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19th Annual Conference on Multi-Organisational Partnerships, Alliances and Networks, 2-4

July 2012, Wageningen University

Title: Exploration of Value arising through Networks of Collaborative

Relations in the UK National Health Service

Author: Usman Zafar (PhD Candidate, Keele University, U. K)

E-mail: u.zafar@ippm.keele.ac.uk

Introduction:

In NHS, Managed Clinical Networks (MCNs) are

emerging as a way of collaborative working: the

preliminary objective is to join-up health

professionals and organisations from primary,

secondary and tertiary care organisations to plan

clinical services in response to local need having a

focus on specific clinical function, or disease, or

speciality, or client group (The NHS Confederation,

2001). In the wider NHS context, they act as a

vehicle to ensure democratic decision-making, make

efficiency gains, and promote organisation learning

(Currie, Starr, White, Dingwall, A. Watson, and

Trueman, 2010a).

Unlike previous networks in healthcare (such as

networks in US Managed Care and Dutch Integrated

Care), involving whole hospitals integration into

network, strong hierarchal control and deeply

contractual in nature, integration through MCN is

generally between certain units of hospital such as

specific to the network focus area, with formal and

informal links between diverse, but related

professionals/organisation. The MCNs are relatively

less hierarchically organised, free from financial and

clinical responsibility of the members involved and

usually not bidding to any contract and setup either

by those who participate in the network or through

mandate, and evolve largely through conscious

efforts to build service coordination (Goodwin et al.,

2004; Addicott et al., 2007; Fulop et al., 2010).

The most distinctive feature of MCNs is its

managed and accountable mode of governance,

which is structured around controlled collaborative

working within a service framework which is

determined by (local) patient need and by the nature

of provision, unconstrained by institutional

boundaries (Spurgeon et al., 2002). They are

managed through their structure (Addicot, 2009),

which is generally comprised of “a lead clinician”

supported by “ network management board (NTM)”

with a role to coordinates and regulates network

activities, along with “a network board”, made up of

strategic personnel from the member organisations

of the network leading the agenda. The

accountability mechanism evolve around business

plan, annual audit reports and validating activities on

evidence base care and adoption of the national

guidelines and work towards key targets ( such as

NHS Cancer Plan by National Audit Office, 2005).

The common functions performed by the MCN

closely intersect with the generic advantages of the

network form of governance in healthcare i.e.

achievement of common goal, plan and implement

joint program, dealing with patient accessibility and

inequalities, share information, scarce resources and

best practices and developing mechanism for the

accountability, risk and rewards (Younger, 2002;

Cropper et al., 2002; Draper et al., 2004; Marlow et

al., 2007; Addicott, 2008; K. E. Smith et al., 2009;

Lamie et al., 2010) Generally, the governance

mechanism is determined through demonstrating

adherence to a defined agenda and principles (such

as “core principle” initially set by Scotish Executive

Health Department, 2002) which influence the

management, structure and function of the network.

Objectively, MCNs are intended to create an

efficient healthcare delivery system in NHS, through

the active involvement of the MCN’s members in

the processes of developing and implementing

guidelines and integrated care pathways, joint

commissioning, sharing scarce capacity, specialist

human resources and knowledge (Addicott and

Ferlie, 2007; Addicott et al., 2007; Marlow et al.,

2007; E. Ferlie et al., 2010; Guthrie et al., 2010;

Hogard et al., 2010; Sheaff et al., 2011; Ewan Ferlie

et al., 2011)

Drawing on literature specifically addressing

“MCNs”, Table 1 sets out arguments about the

purpose, outcome and impact of the MCNs for its

member originations and healthcare system. The

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literature reflects that the success of the MCN rely

heavily on the mediating factors most important the

capability perspective; relational and management

skills:

- Clear strategic vision, common and shared

goals, interest

- Strong management

- Inclusiveness and engagement of members

- Incentive to collaborate: safeguarding and

accountability

- Effective representation of member organisation

- Capabilities of member organization

(Draper et al., 2004; Hamilton et al., 2005; A. Baker

et al., 2006; Addicott and Ewan Ferlie, 2007;

Addicott et al., 2007; K. E. Smith et al., 2009; E.

Ferlie et al., 2010; Guthrie et al., 2010; Currie, Starr,

White, Dingwall, A. Watson, and Trueman, 2010b;

Hogard et al., 2010; Ewan Ferlie et al., 2011)

Research Gap:

Research into MCNs show that some MCNs are

more effective than others (E. Ferlie et al., 2010;

Guthrie et al., 2010; Sheaff et al., 2011). Whilst all

of the networks studied have been found to have

positive impact on service delivery, nevertheless the

magnitude of their effectiveness varies over time and

depends heavily on the mediating factors (as listed

in Table 1).

