The evaluation system proposal of the businesses preparedness for cooperative management implementation.
Vodak, Josef ; Soviar, Jakub ; Lendel, Viliam 等
Introduction
Lately it is noticed the increased interest and discussion of
several theoretical and practical specialists in the matter of
cooperative management and creating of cooperation relationships.
However, the area of cooperative management might be taken as little
developed. In most cases the attention is paid particularly to the
matter of forming clusters, description of their activities and benefits
regarding regional development (Vodak, Soviar 2011). It is necessary not
to forget the existence of common partnerships and mutual cooperation
within supplier and customer relationships. The quality of such
relationships is a prerequisite of the future success of a business on a
market (Soviar, Zavodska 2011). Therefore attention should be paid to
the forms of cooperation, process of creation and especially the issues
of management of the resulting cooperation activities. And so, nowadays
it is significant to talk about cooperative management.
Companies can meet different unsuccessful business initiatives in
development of the relationships in practice mentioned above. Business
strategies that do not recognize the presence of complexity and
uncertainty with related and future changes will be inflexible and
unlikely to be correct (Varmus 2009). The main reasons of failures
include the absence of management of cooperation activities, unclearly
stated plan, improperly divided competitions and at last, but not least,
the absence of corporate strategy intended to form and develop
cooperation. Managers often misunderstand the role of cooperation, the
way of their security, the importance and benefits of cooperative
management and they do not use cooperation potential of a company to the
maximum extent.
Cooperative management may be regarded as a set of approaches,
methods, techniques and procedures used in a company management which
defines cooperation direction of the business. In order to implement and
perform cooperative management in a company successfully it is necessary
for the company to have some results in the area affecting cooperative
management. Every company is situated at a different level of readiness
for utilisation of cooperative management. Therefore it is needed to
identify the current level of preparation to find weaknesses and define
recommendations to improve them (Lendel, Varmus 2012). However, it is
also essential to have a proper methodology to assess readiness of a
company for the implementation and performance of cooperative
management.
1. Objective and methodology
The main objective of the paper is to get new knowledge in the area
of cooperation focusing on the area of strategy management, marketing
and to introduce a possibility of a system of readiness of a company for
cooperative management utilisation. A proposal of particular levels of
readiness of a company for cooperative management utilisation may
contribute to identification of weaknesses of the company in this area
and to find a space for further improvement significantly. The proposed
system can be used as a checking tool during the period of using
cooperative management in a company. It is intended to provide managers
with a tool for self-assessment. Thus the company management gets a real
image of their level of readiness for cooperative management
utilisation.
To solve the examined issues in the paper requires using of several
methods depending on particular parts of the solution.
The methods of documents analyses (when analysing current and
historical data related to the matter), a questionnaire method and a
method of a semi-structured interview (collection of the data in
empirical research and the method of observation (visits of selected
companies) were used to obtain and collect the information.
When processing the information mainly the quantitative assessment
method was used (application of statistical methods) and a comparative
method (when comparing the data obtained in the empirical research and
the data for the analysis of secondary resources).
The objects of the research contained middle and small businesses
operating in the Slovak territory and managers at a middle and top level
of a company management were final respondents. 221 respondents took
part in the research focused on the assessment of preparation of
companies to utilise cooperative management.
The objects of the research were businesses operating in all
sectors of national economy in Slovakia. Specifically, the companies
included in the medium and large businesses based on the number of
employees by the Statistical Office of the Slovak Republic (SO SR). The
target group of research were businesses. These businesses had to meet
the following selection criteria:
--scope of Slovakia,
--the number of employees more than 50.
Based on these criteria, it can be concluded that target group were
medium and large businesses operating in the territory of Slovakia. The
final respondents were the managers at the top and middle management
level of businesses. For the sampling was chosen representative
technique. Its advantage is that when analysing the data it was possible
to generalize to a basic set the results gathered. Specifically, it was
used a sample survey on a random basis. For the sample size calculation
the application available on the internet was used. The application also
provided alternative scenarios for the sampling error and sample size.
