European Journal of Purchasing & Supply Management 7 (2001) 29}37

The dyadic capabilities concept: examining the processes of key

supplier involvement in collaborative product development
Simon R. Croom*
Warwick Business School, University of Warwick, Coventry CV4 7AL, UK
Received 20 January 1999; received in revised form 3 April 2000; accepted 4 April 2000

Abstract

The increased use of suppliers in the new product development process has important implications for the strategic performance of
organisations. In this paper an analysis of supplier collaboration in the development process is deployed to support the development
of a dyadic (or two-level) capabilities analysis of the strategic management of the innovation process. By setting an organisation's
competencies within the context of their customer or supplier interactions this paper supports the view posited by Ford et al. (1986)
that interaction de"nes the value of assets and resources. In a study of collaboration in the UK auto industry, it was found that both
operational and relational competences are critical factors in the performance of the new product development process. Thus, the
ability of customers and suppliers to develop both structured and ad hoc processes of interaction is shown to be important to the
development process from early supplier selection process.  2000 Elsevier Science Ltd. All rights reserved.

Keywords: Strategic capability; Purchasing and supply; Product development

1. Introduction ment process in order to develop an understanding of the

The strategic role of suppliers is one that has been
facing some changes as a result of increasing use of
suppliers in innovation, more speci"cally in the new
product development process (Burt and Soukup, 1985;
Helper, 1991; Clark and Fujimoto, 1991; Ha kansson and
Eriksson, 1993; Lamming, 1993; Hines, 1994). This role is
one typi"ed by increased responsibility for the design
process, and increased autonomy in the development
process. It has also long been recognised that innovation
is a critical strategic process central to the development
of competitive advantage (Penrose, 1959; Hamel and
Prahalad, 1994). Therefore, the management of supplier
involvement in design and development can be posited
as being a major and increasingly important strategic
process.
This paper presents an analysis of research conducted
into supplier involvement in the new product develop-
* Corresponding author. Tel.: #44-1203-528222; fax: #44-1203-
572583.
E-mail address: simon.croom@warwick.ac.uk (S.R. Croom).
nature of strategic capability and the management of
customer}supplier interaction.
In the "rst section of the paper, following a brief
discussion of the competency theory of strategy, consid-
eration is given to the nature and in#uence of governance
structures at the level of a dyad, that is a two-actor chain.
This paper is primarily concerned with dyadic interac-
tion at the customer}supplier level. A discussion of ante-
cedent literature is utilised to support a contention that
capabilities possessed by one party must be contex-
tualised within the speci"c dyad to which they are ap-
plied in order to yield strategic value.
Following the conceptual discussion the research
analysis from a series of in-depth studies of two
new product development programmes in the UK auto
industry is presented, focusing on supplier selection
and the management of supplier involvement. Implica-
tions for a dyadic level analysis are presented in this
section.
The "nal section of the paper presents the preliminary
framework for a dyadic capabilities approach. Three
dimensions of dyadic capability are presented, and a brief
report of initial development of an operationalised form
of the framework is introduced.