The core literature specific on MCNs is heavily

focused on governance issues, such as leadership

and network management and communication, and

their impact on reaching the collective goals through

collaboration and effective delivery of healthcare

(such as Guthrie et al., 2010; Currie, Starr, White,

Dingwall, A. Watson, and Trueman, 2010b).

There are gaps in the literature. Firstly, it lacks the

construct of “member’s perspective”. From the

member perspective achieving the objectives of the

MCN or the success of network may not directly

leads to yield benefits to all the participant as at the

actor (or focal organisation) level value created in

the network is not equally distributed and is

asymmetric in nature: one firm achieve its objective

while the other fails to do so (Gulati, 1998).

Secondly, to potentially create and capture positive

value from the MCN, the focal network member

needs to unlock its capabilities and adapt approaches

which process and re-configure value design of the

organisation.

Keeping these two deficiencies in literature in mind,

the objective of this paper is to develop a framework

of the value creation and value appropriation by

considering the role of “capabilities” in achieving

“collaborative advantage”. The paper will look into;

1. What are these capabilities, as linked with

value?

2. Why are they important?

3. And how they can be developed by the focal

organisation (a member organisation in the

network) or actor (individual representing

member organisation in the network)?

Conceptualizing Value:

What is Value? – Exchange – Use Value

Value indicates the worth of the subject, whether

activity or product and can be simply measured as

the difference between advantages gained and

sacrifices made. The widely accepted approach to

determine value of something is by the relative

assessment to alternative (Ellegaard et al., 2009).

Traditionally theorized from a consumer-supplier

perspective; value is classified into two types;

exchange value (EV) and use value (UV). Use value

is the perceived value of the resource, while

exchange value refers to price, the monetary amount

realized at a single point in time when the exchange

takes place (Bowman et al., 2000). The use value is

processed by the supplier and realized by the

consumer to create exchange value which is then

captured by suppler as a return or use value

(Bowman et al., 2000; Lepak et al., 2007; Wassmer

et al., 2011).

Value in Collaboration: Collaborative Advantage

In networks the construct of value is extended

beyond the concept of mere exchange of resources

(Lasker et al., 2001). It is the share of advantage co-

created and realized from the desired synergic

outcomes which could not have been achieved

without the collaboration and further accounting it

against investment made to obtain these advantages.

In strategic management literature, this is termed as

“collaborative advantage”.

It assumes that the value resides across the

boundaries of the firm and produced through a

process of continuing interaction and collective

pooling of resources and capacities rather than

through simple transactional exchange (Doz et al.,

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1998; Dyer, 2000; Lasker et al., 2001; C. Huxham et

al., 2005). This also suggests that the value is

created and realized through the “rent earning

capacity” of the focal organisations i.e. “the ability

of the partners to earn rents over and above what

could have been achieved in the absence of the

partnership, i.e., in alternative organizational

arrangements” (Madhok et al., 1998) or through the

relational rent, “as a supernormal profit jointly

generated in an exchange relationship that cannot be

generated by either firm in isolation and can only be

created through the joint idiosyncratic contributions

of the specific alliance partners” (Dyer et al., 1998).

Hence, in networks value is co-created and depends

on capabilities.

Further, the value is processed on two dimensions,

first through “value creation” i.e. the potential

magnitude of the advantage; second through “value

appropriation” i.e. the amount of the advantage the

firm is able to capture and the length of time the

advantage persists” (Mizik et al., 2003). Likewise, in

networks, “value creation” is considered as

collective processes that create common benefits to

all partners (Lavie, 2007). Whereas, value

appropriation is defined as, “the share of rent that a

focal firm can capture from the created value”

(Gulati, 1995). Together, they produce collaborative

advantage which is determined by the set of

activities performed by the member organisations in

the network and their capabilities on how well these

activities are carried out (Möller et al., 2006).

Alliance Capabilities – Dynamic Capabilities

On the bases of the network structure and relations

in the network, scholars have identified a range of

different factors that are believed to explain why

some organisations are more successful than other in

achieving collaborative advantage. These factors are

typically captured under the perspectives of

“collaborative capability” (Chris Huxham, 1993;

Blomqvist, 2006; Schreiner et al., 2009), alliance

competences (Lambe et al., 2002; Wittmann et al.,

2009), collaborative know how (Simonin, 1997),

alliance capabilities (Anand et al., 2000; Kale et al.,

2002; Heimeriks et al., 2005, 2007; Ziggers et al.,

2010) , network capabilities (A. Walter et al., 2006),

network competence (Ritter et al., 2003),

relationship management capabilities (Jarratt, 2004),

relationship capabilities (Lages et al., 2009) and

inter partnering competence (Johnson et al., 2003)

(See Table 2 and 3).

