Network Coopetition: An Empirical Analysis with Multiple Case Approach

Transkript

1 Network Coopetition: An Empirical Analysis with Multiple Case Approach By Duygu Aladag Dissertation Presented for the Degree of MSc in INTERNATIONAL BUSINESS and EMERGING MARKETS 2012/2013

2 ÖZET Ortaklaşa rekabet (coopetition), rakip firmaların stratejik amaçları doğrultusunda işbirliği içerisinde olmaları durumudur. Bu stratejik ilişki, konseptin ortaya atılmasından çok daha önce var olmasına rağmen, küresel rekabetin yüksek olduğu günümüzde ayrı bir önem kazanmıştır. Yükselen küresel rekabet, stabil olmayan ekonomik ve çevresel koşullar, kısıtlı kaynaklar ve yüksek maliyetleri göz önünde bulunduran rakip firmalar; ortaklaşa rekabet ile kaynak ve kapasitelerini bir araya getirerek üretim ve inovasyonda maliyet ve riskleri paylaşmaktadırlar. İş dünyasında ve akademik çevrelerce gösterilen ilgiye rağmen ortaklaşa rekabet konsepti halen yeterince araştırılmamış ve tüm yönleriyle keşfedilmemiştir. Konseptin karakteristik özellikleri ve kapsadığı alanlar açısından farklı görüşler mevcut olması nedeniyle; herkes tarafından kabul edilmiş kesin bir tanımı dahi mevcut değildir. Bu çalışma, ortaklaşa rekabet literatürüne teorik ve ampirik açıdan katkı sağlamayı amaçlamaktadır. Teorik katkı olarak; ortaklaşa rekabet üzerine var olan literatür analizi ardından konseptin doğası ve avantajları üzerine teorik bir çerçeve oluşturulmuş; ve konsept için bir tanım yapılmıştır. Bu çalışmanın ampirik katkısı ise; ortaklaşa rekabetin; özellikle ağ ortaklaşa rekabetinin (network coopetition) doğasının ve avantajlarının sergilendiği iki adet vaka analizi olmuştur. İlk vaka analizinde ortaklaşa rekabet ağlarının inovasyon yaratımına katkısının örneği olan EUREKA projeleri ele alınmıştır. Bu vaka analizi ayni zamanda KOBİ lerin ve büyük işletmelerin ortaklaşa rekabete olan yaklaşımlarındaki farklılıkları da gözlemleme imkânı sunmuştur. İkinci vaka ise, ortaklaşa rekabetin önemli bir karakteristik olduğu küresel havayolu endüstrisini mercek altına almıştır. Bu vakada Türk Hava Yolları nın Star Alliance a katilim süreci ve Alliance a katilimin THY ye olan katkılarının incelenmesi, ortaklaşa rekabetin doğası ve avantajlarına dair zengin bir kaynak olmuştur. Ortaklaşa rekabetin doğası ve avantajları hakkındaki bulguların yanı sıra, bu çalışmanın en önemli katkılarından biri ağ ortaklaşa rekabetinde düzenleyici/koordine edici bir kuruluşun öneminin vurgulanması olmuştur. Önceki akademik çalışmalarda değinilmeyen bu hususta, EUREKA ve Star Alliance önemli örnekler olmuşlardır.

3 ABSTRACT Coopetition concept refers to a strategic relationship among competitor firms, where they compete and cooperate simultaneously. Coopetition promises significant advantages for firms in the era of intensive global competition. Although coopetitive relationships existed long before the term was coined, the conditions of contemporary business world make increasing number of firms adopt coopetitive strategies in order to share costs, risks, or lead innovations, by collectively deploying their resource and capabilities with competitors. In spite of the increased interest on the topic, coopetition remains as an under-researched area. It even does not have a commonly accepted definition, regarding the variety of approaches on its defining characteristics and borders. This study provides both theoretical and empirical contributions to the concept of coopetition. Theoretically, after the analysis of the literature on coopetition, it provides a definition of coopetition, as a strategic relationship where firms from the same industry compete and cooperate simultaneously within a dynamic structure, in order to benefit from the synergies and efficiencies created through the common deployment of resource and capabilities in various areas and stages of their businesses. Furthermore, it provides a framework on nature and advantages of coopetition. Empirically, two case studies contribute to the understanding on the nature and advantages of coopetition, specifically on coopetitive networks. The first case study is about EUREKA projects, enabling us observing network coopetition in terms of R&D and innovation creation, which is considered to be of the most substantial areas to coopete. Moreover, the case provides a comparison between SMEs and large companies in terms of their approach towards coopetition. The second case puts global airline industry under scope, in which network coopetition is an industry-defining characteristic. The case specifically analyses the process of Turkish Airlines to join Star Alliance, and the effects of the alliance membership to the company, which became a rich resource to exemplify the advantages and setbacks of network coopetition in airline industry. Additional to the insights on nature and advantages of coopetition, one of the most remarkable findings of this study have been demonstrating the key role of the coordinating organisations on

4 network coopetition (EUREKA in first case study and Star Alliance at the second), which is an issue have not addressed by previous research.

