A Dynamic Collaboration Capability As A Source of Competitive Advantage

Decision Sciences
C 2011 The Authors
Volume 42 Number 1 Decision Sciences Journal

C 2011 Decision Sciences Institute
February 2011
A Dynamic Collaboration Capability as a

Source of Competitive Advantage
Chad R. Allred
Brigham Young University, 683 TNRB Provo, UT 84602, e-mail: chad_allred@byu.edu
Stanley E. Fawcett
Georgia Southern University, CIT 1120, Statesboro, GA 84602,
e-mail: stan.e.fawcett@gmail.com
Cynthia Wallin†
Brigham Young University, 686 TNRB, Provo, UT 84602, e-mail: cynthia.wallin@byu.edu
Gregory M. Magnan
Seattle University, 901 12th Avenue, Seattle, WA 98122, e-mail: gmagnan@seattleu.edu
ABSTRACT
The resource-based view of the firm argues the essence of decision making is to de-
termine how firm and supply chain resources can be configured to achieve inimitable
advantage and superior performance. However, combining resources found among di-
verse members of a supply chain requires higher levels of coordination than exist at
most companies. Manifest cross-functional and interorganizational conflict impedes the
relational advantages of collaboration. This research employs a multimethod—survey
and interview—approach to evaluate collaboration’s influence on operational and firm
performance. Our findings show that collaboration, as a dynamic capability, mediates
the conflict resulting from functional orientations, and improves performance. Specific
structural enablers to enhance an organization’s collaborative capability are identified
and described, providing insight into how firms can exploit interfirm resources for
competitive advantage.
Subject Areas: Collaboration, Dynamic Capability, Multimethod, Multi-

period Study, and Resource-based View.
INTRODUCTION
Strategic decision makers are primarily concerned with helping companies achieve
differential performance (Rumelt, Schendel, & Teece, 1991; Dyer & Singh, 1998).
Managerial efforts over the past 20 years have focused on developing distinctive
competencies as a source of competitive advantage (Prahalad & Hamel, 1990;
Stalk, Evans, & Schulman, 1992). This resource-based view (RBV) argues that
firms that develop valuable, inimitable, rare, and nonsubstitutable capabilities will
† Corresponding author.
129
130 Dynamic Collaboration Capability as Source of Competitive Advantage
outperform their competitors (Dierickx & Cool, 1989; Barney, 1991). Despite in-
tense interest in the RBV, researchers know relatively little regarding the process
through which companies transform extant firm and supply chain resources into
distinctive capabilities (Newbert, 2007; Barreto, 2010). Given the rising compet-
itive pressure accompanying globalization and rapid technological advancement,
assessing the influence of a dynamic collaborative capability on firm competitive-
ness is timely.
Specifically, two extensions to the RBV help explain the process of com-
petitive differentiation. First, whereas early elaborations of the RBV focused on
resource heterogeneity (Penrose, 1959; Rubin, 1973; Wernerfelt, 1984; Barney,
1991), more recent research has emphasized that how a company configures its
resources may be a better indicator of distinctive performance (Teece, Pisano, &
Shuen, 1997; Eisenhardt & Martin, 2000; Barney, 2001). Second, Dyer and Singh
(1998, p. 650) argued that some of the resources needed to achieve distinctive
advantage are often “embedded in interfirm resources and routines.” Supply chain
relationships thus become a potential source of vital complementary resources
and thereby differentiation (Fawcett, Magnan, & Ogden, 2007; Ketchen, Hult, &
Slater, 2007).
However, coordinating activities across functional and interorganizational
boundaries is difficult (Johnson & Borger, 1977; Stevens, 1989; Ellinger, Keller,
& Hansen, 2006). Conflicting goals and competition for scarce resources diminish
trust and the willingness of decision makers across the value chain to work together
(Porter, 1991; Bowersox, Closs, & Stank, 1999; Fawcett, Magnan, & Williams,
2004; Min, Mentzer, & Ladd, 2007). Several researchers have identified collab-
oration as a means of reducing interfunctional and interorganizational conflict
and promoting the development of a distinctive relational advantage (Madhok &
Tallman, 1998; Moberg, Speh, & Freese, 2003; Barratt, 2004b; Nicovich, Dibrell,
& Davis, 2007).
The purpose of this article is to test and enrich theory regarding how decision
makers use collaboration to enable their firms to combine and configure resources
across organizational boundaries. To accomplish our goal, we conducted two cross-
sectional, multimethod studies over a 6-year period to assess the performance
impact of collaboration and companies’ ability to learn how to exploit collaboration
as a valued, rare, and inimitable dynamic capability.
COLLABORATION AS A DYNAMIC CAPABILITY

Several theories implicitly or explicitly inform the importance, development, and
impact of collaboration as a dynamic capability. We identified three streams of
literature as central to understanding the development of a distinctive collabora-
tion advantage: (i) RBV of the firm, (ii) organizational orientations and conflict,
and (iii) interfunctional and supply chain collaboration. Each stream’s relevance
derives from insight provided into the use of resources to create value (Collis,
1994). A resource or capability is valuable if it enhances the customer’s percep-
tions of the usefulness of a product and her willingness to pay for it (Bowman &
Ambrosini, 2000; Bowman & Ambrosini, 2001; Peteraf & Barney, 2003). Valu-
able resources enable a company to (i) more effectively satisfy customer needs
Allred et al. 131
(Bogner & Thomas, 1994; Verdin & Williamson, 1994) and/or (ii) lower the costs
of satisfying customer needs (Barney, 1986; Peteraf, 1994). Although we found
that each perspective yields insight into the capability-development process, in-
dividually, none provide a clear picture of how a firm may develop and exploit
collaboration as a source of competitive advantage.
The RBV
The RBV argues that a firm consists of “a collection of productive resources” that
can be exploited to create value and competitive advantage (Penrose, 1959; Rubin,
1973; Wernerfelt, 1984). The more valuable and rare the resources, the greater the
advantage the firm may obtain (Dierickx & Cool, 1989). Barney (1991) noted that
because resources are heterogeneously distributed among firms and imperfectly
mobile, a firm’s unique resource endowments may lead to persistently superior
performance. To the extent that a firm’s resources are inimitable and nonsubsti-
tutable, a sustainable competitive advantage can be achieved. This approach to
RBV stresses the need to acquire a “distinctive” resource base.
This “static” view of RBV has expanded to focus on how a firm integrates and
deploys its resources (Mahoney & Pandain, 1992; Priem & Butler, 2001). Resource
possession is a necessary but not sufficient condition for competitive advantage.
Sufficiency arises based on how the firm organizes to exploit its resources to create
unique capabilities and value (Barney, 1997; Teece et al., 1997). This “dynamic-
capabilities” conceptualization of RBV argues that the real differentiator is how a
firm develops and configures resources in a way that maximizes their competitive
potential (Eisenhardt & Martin, 2000). Thus, the RBV has “evolved into a dynamic
recipe explaining the process by which these ingredients [a firm’s resources] must
be utilized” to deliver competitive advantage (Newbert, 2007, p. 124).
Importantly, the dynamic-capabilities approach highlights two realities that
underlie a firm’s opportunity to exploit collaboration. First, the word “dynamic”
implies the ability to rapidly change a firm’s resource base in response to a changing
environment (Zahra, Sapienza, & Davidsson, 2006; Teece, 2007; Barreto, 2010).
Second, by definition, a capability is “the firm’s ability to integrate, build, and
reconfigure internal and external competencies” (Teece et al., 1997, p. 517). The
literature consistently employs terms such as “coordinate,” “combine,” and “in-
tegrate” to describe the process of capability development (Eisenhardt & Martin,
2000; Ettlie & Pavlou, 2006; Barreto, 2010). These core concepts suggest the
need to work effectively across organizational boundaries—both interfunctional
and interfirm. Thus, decision makers should consider the orientations and strategic
conflict literatures as they seek to achieve inimitable advantage via a dynamic
collaboration capability.
Organizational Orientations and Conflict