0969-7012/00/$ - see front matter  2000 Elsevier Science Ltd. All rights reserved.
PII: S 0 9 6 9 - 7 0 1 2 ( 0 0 ) 0 0 0 1 9 - 8
30 S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37
1.1. Competence and governance
Recent literature in the "eld of strategic management
re#ects a move away from the structural determinism of
theorists such as Porter (1980) who emphasise product}
market position as a key competitive concern, towards
a competence theory as expounded by Prahalad and
Hamel (1990) and Wernerfelt (1995) for whom competi-
tive advantage results from the way in which "rms allo-
cate their resources and develop new products through
their innovative processes. Whittington (1993) contrasts
between the externally opportunistic approach of deter-
ministic theory, and the inward, more developmental
approach of the competency theory. Two complement-
ary streams of development in the competency literature
being the resource-based (Wernerfelt, 1984: Kay, 1993;
Montgomery, 1995) and knowledge-based (Nonaka and
Takeuchi, 1995) views. Scarbrough (1998) notes that
common to both of these streams of literature is the
recognition that organisational knowledge is `2central
to a proper understanding of the nature of resources,
competencies and capabilities within the "rma.
Major elements of the deterministic view and a large
segment of the competency view assume that the strategy
process is fundamentally concerned with an organisa-
tion's response to its environmental conditions. Conse-
quently, there is a tendency to attempt to analyse the
environment as a set of interactions between di!erent
organisations that are treated as if they were single,
perceiving and interpreting human actors. To counter
this perspective, Knorr (1979) questioned the productiv-
ity of the dualism of system and environment that under-
lies most theories of organisation. She argued that
organisational action and relationships are subject to
inherent contextuality, which challenges the mainstream
prescriptive approaches to strategic management
(Charan, 1991) She presented an analysis predicated on
the view that it is the organisation which should be
viewed as the environment for interorganisational or
transorganisational relationships, since contextuality is
inherent in the organisation. Her contention is that the
organisation does NOT represent an appropriate level of
analysis for understanding intra-organisational (or in-
terorganisational) behaviour. Many writers reinforce
Knorr's view that in order to understand the nature of
strategic action it is necessary to recognise the socially
constructed nature of networks of interacting individuals,
groups and organisations which emphasises the signi"-
cance of perception and interpretation to the analysis of
interorganisational relationships.
Ford et al. (1986) argue that a primary focus for stra-
tegic analysis is to view companies in the context of their
network of interactions with others, whilst as far back as
Hall and Fagen (1956) it was argued that the de"nition of
a boundary in any social system was quite arbitrary,
largely dependent upon the intentions of the observer.
The study of interorganisational relationships (IORs) is
an established area of organisational theory, being
founded upon studies in established disciplines such as
sociology and psychology (which explains the conse-
quent focus upon behavioural issues), although many
authors commented upon the lack of an integrated, uni-
"ed theoretical base. (Negandhi, 1980; Pfe!er, 1982) The
contribution of the area of IOR to the concerns of pro-
curement is that writers who view the environment as
a collection of interacting parties examine the compara-
tive and relational properties of an interaction network.
An organisation's environment is viewed as constituted
by subsystems of interorganisational collectivities (Van de
Ven and Walker, 1984) which are de"ned as distinct
units. The argument here is that collectivities act e!ec-
tively when their constituent organisations behave in
a goal-directed manner, recognising that the primary
goals of the interorganisational collectivity are such that
no single organisation can achieve them individually.
Van de Ven and Walker found in their research that the
relationships between members of a collectivity are very
distinctive and almost gains legitimacy in its own right.
This distinctiveness of an IOR has been acknowledged in
numerous other quarters, often being referred to as con-
stituting a &quasi-autonomous organisation' (Blois, 1972;
Monteverde and Teece, 1982; Aoki, 1984; Levy et al.,
1993). Lamming (1993) saw this as being of vital signi"-
cance, stating that &&2[the challenge] is for collabor-
ators to view the relationship [as a distinct] &third
party'2[and that] the cost of resourcing the quasi-"rm
must be justi"ed by the value it adds, the cost and time
savings it achieves, and the mutual competitive advant-
age which it provides''.
2. Forms of governance structure
Concern for the way in which "rms organise the pro-
duction and delivery of their goods and services is central
to both economic and social theories of the "rm. Trans-
action cost economics (TCE) concentrates on the degree
of dedication of assets by one "rm to another under
di!ering exchange conditions with a view to maximising
the e$ciency of the transaction (Williamson, 1994; Die-
trich, 1994), whilst social network theory emphasises
inter"rm co-ordination, emphasising the informal social
systems that are linked through a network of relations
(Granovetter, 1992; Alter and Hage, 1993). These entities
are involved in continuous exchange relationships with
the organisation, with each party exerting considerable
in#uence on the organisation. Such forms of governance
have been observed in a wide range of industries (Jones
et al., 1997) with several empirical studies (including
Turnbull and Valla, 1986; Ha kansson, 1989) suggest-
ing that this type of situation may be the rule rather
than the exception for a wider population of business
 S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37
organisations in general. It is useful at this stage to
examine the propositions of the social network model
which have been summarised as follows (Ha kansson and
Snehota, 1989)
E Business organisations often operate in a context in
which their behaviour is conditioned by a limited
number of counterparts, each of which is unique and
engaged in pursuing its own goals.
E In relation to these entities, an organisation engages in
continuous interactions that constitute a framework
for exchange processes. Relationships make it possible
to access and exploit the resources of other parties and
to link the partiesa activities together.
E The distinctive capabilities of an organisation are de-
veloped through its interactions in the relationships it
maintains with other parties. The identity of the organ-
isation is thus created through relations with others.
E Since the other parties to the interaction also operate
under similar conditions, an organisation`s perfor-
mance is conditioned by the totality of the network as
a context, i.e. even by interdependencies among third
parties.
It has been claimed that in#uence (or power) is the
`central concepta in network analysis (Thorelli, 1986)
and is often couched in predominantly unilateral terms
(dependence), whilst the more typical phenomenon is
that of interdependence. Further, `a radical shifta is seen
as emerging `2in the nature of relationships between
organisations. In particular there is a move away from
what might be termed &power-based' relationships in
which there is some hierarchical dependence, towards
more of a network model in which there is a sense of
mutual development within a partnershipa (Bessant,
1990) The positioning of a "rm in the network in terms of
its relative power and in#uence is seen as a matter of
`2as great strategic signi"cance as positioning its prod-
uct in the marketplacea. (Ha kansson, 1989).
Jones et al. (1997) synthesise the network literature
around two `clustersa, one pertaining to patterns of
interaction, the other to #ows of resources between inde-
pendent units. This clustering can be seen to accommod-
ate much of the supply chain management literature
which generally considers that competitive advantage is
derived from the physical and social processes that sup-
ply products and goods through the chain's constituent
organisations. (Christopher, 1992; Bowersox and
Closs, 1996; Gattorna and Walters, 1996; Houlihan,
1987; Poirer and Reiter, 1996; Stevens, 1989; Saunders,
1997).
3. Towards a dyadic model of capability
By adopting an inter-organisational approach to strat-