The underlined argument overlapped in all these

perspective is based on “capabilities”, which are

important characteristics and activities producing

output that are necessary for the actors and focal

organisation propensity in the network (Zahra and

George, 2002a). These capabilities (network

capabilities) are believed to be a specific dynamic

capabilities (Liedtka, 1996; Eisenhardt et al., 2000;

Zollo et al., 2002) or higher order resources or

routines (Heimeriks, 2005), determined by the

unique knowledge, skills and institutionalized

routines related to the coordination of the activities

and resources with the network partners (Schilke,

2007; Ziggers et al., 2010). As a specific “dynamic

capabilities”, their role is to integrate, build and

reconfigure internal and external resource of the

focal organisation (David J Teece et al., 1997).

which eventually leads to the change of

organisation’s resource base – the main purpose of

dynamic capabilities and consequently of network

capabilities (Schilke, 2007).

From the value perspective, dynamic capabilities are

classified into two categories; Intended to create

value or intended to capture value – ability of the

organization to impact positively on the

determinates of value creation, and ability to build

value capture architect leading to value

appropriation (Katkalo et al., 2010).

Beholding this from the lenses of hierarchy of

capabilities (see Collis, 1994; Winter, 2003), value

creation can be seen as the function of “first order

and second order” category, or zero-order category

which is the ability to “integrate and build” (Teece,

1997). Whereas, the value appropriation is the

function of “third order and higher-order ability” and

lead to “reconfiguration” (See table 4)

As higher-order routines, network capabilities

manifest themselves in an array of concrete

organization practices that are aimed at preventing

misapplication of “zero-order” routines. Whereas

zero-order routines are “ordinary” or operational

routines, higher-order routines operate to modify

ordinary routines (Winter, 2003; Zahra et al., 2006;

Heimeriks et al., 2012).

Therefore, dynamic capabilities play dual role in the

network; at one end they enable the organization to

change and enhance the exiting resource and

ordinary capabilities to create new dynamic

capabilities. At the other end, to take advantage of

the capabilities produced by network the

organization need to effective realize this value

which is the function of “organization” higher order

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capabilities or the network capabilities (See figure

1).

Hence the effective creation and realization depends

upon both the mix of lower-order and higher order

capabilities which are internal and external to the

actors. Based on the network capabilities literature

mentioned earlier (and listed in table 2 and 3,

network capabilities can be grouped in five

categories which are more likely to influence the

“value creation and value appropriation” dynamics

for the focal organization in a network (See figure

2).

1. Network Management Capabilities:

Abilities related to the management of

network such as control, coordinate and

safeguarding network resources and create

opportunities and incentives to collaborate.

2. Relationship Capabilities: Interpersonal

skills such as trust and commitment and

intent of network members to engage with

each other by committing and sharing

resources.

3. Actors networking capabilities: Ability of

the actor to identify opportunities, be alert

and responsive to opportunities, combine,

deploy, share resources and then transfer

them to parent organization.

4. Actors technical capabilities: Ability to

evaluate and plan network actions

5. Focal Organization Capabilities: Ability to

recognize the value of network and making

adjustments to enable change:

Synthesising the above, this paper conceptualizes

five dimensions of “managed networks”, as mutually

reinforcing drivers of the value creation and

appropriation by the member actors of the network.

These are “reach, richness and receptivity”, as

expressed by Gulati, Lavie, & Madhavan (2011),

complemented by “regulations” and “renewal” (See

figure 3). The argument that follows considers that

the effectiveness and success of inter- organizational

ventures rests equally with the people involved in

the process and their abilities.

Conceptual Model

Regulation:

“Regulation” is the extent to which the focal actor is

formally controlled and governed by certain rules

through governance entity such as a dedicated

management system with an authority to lead the

network functions under set standards or guidelines.

The source of the regulation can be “government

agencies” which by policy dictates the formation of

the network (such as institutional pressure, Barringer

& Harrison 2000), or it can be “the professionals and

organizations”, participating in the network (Kenis

et al., 2009). The formal control is implemented

through the “alliance management system” (Kale et

al., 2001) or “supra-organizational forum”

(Einbinder et al., 2000) or “dedicated alliance

function” (Kale et al., 2009). The need for the

formal regulation to control network through

governing body is extensive quoted in the literature

(Mjoen et al., 1997; Birnberg, 1998; Einbinder et al.,

2000; Sivadas et al., 2000; Chris Huxham et al.,

2000; Pangarkar et al., 2001; J. J. Mohr et al., 2002;

Provan et al., 2007; Kale et al., 2009).