Organizational boundaries exist to foster the deep skills and the mastery of chal-
lenging tasks that make specialization and scale economies possible (Coase,
1937; Anderson, 1982). The orientations literature explains the importance
of boundaries, noting that firms must develop an area of emphasis/expertise
to improve value creation. For example, a customer orientation promotes the
organization-wide gathering, sharing, and use of customer intelligence so that

action can be taken to effectively and efficiently meet customer needs (Kohli &
Jaworski, 1990; Narver & Slater, 1990; Deshpande, Farley & Webster, 1993; Ja-
worski & Kohli, 1993; Slater & Narver, 1994; Slater & Narver, 1995; Hult, Ketchen,
& Slater, 2004; Rapp, Trainor, & Agnihorti, 2010). Marketing typically culti-
vates a customer orientation, helping the entire organization understand customer
needs and directing the development of customer-fulfillment processes (Javalgi,
Martin, & Young, 2006; Grzeskowiak, Blut, & Kenning, 2007; Min, Mentzer, &
Ladd, 2007). Similarly, a supplier orientation—driven by the operations and supply
functions—emphasizes the need to manage the capacity and capabilities of sup-
pliers to improve productivity, quality, and innovation (Heikkila, 2002; Attaran &
Attaran, 2004; Ferdows, Lewis, & Machuca, 2004; Lee, 2004; Daugherty, Richey,
Genchev, & Chen, 2005; Hendricks & Signhal, 2005; Fawcett et al., 2007; Ireland
& Webb, 2007). To the extent that the marketing and supply functions inculcate
these orientations, firm performance should improve, establishing the foundation
of this study’s initial hypotheses.
H1: A customer orientation is positively related to a firm’s value-creation

capability as measured by customer satisfaction and productivity.
H2: A supplier orientation is positively related to a firm’s value-creation
capability as measured by customer satisfaction and productivity.
Unfortunately, strong functional orientations can instill counterproductive

behavior as “specialists” pursue their own goals to the exclusion of other concerns
because they are rewarded on disparate metrics and operate with distinct report-
ing structures (Dyer & Song, 1997; Fawcett, Magnan, & McCarter, 2008). The
conflict literature explains that the negative consequences of organizational bound-
aries occur at both the interfunctional and interorganizational levels. For example,
interfunctional conflict describes the detrimental behavior among business func-
tions such as marketing and supply management that arises because of perceived
differences in goals and ideologies (Walton, Dutton, & Cafferty, 1969; Ruekert,
& Walker, 1987; Barclay, 1991; Xie, Song, & Stingfellow, 1998). Thomas (1992,
p. 653) observed that conflict “begins when one party perceives that the other has
negatively affected, or is about to negatively affect, something that he or she cares
about.” Thus, the stronger the functional orientations, the more likely conflict is to
result (Pondy, 1967; Gaski, 1984; Humphreys, Williams, & Goebel, 2009).
Similarly, interorganizational conflict results from goal incongruence among
members of a supply chain and leads to dysfunctional behavior, frequent disagree-
ment, and frustration (Kumar, Scheer, & Steenkamp, 1995; Duarte & Davis, 2003;
Gulati & Nickerson, 2008; Rossetti & Choi, 2008; Groznik & Heese, 2010). Interor-
ganizational conflict thus diminishes relationship performance and is an impedi-
ment to relational advantage (Duarte & Davis, 2003; Fawcett, Ogden, Magnan, &
Cooper, 2006). Because value-creation processes have become more complex and
intertwined—relying on resource integration across the supply chain—decision
makers may desire to enhance collaboration skills to mitigate organizational
conflict.
Allred et al. 133
Interfunctional and Supply Chain Collaboration

By definition, core competencies are interfunctional. The most valuable are often
interorganizational. Describing Honda’s engine development as the model core
competency, Prahalad and Hamel (1990, p. 4) emphasized, “core competencies are
the collective learning in the organization, especially how to coordinate diverse
production skills and integrate multiple streams of technologies.” Stalk, Evans,
and Schulman (1992, p. 61) used Wal-Mart’s delivery capability to underscore
the integrative nature of a valued competency, “critical capabilities are collective
and cross-functional—a small part of many people’s jobs, not a large part of
a few.” Because companies struggle to reduce organizational conflict and work
effectively across borders, core competencies are rare. The need to assess and
merge diverse, complementary skills that reside in different functions and across
different organizations makes core competencies unique and hard to replicate
(Raghunathan, 1999; Sanders, 2007; Wang & Wei, 2007).
These realities suggest that collaboration can act as a valued dynamic ca-
pability (Ettlie & Pavlou, 2006; Agarwal & Selen, 2009). Adroit collaboration
skills reduce counterproductive behavior by promoting goal alignment, more fre-
quent and open information sharing, higher levels of managerial interaction, the
exchange of expertise and resources, and a willingness to share risks and rewards
(Morgan, 1997; Rai & Bajwa, 1997; Gulanic & Rodan, 1998; Stonebraker & Afifi,
2004; Eng, 2006; Green, McGaughey, & Casey, 2006; De Luca & Atuahene-Gima,
2007). Because valued resources and routines are found across functions within the
firm as well as among members of the extended supply chain, a dynamic collabora-
tion capability consists of both internal and supply chain oriented facets (Fawcett,
Ellram, & Ogden, 2006; Agarwal & Selen, 2009). By improving resource config-
uration and adaptability, collaboration enhances process efficiency and customer
satisfaction (Frohlich & Westbrook, 2001; Barratt, 2004b; Li, Chau, & Lai, 2010).
Therefore, our third hypothesis states,
H3: A collaboration capability is positively related to a firm’s ability to
create value as measured by customer satisfaction and productivity.
Of note, the relationship between functional orientations and a collabora-
tion capability is likely interactive and iterative (thus, the two-way arrows in
Figure 1). The deep skills promoted by strong functional orientations are the build-
ing blocks of core competencies. Yet, without a collaboration capability, firms
cannot effectively combine, coordinate, and integrate these skills. Importantly, the
collaboration process influences functional and supply chain participants. As they
work together, they learn more about each others’ value-added contributions, build
relationships of trust, and begin to view colleagues from other areas and firms as
resources rather than as competitors (Moberg et al., 2003; Barratt, 2004a; Min,
Mentzer, & Ladd, 2007; Fawcett et al., 2008). Deep skills that contribute to unique
capabilities are thus valued more broadly as a source of inimitability. We there-
fore propose that collaboration mediates the relationship between orientations and
performance:
H4: A collaboration capability mediates the relationship between functional
orientations (customer and supplier) and a firm’s ability to create value
as measured by customer satisfaction and productivity.
Finally, the difficulty inherent in building a complex, behavioral capability

like collaboration suggests insight can be gained by assessing its development
over time (Agarwal & Selen, 2009). Resource-advantage theory argues that the
process of competition contributes to organizational learning and stresses the im-
portance of learning in the creation and maintenance of inimitable competencies
(Hunt & Davis, 2008). Resource-advantage theory thus intimates that today’s
intensely competitive marketplace should lead firms to become increasingly con-
nected, more willing to share information, and more collaborative. By collecting
data at two different points in time, our study provides an opportunity to evaluate
the evolution of collaboration as a dynamic capability. Although we expect to see
higher levels of collaboration over time, the nature of today’s competitive environ-
ment may mitigate any performance improvements. We therefore approach this
aspect of the study from an exploratory perspective.
Organizational Performance
Dynamic capabilities are highly sought after because they lead to better firm
performance (Wernerfelt, 1995; Barney, 2001; Newbert, 2007). We model this
expected performance benefit as an outcome of improved customer satisfaction
and higher productivity. That is, companies that grow the top line while keeping
costs in line so that margins are at or above industry averages tend to perform
well consistently. Our final hypothesis verifies this mediated relationship between
a dynamic collaboration capability and organizational performance.
H5: A firm’s ability to create value via customer satisfaction and productivity
is positively related to organizational performance as measured by
profitability and growth.
RESEARCH METHODS
Because issues involving collaboration are complex and not well understood, an
exploratory, multimethod research framework employing an extensive literature
review, a survey, and interviews was employed. As the study began, collaboration
had been identified in the literature, but not fully explored. Nor had an effort
been made to empirically evaluate its evolution—thus, the decision to replicate the
study. A six-year interval between Period 1 and Period 2 provided sufficient time to
evaluate the emergence of a collaboration capability. Three steps were undertaken
to ground the research:
(i) An extensive literature search going back to the early 1980s was conducted.
This review provided insight needed to design meaningful data collection
instruments.
(ii) A series of half a dozen preliminary, informal managerial interviews were
conducted to ensure managerial relevance.
(iii) An advisory board consisting of managers and academics was assembled
to provide feedback on the research content and process.
Allred et al. 135
Table 1: Survey response rates.

