer to the question why,
despite numerous recognized advantages, still a few entities decide for the implementation
of the risk management system. It is worth noting that for Polish entrepreneurs greatest
difficulties resulted from the lack of appropriate know-how, limited material and human
resources, as well as ineffective inner communication.
In addition, an extensive analysis of the risk inherent in the process of enterprise
cooperation was made, particularly in the context of a dynamic and heterogeneous nature
of inter-organizational relationships. There were observed a several areas of risk appearing
on various stages of cooperation, inhibit the growth of entities, being a significant threat
in the process of establishing, maintaining, extending, or finalizing the inter-organizational
relations. For Polish entrepreneurs the most important were the risks of:
-
design, information technology, strategy, asymmetry and excessive expectations
on the stage of determination of requirements and selection of partners,
-
globalization in the phase of establishing cooperation,
-
communication, competences, coordination, adaptation, stocks, loss of autonomy
and the collection of receivables in the stage of development of cooperation,
-
loss of resources in the phase of finalizing the relationship.
It was also noted that with the tightening and developing the relations between
enterprises, there are new, previously irrelevant threats connected. As proved by empirical
research, the safest for businesses are occasional transactions because they do not involve
commitment and parties engaged in such trades are usually dependent on the another side
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only to a small extent. In contrast, when making more advanced and direct relationship
enterprises are exposed to more and more important sources of risk.
Empirical studies have shown that Polish companies do not attach sufficient
importance to the issue of risk management, treating this problem in a limited and selective
way. To prove this, the evaluation of awareness of Polish entrepreneurs in the field of risk
management was made. Research shows that only 11% of the surveyed companies declare
to have implemented risk management system, and only 6% actually performs all actions that
should be included in the risk management process. A significant percentage of organizations
manage risk on a selective basis, using only part of the activities of risk management.
The cause of selective application of mechanisms for risk management is a need to achieve
a compromise between the employed resources, and the received effects. It should be noted,
that this kind of action, if it is not used with the full knowledge, can be dangerous - in fact
it contributes to the construction of a false sense of security. In addition, the existence
of a large communication barrier was noted, because as many as 14% of those surveyed
employees did not realize that the company has implemented a risk management system,
what means that even if it has been implemented, it does not work effectively, because
according to its assumptions, it should cover the entire area of the enterprise and apply to all
of its employees. As part of the analysis an attempt to develop a authorial methodology for
risk management in the enterprise cooperation process was made. Bearing in mind that
the cooperation risk management is not a one-off task, but continuous process, under which
entities should continuously identify new threats and verify the level of risk, a series
of actions were proposed.
In
conclusion,
it
can
be
said
that
theoretical
considerations
conducted
in the dissertation and the results of empirical studies confirm the main hypothesis, saying
that inter-organizational cooperative relations risk management is a complex, complicated
and multi-faceted process, which enables the company to achieve a number of benefits,
including the development of cooperation.
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