The emergence of interactions as strategic entities in value chain networks

Abstract

Purpose: The article analyses the interactions that are engaged in when specialist organisations collaborate in value chain networks. It aims to bridge the gap between existing theory and emerging practices and identify a conceptual foundation for future research and practical application. Interaction costs are described as including transaction costs plus the costs for exchanging ideas and information. Design/methodology/approach: The paper adopts a conceptual approach, and introduces the basic elements of an interaction theory based on past theory and current practices. Findings: In an increasingly global economy, reducing risks while maximizing returns for emerging business models are a key concern. The article puts forward the view that as interaction costs decrease, potential business partners have greater scope to interlink their business strategies and operations to co-create value. It discusses the nature of interactions and highlights three factors that are either reducing interaction costs or increasing the effectiveness or frequency of interactions, thus increasing their facility for business purposes: the convergence of technologies, the delineation of roles within value chain business networks, and the emergence of innovative interaction strategies among network participants. It concludes by emphasizing the importance of an interactions strategy through an analysis of IKEA’s business model from an interactions perspective. Originality/value: The paper provides the basis of an interactions framework for researchers and practitioners to analyse value adding activities and to develop strategies in value chain networks.