egy it can be argued that the distinctive capabilities of an
31
organisation could be considered to be developed
through its interactions in the relationships it maintains
with other parties * in other words the so-called `ident-
itya of the organisation is created through its relations
with others. Since the other parties to the interaction also
operate under similar conditions, an organisation's per-
formance is conditioned by the totality of the network as
a context, i.e. even by interdependencies among third
parties. In examining the impact of interaction upon
"rm's capabilities, Ford et al. (1986) and Anderson et al.
(1994) make a critical claim for the development of
a dyadic capabilities view * that resources possessed by
an organisation may be considered to be inert (passive)
and of no competitive value until activated by interaction
with others. This is an important point, and is similar to
Teece's (1987) contention that competitive advantage is
gained through the development of distinctive capabili-
ties supported by `complementary assetsa through the
network. Cox (1997) has also considered the nature of
core and complementary competencies located within
other "rms in the network (the central point in his thesis
being that "rms access capabilities through various forms
of contractual arrangements). The interdependence of
enterprises and processes is clearly a major issue in the
development of strategic competency.
Croom and Batchelor (1997) have argued that within
this interactive environment strategic capability is
founded on two forms of capability: operational and
relational. The former refers to the technical and eco-
nomic capabilities of the "rm such as superior manufac-
turing process design or rapid delivery systems; the latter
category of capability relates to institutional and social
dimensions that constitute an as organisation's `architec-
turea (Kay, 1993), namely the formal and informal ties
within and between individuals, groups and functions.
Advantage from operational capability may be relatively
transitory in nature. Firstly, such capabilities are often
imitable (Teece et al., 1992), and secondly an increasing
rate of technical change increases the threat of substituta-
bility by industry rivals and new entrants (Porter, 1980).
Imitability is a major concern when it is `creatively
destructivea, resulting in a new source of strategic ad-
vantage for a competing "rm. Many of these operational
capabilities impact on the performance characteristics of
the product or system under development (Cooper,
1984).
Thus, whatever an organisation may see as its core
competence is only so because of its strategic contribu-
tion within the context of the resources and relationships
that exists in its network. As Knorr argued, an important
issue for organisational studies is the contextualisation of
resources and assets within an interactive environment,
which Granovetter (1992) de"nes as `structural embed-
dednessa recognising the in#uence on economic action
and outcomes at the dyadic and overall network level
con"guration of relations.
32 S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37
This line of reasoning predicates the study of compet-
encies founded on suppliers' and customers' resources
and activities in the domain of the customer}supplier
dyad. The research theme here was thus to examine the
impact of the supplier management process on strategic
performance at a dyadic level of analysis (Ellram and
Hendrick, 1995).
4. Research methodology
In order to explore dyadic processes research was
conducted into the process of collaborative new product
development, an important change process which was
deemed to be the most appropriate domain within which
to examine the impact on the performance of core com-
petencies (Hamel and Prahalad, 1994p. 202). The re-
search process involved document analysis, interviews,
site visits, observation and detailed performance data
analysis over the duration of two development pro-
grammes by one major player in the automotive industry
conducted over an eight-year period. The research pro-
grammes concentrated on analysing the development of
purchasing strategy and identi"cation of strategic com-
petency within a number of customer}supplier dyads.
The main concern of the research was with human
perceptions of competitive criteria, and the physical con-
"guration of resources and procedures adopted to man-
age interaction. Given the interest in both subjective and
objective variables and constructs a mixed-methodology
case study approach was therefore taken. Broadly speak-
ing, a principally qualitative methodology was con-
sidered appropriate in the observation of behaviours and
perceptions informing decisions using primarily semi-
structured interviews as the research method. It was also
possible to engage in participant observation for the
development of the case studies. In the observation and
examination of more objective elements of the study
(such as vendor rating pro"les, process capability and
facilities layout), the use of archives, reports, and perfor-
mance measurement were key methods of data collec-
tion. In particular, a longitudinal content analyses of
a series of customer}seller team meetings between the
buying company and three of their suppliers over
a three-year period provided an insight into the concerns
addressed during formalised interactions. However, many
of the interactions between actors in the dyads studied
were of an informal nature and here contemporaneous
notes and post event interviews were employed within
the customer organisation and six suppliers. It is felt that
by the adoption of a multi-method approach in the
examination of speci"c customer}supplier interaction,
the concern for triangulation and methodological plural-
ism has been addressed.
The analysis of the "eld research presented in this
paper concentrates on the initial supplier selection pro-
cess and the subsequent collaboration of the suppliers
and customer over the duration of the development pro-
grammes studied.
5. Supplier selection
Supplier selection for speci"ed goods and services is
a critical decision for many purchasing organisations,
since supply performance can have a direct "nancial and
operational impact on the business. (Baily et al., 1994). In
collaborative design the selection of suppliers becomes of
increased signi"cance since suppliers are involved in the
speci"cation of goods and services, and therefore the
commitment to a particular source of supply may be
embedded in the product/service design. It has thus been
argued that in such circumstances organisations are buy-
ing the supplier's capabilities (Croom, 1992). Study of the
supplier selection process is thus useful to test the in#u-
ence of operational and relational criteria on the selec-
tion decision.
The sourcing decisions behind supplier selection for
a range of vehicle systems including steering, interior
trim, wiring harnesses, climate control, braking systems
and fuel tank systems were examined. Supplier selection
was seen by the customer organisations as a critical
process, and documented sourcing procedures, or proto-
col, were set out to codify these capabilities in a struc-
tured manner. To support the protocol, the sourcing
decisions were undertaken by a team representing design
engineering, "nancial analysis, manufacturing, logistics
and purchasing.
Ceteris paribus, the formal sourcing protocol relied
heavily on the supplier's ability to meet cost targets.
However, from the research analysis it was clear that in
practice a wider set of concerns were involved. These
included concerns for carry-over of components to other
programmes; warranty and productivity performance,
design system compatibility, availability of key project
management skills and personnel and R & D resources.
In addition, the perceptions of the sourcing team were
noted and in some cases were seen to be the determining
factors.
In presenting the summary analysis of the sourcing
decisions it was clear that major and signi"cant di!er-
ences existed between the decision process relating to
totally new suppliers and the decision relating to existing
suppliers.
The summary analysis is presented in Table 1.
The signi"cance of the di!erence between existing and
new suppliers lies predominantly in the emphasis placed
on relational capabilities when considering existing
suppliers.
Following this analysis a paired investigation of sup-
pliers' perceptions of the sourcing selection decision was
undertaken in order to identify the degree of congruence
 S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37 33

