Achieving Suitable Coopetition in Buyer-Supplier Relationships: The Case of AstraZeneca

Purpose: The purpose of this research is to deal with the two crucial managerial challenges of first identifying and then achieving a suitable balance between cooperation and competition in buyer-supplier relationships. Methodology/Approach: First, a purchasing framework is developed by utilizing principal-agent theory to bridge the literature on transaction cost economics and industrial buying behavior. The practical use of this framework is then empirically illustrated by a case study description of how a construction client's purchasing procedures affect coopetition in a partnering project. Findings: The developed purchasing framework shows how actions taken during the different stages of the buying process affect coopetition in buyer-supplier relationships. It highlights the deficiencies of both the neoclassical competitive focus and the cooperative focus found in the literature on interorganizational relationships. Instead it emphasizes the importance of balancing cooperation and competition. Research Implications: This research shows how the traditional analysis of governance structure can be transformed into an analysis of coopetition. Furthermore, it explores how purchasing procedures affect governance forms through different control mechanisms. It also shows how trust and social context can be integrated into a transaction cost framework through social control. Practical Implications: The developed framework can be used for guiding purchasing decisions. Managers planning to implement coopetitive (cooperative and competitive) relationships should recognize the importance of considering all stages of the buying process. Collaborative tools (e.g., teambuilding, joint objectives, and a shared project office) are useful but not enough to transform an otherwise competitive relationship into a cooperative one. Hence, technical aspects of the buying process need to be addressed as well (e.g., joint specification, bid evaluation, etc.).