The size of the sample represents 345 respondents (medium and large
businesses) for the desired 95% confidence interval a maximum
permissible error of 5%. Because the research involved 221 respondents
the maximum sampling error reached 6.37%. The data collection was
carried out solely by a personal enquiring.
The methods of induction, deduction, synthesis (when forming the
assessment system of readiness of a company for utilisation of
cooperative management and in definition of particular levels of
preparation), abstraction and modelling were used to solve the examined
matter.
2. The current state of dealing with the issue
Nowadays there is a debate on a definition of cooperative
management and allocation of their operation areas. There are a few
definitions of cooperative management in the literature but each of them
covers only a part of the overall role of cooperative management. Table
1 summarizes the definitions of the term cooperative management.
A wide explanation variability of the term cooperative management
may be also documented by the following theses. Lafleur (2005)
understands cooperative management as the way the management and
development of cooperation are conducted in a competitive setting. In
Ray opinion (2002) cooperative management represents a term for
framework for the integrated management of enterprise networks. Brown
(1998) also leans to this opinion by his thesis that cooperative
management is a partnership between government and industry. According
to Staatz (1983), cooperative management is about the cooperative
decision making in the context of heterogeneous preferences, there is a
need to develop models that address the issue explicitly and in so doing
suggest alternative ways of structuring cooperatives to deal with the
group choice. Mendoza gives some attention to the fact that the
cooperative management may be defined as the efficient and effective
utilization of the resources of a cooperative as a business organization
for the purpose of serving the needs of its members within the context
of the accepted cooperative principles. Watzlawick sees cooperative
management as a complex decision making process within the three levels
of management pyramid which aims at achieving a proper balance of
success of cooperative enterprise as a business unit as well as a social
institution. Davis (1999) perceives cooperative management as a practice
of managing a cooperative business organization. Davis & Donaldson
(1998) are inclined to believe and claim that cooperative management is
a philosophy of management that can be applied irrespective of the
ownership structure. Zhang (2011) believes that cooperative management
is a core of all management problems. In his opinion the cooperative
management provides conditions of constructing a cooperation system.
These conditions are the motivation of resource dependence, objective of
effect enhancement, constraints of encouraging cooperation and
possession of technology of cooperation.
Based on the thorough analysis of domestic and foreign literature
we can proceed to the following definition: "Cooperative management
is effective and pragmatic management of cooperative relations between
independent organizations or individuals for the purpose of raising of
theirs competitiveness." (Soviar 2012).
Within the analysis of scientific literature the attention was paid
also to the effort to find out or to identify current assessment
processes of readiness of a company for utilisation of cooperative
management. The carried-out the detailed analysis shows that the authors
deal solely with the area of forming clusters within the examined
matter. This area has been discussed in detail and different methods of
clusters forming have been proposed. One of the most popular techniques
is based on a pattern created by Professor Michael Porter. It is a quite
simple, very useful and flexible pattern called Location Quotient--LQ
(1).
[LQ.sub.i] = [e.sub.i]/e/[E.sub.i]/E, (1)
where
[LQ.sub.i]--location quotient for the sector "i"
[e.sub.i]--regional employment in the sector "i"
e--general regional employment,
[E.sub.i]--state employment in the sector "i",
E--general state employment.
The values inside and mainly above the area of 0.85-1.15 are
considered as significant for cluster creation. In this pattern there is
possible to change the values for example for profit or high-added value
etc. (Porter 1998).
Therefore only a partial proposal may be found in the scientific
literature, especially, in the area of cooperation and understanding of
cooperative management, such as (Veerakumaran 2006):
Cooperative management is a complex decision making process, and
decisions are made at all the three levels of management pyramid.
The overriding objective of cooperative management is to serve the
needs of members.
The conduct of all the activities must be governed jointly by the
two sets of principles namely, a) principles of management and b)
principles of cooperation.
The creation of proper balance between efforts aiming at commercial
success and those aimed at maintaining the institutional goals of the
cooperative association.