Table 1 Table 2
Sourcing criteria * a comparison of existing vs. new suppliers Ranked paired analysis of customer and supplier perceptions of sourc-
ing criteria
Existing Supplier New Supplier
Perception of key sourcing criteria
Operational Quality audit Quality audit
Production process Production process Case example Customer Supplier
analysis analysis
Existing product design Existing product design A &Brand reputation' Design capability
Design capability (e.g. Design capability (e.g. Experience (vicarious) Size
CAD) CAD) Respect and trust Market penetration and
Facilities location & Facilities location & layout scope
layout (e.g. Flowlines) (e.g. Flowlines) Attitudes
Quality assurance (SPC; Quality assurance (SPC;
FMEA etc) FMEA etc) B Adapted relationship Attitudes
Product complexity Product complexity Empathy Responsiveness
Familiarity Service #exibility
Relational Interpersonal relations Team structures Trust Developement capability
Friendships Dedicated individuals Corporate technical
Shared experiences Communication channels support
(internal & external) Attitudes
Team structures Quality management
Quality management Reputation C Familiarity Dedicated production
Responsiveness Recommendation facility
Communication channels Corporate product Attitudes
(Internal & external) capability
Dedicated individuals Process capability Responsiveness
Personal competensies Experience Closeness
Trust Trust
Familiarity Customer focus
Empathy Empathy
Attitudes

