A Global Network View of Auto Manufacturing Ecosystem: Coopetition & Sustainable

Competitiveness

Over the past few years, academics and practitioners have started paying more attention to the analysis of value creation and business models from a business ecosystem perspective. Developing strategies to help sustainable competitive advantage in business ecosystems is a key challenge for businesses around the world. Using the latest world input-output data of intermediate auto manufacturing good and services this study explores the patterns and changes in the business ecosystems of global auto manufacturing. Furthermore, discussions are presented about strategies that support sustainable collaborative value creation and sustainable competitiveness of businesses across the global manufacturing ecosystems. Keywords: Business ecosystem, strategy, coopetition, manufacturing, value creation Introduction

During the past few decades organizations have experienced significant transformation in their business models. In certain sectors, a competition which was traditionally among the businesses has now become primarily among their supply chain. In recent years we have observed competition among the business ecosystems. The main players in the ecosystems not only compete with each other, but also they are engaged in significant cooperation and collaboration. It is not surprising to see companies collaborating with each other and compete with each other at the same time in the same market. This cooperation among competitors with the goal of creating a “win-win” outcome is defined as “coopetition” (Basole, Park, and Barnett, 2015). If the main players in the business ecosystem cannot maintain the “win-win” outcome of the cooperation, the coopetitive environment will have less cooperation and consequently the ecosystem participants may face challenges with regards to value creation and maintaining sustainable competitiveness.

Auto Industry Business Ecosystem

The goal of this study is to provide a framework for investigating and analyzing the complex global manufacturing business ecosystems. The present study primarily focuses on the auto industry as a manufacturing industry with extensive global and domestic supply chain. This industry includes a

“large number of small players” and several large corporations around the world (IBISWorld, 2017).

For example in the manufacturing parts and accessories sector of this industry, the tier-one OEM suppliers only carry about 5% of the industry revenue and the top 75 suppliers contribute to less that

50% of the industry review. Over half of the auto industry in this sector is generated by small suppliers speared around the world (IBISWorld, 2017). This makes the auto industry an interesting sector to study.

The scope of the present study does not explore all of the business processes relate to the auto industry. Our focus in this research is on the manufacturing function and related processes. Our investigation includes activities related to the intermediate products and operations such as manufacturing and assembly of engine, transmission, parts and accessories. Consequently, as discussed in the research methodology our main focus will be on the movement of auto industry intermediate (and not final) products and services across the world.

The auto industry has experienced significant complexity in terms of its global network of operations. The ecosystem of auto industry brings together up-steam and down-stream nodes as well as the competitors; creating what we refer to as coopetitive ecosystem. This coopetition promotes the creation of global auto manufacturing ecosystems since the 1980s with the “growth in the popularity of alliances between competitors” (Burgers, Hill and Kim, 1993). Operating in the coopetitive business ecosystems is being recommended as a strategy of choice for achieving sustainable competitive advantage in the auto industry (Calleja-Blanco and Grifell-Tatje, 2016).

Many businesses have experienced a move from a rational and natural view of their business models to the open system perspective. In such environment, there is a greater need to assess companies based on the industry ecosystem rather than merely “from the focal firm perspective” (Burgers, 1993; Ritala, Golnam and Wegmann 2014). This open systems view of businesses will require the study of networks, subnetworks and collaborations in the business ecosystem.

Exploring the business ecosystems can be conducted from different perspectives; each providing valuable inputs and insights. For example, Basole, Park, and Barnett (2015) explore the business ecosystem in telecommunications industry using the information about mergers and acquisitions in the industry. Considering the characteristics of the auto industry including the global spread of the industry we use the movement of intermediary products and services to explore this ecosystem.

While the result of such study may not be generalized other manufacturing sectors however the methodology and framework of the study can be easily replicated to those sectors.

Research Methodology

The present study uses data from the global input-output database of the auto manufacturing. Since the focus of this study is on the manufacturing and operations functions, we only use the data related to intermediate products and services. This study utilizes appropriate techniques for big data and networks analysis. We conduct networks analytics techniques using Gephi and other similar software to measure various aspects of the auto manufacturing ecosystem.

References:

Basole RC. Park H., and Barnett B.C. (2015) Coopetition and convergence in the ICT ecosystem, Telecommunications Policy, 39, pp. 537-552.

Burgers W.P., Hill C.W. and Kim W.C. (1993) A Theory of Global Strategic Alliances: The case of the global auto industry, Strategic Management Journals, 14(6), 419-432.

Calleja-Blanco J. and Grifell-Tatje E. (2016). Potential Coopetition and Productivity Among European Automobile Plants. In J. Aparicio, C.A.K. Lovell, and J. P. Pastor (Eds.) Advances in Efficiency and Productivity, Volume 249 of the series International Series in Operations Research & Management Science pp 249-273.

IBISWorld (2017) Industry Research Reports.

Ritala P., Golnam A. and Wegmann A. (2014) Coopetition-based business models: The case of Amazon.com, Industrial Marketing Management 43 (2014) 236–249.