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5. Establishing successful interorganizational relationships is difficult, according to authorities. Will the
success record improve in the future as more companies pursue this strategy?
As more companies pursue interorganizational relationships, we will be able to learn more about what
factors influence and create a successful relationship. In addition, the environment will change and
provide increased opportunities. For example, the increasing advancement in technology continues to
improve communication among alliances partners, and do so in a more cost efficient manner.
Similarly, as firms gain more experience with these relationships, they will be better able to handle
problems and resolve conflicts. The experience of the firms also may allow problems to be avoided
more often. Firms may also increase the amount of attention given to the type of partner selected and
critically examine the overall motivation for the relationship. More of this advance planning should
increase the likelihood of success. Firms should be more interested in this type of “pre–planning” once
they have seen or participated in interorganizational relationships.
6. Are vertical relationships more likely to be successful than horizontal relationships? Discuss.
Vertical relationships link together participants in the value chain of manufacturing products or
services. This may include a supplier/manufacturer cooperation, or a distribution channel relationship.
These relationships may be transactional or collaborative.
In contrast, horizontal relationships describe strategic alliances or joint ventures which join partners at
the same level in the distribution channel. It is not the type of the relationship which determines the
chances for success. What is more important in predicting success is: 1) how well the partners are
matched; 2) how committed the partners are to the relationship; 3) the degree of definition of the
alliance objectives for all partners; 4) the amount of effective communication between the partners; 5)
the mechanism in place for managing the relationship and resolution of conflict; 6) the cultural
(national and corporate) similarities of the partners; 7) the degree of dependence of the partners on each
other for overall corporate success, or how important the relationship is to each of the partners in the
context of the organizational objectives; and 8) the degree of similarities in the overall corporate
philosophies of the partners. To the extent that a vertical or horizontal relationship can positively
influence all of these factors, then one form would be more likely to be successful.
While it is difficult to make broad generalizations, vertical relationships appear to provide the
situations which most often lead to successful interorganizational relationships. The vertical
relationship links partners together which are more dependent on each other for overall corporate
success. Also, the relationship is more likely to be critical to the organization’s success overall. This is
especially true of customer supplier relationships. Vertical relationships may provide easier
communication, and often the corporate philosophies of the participants are similar. Similarly, the
participants may be a part of a common distribution chain where it is not necessary to divulge any
proprietary information. It may be easier for vertical partners to trust each other, and thus
communicate more effectively. The reason for the formation of the relationship often tends to be
related to achieving efficiencies in the value chain process. Again, this imposes the need for a
cooperative relationship among the partners. The relationship is thus perhaps more destined from the
start to be successful.
This is not to say that horizontal relationships cannot be successful. Participants in horizontal
relationships must be aware of the situations which might make management of the relationship more
difficult and less likely to succeed than a vertical relationship.
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