D Familiarity Quality focus

between suppliers' and purchasers' views. The process Empathy Attitudes
employed for this analysis was to interview all members Process capability Service responsiveness
of the relevant sourcing teams in order to identify and Reputation Process capability
rank selection criteria. Once the preliminary ranking had Trust
been identi"ed, respondents were invited to evaluate and Customer focus
Attitudes
amend the ranking. The same process was repeated with
the main contacts in each of the six suppliers chosen for E Technical developement Design capability
this analysis (representing both new and existing sup- capability
pliers, and a representative range of systems). This analy- &Brand' Reputation Responsiveness
sis is presented in Table 2. Customer focus Process capability
Attitudes Market penetration and
For the customer, the importance of familiarity, empa- scope
thy and the ability of the supplier to demonstrate adapta-
tion to the customer were dominant criteria, re#ecting F Familiarity Attitudes
the recognition that interaction is a critical development Empathy Design
process. Suppliers, on the other hand, were less aware of Adapted relationship Responsiveness
Materials technology Materials expertise
interaction and relational capabilities than technical ex- Attitudes Closeness
pertise. This was not surprising given the emphasis of the Process capability Process capability
sourcing protocol on operational capabilities such as
quality assurance systems, design software and skills and
production tooling capabilities.
As a result of this analysis, the buying organisation 6. Supplier involvement
expanded their sourcing protocol to incorporate more
subjective and relational elements in the analysis. This Throughout the duration of each of the development
re#ected their recognition that supplier selection needed programmes the progress of supplier involvement in the
to re#ect the supplier's strategic capabilities (including process was studied. The progress of supplier involve-
their management of their customer interactions) rather ment involved varying degrees of interaction and com-
than merely concentrating on component/system-related munication between customer and suppliers, often
criteria. focused on the technical issues relating to design
34 S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37