Like any other management, it seeks to achieve its aim by means of
effective and efficient use of resources.
These findings formed a base for the subsequent proposal of an
assessment system of a company readiness for utilisation of cooperative
management and for definition of particular levels of readiness.
3. Proposal of an assessment system of readiness of companies for
cooperative management utilisation
The research performed was intended to identify the level of
readiness of the Slovak companies for cooperative management
utilisation. A so called readiness index was used to assess the
readiness of the companies. For internal purposes (monitoring of
improvement of cooperation processes, motivation of employees,
remuneration system, etc.) it is very good to have a value which
represents the general readiness of a company in the area of utilisation
of cooperative management available.
Stating of a methodology to calculate the readiness index the same
principles which are used to calculate the index of customer
satisfaction were followed. That means that two measured values are used
for the calculation: the importance rate of factors affecting successful
utilisation of cooperative management for managers (performance of
mutual cooperation) and performance which the company achieves at such
factors.
The calculation of particular weights (V) is needed to calculate
the readiness index of a company to utilise cooperative management. The
calculation of weights follows the level of importance:
[v.sub.i] = [w.sub.i]/[N.summation over (i=1)] [w.sub.i], (2)
where
[v.sub.i]--weight of the ith factor,
[w.sub.i]--importance rate of the ith factor,
N--number of factors affecting successful utilisation of
cooperative management.
The level of readiness of a company for cooperative management
utilisation (readiness index) is calculated using the following formula:
[Ip.sub.i] = [N.summation over
(i=1)][v.sub.ij][x.sub.ij]/10[N.summation over (i=j)][v.sub.ij], (3)
where
[Ip.sub.i]--readiness index of the ith company,
[v.sub.ij]--weight of the ith factor,
[x.sub.ij]--performance achieved at the ith factor,
10--refers to the range used (the scale from 1-10),
N--number of factors affecting a successful utilisation of
cooperative management.
The total index of readiness is a mean of all individual indexes of
readiness. The readiness index has a target to be improved through a
reduction of a difference between the rate of importance of particular
factors and assessment of their performance.
The companies managers were provided with the key factors of
cooperative management utilisation (Table 2) upon which they assessed
their performance. The following table shows the factors together with
the description of the activities which they include.
In terms of Table 2, the cooperation management is seen as
management that stems from initiatives and needs to cooperate, leaning
on the cooperation potential of the company, using mutual trust as its
main cooperation tool and acting in the pro-cooperation climate
supported by suitable communication and information systems. In centre
of enterprise attention is the benefit of cooperation. The outcome of
the cooperation is the created value that improves competitiveness of
the company and opens doors to new opportunities (on the market, in
processes, and work approaches, etc.).
The first important aspect which influences cooperation management
is a mutual trust. Its purpose is to create such a work environment that
it will support a cooperation climate. In particular, this means to
adhere to contractual terms, professional approach and seriousness of
parties in cooperation, responsible approach to dealing with issues
during the cooperation as well as reliability of parties in the
cooperation.
The important aspect of cooperation management is an information
system. Cooperation management must be supported by a suitable
information system which enables the use of company cooperation
potential in its cooperation activities. This aspect can be also seen as
a system of management that supports cooperation, including cooperation
approaches, methods, management resources, management styles,
initiatives that lead to improvement and better use of cooperation in
the enterprise. We also include the external and knowledge systems that
were created with the goal of ensuring effective work with knowledge and
data related to cooperation. This requires a certain investment of
company management into information systems, so that a free flow of
information is ensured together with appropriate technical and program
equipment.
They could also match particular factors with the importance level
or to set priorities. As Figure 1 shows the highest priority is given to
the mutual trust (9.35), observing contractual conditions (9.35) and
benefits of cooperation (8.94). The lowest priority was given to a
communication level (8.52) and especially, to an information system
(7.62).
There is not a single case when the performance assessment would
exceed the priorities of company managers (Fig. 2) which may be regarded
as unacceptable, especially, regarding the matter of utilisation of
cooperative management.