Period 1 Period 2
Percentage Percentage
Professional Completed Response of Total P1 Completed Response of Total P2
Association Surveys Rate Sample Surveys Rate Sample
APICS 171 12.1% 36% 159 17.9% 31%
ISM 138 10.6% 29% 156 19.0% 31%
CSCMP 166 11.6% 35% 190 19.3% 38%
Overall 475 11.4% 100% 505 18.8% 100%
These efforts provided the context to effectively analyze and interpret the
study findings.
Survey Data Collection

The nature of a collaboration capability as well as the desire to replicate the
study required careful, consistent selection of the survey’s key informants. The
preliminary interviews and advisory board discussions suggested that participants
be limited to senior-level managers (e.g., director, vice-president, CEO, etc.) with
broad organizational accountability, cross-functional interactions, and access to
overall firm-level performance data. In each time period, the mailing list was com-
piled with the assistance of three professional associations: the Council for Supply
Chain Management Professionals (CSCMP), the Institute for Supply Management
(ISM), and APICS. The random samples in Periods 1 and 2 were designed to
mirror each other in terms of geography, industry, and management position. This
selection process yielded a list of seasoned managers who were likely to have ex-
perience with the challenges of managing across functional silos and as members
of cross-functional and supply chain teams.
In both time periods, the survey process followed Dillman’s total design
method. To increase the response rate, managers were invited via prenotification
phone calls to participate. Managers were also offered a copy of the study find-
ings and an opportunity to win one of several iPod Nanos. Overall, 980 usable
surveys were returned for a response rate of 15.21% (Table 1). The relative sam-
ple sizes and proportions from each of the three professional associations were
consistent across the two time periods suggesting sample equivalence. Further, an
independent t-test was performed on the control variable of firm size as measured
by number of employees. No significant difference was found, indicating sample
comparability.
Nonresponse bias was evaluated using two methods. First, a comparison of
early versus late responses revealed no problematic response patterns (Armstrong
& Overton, 1977). Second, to more clearly verify that the respondents and nonre-
spondents were not uniquely different, the demographic profiles of the two groups
were compared. In Period 1, because responses were anonymous, we called man-
agers on the mailing list until we had spoken with 300 nonrespondents (100 from
each managerial group) to gather basic demographic data so that respondent and
Table 2: Qualitative sample: channel sales, profits, and employee levels.

Period 1 Period 2
Channel Position Number Number
Retailer 14 15
Finished-goods assembler 13 19
Direct-materials supplier 15 13
Service provider 9 11
Public vs. private
Public company 34 36
Private company 17 22
Descriptive Sales Profits Sales Profits

Statistics ($M) ($M) Employees ($M) ($M) Employees
Mean $28,751 $1,704 124,706 $24,077 $2,168 94,408
Median $9,045 $589 44.750 $4,954 $679 16,300
Minimum $103 −$705 2,701 $3 −$4,183 35
Maximum $285,222 $10,267 1,700,000 $378,799 $12,731 2,100,000
nonrespondent profiles could be compared. In Period 2, respondents were tracked

so that mailing and survey administration costs could be minimized. Nonrespon-
dents could also therefore be identified. Demographic profiles for 100 randomly se-
lected nonrespondents were developed using Dun and Bradstreet databases. These
profiles were compared to those of the respondents. No significant differences
were found in either time period.
Case Study Data Collection Interview Process

A case study methodology is best used to explore the complex what, why, and how
questions associated with organizational conflict, dynamic capabilities, and per-
formance outcomes (Yin, 1981; Meredith, Raturi, Amoako-Gyampah, & Kaplan,
1989; McCutcheon & Meredith, 1993). Therefore, following the initial stages of
the survey data collection in each time period, a series of detailed interviews were
conducted to complement and contextualize the survey findings (Pettigrew, 1990).
To gain a comprehensive view of the challenges managers encounter in si-
multaneously creating deep skills and fostering collaboration, interviews were
conducted across four channel positions—retailers, finished-goods assemblers, di-
rect materials suppliers, and service providers. For Period 1, 51 interviews were
conducted. For Period 2, 58 interviews were performed. Fifteen companies par-
ticipated in both interview rounds. The typical interview lasted two to four hours.
Because of the cross-functional nature of the research, the contact manager of-
ten invited other managers—for example, IT managers, logisticians, new prod-
uct managers, purchasers, and project leaders—to participate in the interview.
Table 2 shows the demographic statistics for the interview companies. By design,
the participants in the two panels possess similar attributes.
Once a company agreed to participate, a brief overview of the research
objectives and a copy of the interview protocol were provided (Spradley, 1979). A
Allred et al. 137
semistructured interview guide was used to assure comparability of findings while

allowing for flexibility in pursuing insight into unique practices and programs that
became evident during the interview. During each interview, extensive notes were
made for later reflection. These notes were then translated into structured case
write-ups to avoid “data asphyxiation” from the large amounts of data (Pettigrew,
1990). Importantly, each case was viewed as a “stand-alone entity” to help identify
unique patterns and to form a generalized theory in cross-case comparisons.
As the interviews continued, the researchers met to compare notes. This
iterative process was used to dissect the results, derive a consensus regarding their
meaning, and improve the process for upcoming interviews (Eisenhardt, 1989a,
1989b; Seidel, 1998). After all of the interviews were conducted, a rigorous, three-
step content analysis was performed to provide insight into the findings regarding
each hypothesis.
(i) Based on the literature and the iterative discussions described above, an
initial categorization schema was developed.
(ii) Each interview was carefully read to identify key words, phrases, and
interrelationships. Each survey was coded and the results entered into a
spreadsheet.
(iii) The findings from the coding process were tabulated and frequency dia-
grams created.
The results of this analysis add depth of understanding to the structural
equation model (SEM) findings discussed below.
ANALYSIS: CONSTRUCT EVALUATION AND MODEL FIT

To test the hypothesized relationships, constructs were developed based on the
literature and feedback from the advisory board. Table 3 reports descriptive statis-
tics for the purified constructs as well as the individual measures that comprise
them. We comment in detail on changes in construct scores below. Standardized
measures were used in the confirmatory factor analysis (CFA) and SEM.
Data Pooling and Construct Evaluation

