Empirical context

This section describes the empirical context of this study and the aims of the practical development work. The research was carried out along with two research and development projects during the years 2008-2010. In addition, complementary interviews concerning the

specific themes were conducted in 2011-2012. The author acted as the main researcher and project manager in both research and development projects. The initiative for the development work came from the studied network. A lack of performance information and a comprehensive performance measurement system has caused unexpected financial challenges for some of the network partners. Hence, the studied network had a practical need for a tool that would evaluate the performance of a single network partner as well as the entire collaborative network. A network-level performance measurement system was recognised as a suitable tool to manage and develop the performance of the collaborative network. This setting enabled various research activities to be linked to the practical development work. In the research tradition of industrial management, this kind of practically-oriented research projects are typical. Hence, the action research approach (see 3.4.2, research methods and data) was chosen to gain access to relevant empirical data and to increase the in-depth understanding of this specific setting.

The empirical data of the research was gathered in a collaborative network that operates nationwide in Finland. The collaborative network consists of a leading partner that manufactures kitchen fitments and partner companies that sell these products to the end-customer. The leading company transports these products to the end customers, and invoices the end customers. As a whole, the leading partner has four trademarks and five selling concepts (i.e. brands). Every trademark has its own selling concept, and there are also selling concepts which sell three of these trademarks. The network partners collaborate with the leading partner by selling the products under five selling concepts. The main company is a part of a larger international consolidated company, and the reselling network partners can also connected to other networks, but this research is limited to the collaborative network level.

The empirical data has been gathered from the partner companies that operate under two different selling concepts (further on called reselling network 1 and 2), and from the leading partner.

Reselling network 1 operates inside hardware stores where they have their own selling points.

There are in total 23 resellers and 28 reselling units in this reselling network. Typically, these reselling units consist of the reseller and 1-3 seller(s). The resellers are independent entrepreneurs and owners of the reseller unit. The owners are responsible for the financial success and operations of their businesses. They might have other businesses along with this business, but the additional businesses are not studied in this research. In this reselling network, most of the sellers are also independent entrepreneurs. This network has one kitchen fitment brand that they sell to end customers. The partners of reselling network 2 operate in their own stores, and they have three brands that they sell in 14 selling points around Finland. In this network, the reselling points consist of resellers (i.e. owner) and 2-20 sellers, depending on the size of the city where they operate. Almost all of the sellers work as hired employees.

There is a contract between the leading partner and the reselling partners. The contract is a loosely adapted franchising concept in reselling network 2. Franchising is a method where an independent operator practices and uses another person’s business philosophy (Campbell et al., 2009; Sherman, 2011). The franchisor grants the independent operator the right to distribute its products, techniques, and trademarks for a percentage of gross monthly sales and a royalty fee.

Various tangibles and intangibles, such as advertising, training, and other support services are typically made available by the franchisor (Campbell et al., 2009; Sherman, 2011). In reselling network 1, the contract is not as tight as that in reselling network 2. The contracts have the same features, such as franchising contracts and common brand and trademarks, but it differs from the traditional franchising concept in many ways, which are illustrated in figure 1 below.

Figure 1 Description of the studied collaborative network

The reselling partners sell kitchen fitments, which are very challenging to sell, because the sales action is unique in each customer service process. Buying a kitchen is an expensive investment, and there are plenty of different variations, as well as tastes and needs, that affect the selling process. The selling process requires strong expertise and knowledge regarding the collection, design, and installation. For the above reasons, the collaborative network – the leading partner and the selling partners – have a strong and shared identity and joint targets, and they collaborate around many issues; for example, on collection and marketing planning (see figure 1). The

Joint targets (created together) Joint responsibilities Joint identity Equal partnership

Reselling network partners Collaborative network

Leading network partner

Communication, information and knowledge sharing

leading partner is in a more equal role with the reselling partner compared to the traditional franchising concept. The challenging selling process offers many opportunities to learn from the other partners of the network. The collaborative network has many plans in common, regarding, for example, the action plan and marketing, and they share the risk around these issues. They also have a joint information system, where they are able to participate in the design process. The network also has a common target to maximise the turnover of the entire collaborative network.

On the basis of the above facts, it can be stated that the studied collaborative network covers very well the different criteria, such as joint process, information sharing, and the resources and responsibilities to plan, implement, and evaluate the activities to achieve a common goal of the network (cf. Camarinha-Matos et al., 2009).