The purpose is to maintain internal and external

legitimacy (Meyer et al., 2007), act as an assurance

mechanism against opportunistic behavior,

uncertainty and risk (S. Chan et al., 1997; Weber,

1998; Das, 2005), enhances network’s external

visibility (Dyer et al., 1998) and create

accountability of network members. Consequently,

“regulation” directs the network towards value

creation initiative by co-creating positive outcomes

and their equitable appropriation through network

internal coordination, standard operating procedures,

trust building, incentive systems and dispute

resolution procedures (Trist, 1983; S. Chan et al.,

1997; Das et al., 2002; Dekker, 2004)(Dyer et al.,

1998). Generally regulations plays four roles, if

played effectively can lead to collective value

creation and appropriation;

- It directs the value creation processes by

involving all the actors and providing them

with the opportunity to collaborate and

collectively sharing information and

resources

- It communicates with all the actors in the

process, develop trust and norms and protect

the unethical behaviour and opportunism

- In the third and fourth stage, facilitate the

value appropriation process by co-creating,

combining and codifying the

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resources/skills/capabilities and transferring

them to the actors in a manner that it

produce low transaction cost and build

legitimacy and visibility both internally and

externally.

(Gulati et al., 1998; Wang et al., 2007; Provan et al.,

2007).

For the actor and focal organization the role of

“regulations” can possibly have both negative and

positive effects as it demarks the extent to which the

focal actor can “penetrate” into the network to

capture the value. Also the “regulations” has an

impact on “distributive, procedural, interpersonal,

and informational” fairness which influences and

balance the perception/expectation of the member

organizations towards value creation and

appropriation (see Arino & Ring 2010).

On the negative end (such as in the case of mandated

network) the focal actor may consider a network

inappropriate (to address the “real” needs of the

focal actor), over-regulated and over-demanding (by

authority, accountability norms and target-

orientation) causing distortions in the actors current

routines (Addicott et al., 2007), restricting actors

capacity to contribute (H. Sullivan et al., 2006), and

sometime leave the actor in the state of isolation and

alienation from other members and purposelessness

in the network (Dhanaraj, 2006).

Also incompetence of the regulations to perform the

desire roles or act in inequitable manner or the

capture of network by dominant organization or

group, eventually leads the focal actor to feel

“vulnerable”(Chris Huxham et al., 2000; Guthrie et

al., 2010) perceive network as being “unfair” and

diminishing value gained by actor (Kumar et al.,

1998; Arino et al., 2010).

To overcome above issues and to maximize the

potential of a network to create value the actors

needs to demonstrate the following abilities;

Boundary Spanning Activities:

Boundary spanning (Manev et al., 2001; P.

Williams, 2002; Richter et al., 2006) is the ability to

engage and deploy effective relational and

interpersonal competencies which includes

networking, communication and negotiation (P.

Williams, 2002; Richter et al., 2006). Boundary

spanners perform two strategic roles include; a)

information processing, i.e. filter and facilitate

transfer of information from external environment to

the organisation, b) external representation, i.e. act

as a decision maker and mediator on the behalf of

the organisation In MCN literature boundary

spanning activities and competencies are attributed

to the “regulator” (i.e. Lead Clinical) (for example,

Guthrie et al. 2010; Currie et al. 2010; E. Ferlie et al.

2010). Indeed it is equally vital to colour “the

perceptions and expectations” from MCN into

fruitful partnership and to mitigate the negative

impact of MCN (as mentioned earlier) boundary

sapping abilities are required from the individual

representing the focal actors (Gulati et al., 2008).

Sense-making:

Sense-making of formalization” (Vlaar et al., 2006)

is the abilities to understand network arrangements.

It is the perceptions of the actor towards network

governance, its structure, and networking, in large

aimed at cultivating trust and positive attitude

(Duisters et al., 2007). It’s a cognitive process in

which the focal actor study the implication of

governance mechanism, plan its action and make

internal adjustment (Ring et al., 1994; Simonin,

1997). Better understanding and planning leads to

build actor’s willingness to corporate and develop

the intent to learn (G. Hamel, 1991)

Create Goodwill:

Equally important to the above factors is the actors’

ability to create a prominence in the network so that

their voice can be heard all across the network. Also

this prominence can help them gain a reputation and

trust among the members (Schreiner et al., 2009).

One way through which this prominence can be

created by offering help in-kind such as in the shape

of trainings or expert advice.

Reach:

In the Gulati et al., (2011)’s framework, reach is

referred as the extent to which the focal actor’s ties

(a channel for the information and resource flow, see

e.g. Tsai 1998) in a network connects it to its distant,

different and diverse partners. It is linked with the

embeddedness perspective, giving distinctive

attention to the position of the focal actor in the

network.