Measurement equivalence and construct validity were evaluated using tests pro-
posed by Rungtusanatham, Ng, Zhao, and Lee (2008) and Fornell and Larcker
(1981) respectively. Initially, we examined configural, metric measurement error,
and scalar invariance across our sample frames using multigroup CFA. Overall,
the various measurement equivalence tests justified pooling the survey responses
across sample frames. Similarly, we evaluated average variance extracted, average
shared variance, and reliability rho to assess construct acceptability. The findings
reported in Table 4 suggest that we can be reasonably confident that the measured
items reflect the theoretical constructs they are designed to measure. The use of
rigorous tests establishing convergent and discriminant validity showing factors to
be distinct and unique allows us to conclude that common method bias does not
unduly affect the interpretability of the findings (Podsakoff, MacKenzie, Lee, &
Podsakoff, 2003).
Table 3: Descriptive statistics: means (std. dev.) and p-values of multiple inde-
pendent t tests∗ .
P1 [n = 475] P2 [n = 505] Sig.
Questions/Measures Mean (SD) Mean (SD) Diff.∗
Orientations and Capabilities:a
Customer orientationb 5.36 (1.06) 5.09 (1.08) 0.00
My firm is flexible in terms of 5.49 (1.23) 5.48 (1.19) 1.00
accommodating customers’ special
requests
My firm uses dedicated customer account 5.36 (1.39) 5.08 (1.58) 0.01
teams to support its best customers
My firm aggressively and frequently 5.23 (1.31) 4.71 (1.50) 0.00
solicits customer feedback
Supplier orientationa 4.38 (1.13) 4.42 (1.25) 0.57
My firm aggressively shares resources to 3.69 (1.47) 4.20 (1.39) 0.00
help suppliers improve their capabilities
Supplier performance is closely monitored 4.62 (1.39) 4.59 (1.46) 1.00
and is the basis for future business
Supplier scorecards are used to 4.83 (1.40) 4.47 (1.73) 0.00
communicate expectations for
performance levels
External collaborationa 4.17 (1.26) 4.78 (1.04) 0.00
Frequent, open information sharing among 4.59 (1.57) 5.21 (1.22) 0.00
supply chain members
Efforts to establish common goals among 4.30 (1.58) 4.84 (1.30) 0.00
Senior level managerial interaction among 4.20 (1.65) 4.77 (1.45) 0.00
Sharing of technical expertise with 4.24 (1.41) 4.79 (1.26) 0.00
customers and suppliers
A defined and accepted approach to sharing 3.83 (1.58) 4.40 (1.37) 0.00
risks and rewards
Use of clear guidelines to manage supply 3.85 (1.56) 4.65 (1.37) 0.00
chain relationships
Internal collaborationa 4.38 (1.00) 4.44 (1.08) 0.37
Information applications are highly 3.45 (1.41) 3.78 (1.49) 0.00
integrated w/in the firm and the supply
chain
Middle managers are more empowered to 4.70 (1.41) 4.50 (1.46) 0.14
make operating decisions than five years
ago
More process-oriented performance 5.08 (1.33) 4.99 (1.36) 1.00
measures are tracked today than five years
ago
Our company culture promotes 4.54 (1.17) 4.40 (1.50) 0.50
collaboration across functional areas
Workers are more empowered to make 4.11 (1.40) 4.52 (1.41) 0.00
operating decisions than five years ago
Continued
Allred et al. 139
Table 3: (Continued)
P1 [n = 475] P2 [n = 505] Sig.
Questions/Measures Mean (SD) Mean (SD) Diff.∗
Mediators: value creation and delivery
Productivityc 4.10 (1.10) 4.31 (1.01) 0.02
Cost of purchased items 4.57 (1.46) 4.58 (1.30) 1.00
Overall product and supply chain costs 4.34 (1.20) 4.59 (1.15) 0.01
(productivity)
Overall product quality 4.14 (1.48) 4.32 (1.38) 0.22
New product development capability (e.g., 3.61 (1.35) 3.93 (1.45) 0.00
cost, time, uniqueness)
Transportation costs 3.87 (1.56) 4.13 (1.35) 0.03
Customer satisfactiond 4.66 (1.24) 4.86 (1.07) 0.08
Responsiveness to customer requests or 4.68 (1.36) 4.86 (1.18) 0.09
unexpected challenges
On-time delivery/due-date performance 4.67 (1.45) 4.81 (1.31) 0.31
Overall customer satisfaction 4.64 (1.36) 4.90 (1.16) 0.00
Outcomes: business performance
Firm growthc 4.87 (1.13) 4.91 (1.06) 0.52
Sales growth in the last three years 4.98 (1.31) 5.02 (1.19) 1.00
Market share growth in the last three years 4.85 (1.30) 4.90 (1.19) 1.00
Growth in return on assets (ROA) in the 4.77 (1.28) 4.82 (1.21) 1.00
last three years
Profitabilityc 4.50 (1.37) 4.65 (1.20) 0.02
Firm profitability 4.50 (1.37) 4.65 (1.20) 0.08
∗
The t-tests assume equal variance. Bonferroni p-value adjustments applied to raw measures
within constructs. The p-values for summated construct are unadjusted.
a
Mean (SD) for composite measures calculated for summated constructs.
b
Indicate the extent to which you agree with each of the following statements as they relate
to your firm’s supply chain: (1 = strongly disagree; 7 = strongly agree).
c
To what extent has supply chain integration improved your firm’s performance in the
following areas? (1 = not a facilitator; 7 = effective facilitator).
d
Indicate your firm’s position relative to leading competitors in your primary industry along
the following dimensions: (1 = much less; 7 = much greater).
Model Fit and Estimates

To test the hypothesized relationships across the two time periods, a set of multi-
group SEMs was used. Results of the analysis are reported in Table 5 and shown
graphically in Figure 1. The proposed unmediated model fits the data well (com-
parative fit index [CFI] = .98, incremental fit index [IFI] = .98, root mean
square error of approximation [RMSEA] = .07). To test the mediation effect of
collaboration, the latent collaboration construct was included in the estimation
(panel B in Figure 1). The proposed mediated model also fits the data well
(CFI = .98, IFI = .98, RMSEA = .05). Chi-square differences between the me-
diated and unmediated models were highly significant (CMIN = 863.382, 12 d.f.,
p < .001), validating the importance of specifying a latent collaboration capa-
bility within the model. A comparison of the models for both periods clearly
shows supplier orientation and customer orientation effects on productivity and
Table 4: Construct loadings and measurement propertiesa,b .
140
Average Average
CFA Std. Variance Variance
Loadings Extracted Reliabilityρ Shared γ 2
Construct / Item P1 P2 P1 P2 P1 P2 P1 P2
Orientations and capabilities
Customer orientation 0.50 0.36 0.75 0.62 0.11 0.24
My firm is flexible in terms of accommodating customers’ special requests 0.75 0.52
My firm uses dedicated customer account teams to support its best customers 0.63 0.58
My firm aggressively and frequently solicits customer feedback 0.73 0.68
Supplier orientation 0.50 0.53 0.75 0.77 0.25 0.29
My firm aggressively shares resources to help suppliers improve their capabilities 0.52 0.61
Supplier performance is closely monitored and is the basis for future business 0.78 0.85
Supplier scorecards are used to communicate expectations for performance levels 0.79 0.71
External collaboration 0.59 0.54 0.90 0.88 0.25 0.16
Frequent, open information sharing among supply chain members 0.75 0.72
Efforts to establish common goals among supply chain members 0.82 0.78
Senior level managerial interaction among supply chain members 0.71 0.66
Sharing of technical expertise with customers and suppliers 0.72 0.67
A defined and accepted approach to sharing risks and rewards 0.79 0.77
Use of clear guidelines to manage supply chain relationships 0.81 0.81
Internal collaboration 0.45 0.46 0.80 0.81 0.26 0.28
Information applications are highly integrated w/in the firm and the supply chain 0.54 0.57
Middle managers are more empowered to make operating decisions than five years ago 0.67 0.75
More process-oriented performance measures are tracked today than five years ago 0.67 0.68
Our company culture promotes collaboration across functional areas 0.76 0.65
Workers are more empowered to make operating decisions than five years ago 0.70 0.75
Continued
Dynamic Collaboration Capability as Source of Competitive Advantage
Allred et al.
Average Average
CFA Std. Variance Variance
Loadings Extracted Reliabilityρ Shared γ 2
Construct / Item P1 P2 P1 P2 P1 P2 P1 P2
Operational performance
Productivity 0.54 0.48 0.85 0.82 0.30 0.31
Cost of purchased items 0.65 0.71
Overall product and supply chain costs (productivity) 0.89 0.83
Overall product quality 0.75 0.67
New product development capability (e.g., cost, time, uniqueness) 0.74 0.69
Transportation Costs 0.61 0.55
Customer satisfaction 0.69 0.66 0.87 0.85 0.31 0.32
Responsiveness to customer requests or unexpected challenges 0.83 0.76
On-time delivery/Due-date performance 0.80 0.81
Overall customer satisfaction 0.85 0.86
Business performance
Growth 0.68 0.71 0.86 0.88 0.03 0.08
Sales growth in the last three years 0.92 0.92
Market share growth in the last three years 0.93 0.93
Growth in return on assets (ROA) in the last three years 0.59 0.64
Profitability (single item construct omitted from CFA)
Continued
141
142
χ 2 (d.f.) = 1,789.294 (658); CFI = .92; IFI = .92.