The areas for improvement may be seen in all case. The most
significant differences in the importance and performance are in the
factors like trust, cooperation benefits and contractual conditions
meeting.
The total index of readiness of companies for cooperative
management utilisation is 75.88%. The highest level of readiness
achieved was 98.26% and the lowest one was only 10%.
The performance matrix is a specific type of graphics showing the
results of the research of company readiness. All the factors analysed
are arranged inside the matrix according to their importance and the
performance achieved matched to them by the company managers. The matrix
shows the options for future planning. It is divided into four quadrants
according to the level of importance and performance. Figure 3 shows a
positive situation where all companies responded are in the quadrant
with the high importance and performance. However, certain factors are
in the border area with the low performance quadrant (information system
and communication level). It is necessary that the managers of the
companies notice exactly these factors which will result in the increase
of performance at these factors.
Upon the values of readiness index achieved the companies may be
divided into five levels of readiness:
--chaotic level,
--insufficient level,
--acceptable level,
--high level,
--excellent level.
[FIGURE 1 OMITTED]
[FIGURE 3 OMITTED]
The chaotic level of readiness corresponds with a company which is
not primarily interested in working with other companies and
organizations, i.e. in forming of cooperation relationships in the
business area. The company management does not have clear ideas about
potential cooperation and benefits resulting from it. This lack of
awareness is reflected especially in the fact that companies do not
develop the already existing cooperations and they only maintain them.
Company managers stick to the ways approved and they do not develop new
initiatives outwards. Other signs of this lack of awareness and lack of
interest are insufficient and non-working communications not only
between the departments inside the companies but also in a mutual
communication with the current company partners. The communication level
gets even worse by the companies' improper information systems.
The insufficient level of readiness corresponds with a company
which shows a commencing effort to apply some elements of cooperative
management and creation of new relationships. Although the company
management have some ideas about cooperation and the benefits of it,
such an idea is not reflected in the long-term company plans and in the
comp any strategy at all. A slight progress may be seen in the area of
the company information system. That serves as a tool to save, process
and communicate important information resulting from the partnership
relationships, however, without any integrated conception. In many cases
the company employees do not know about the existing cooperation
relationships which should be developed. Company managers focus only on
fulfilment of the tasks exactly specified by the top management.
Problems occur also in the area of meeting of contractual conditions.
However, these are in a much smaller extent than at the previous level.
The acceptable level of readiness corresponds with a company which
meets at least a minimum level for utilisation of cooperative
management. Cooperation is already included in both the corporate
strategy and company plans in a certain way and some sources are
designated to develop them. New initiatives in this area are registered
in the company within an active information system. The company
employees try to find solutions differently and participate within the
existing partnership relationships actively. They discuss such solutions
with each other actively. However, interconnection of their ideas with
the work of the management and further detail development and spreading
the ideas into new dimensions are limited.
The high level of readiness corresponds with a company that is on a
good way of becoming very successful in the area of utilization of
cooperative management. Company management and marketing support the
development of the current and making of new cooperation relationships.
The employees of the company notice their partners and they foreseen
their future needs including cooperation needs. They think in a context
and in conditions different from the employees in most of the companies
and their objective is to bring a higher added value for the partners in
cooperation (Blaskova 2010). The efficient registration of information
related to the cooperation relationships within the company information
system helps to this purpose. There is the efficient communication based
on directness and mutual trust in the company.
The excellent level of readiness is typical for a company, which
may be classified in a top group in the area of utilisation of
cooperative management. The company achieves the highest values in
particular key elements of utilisation of cooperative management.
Cooperative management supports cooperation activities of management to
the full extent and engages all employees of the company to this process
actively. There is a sophisticated information system providing
efficient information flows between the company and its partners.
Cooperation relationships are based on intentional maintenance and
building of mutual trust. Cooperative relations are based on a mutual
trust and meeting the contractual conditions.
A comparative table has been prepared according to the calculation
of readiness of particular companies for utilisation of cooperative
management upon the achieved readiness indexes (Table 3).