“Embeddedness” dominates the core the network

theory with an emphasis on the focal actors’

relational (quality of ties – commitment, satisfaction,

trust), structural (configuration of actor’s position

with multiple ties) and cognitive dimension

(collective recognition and shared understanding), as

an enabling mechanism to drive value (economic

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returns) from its contacts in the network through its

contacts (Granovetter, 1985; Nahapiet et al., 1997;

Portes, 1998; Zaheer et al., 2005).

Quality of ties is also the function of frequency,

intensity and multiplicity of the actors’ interaction

with its member. (Adler et al., 2002; McFadyen,

2004), which enables the actor to penetrate into its

network through redundant or non- redundant ties to

gain access to the different and diversified resources

(see; Burt, 1997; Coleman, 1988), which is in-turn

the function of the degree of dissimilarity across the

actor’s partners with respect to organizational

attributes such as industry focus, business lines,

geographic location, and culture (Gulati et al., 2011).

Therefore to gain reach, actor needs to:

Scan the environment:

Reach is the function of the actor’s ability to scan

their environment for desirable network

opportunities and resources held by existing or

prospective partners entails familiarity with potential

partners and with the network (Simonin, 1997;

Gulati et al., 2011) and maintaining and retain the

relation with the partners who can provide needed

resources (Lasker et al., 2001)

Gain experience:

Further the function of the actors inter-personal

skills to penetrate into the network and positioning

close to the partners that have complementary

resources is based on negotiation and social

interaction (J. Mohr, 1994; Spekman et al., 1996;

Lambe et al., 2002). These skills can be learned on

the bases of prior networking experience (Kale et

al., 2001, 2009) . The richer the prior experience of

the firm, the greater its exposure to various

combinations of processes, inputs, and outcomes

(Sampson, 2005) which be learned through repeated

joint actions and the social content (Ziggers et al.,

2010).

Alertness and responsive:

Alertness and responsive (Gulati et al., 2000) are

also important ingredient for establishing the quality

of the ties with resourceful partners in the network,

specifically when the resourceful partner approach

the actor on individual level or network level.

Richness

According to Gulati et al., (2011) richness is

conceptualized as the inherent value of “network

resources” available to the actor to utilize through its

membership in the network. This arguments in based

on the resource based view of the firm (Wernerfelt

1984; Peteraf 1993; Barney 1991), and resource

dependency theory (Pfeffer et al., 2003) which sees

firms as bundles of resources and capabilities,

tangible and intangible assets owned or controlled

by firms, which creates value when they, rare,

imperfectly imitable and non-substitutable

(Wernerfelt, 1984; Peteraf, 1993).

Extending RBV, in the context of the network, its

perceives each firm as a subset of shared resources

and a subset of non shared resources that together

formits complete set of resources called as “network

resources” ( Lavie, 2006).

Depending upon the characteristic and configuration

of the resource in the network it can lead to the

creation and appropriation of four types of rent or

value, namely, internal rent – private benefits

extracted from the focal organization’s internal

shared and non-shared resources by accessing

network resources, relational rent - extracted only

from shared resources of the partners, outbound spill

over rent - the transfer of benefits from the focal

firm to the partners and inbound spillover rent –

private benefit extracted from the partner’s shared

and non- shared resources through unintended

leakage of resources ( Lavie, 2006). These rents can

be gained by:

- First, a focal firm can use network resources to

directly extend and enrich current resourse base

by assessing partner’s complementary assets.

(Koh and Venkatraman, 1991; Mowery, Oxley,

and Silverman, 1998; Pisano, 1990; Rothaermel,

2001).

- Second, a focal firm can generate value from

resource combinations. According to the

relational view (Dyer and Singh, 1998) (Grant,

1991)(Amit et al., 1993), the firm can generate

synergies by combining network resources with

its internal resources.

- Finally, the focal firm can indirectly benefit

from network resources that enhance the value

of its internal resources or provide it with

opportunities to internalize external resources

(Huggins, 2009)

The configuration and the location of resources i.e.

located internally or externally, hidden or visible,

reachable or unreachable and combined bilateral or

multilateral determines the extent to which the focal

actor can make use of these resources positively

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through orchestration. It is the ability of firms to use

network for integrating pooling and deploying

network partner firms’ resources (Dyer et al., 1998;

Lambe et al., 2002). As such orchestration

capabilities complements on the actors abilities

related to “regulation” and “reach”. Regulation

entails the governance of resources, while richness

entails discovery of resources, whereas richness goes

beyond both dimension, it entails successfully

establishing novel ways to create value by engaging

with them is another (Gulati et al., 2011). Also note

that one actor’s capacity to identify a potential

combination may depend on its counterpart’s

decision to make relevant resources accessible

(Gulati, Khanna, & Nohria, 1994; Hamel, 1991),

underscoring the need for mutuality in nurturing this

capacity.