N 2001 = 475, N 2007 = 505.
Noncentrality Parameter (90% CI) = 1131.294 (1,009.358–1,260.855).
RSMEA (90% CI) = .042 (.040–.044).
All loadings significant at p < .001.
Reduced balanced dataset.
a
All standardized loadings were shown to be sufficiently large and significant. CFA fit statistics showed that the data manifest the theorized construct
structure well, both across response groups (CFI = .93, IFI = .93 and RSMEA = .03) and across survey periods (CFI = .92, IFI = .92 and RSMEA = .04).
Metric Invariance was determined by constraining all construct measurement weights to be equal across the three sample groups. Chi-square fit comparisons
showed no significant difference between the constrained and unconstrained baseline models [CMIN = 62.78 (56), p = .25]. Measurement error variance
invariance was then tested by further constraining measurement intercepts to be equal across response groups. Initial tests failed to establish strong
measurement error invariance. However, weak invariance could be established by releasing only seven of 84 imposed measurement error constraints: three
of ten on productivity errors, two of ten on internal collaboration errors, and single constraint on customer and supplier errors. In other words, most of the
error variance remained constrained across groups. Chi-square comparisons for the partially constrained model against the unconstrained baseline model
[CMIN = 118.74 (104), p = .15] and constrained measurement weight model [CMIN = 55.96 (48), p = .20] were insignificant, offering reasonable
evidence of measurement error invariance. Finally, scalar invariance was tested, and initial results showed significant difference between models. It
was necessary to release 16 of 84 measurement intercept constraints from the model to achieve a statistically insignificant comparison >.10 with the
unconstrained baseline model [CMIN = 162.51(142), p = .12] and the partially constrained measurement error model [CMIN = 43.77(38), p = .24].
Constraints were released on multiple measurement intercepts for only two constructs—internal collaboration and productivity. For these, the results were
not indicative of systematic bias. Thus, results from the various measurement equivalence tests offered sufficient justification to pool survey responses
from all three response groups.
b
Average variance extracted exceeds .50 for 10 of the 14 constructs. Exceptions were customer orientation in Period 2 (.36), internal collaboration in both
time periods (P1 = .45; P2 = .46), and productivity in Period 2 (.48). However, average variance shared was small and did not exceed average variance
extracted for any of these constructs. Additional evidence of convergent validity is shown by the fact that 13 of the 14 composite reliability rho scores
exceeded the recommended threshold of .70. Customer orientation in Period 2 (.62)—the one exception—exceeded the minimum threshold for exploratory
research (Nunnally, 1978; Churchill, 1979). Discriminant validity is evidenced by low average variance shared values, which do not exceed .32 for any
modeled construct.
Allred et al.
Table 5: Coefficients for nomological relationships.

2001 2007 R2
χ2 Difference
Variables Estimate Significance Estimate Significance P1 vs. P2 2001 2007
Unmediated model:
Customer orientation → productivity 0.00 ns 0.10 p ≤ .05 p = .10 0.27 0.28
Supplier orientation → productivity 0.51 p ≤ .01 0.38 p ≤ .01 p = .02
Customer orientation → satisfaction 0.18 p ≤ .01 0.14 p ≤ .01 ns 0.54 0.48
Supplier orientation → satisfaction 0.11 p ≤ .05 0.14 p ≤ .01 ns
Productivity → satisfaction 0.71 p ≤ .01 0.56 p ≤ .01 p = .01
Productivity → profitability 0.72 p ≤ .01 0.76 p ≤ .01 ns 0.51 0.52
Satisfaction → profitability 0.19 p ≤ .05 0.13 p ≤ .01 ns
Productivity → growth 0.05 ns 0.22 p ≤ .01 p = .05 0.04 0.10
Satisfaction → growth 0.15 p ≤ .01 0.14 p ≤ .05 ns
χ2 (d.f.) = 59.419 (10)
N(P1) = 475, N(P2) = 505
CFI = .975, IFI = .975;
NCP (90% CI) = 49.419 (28.797 – 77.545)
RMSEA (90% CI) = .071 (.054–.089)
χ2 (d.f.) = 59.419 (10)
Continued
143
144
2001 2007 R2
χ2 Difference
Variables Estimate Significance Estimate Significance P1 vs. P2 2001 2007
Mediated model (structural):
Customer orientation → productivity −0.14 p ≤ .01 −0.10 ns ns 0.49 0.44
Supplier orientation → productivity 0.09 ns 0.07 ns ns
Collaboration capability → productivity 0.82 p ≤ .01 1.15 p ≤ .01 ns
Customer orientation → satisfaction 0.06 ns −0.06 ns p = .10 0.62 0.62
Supplier orientation → satisfaction −0.10 ns −0.11 ns ns
Collaboration capability → satisfaction 0.64 p ≤ .01 1.30 p ≤ .01 p = .04
Productivity → satisfaction 0.47 p ≤ .01 0.31 p ≤ .01 ns
Productivity → profitability 0.72 p ≤ .01 0.76 p ≤ .01 ns 0.51 0.52
Satisfaction → profitability 0.19 p ≤ .01 0.13 p ≤ .01 ns
Productivity → growth 0.05 ns 0.22 p ≤ .01 p = .05 0.04 0.10
Satisfaction → growth 0.15 p ≤ .01 0.14 p ≤ .05 ns
Mediated model (measurement):
Collaboration capability → external 1.00 1.00 0.52 0.30
Collaboration capability → internal .78 p ≤ .01 1.35 p ≤ .01 p ≤ .01
χ2 (d.f.) = 84.467 (24)
N(P1) = 475, N(P2) = 505
CFI = .979, IFI = .979;
NCP (90% CI) = 60.467 (36.170 – 92.355)
RMSEA (90% CI) = .051 (.039–.063)
Allred et al. 145
Figure 1: The mediating influence of a collaboration capability on firm perfor-

mance.
satisfaction to be mediated through collaboration capability. Finally, differences in

each of the hypothesized relationships within the model (as measured by the β co-
efficient) were evaluated across periods evaluated using chi-square difference tests.
The p-values from the tests are reported in Table 5. Four of the reported effects
differ significantly from Period 1 to Period 2. All other effects are consistent across
periods.
DISCUSSION OF HYPOTHESES
Customer Orientation’s Influence
Hypothesis 1 examined the relationship between a firm’s customer orientation
and its ability to create value as measured by satisfaction and productivity. The
unmediated models in both periods show that customer orientation is positively and
significantly related to satisfaction (panel A in Figure 1). The relationship strength
is stable across time (β = .18 in Period 1, p < .01 versus β = .14 in Period 2,
p < .01). This is noteworthy given the significant decrease in customer orientation
over time (5.36 to 5.09; p = .00). Apparently, a threshold for customer orientation
exists. As long as companies surpass this threshold, they achieve high levels of
satisfaction as measured by their internal systems. In fact, the mean satisfaction
score increased significantly from Period 1 to Period 2 (4.66 to 4.86; p = .08). We
should note that the customer-orientation construct obtained the highest means of
all the constructs in both time periods.
These findings were supported by the interviews. Approximately 70% of the
managers interviewed in both time periods confirmed that improving customer
satisfaction is a primary driver behind their collaboration initiatives and a core
reason to build close customer relationships, establish dedicated account teams,
and accommodate customers’ special needs. Moreover, interview managers con-
sistently noted (almost 80% of the time) that their company cultures are focused
downstream toward the customer. Managers at most companies perceive marketing
as possessing asymmetrical power vis-à-vis other functions. This reality drives the
strength of the customer orientation construct in both time periods.
Customer orientation’s influence on productivity is more subtle and less
consistent over time. In Period 1, no significant relationship existed (β = .00;
p = ns). However, the relationship strengthened over time such that by Period 2,
customer orientation exerted a positive and significant influence on productivity
(β = .10, p < .05). It is interesting to observe that the strengthened relationship
emerges as the customer orientation score weakens. Indeed, the productivity score
actually increases in the presence of a slightly lower customer orientation (4.10
to 4.31; p < .05). This finding appears to confirm the belief that too much cus-
tomer focus can create chaos and diminish productivity in the supply side of an
organization.
The interviews suggested two issues drive this relationship change. First,
managers noted team decision processes lead to more balance in decision making
and fewer disruptions in supply processes. The use of collaborative structural en-
ablers such as sales and operations planning (S&OP) increased from 45% in Period
1 to 67% in Period 2. S&OP allows supply managers to plan for upcoming sales
promotions and enables marketers to better grasp capacity and supply constraints.
As such, cost-incurring, counterproductive decisions are reconsidered. Second, in
each interview in Period 2, the question was asked, “How has the competitive
environment changed?” Managers responded universally that the world is more
competitive, with more than 50% of the interview managers identifying globaliza-
tion and China’s emergence as two factors that have created tremendous downward
pressure on prices. Much of this pressure comes directly from customers who de-
mand that their supply chains improve productivity. Thus, customers themselves
Allred et al. 147
have directed their suppliers to be more productivity oriented. In this sense, an

