Firms require strategic action to successfully respond to competition within their supply chain networks. The supply chain network is a complicated network model, and its specific context depends on the relationships among the network members. Developing a strategy under these circumstances is not straightforward and must proceed through a series of systematic analyses. The purpose of this paper is to provide strategy development for a firm within a supply chain network. To develop these strategies, this study first classifies supply chain networks as being one of four types, defined by the role of the focal firm relative to its suppliers and buyers: (1) upstream network dominance, (2) focal firm dominance, (3) focal firm obedience, and (4) downstream network dominance. Once the types are defined, the context of each type is further analyzed at the upstream level, the focal firm level, the downstream level, and the network level. These context analyses offer a more detailed understanding of each network's environment. But two questions remain to be answered: what are the sources of advantage in a network environment? And how does one develop a strategy in these complex network environments? The relational view (Dyer & Singh, 1998) provides strong theoretical support for these two questions. Utilizing the relational view and the context analyses, our study develops a focal firm strategy for both upstream and downstream in a supply chain network in the following areas: relation-specific assets, knowledge-sharing routines, complementary resources and capabilities, and network position.
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