Receptivity:

Receptivity is the extent to which the focal actor can

realize the potential value of the resources available

to it by means of its reach and the richness. Reach

and richness refers to potentially available resources,

whereas receptivity refers to realizable resources

which indicate the actual flow of resources. An

organization’s receptivity to network resources

depends on factors which are internal to the focal

actors and related first and foremost on the quality of

its ties to partners (Reach) and then to the extent that

the network can enable the focal actor to access

resource (Richness) and mediated by the network

management system (Gulati et al., 2011).

This can be achieved by means of contracting and

absorptive capabilities that enhance the accessibility

and utilization of network resource. The concept of

receptivity is critical to explain why different actors

and focal organizations tied to the same partners and

with access to the same network resources extract

dissimilar benefits.

Absorptive capacity:

Firstly receptivity is linked with the absorptive

capacity which ability to internalize external

resources (Cohen et al., 1990; Lane et al., 1998),

which in turn encompasses three capabilities: (1)

recognizing the value, (2) assimilating and (3)

applying new external knowledge to organizational

delivery ends (F. V. den Bosch et al., 2006). The

first two are the functions of potential absorptive

capacity, while the latter is the function of realized

absorptive capacity (see Jansen et al. (2005), Zahra

& George (2002)

The potential absorptive capacity is the acquisition -

ability to identify external resources and assimilation

- ability to analyze and understand external resource

(Zahra and George, 2002b; Jansen et al., 2005). It is

usually nurtured in the course of employing

comprehensive organizational processes for

assessing, codifying, and internalizing external

resources (Kale et al., 2002).

Support of top management

Complimented with “potential absorptive capacity”

is the support of organizational top management.

Top management support can create a positive

internal and external environment that facilitates in

overcoming of barriers by legitimating and

authorizing the actors initiative within the

organization (Sivadas et al., 2000), as it is critical to

ensure that potential actor receive the kind of

information, training and experience that they need

to become capable managers (Lambe et al., 2002).

This also indicates that top management support

shows that the networks activities and the actors

actions are acceptable and desirable to utilize value

(Sivadas et al., 2000; Nembhard, 2006)

Renewal:

Renewal is used to supplant the older phase

“strategic change” and defined broadly as, “the

process, content, and outcome of refreshment or

replacement of attributes of an organization that

have the potential to substantially affect its long-

term prospect” (Agarwal et al., 2010) or the

activities a firm undertakes to alter its path

dependence (Henk W. Volberda et al., 2001).

Renewal is the extent to which the focal actor

successfully “refreshes” and “replace” its existing

capabilities and resources in long term.

Renewal is firstly linked with the quality of tie and

resources available to the focal organisation (within

and outside the organisational boundaries).

Secondly, it relies on the organisational intrinsic

culture and environment. It shows how effectively

the value realized by the member actor is

transferred, adapted and implemented, incrementally

or radically, by the member organisation. There are

three seniors of in whom the co-created value

influences the renewal:

i. Maintenance – incremental change: Existing

resources and roles are strengthen or shaped.

ii. Reconfiguration - radical change:

Established resources and roles are same

with new resources are added.

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iii. Extension: New resources and new roles are

added.

Renewal is entailed with transformational absorptive

capacity which denotes a firm's capability to develop

and refine the routines that facilitate combining and

assimilating existing and the newly acquired

resources into its operations (Zahra and George,

2002b).This absorptive capacity is linked with there

are three internal dynamics that significantly affect

the propensity of an organisation to its renewal, a)

ability to patch, b) interest of middle and top

management and organisational culture.

The ability to patch refers to a actors ability to

reposition its assets, competencies, and resources to

address changing needs and priorities (Shortell et al.,

2002). Patching leads to effective and efficient

implementation incremental and radical change and

easy the process of renewal by making adjustment

prior to radical change. It facilitates and justifies the

value appropriation in an economic way.

The “patching ability” is heavily dependent on the

interests and level of satisfaction of different

organisational sub-units and groups and in particular

those groups which are directly subjected to

exploitation of value such as middle manager (Sun

et al., 2011). Top management can enable advocacy

of the renewal process, and continued commitment

to it enhance the success of implementation and

reutilization. The leaders are actively involved and

frequently consulted, the innovation is more likely to

be routinized (Greenhalgh et al., 2004)

Conclusion:

In business networks (Möller et al., 2006), value

creation and value appropriation are likely to be

quantifiable. This is more difficult in health care,

where, in the absence of a single ‘bottom line’, a

wide variety of benefits arising from networks have

been claimed. However, it can be argued that the

basic dynamics impacting the degree and magnitude

of the value creation in “managed network” are

similar and the model presented in this paper makes

this case.