effective customer orientation should drive productivity improvements.
Supplier Orientation’s Influence

Hypothesis 2 assessed the relationship between a firm’s supplier orientation and
its ability to create value as measured by satisfaction and productivity. Not surpris-
ingly, as shown in panel A of Figure 1, supplier orientation has a strong, positive
influence on productivity in both time periods (β = .51, p < .01; β = .38, p < .01).
The surprise is that the strength of the relationship appears to be diminishing. Data
need to be collected at a future point to verify the existence of a meaningful trend.
Supplier orientation’s influence on satisfaction is slightly different: the relation-
ship is significant in both time periods, but the magnitude of the β-coefficient has
increased slightly (β = .11, p < .05; β = .14, p < .01). This possible trend also
merits future assessment.
The interview findings suggest that the nature and importance of a supplier
orientation is changing. Historically, sourcing has been managed as a nonstrategic,
transaction-focused cost center. The customer side of the company overshadowed
the supply side. Many managers noted that vestiges of this mindset still linger. Even
so, they note that competitive pressures are forcing their companies to place greater
emphasis on managing the capacity and capabilities of key suppliers worldwide
(24% in Period 1; 48% in Period 2). As companies outsource more aspects of their
business model, they invest more in supplier capabilities. Supplier development via
Six-Sigma training, kaizen bursts, and value-stream mapping are among the tools
used by interview companies to improve supplier capabilities. One consequence
of the increased emphasis on helping suppliers improve their own skills is the need
for higher levels of relationship-management skills, which are also needed to work
more closely with the customer-facing side of the organization (51% in Period
1; 72% in Period 2). However, managers noted their companies are struggling to
adapt to this new role, often because it is difficult to find employees with the right
skills (16% in Period 1; 38% in Period 2). To summarize, more time is needed
to see if companies can learn to manage the supply side of the organization for
competitive advantage.
Collaboration Capability’s Influence

Hypothesis 3 evaluated the relationship between a firm’s collaboration capability
and its ability to create value as measured by customer satisfaction and productiv-
ity. The collaboration capability construct was operationalized as a latent construct
comprising two observable indicators: external collaboration and internal collabo-
ration. Of note, the internal collaboration score remained consistent across the two
time periods (mean = 4.38, rank = 5 in Period 1 compared with mean = 4.44,
rank = 6 in Period 2). By contrast, the external collaboration score increased
dramatically and significantly over time. The increase of .61 from 4.17 to 4.78
(p = .00) was the largest change among the eight measured constructs (rank = 6
in Period 1; rank = 4 in Period 2). The responses clearly suggest that estab-
lishing the mechanisms to share information, mitigate conflicts, and collaborate
across functional boundaries is difficult. Many companies find it easier to build
collaborative mechanisms with supply chain partners than to build them between
functions within their own organizations.
The interviews provide some insight into the dynamic challenges inherent
in establishing collaborative mechanisms. During Period 1, managers emphasized
that the desire to build a collaboration capability was quite new. Early efforts
had been painful, but companies were realizing meaningful results. By Period 2,
interview managers expressed the feeling that although they had invested heavily
in mechanisms to bridge supply chain gaps, they had not made much progress in
diminishing internal cultural barriers. Much of the effort had focused on technology
linkages, which had initially improved communication-driven performance but
had not led to breakthrough collaboration. When asked to identify and describe the
primary barriers inhibiting high-level collaboration, the top five inhibitors were
as follows: (i) organization structure and turf conflicts (P1 = 73%, P2 = 75%),
(ii) resistance to change (53%, 58%), (iii) poorly aligned performance measures
(73%, 55%), (iv) lack of trust and high levels of power asymmetry (47%, 42%),
and (v) inadequate managerial support (29%, 42%).
Despite the substantive progress made in aligning measures during the years
between the two studies, critical cultural and structural barriers remained firmly
entrenched. Moreover, interview managers expressed a strong belief that their
companies are not well positioned to embrace the changes needed to leverage
collaboration as an organizational capability and strategic weapon. Ultimately,
managers identified a renewed effort to make cultural and structural changes as an
antecedent to breakthrough collaboration.
Focusing on the hypothesized relationships, panel B in Figure 1 shows that
collaboration capability is positively and significantly related to both satisfaction
and productivity. Collaboration’s influence on productivity (β = .82, p < .01) in
Period 1 is somewhat stronger than on satisfaction (β = .64, p < .01). Over time,
both of these relationships strengthen: productivity (β = 1.15) and satisfaction
(β = 1.30). These are the largest β-coefficients in the structural models, suggesting
that a collaboration capability is increasingly important and that managers must
embrace the challenge of removing barriers to more effective collaboration.
The interview findings support the idea that effective collaboration leads
to improved operational performance. In fact, interview managers emphasized
the notion that if their organizations did not need to improve performance to
survive in today’s competitive marketplace, they probably would not be willing to
expend the resources needed to build a collaborative capability. Managers identified
three primary benefits of enhanced collaboration: lower costs and higher quality
(P1 = 67%, P2 = 82%), improved customer service and satisfaction (53%, 60%);
and establishment of higher value-added relationships (22%, 55%).
Importantly, managers report higher levels of performance attainment for
each of these benefits in Period 2. They note that without at least small successes,
building support for collaboration is almost impossible. They stressed that the
inertia created by the inhibitors discussed above presents a constant threat to
collaboration. Interview managers recognized that much work is needed to really
establish a collaboration capability as a competitive weapon.
Allred et al. 149
Collaboration’s Mediating Role