concerns, but also frequently involving discussion of rela-
tional issues pertaining to the degree of on site repres-
entation, the #ow of information through the supplier
organisation, and demonstration of commitment
through dedicated project management teams. In Table
3 the format of interaction is categorised according to the
content and focus of the interaction. The use of general
processes of interaction such as team meetings and de-
ployment of resident engineers served to provide the
formal and pre-determined channels of interaction (cf.
communication channels). These were found to be pres-
ent across the supply base. The less formal or reactive
interactions arose as a consequence either of operational
di$culties (such as design or manufacturing problems) or
in response to relational issues (for examples open sup-
plier events or social events).
The signi"cance of categorisation of customer supplier
interaction is to focus attention on the nature of interac-
tion channels. This was of particular use in analysing the
mechanisms employed to manage supplier involvement,
in which a critical incident approach was utilised to
explore a number of events during the development pro-
grammes.
One such critical incident was encountered with a new
supplier of electrical distribution systems. The customer
had no previous experience of dealing directly with this
company but was well aware of their reputation and
ability from their various sources within the industry.
Problems and delays began to arise during the develop-
ment, which had serious repercussions across the whole
project. Whilst the product (electrical distribution sys-
tem) was to speci"cation, delivery was often late, or
components needed modi"cation in order to integrate
fully with other components. The main source of prob-
lems seemed to be related to logistics, "tting and integra-
tion with other components.
Table 3
Classi"cation of buyer}seller interactions
Speci"c General
Programmed Pre-scheduled team More general supplier
meetings and interactions suh at
negotiations convened attenance at open days
to address matters or deploymen of
relating to supplier's resident engineers
involvement, (e.g.
project team meetings
during new product
development
Ad Hoc Supply related, un- Casual, social interactions
scheduled. Such between individuals and
episodes are reactive groups outside of the
* e.g. response to an operating environment
unforeseen event such of the relationships (e.g.
as a quality problem or dining out, playing
delivery failure a round of golf )
Investigations found a number of critical causal
factors.
1. The supplier was not aware of the peculiarities of the
customer's operations processes and the particular
technical requirements of the new project.
2. Design engineers were not used to delegating so much
responsibility to their suppliers, and were conse-
quently resolving minor problems without including
the supplier in the process.
3. Many of the design, quality and production engineers
felt a strong loyalty to the previous, displaced,
supplier.
Analysis of the management of this supplier's involve-
ment illustrated a lack of any ad hoc interactions, and
consequently a lack of real empathy between the parties.
This focused the failure recovery on greater interpersonal
involvement and also the need for this supplier to place
a resident engineer in the customer design facility.
7. Summarising the management of supplier involvement
In presenting the summary analysis of the manage-
ment of supplier involvement during collaborative devel-
opment three main elements of the customers' formal
development protocol were identi"ed. These represent
the signi"cant strategic elements of the new product
development protocol adopted by the client organisa-
tion, and relate to a. the deployment of structured con-
current engineering, b. the emphasis of quality in the
programmes studied, and c. the impact of supplier in-
volvement in the process. These dimensions were re-
garded as common to the programmes studied, and
also subject to review as part of the organisation's
product development strategy process. The analysis
of the research data collected over the duration of
the study has been concentrated into common and domi-
nant factors through axial and subsequently selective,
coding of the research narrative analysis. (Punch, 1998,
p. 214-218).
The elements identi"ed in Table 4 represent the key
drivers of e!ective collaborative development and are
intended to summarise the collaborative process
design.
The use of clear project management and quality man-
agement approaches have been recognised widely as
critical to product development performance, and such
capabilities are widely acknowledged as essential in prac-
tice and the literature (Wheelwright and Clark, 1992).
From this research the development of cross-functional
and inter-organisational mechanisms for the manage-
ment of supplier involvement are regarded as important
process structures for the facilitation of collaborative
product development performance. However, in addition
to the formal structures laid down, this research has
 S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37 35