The balance of creation and realization of value

depends upon the interplay of the abilities of all four

players in the network; a) network management

team, b) an individual actors, c) the focal

organisations, d) partners in the network.

Like the Gulati et al. (2011) model, our framework

also focuses on the organization and its partners in a

network. It further takes into account not only the

structure and relational aspects emphasized by prior

network research, but also the characteristics of the

management team, the focal organization and its

partners and added ‘renewal’ as a major driver of

value appropriation.

The implication of our model is the individual actor

and focal organisation should pay attention to the

skills and abilities they have to create and realize

value, as in the network which is mandated, actors

have little freedom to exit, or to make alterations in

the network structure or partner mix. Similarly, the

role of management team is crucial but it is beyond

the control of actor and focal organisation to modify

it in a way favourable to them.

9

Core Purpose

- Overcome inadequate capacity and dysfunctions in the service delivery (Draper, Manktelow, & McCabe, 2004)

- Provision of high quality service (Gale, Santhakumaran, & Nagarajan, 2012)

- Effective and appropriate use of the specialist care units (Gale et al., 2012; Myint et al., 2011)

- Reducing waiting time (McCarthy et al., 2008)

- Equitable access to the services (Marlow & Bryan Gill, 2007; Younger, 2002)

- Implement government policy (Addicott, 2008)

- Cope with European Working Time Directive (Draper et al., 2004)

Process

Integration

Service Improvement

Cost Reduction

Develop and implement integrated

care pathways and guidelines

(Addicott & Ferlie, 2007; E. Ferlie

et al., 2010; Ewan Ferlie,

Mcgivern, & FitzGerald, 2011;

Marlow & Bryan Gill, 2007;

Sheaff, Schofield, Charles,

Mannion, & Reeves, 2011)

Mutual support, consultation ,

supervision , collective decision

making and problem solving

(Guthrie et al., 2010; Hogard &

Ellis, 2010)

Joint commissioning and funding

(Marlow & Bryan Gill, 2007)

Sharing scarce capacity, patient

data, specialist human resources,

best practices and knowledge (E.

Ferlie et al., 2010; Ewan Ferlie et

al., 2011; Guthrie et al., 2010;

Hogard & Ellis, 2010)

Research and evidence-based clinical

practice (Addicott, McGivern, &

Ferlie, 2007)

Education and trainings (Guthrie et

al., 2010; Hogard & Ellis, 2010;

Sheaff et al., 2011)

Risk sharing (Sheaff et al., 2011)

Clinical audits, servicer assessment and gap analysis

(Guthrie et al., 2010; Hogard & Ellis, 2010)

Outcomes

Improvement in patient outcomes, existing service and standards (Draper et al., 2004)

Localized guidelines, protocols (published) and training material (Guthrie et al., 2010)

Patient information material (Sheaff et al., 2011)

Legitimization of existing and new services (Ewan Ferlie et al., 2011)

New model of care, programs and services (Guthrie et al., 2010)

Mediating Factors

Clear strategic vision, common and shared goals, interest (E. Ferlie et al., 2010; Guthrie et al., 2010)

Strong management: effective regulation, governance, strong network leadership and administrative team and information systems

(Currie, Starr, White, Dingwall, Watson, & Trueman, 2010a; Ewan Ferlie et al., 2011; Guthrie et al., 2010; Hamilton et al., 2005;

Sheaff et al., 2003)

Inclusiveness and engagement of members: trust building, positive attitude, willingness to corporate and communication (Addicott &

Ferlie, 2007; Addicott et al., 2007; Draper et al., 2004; E. Ferlie et al., 2010; Hogard & Ellis, 2010; Smith et al., 2009)

Incentive to collaborate: safeguarding and accountability (E. Ferlie et al., 2010; Sheaff et al., 2003)

Effective representation of member organisation: representative interpersonal skills, support from parental organisation, and

willingness and ability to learn and diffuse learning (Baker & Wright, 2006; Currie, Starr, White, Dingwall, Watson, & Trueman,

2010b; Draper et al., 2004; E. Ferlie et al., 2010)

Capabilities of member organization: Efficacy of members units/services, members willingness and abilities to embrace integration,

reconfiguration of services and change and design new services and patient pathways (E. Ferlie et al., 2010; Ewan Ferlie et al., 2011;

Sheaff et al., 2003)

Table 1: Purpose, process, outcome of Managed Clinical Networks.