Hypothesis 4 suggested that a collaboration capability mediates the relationship
between functional orientations and value creation. This mediation effect was an-
alyzed by comparing the differences in the relationships between the functional
orientations and value creation, with and without the collaboration construct in-
cluded in the model (compare panels A and B in Figure 1). In panel A, the
collaboration capability paths are constrained to zero. In panel B, the collabo-
ration capability construct is allowed to enter the analysis. The constrained and
unconstrained models are significantly different, indicating a need to evaluate the
mediating role of collaboration (CMIN = 863.382, 12 d.f., p < .001).
The results displayed in Figure 1 confirm the importance of a strong collabo-
ration capability. In Period 1, significant relationships exist between both customer
orientation and supplier orientation and collaboration capability (β = .41, p < .01;
β = .72, p < .01 respectively). Collaboration capability in turn fully mediates
customer orientation’s relationship with both satisfaction and productivity. In Pe-
riod 2, these relationships remain consistent. The analyses suggest that investing
in a multifaceted collaboration capability is critical to harnessing and meshing the
deep skills engendered through customer and supplier orientations in the quest to
create superior levels of value. One final analytical note: comparing the Periods
1 and 2 models reveals that collaboration capability is increasingly influenced by
internal collaboration initiatives rather than external mechanisms (Table 5). Given
internal collaboration’s low scores across both time periods, more managerial ef-
fort needs to focus on mitigating functional conflicts to promote higher levels of
cross-functional collaboration.
Although the interviews hinted at collaboration’s mediating influence, per-
haps their greatest value was in providing insight into how to build a multifaceted
collaboration capability. Managers talked about how collaborative initiatives lead
to (i) greater balance between customer and supplier orientations, (ii) less conflict,
and (iii) the ability to work together. Managers described how collaboration had
led them to view colleagues from other disciplines more favorably because they
recognized more fully the value they brought to the company. They also noted that
they better understood why managers in other functions, out of necessity, made
some seemingly crazy decisions (of course, despite the collaboration, they still
perceived some decisions as counterproductive). These discussions suggest that
collaboration mediating influence is truly iterative—it brings valued competencies
together even as it modifies managerial perspectives and builds new skills. When
asked, “What are the three or four keys to improving collaboration?” interview
managers identified the following specific practices as vital to meaningful collab-
oration: (i) collaborative process redesign (P1 = 37%, P2 = 62%), (ii) improved
information sharing (41%, 58%), (iii) aligned goals and metrics (53%, 47%), and
(iv) training in process thinking and collaborative behaviors (43%, 45%).
These comments all point to a move toward changing traditional organiza-
tional structures and cultures. The 68% increase in the emphasis on collaborative
process design from Period 1 to Period 2 is striking. It is worth noting that the
other three collaborative bridges—information sharing, aligned goals and metrics,
and collaborative training—must all be in place to truly begin to manage processes
across functional and company borders. Although none of these practices are new,
the ability to bring them together appears to be the core challenge to creating a
collaborative capability. Many companies address one or two of these issues and
achieve short-term, local improvements, but they are not able to transform the cul-
ture in a way that supports breakthrough collaboration. Eventually, cultural inertia
slows the momentum for collaboration.
Business Performance
Our final hypothesis explored the relationship between the operational performance
constructs satisfaction and productivity and firm performance as measured by
profitability and growth. Satisfaction exerts a consistent positive influence across
both profitability (Period 1: β = .19, p < .01; Period 2: β = .13, p < .05) and growth
(2001: β = .15, p < .01; 2007: β = .14, p < .05). Productivity’s influence on firm
performance manifests itself primarily through a consistently strong, positive, and
significant relationship with profitability (Period 1: β = .72, p < .01; Period 2: β =
.76, p < .01). However, although productivity is not statistically related to growth
in Period 1, by Period 2 productivity had begun to drive growth at a moderate level
(Period 1: β = .05, p < ns; Period 2: β = .22, p < .01). This change is likely the
result of a shift in marketplace values: managers pointed out that competition had
intensified in the interval between the two studies, placing tremendous pressure
on cost reduction. Finally, the direct paths between our antecedents (customer
orientation, supplier orientation, and collaboration capability) and our business
performance outcomes (profitability and growth) were all insignificant, indicating
that productivity and satisfaction fully mediate these relationships.
To summarize, a collaboration capability is important. Of note, many of
the relationship results did not change over time, suggesting that (i) the samples
were comparable and (ii) the model itself is a good reflection of the constructs
and relationships. The cross-sectional study across time revealed that companies
are building their collaboration capabilities and achieving greater balance across
customer and supplier orientations. Strong functional orientations are important,
but it is possible for them to be too strong. When this occurs, decision-making
myopia may lead to counterproductive outcomes. Evidence for this idea emerged
from the fact that the mean score for customer orientation decreased significantly
over time, but its impact on productivity increased.
CONCLUSIONS AND MANAGERIAL IMPLICATIONS

The rationale for investing in a collaboration capability was described by a senior
manager at a Fortune 500 company who provided motivation for the study: “If you
ask me what I stay awake at night thinking about, its cross-functional processes.
Our challenge is to become more process focused while maintaining functional
expertise.” Our findings reveal that rather than diminishing deep functional skills,
a strong collaboration capability increases awareness and appreciation of strong
functional orientations and promotes their development as essential ingredients of
a core competency. By bridging the divide between the upstream, supplier-facing
Allred et al. 151
and downstream, customer-facing sides of the business, a collaboration capability

also reduces counterproductive decisions.
Unfortunately, we found that high-level collaboration is not just valuable
but it is also rare—such that collaboration itself becomes a dynamic capability.
Entrenched organizational structures and cultures perpetuate interfirm and interor-
ganizational conflict and stifle collaboration. Yet, although these barriers are perva-
sive, efforts to remove them tend to be piecemeal and isolated. Boundary spanning
initiatives like aligning goals and metrics, improving information sharing, and in-
vesting in collaborative people skills are seldom embraced holistically. The failure
to take a holistic approach to developing a collaboration capability often sows the
seeds of cynicism toward future initiatives.
Fortunately, we documented that even moderate levels of collaboration lead
to superior productivity and satisfaction. The interviews yielded valuable insight
into the pattern of behavior needed to cultivate a collaborative orientation. An
interviewed manager described the pattern as follows: “Collaboration is a two-step
process. You have to change mindsets. Then you can change the structure. We have
spent the last couple of years on changing mindsets. Changing the structure still
lies in the future.” Several implications emerge from this insight:
(i) Change requires new skills. At many companies, managers know they
should collaborate. They talk about collaboration as part of the compet-
itive strategy. But people resist change—they may have been burned by
previous “collaborative” efforts. Habit and inertia freeze decision makers
into inaction. Companies must proactively invest in change management
skills to help collaboration champions break down resistance to collabo-
rative change.
(ii) Collaboration requires structural enablers. As one manager noted, “To ex-
pect a change in behavior without a change in structure is the definition
of insanity.” Structural changes must focus on bringing people together to
make decisions. Likewise, measures must be modified to make collabora-
tion safe. Table 6 describes some of the effective structural enablers used
by the interview companies.
(iii) Developing a collaboration capability is challenging and resource depen-
dent. As one manager commented, “We are making progress, but collabo-
ration is a long journey. It requires time and resources.” The key to freeing
up resources and building momentum is to document and disseminate early
successes—often via collaborative pilot projects.
As managers (i) pursue a holistic approach, (ii) invest in change manage-

ment skills, and (iii) build structural enablers they will achieve success and build
momentum for collaborative initiatives. Our findings represent an important step
in documenting the value of collaboration.
LIMITATIONS AND FUTURE RESEARCH

While conducting research over time provides insights not available in single-
period case study and survey research, it also introduces some limitations.
Table 6: Structural collaboration enablers used by interview companies.
Enabler Role Description
152
Collaboration Define objectives and obtain Key players meet together to define objectives, define the strategy, and establish key elements of
strategy buy-in for specific projects. the plan (e.g., activities, roles and responsibilities, milestones, measures). Each manager signs
meetings the document. A copy of the document is given to each manager. A copy may be posted to the
company’s Web site or displayed in a common area.
Executive steering Prioritize and promote Senior-level managers meet periodically with the specific task of identifying strategic priorities.
committee sustained collaboration. Specific initiatives are prioritized according to their ability to help achieve strategic goals. The
managers are then tasked with (i) removing obstacles to success, (ii) allocating the required
resources, and (iii) providing visibility for the initiatives.
Collaboration Teach and learn about new Managers from across the organization (or the supply chain) come together for a short but
workshops collaborative tools. concentrated time period to learn about new collaborative tools. Ideas are shared, documented
benefits communicated, concerns raised, and commitment generated.
Cross-functional Solve problems and implement Short-term teams created to solve specific problems, manage specific projects, or implement
teams initiatives. specific initiatives including but not limited to new product development, RFID
implementation, supplier selection, supply chain mapping, and brainstorming resolutions to
problems. Teaming is the most common structural enabler.
S&OP Align expectations regarding Brings the customer and supply sides of the organization together on a periodic and formal basis
demand and supply issues. to plan operations to meet customer demand. The S&OP process forces managers to discuss
strategies, confront realities, resolve discrepancies, and remove constraints so that the
company’s resources can be used to meet customer needs.
Supply chain Promote collaboration among Advisory boards consist of key customers or suppliers and are tasked with evaluating potential
advisory boards SC members. collaborative initiatives. Act as sounding boards, sharing best practices and helping remove
implementation barriers so that implementations can be streamlined. Board members are often
used in pilot projects.
Co-located Liaison to promote intense, Locating employees on site at customers or suppliers to drive high-level interaction. Often used
managers long-term collaboration. in conjunction with new product development or to participate in planning, forecasting, and
ordering activities. Provides an inside view into a partner’s culture and decision-making
process.
“C”-suite SC Executive-level integrator of Executive is responsible for value-added process from new product development to order
executive ideas and resolver of fulfillment. Because marketing, logistics, production, sourcing, and engineering all report to
conflicts. the same executive, the blame game is mitigated and opportunities to work together to build
better processes and deliver more value are easier to identify.