Table 4 8. Conclusion: a dyadic capabilities framework

Signi"cant elements of the collaborative development process
A distinction has been made in this paper between
Concurrent Quality planning Supplier involvement
engineering operational and relational competencies (Croom and
Batchelor, 1997). Operational competencies are typically
Cross functional Integration of Acess to supplier by the related to the process capabilities obtaining to design,
team dedicated to decision making customer manufacture and delivery. Relational competencies are
the project both cross- those competencies obtaining to the processes of com-
functionally and
cross- munication, interaction, problem resolution and rela-
organisationally tionship development. This paper has set out to
Deconstruction of Clearly prescribed, Suppliers viewed as demonstrate that in the management of supplier interac-
a complex project established centres of excellence tion, management concerns need to recognise that in-
into clear, short- methodologies such creased emphasis upon relational competency has
term tasks and as FMEA, QFD and
targets VA/VE as a signi"cant impact on collaborative product develop-
a common, ment performance. In this "nal section, an interpretation
comparable system of the research analysis is presented that sets out a con-
of control ceptual framework for understanding the nature of
Identi"cation of Customer's primary role dyadic capabilities. Further research is on-going to re"ne
development time, one of co-ordination
quality performance rather than operation this framework, so this section presents the initial devel-
and product cost as opment of this model.
critical performance As we saw earlier, advantage from operational capabil-
criteria ity may be relatively transitory in nature. One set of
Customer's able to focus operational capabilities may be classed as a product-
on core competencies.
based dimension of the dyadic capabilities framework, an
example of which would be the technical function of
identi"ed the existence of ad hoc interaction within the a component (weight, hardness, output, etc.,). As much of
collaborative process. It is thus contended that given the the strategic management and operations management
importance of interaction for the management of supplier literature acknowledges, (Slack et al., 1998) the strategic
involvement (see also Ellram and Hendrick, 1995), analy- performance of an organisation is heavily in#uenced by
sis of the nature of interaction has enabled us to posit the the structures employed to transform resources of the
view that interaction is constructed by both formal and organisation or network. These structures may process
ad hoc interactions. Formal interactions may be pre- materials or components (as in production processes) or
scribed through standard operating procedures and pro- they may facilitate control, co-ordination and commun-
cesses. As this research has found, ad hoc interactions ication through organisational and interorganisational
pose more of a challenge. systems. Thus, a second dimension may be classed as
The performance of the supplier involvement process structure-based capabilities, examples here including
may depend on personalities, proximity, and familiarity manufacturing process cells, just-in-time delivery systems
of the parties, but in addition the process of ad hoc and the institutional characteristics of the formal and ad
interaction is often seen by the more e!ective suppliers to hoc interaction structures
be an integral element of their account management When attention is given to the relational dimensions of
processes. In some ways traditional sales practices of collaborative performance, the exploitation of new tech-
building close working and personal relations are very nological developments or improved operational capa-
supportive of this process. The di$culty arises where bilities is founded on the e!ectiveness of the interaction
such processes are frowned upon as `unethicala or seen process. The e!ectiveness of supplier and customer inter-
as non-commensurate with proactive purchasing behav- action has been shown to be a signi"cant factor in the
iour. It is here that there is an important role for the performance of collaborating suppliers, and the nature of
purchaser in the management of interaction and relation- interaction to be strongly in#uenced by both formal and
ships with suppliers. ad hoc processes of interaction. Thus, it is argued that
From the analysis of supplier involvement it is claimed a third dimension of dyadic capability is interaction-based
that since interaction is a dyadic process, e!ective collab- capabilities, examples of which would include familiarity
orative performance is dependent on the management of and empathy between the parties.
relationships by both the supplier and the customer. In The dyadic capability framework thus sees capability
the cases where there was evidence of a lack of ad hoc as founded on the appropriate combination of product-,
interaction, or evidence of unitary management of the structure- and interaction-based capabilities. This builds
relationships, di$culties and examples of failure were on the operational/relational dichotomy espoused
typically encountered. earlier, and has been found to have a conceptual utility,
36 S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37
and interestingly a clear, practical application outside of
the auto industry. A brief case example demonstrates
some of the issues raised through its application.
The recognition that strategic capability is dependent
upon interorganisational relationships is not particularly
new, or even novel (see Teece, 1987; Hines, 1994), yet this
research has found that the formal processes employed
by customers and suppliers to align their interactions to
the idiosyncrasies of their partners do not re#ect the
relationship-speci"c nature of individual dyadic collab-
oration throughout the development process. By under-
standing the dimensions and development of dyadic
capabilities, organisations will be better positioned to
manage their customer and supplier interactions and
relationships for improved collaborative development
performance.
9. Operationalisation
In an attempt to demonstrate the operationalisation of
the framework discussion with operational managers
from production, design, sales and purchasing from three
engineering businesses in the UK, the dyadic capability
framework was applied to speci"c customer and supplier
dyads. Some of the issues identi"ed in their analysis
highlighted the in#uence of interaction-based capabilities
and their implication for improved supplier manage-
ment, in particular noting the role of the purchasing
executive in the development of dyadic capabilities. The
product- and the structure-based dimensions did not pres-
ent the delegates with too many di$culties in terms of
identi"cation and evaluation. Where some initial di$-
culty was encountered was with the interaction-based
dimension, largely due to the rather qualitative nature of
the analysis. One group of executives `mappeda the fre-
quency and form (i.e. formal or ad hoc) nature of the
interactions between themselves and one selected sup-
plier. By eliciting the help of the supplier in this exercise it
was felt that both parties began to focus more clearly on
a signi"cant area in their processes of development and
also helped to provide a better insight into the supplier's
and their own modes of interaction.
The next stage of the research is to develop a focused
workbook aimed at further developing an operational
form of the dyadic capabilities framework This work will
be the subject of a future paper.
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