10

Author Capabilities

P

rio

r re

lati

on

/ e

ng

agem

ent

/ T

rust

Neg

oti

ati

on

, co

nfl

ict

reso

luti

on

&

com

mu

nic

ati

on

Tru

st

Co

mm

itm

ent

/ In

ten

t to

co

ord

inate

/ sh

are

info

rmati

on

Id

enti

fy p

ote

nti

al

part

ner

s a

nd

op

po

rtu

nit

ies/

Pen

etra

te i

nto

net

wo

rk

Co

mb

ine

an

d s

yn

thes

ize

reso

urc

es

Tec

hn

ica

l k

no

w-k

no

w

Ev

alu

ati

on

an

d P

lan

nin

g

Ab

sorp

tiv

e ca

pa

city

To

p m

an

agem

ent

sup

po

rt/

Inv

olv

emen

t o

f

mid

dle

ma

na

gem

ent

Inte

rna

liza

tio

n, re

con

fig

ura

tio

n/

op

enn

ess

to

inn

ov

ati

on

Ince

nti

ve/

Sh

are

d V

alu

e a

nd

No

rms

Sa

feg

uard

ing

Ma

na

gin

g/c

on

tro

l O

rga

nis

e/F

orm

al

rule

s

(Lambe, Spekman, &

Hunt, 2002) x x x x

(Wittmann, Hunt, &

Arnett, 2009) x x x x x x

(Blomqvist, 2006) x x x x

(Heimeriks, Klijn, &

Reuer, 2009; Ziggers &

Tjemkes, 2010)

x x x x x x x x

(De Man, 2005; Kale,

Dyer, & Singh, 2002) x x x x x x

(Schilke, 2007) x x x x x

(Kale & Harbir Singh,

2009) x x x x x x x x x

(Ritter, 1999; Ritter &

Gemünden, 2003) x x x x x x x

(Sivadas & Dwyer, 2000) x x x x x x

(Schreiner, Kale, &

Corsten, 2009) x x x x x x

(Walter, Auer, & Ritter,

2006) x x x x x x x

(Möller, 1999) x x x x x x x x

(Lages & Styles, 2009) x x x x x x

(Johnson & Sohi, 2003) x x x x x

Table 2: Capabilities (Components)

11

Author Concept

(Lambe et al., 2002) Alliance Competence, “ability for finding, developing, and managing

alliance”

(Wittmann et al., 2009) Alliance Competence, “an ability to sustain the coordinated

deployment of assets in a way that helps a firm to achieve its goals”

(Blomqvist, 2006) Collaboration capability, “ability to build and manage network

relationships based on mutual trust, communication and commitment”

(Heimeriks & Duysters,

2007; Heimeriks et al.,

2009; Ziggers & Tjemkes,

2010)

Alliance capability, “extent to which a firm possesses unique

knowledge, skills, and institutionalized routines in order to form,

manage, and evaluate alliances”

(De Man, 2005) (Kale et

al., 2002)

Alliance capability, “routines that are purposefully designed to

accumulate, store, integrate, and diffuse resource acquired through

alliance”

(Schilke, 2007) Alliance capability, “ability to deal effectively with their partners and,

ultimately, improve collaborative benefits”

(Kale & Harbir Singh,

2009)

Alliance Capability, “skills required to successfully manage a single

alliance through the different stages of its life cycle”

(Ritter, 1999)(Ritter &

Gemünden, 2003)

Network competence, “company-specific ability to handle, use, and

exploit inter-organizational relationships”

(Sivadas & Dwyer, 2000) Cooperative competency, “means of developing interfirm cooperation

and coordination”

(Schreiner et al., 2009) Alliance management capability, “skills that are relevant to managing

an alliance”

(Walter et al., 2006)

Network capability, “firm’s abilities to develop and utilize inter-

organizational relationships to gain access to various resources held by

other actors”

(Möller, 1999) Network management capabilities, “Ability to coordinate the

resources and activities of other actors in the network”

(Lages & Styles, 2009) Relationship capabilities, “intangible assets that reflect a series of

inter- actions occurring between the interrelated parties”

(Johnson & Sohi, 2003) Interfirm partnering competence, “factors within the firm that

encourage organizational learning activities"

Table 3: Capabilities (Definition)

12

First category An ability to perform the basic functional activities of the firm

Second category Ability to share the common theme of dynamic improvement

Third category Ability to recognize the intrinsic value of other resources leading to

dynamic improvement

Forth category Mata-capabilities or higher order capabilities which is the capability to

develop the capability and transformational in nature

Table 4: Hierarchy of capabilities (based on Collis, 1994; Winter, 2003)

13

Dynamic Capabilities to realize value from the network

Dynamic Capabilities Network

Network to create dynamic capabilities

Figure 1: Dual Roles of Dynamic Capabilities

Figure 2: Capabilities and Value Dynamic

14

Figure 3: Model (Regulations, Reach, Richness, Receptivity and Renewal)

15

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