Allred et al. 153
For example, survey questions used in future periods are constrained to follow
the original design. In this case, the questions were originally designed when the
literature related to market orientations and dynamic capabilities was relatively
new and constructs for the issues evaluated in this article (with the exception of
the business performance constructs) had yet to be widely developed.
Also, longitudinal research ideally tracks the same firms over time. However,
the nature and costs of large-scale survey research makes this impracticable. Thus,
we collected random samples from the same populations in both time periods to
allow an analysis of the phenomena in question over time. We were careful to
survey the same populations and to develop comparable respondent profiles at
each point in time. To the extent that the random sample represents the population,
our findings add valuable insight into the general evolution and influence of a
collaboration capability. A small-scale case study that follows the same companies
over time could provide additional details regarding the dynamics of developing
a collaboration capability. Such an approach could be designed to capture dyadic
or even supply-chain-wide insight. However, a case study methodology also has
limitations, most notably the lack of generalizability to a large population of firms.
This investigation sets the stage for a variety of future research. For instance,
building on the RBV literature, new questions regarding the developmental pro-
cess of building a dynamic collaboration capability should be explored. That is,
what resources, activities, and relationships antecede a collaboration capability?
Similarly, are certain environmental contexts more conducive to collaboration?
Further, the iterative interaction between change management and collaboration
should be explored. Such an exploration could contribute to our understanding of
organizational change, conflict, and systems evolution. Focusing on the orienta-
tions literature, researchers should explore the development of a multidimensional
representation of market orientation. Our study explores two aspects of market
orientation, customer and supplier, but the role of other constituencies, such as
channel members, competitors, and relevant governmental agencies should also be
explored. Finally, we have established a connection between collaboration and op-
erational performance. More research is needed to understand the extent to which
collaboration can contribute to sustained performance improvements by enhanc-
ing networked or relational learning and innovation. [Received: August 2009.
Accepted: October 2010.]
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Chad R. Allred is an assistant professor of marketing in the Marriott School of

Management at Brigham Young University. He received his PhD from Purdue
University and his MBA and MS in electrical engineering from Brigham Young
University. He pioneered innovative alliances, advanced professional associations,
and managed award winning services and technologies for nearly a decade prior
to entering academia. His current research interests include business-to-business
relationship management, services and technology management and marketing,
marketing strategy, and value chains. His research has appeared in several journals,
including Journal of Supply Chain Management, Journal of Services Marketing,
and Negotiations Journal.
Stanley E. Fawcett is a visiting distinguished professor of logistics and supply

chain management on leave from Brigham Young University’s Marriott School
of Management. His teaching and research expertise is centered on global supply
chain strategy and collaborative business model design. He has taught executive
development programs in Asia, Europe, and North and South America. He received
his PhD at Arizona State University and taught at Michigan State University before
joining the Marriott School. He has published more than 100 articles and 6 books
on supply chain topics, including network design, information technology as a
collaboration enabler, leading change, performance measurement, and trust. He
is co-editor in chief of the Journal of Business Logistics and a member of the
Allred et al. 161
Academy of Management, Council for Supply Chain Management Professionals,

Decision Sciences Institute, and Institute of Supply Management.
Cynthia Wallin is an assistant professor of global supply chain management in

the Marriott School of Management, Brigham Young University. She received
her PhD from Arizona State University. Her research focuses on buyer-supplier
relationships, including information sharing, collaboration, and trust. She has also
studied inventory management approaches and decision making. Her research has
appeared in several journals, including the Journal of Supply Chain Management,
the Journal of Business Logistics, and Quality Management Journal. Her indus-
try background includes positions as senior buyer, purchasing manager, stores
manager, and commodity manager. She is affiliated with the Decision Sciences
Institute, Production and Operations Management Society, and the Institute of
Supply Management.
Gregory M. Magnan is a professor in the Albers School of Business & Economics

at Seattle University (SU). He received his PhD in production/operations manage-
ment from Michigan State University. His current teaching and research interests
involve enhancing effectiveness and performance through supply chain integration
strategies and leading change in organizations. He was recently voted the Professor
of the Year (2005) in SU’s Albers School of Business & Economics. He regularly
speaks and gives presentations on a wide variety of supply chain-related topics
and is affiliated with the Decision Sciences Institute, APICS—The Association for
Operations Management, and the Institute of Supply Management.

A Dynamic Collaboration Capability As A Source of Competitive Advantage

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Decision Sciences

C 2011 The Authors

Volume 42 Number 1 Decision Sciences Journal

A Dynamic Collaboration Capability as a

Subject Areas: Collaboration, Dynamic Capability, Multimethod, Multi-

COLLABORATION AS A DYNAMIC CAPABILITY

Organizational Orientations and Conflict

organization-wide gathering, sharing, and use of customer intelligence so that

H1: A customer orientation is positively related to a firm’s value-creation

Unfortunately, strong functional orientations can instill counterproductive

Interfunctional and Supply Chain Collaboration

Finally, the difficulty inherent in building a complex, behavioral capability

Table 1: Survey response rates.

Survey Data Collection

Table 2: Qualitative sample: channel sales, profits, and employee levels.

Descriptive Sales Profits Sales Profits

nonrespondent profiles could be compared. In Period 2, respondents were tracked

Case Study Data Collection Interview Process

semistructured interview guide was used to assure comparability of findings while

ANALYSIS: CONSTRUCT EVALUATION AND MODEL FIT

Data Pooling and Construct Evaluation

Model Fit and Estimates

χ 2 (d.f.) = 1,789.294 (658); CFI = .92; IFI = .92.

Table 5: Coefficients for nomological relationships.

Figure 1: The mediating influence of a collaboration capability on firm perfor-

satisfaction to be mediated through collaboration capability. Finally, differences in

have directed their suppliers to be more productivity oriented. In this sense, an

Supplier Orientation’s Influence

Collaboration Capability’s Influence

Collaboration’s Mediating Role

CONCLUSIONS AND MANAGERIAL IMPLICATIONS

and downstream, customer-facing sides of the business, a collaboration capability

As managers (i) pursue a holistic approach, (ii) invest in change manage-

LIMITATIONS AND FUTURE RESEARCH

better processes and deliver more value are easier to identify.

Barclay, D. W. (1991). Interdepartmental conflict in organizational buying: The

Ferdows, K., Lewis, M. A., & Machuca, J. A. D. (2004). Rapid-fire fulfillment.

implications for service providers. The Journal of Services Marketing, 20(1),

Newbert, S. L. (2007). Empirical research on the resource-based view of the firm:

Verdin, P. J., & Williamson, P. J. (1994). Core competences, competitive advantage

Chad R. Allred is an assistant professor of marketing in the Marriott School of

Stanley E. Fawcett is a visiting distinguished professor of logistics and supply

Academy of Management, Council for Supply Chain Management Professionals,

Cynthia Wallin is an assistant professor of global supply chain management in

Gregory M. Magnan is a professor in the Albers School of Business & Economics

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