As you can see in Figure 4 the biggest part of the companies is
situated in the acceptable level of readiness (39.8%). Such companies
have a good basis on which utilisation of cooperative management may be
built systematically step by step. A group of the companies typical for
chaotic (3.1%) and insufficient levels (10.8%) may be considered to be
negative. Such companies must choose a waiting strategy. They should
take some measures to increase the level up to the acceptable level at
first. Only then they can be recommended to get to the utilisation of
cooperative management.
The fact that 29.8% of the responding companies showed a high level
of readiness and 16.2 % of them showed an excellent level and so they
may be considered positively.
4. Discussion
We have prepared a detailed methodology in order to assess the
level of readiness of companies for utilisation of cooperative
management which might be a basis for further assessment also in other
performed researches. On the other side we realize that this methodology
has been made upon our experience and particularly upon detailed
analysis and synthesis of the knowledge in the area of cooperative
management obtained from the scientific literature. Therefore, the
methodology created bears the signs of subjectivism. Verification of it
in form of a discussion of the wider public and practice in the area of
cooperation, strategic marketing and strategy management will be
necessary for its further application. In order to do this we are
planning to address it to the experts from universities especially, in
Italy, Germany, Austria, Poland, Lithuania and the Czech Republic. The
correctness of the defined levels of readiness may be also verified if a
more detailed empiric research is carried out.
The results obtained by the research form a basis to define
particular levels of readiness and specification of the ranges.
Particularly the interviews with managers from the middle and top
management levels help to achieve more comprehensive sight of
utilisation of the cooperative management, identify the key areas
affecting the preconditions for its utilisation in a company which are
subjects to the assessment within the readiness index.
Particular levels of readiness have been proposed in order to
define different development stages in achievement of the highest level
of utilisation of cooperative management. A similar approach may be seen
also in case of maturity stages from the CMM model (Capability Maturity
Model) that was made in the Software Engineering Institute Carnegie
Mellon of Pittsburgh University in the early ninetieth of the last
century (more Gartner 2001).
The presented methodology is a valuable tool for company managers
in utilisation of cooperative management. It may also be used as a tool
for self-assessment. Management gets the assessment of company readiness
for utilisation of cooperative management, identifies their weaknesses
in this area and reveals space for further improvement this way. We can
also see utilisation of the proposed methodology in form of a checking
tool during utilisation of cooperative management. The objective of a
company should contain sustainable development of mutual cooperation
with partners in order to enhance competitiveness of the company.
However, a minimum acceptable level is necessary for a successful
performance of cooperative management which will provide utilisation of
its key elements.
Conclusions
Nowadays, active work in the area of cooperative management may
help companies not only to keep their position on the market and it can
even enhance its competitiveness and find new perspective partners
(Soviar 2009). It is essential to form suitable conditions in the
company to have cooperative management applied. That requires
identification of current conditions of meeting of the key elements of
cooperative management. The methodology proposed should serve this
purpose.
In the proposal of the assessment system of readiness of a company
for utilisation of cooperative management we followed the strategy
management and marketing theory. Upon the detailed analysis including an
empiric research the facts that helped to propose the assessment system
for readiness were found out. They pointed out problematic areas which
affect readiness of companies to utilise cooperative management. The
collected knowledge from the matter of cooperative management enabled us
to create an integrated proposal of the assessment system of readiness
of a company for the cooperative management utilisation. The analysis of
the scientific literature found a lack of the integrated assessment
system of a company readiness for cooperative management utilisation.
The authors mostly deal only with the description of the methods
intended to the clusters forming issue.
The solution of the matter in the paper was intended to propose an
assessment system of company readiness for cooperative management
utilisation. The assessment methodology of a company readiness we have
designed is applied in the conditions of Slovak companies and is
considered a determining result. The methodology prepared should serve
the managers at secondary and top management both as an inspection tool
and self-assessment tool which indicate company weaknesses in the area
of cooperation and reveal a space for improvement.
