Abstract:
This research takes a supply chain management perspective to explore the barriers to effective horizontal coordination in clusters of companies that otherwise compete but which come together to cooperate. Vertical coordination in supply chains is more commonly investigated; however, horizontal coordination can provide a valuable source of competitive advantage for clusters. A multiple-case study design was used in the data collection process. Data were gathered from three clusters, each exhibiting different degrees of success in managing the horizontal coordination. Case studies were created and compared to infer how the clusters bridged barriers to horizontal coordination. Cluster members compete in some markets while cooperating through coordinated activity in other markets, representing a 'coopetitive' situation. The primary barriers identified are lack of information sharing, distrust and unwillingness to work together, power and capability imbalances, competitive pressures, lack of risk and reward sharing, inconsistent goals, and a limited competitive focus. The barriers can be bridged through engaging with all members, generating value in the supply chain that breeds group pressures, structuring the division of costs and benefits, aligning member goals with the cluster, and sharing and respecting member capabilities. Coordinating activities in a cluster enables small firms to gain cost benefits while also generating greater value in the supply chain. Bridging the barriers and being aware of key variables that relate to trust within coopetitive clusters enables managers to navigate the relationships successfully. The long-term success of the coopetitive venture must be supported with clear communication and structure in the relationships. When the decision to cluster is operationalised greater value can be created throughout the supply chain, returning significant benefits to cluster members. The research highlights the importance of governance and competitiveness in supply chain management, particularly the importance of capabilities and group pressure to effective coordination. It complements existing research on vertical coordination by expanding the focus to horizontal coordination and explaining how it may be enhanced. Many issues in horizontal coordination are interrelated and the connections between important variables are explicated to allow improved decision making for enhanced coordination.