Caption: Fig. 1. Rate of importance of key factors of cooperative
management utilisation
Caption: Fig. 3. Performance matrix
doi: 10.3846/btp.2013.33
Acknowledgements
This paper was partially supported by the Slovak scientific grant
VEGA 1/0992/11 2011-2013.
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Josef Vodak (1), Jakub Soviar (2), Viliam Lendel (3)
Department of Management Theories, Faculty of Management Science
and Informatics, University of Zilina, Slovak Republic
E-mails: (1) josef.vodak@fri.uniza.sk; (2)
jakub.soviar@fri.uniza.sk (corresponding author); (3)
viliam.lendel@fri.uniza.sk
Received 22 July 2013; accepted 08 October 2013
Josef VODAK. Assoc. Prof. PhD in Management (University of Zilina),
lecturer at Faculty of Management Science and Informatics, University of
Zilina. Research interests: talent management, marketing, human resource
management.
Jakub SOVIAR. Assoc. Prof. PhD in Management (University of
Zilina), lecturer at Faculty of Management Science and Informatics,
University of Zilina. Research interests: cooperative management,
marketing, marketing communication, sociology.
Viliam LENDEL. PhD in Management (University of Zilina), lecturer
at Faculty of Management Science and Informatics, University of Zilina.
Research interests: management information systems, crm, innovation.
Table 1. Definitions of the term cooperative management
Author(s) Definition
Davis, Donaldson Cooperative management is a philosophy of
(1998) management that can be applied irrespective of
ownership structure.
Davis (1999) Cooperative management is the practice of
managing a cooperative business organization.
Mendoza Cooperative management may be defined as the
efficient and effective utilization of the
resources of a cooperative as a business
organization for the purpose of serving the
needs of its members within the context of the
accepted cooperative principles.
Watzlawick Cooperative management should be understood as a
complex decision making process within the three
levels of management pyramid which aims at
achieving a proper balance of success of
cooperative enterprise as a business unit as
well as a social institution.
Lafleur (2005) Cooperative management is the way the management
and development of cooperation are conducted in
a competitive setting.
Ray (2002) Cooperative management represents a term for
framework for the integrated management of
enterprise networks.
Brown (1998) Cooperative management is a partnership between
government and industry.
Staatz (1983) Cooperative management is about the cooperative
decision making in the context of heterogeneous
preferences, there is a need to develop models
that address the issue explicitly and in so
doing suggest alternative ways of structuring
cooperatives to deal with the group choice.
Zhang (2011) Cooperative management is a core of all
management problems. Cooperative management
provides conditions of constructing a
cooperation system. These conditions are the
motivation of resource dependence, objective of
effect enhancement, constraints of encouraging
cooperation and possession of technology of
cooperation.
Table 2. Description of factors of successful utilisation of
cooperative management
Factor Description
Mutual trust flexibility, seriousness, trustworthiness,
responsible approach, frankness,
reliability, etc.
Benefits of cooperation cooperation value, competitiveness, mutual
utilisation of advantages, etc.
Observing of contractual deadlines meetings, agreements fulfilment,
terms and conditions willingness to cooperate, etc.
Level of communication companies willingness to communicate, to
inform inwards and towards partners,
open communication, etc.
Information system Data and information flows, technical
equipment, data saving, data
transfer, etc.
Source: own elaboration
Table 3. Comparative table--the readiness index
Level Readiness index Number of
(range in %) companies
chaotic 0-40 7
insufficient 41-60 24
acceptable 61-80 88
high 81-90 66
excellent 91-100 36
Source: own research
Fig. 2. Profile of performance of cooperative management
utilisation in a company
important level performance level
Mutual trust 9.35 7.91
Benefit of cooperation 8.94 7.48
Observing of terms and 9.35 8.00
conditions
Level of communication 8.52 7.25
Information system 7.62 6.66
Source: own research
Note: Table made from line graph.
Fig. 4. The achieved level of readiness
for utilisation of cooperative management
Chaotic level 7
Insufficient level 24
Acceptable level 88
High level 66
Excellent level 36
Note: Table made from bar graph.
Source: own research