5 ACKNOWLEDGEMENTS My sincerest thanks To my supervisor Dr. Tanja Kontinen, for your support, motivation, and guidance throughout writing my dissertation. To all interviewees, for your time and invaluable information you generously provided. To European Union s Jean Monnet Scholarship Programme, for providing me the opportunity of having an MSc degree from one of the world s most prestigious universities. To my dearest friends, you became my second family in Edinburgh and made this year an unforgettable journey. To Martin, for making the world smaller, for sharing this life changing experience with me, and for all your love and support. Finally, the biggest thanks to my family, Nedime and Mehmet. You taught me the two greatest things in this life: love, and constantly fighting for my dreams. I am proud of being your daughter.

6 Table of Contents 1. INTRODUCTION LITERATURE REVIEW Competition, Collaboration and Coopetition Components of coopetition: Competition and Collaboration Nature of coopetition: Paradoxical, Multidimensional and Multifaceted Increased interest on topic Lack of definition Defining Coopetition Who actually coopetes? The timing of competition and cooperation Are strategic alliance and coopetition same things? Definition of Coopetition Theoretical Background of Coopetition Game Theory Resource Based View Knowledge Based View Network Economy Types of coopetition Network Coopetition Advantages of coopetition Cost Related Advantages Market Standardization and Lobbying Advantages on Learning and Innovation Setbacks about Coopetition: Opportunism Threat and Trust Issue The importance of the coordinating organisation in Network Coopetition Comparing SMEs and large companies in terms of coopetition METHODOLOGY Case Study Design Interviews Case One: EUREKA Case Two: Turkish Airlines The analysis of interviews ETHICAL CONSIDERATIONS... 4

7 4. CASE 1: EUREKA Network Coopetition in Eureka Eurostars Programme: SMEs in Network Coopetition Eureka Clusters Analysis of the Programmes Advantages of Eurostars and the Clusters Differences between SMEs and large companies CASE2: AIRLINE NETWORK COOPETITION - TURKISH AIRLINES IN STAR ALLIANCE Global Airline Industry: A Snapshot Alliances: Major Actors of the Industry The Factors Shifting Industry towards Alliances Star Alliance Advantages of Star Alliance Joining Star Alliance: How to Become a Member Turkish Airlines About the Company Turkish Airlines and Star Alliance Deciding to Join Star Alliance: Decision And Integration Processes Star Alliance-Turkish Airlines Relationships Benefits for Turkish Airlines: Prestige and Increased Brand Awareness Disadvantages of Star Alliance Findings on Nature of Coopetition n Airline Industry Do All Participants Benefit Equally? Increased Level of Competition Future of Coopetition in Airline Industry Conclusion Cross Case Analysis Similarities On Advantages of Coopetition Differences CONCLUSION LIMITATIONS AND DIRECTIONS FOR FUTURE RESEARCH REFERENCES... 48

8 APPENDIX 1- TRANSCRIPTION: Interview With Serhat Sari- Turkish Airlines Scotland General Manager ORIGINAL INTERVIEW-IN TURKISH TRANSLATION to ENGLISH APPENDIX 2- TRANSCRIPTION: Interview with Fatma Basaran Çiçek, Turkish Airlines Edinburgh-Regional Commercial Manager- Turkish Airlines Edinburgh Directorate ORIGINAL INTERVIEW-IN TURKISH TRANSLATION to ENGLISH APENDIX 3- TRANSCRIPTION: Interview with Onur Alpan-Turkish Airlines, Internatonal Relations and Agreements Manager; and Banu Ekerim- Turkish Airlines International Alliances Specialist ORIGINAL INTERVIEW: IN TURKISH TRANSLATION to ENGLISH APPENDIX 4- TRANSCRIPTION: Interview with Marej Jazak, Impact & Portfolio Analyst ar EUREKA Secretariat and Piotr Pogorzelski, officer at EUREKA Secretariat, and Lecturer at European Institute of Public Administration APPENDIX 5- TRANSCRIPTION: Interview With Emre Yurttagul, EUREKA Turkey- International Project Coordinator ORIGINAL INTERVIEW: IN TURKISH TRANSLATION to ENGLISH APPENDIX 7- EUREKA Historcal Evolution of EUREKA EUREKA MEMBER COUNTRIES EUREKA UMBRELLAS SAMPLE CONFIDENTIAL AGREEMENT EUROSTARS CONSORTIUM SKELETON A Sample Project Management Structure, from Celtic Plus Eurostars Programme Funding excellence in innovation Eurostars Application Assessment Guidelines,

9 LIST OF TABLES Table 1: Matrix of strategic alliance and coopetition Table 2: Theories and views related coopetition Table 3: Types of coopetition Table 4: Table of Interviews... 1 Table 5: Thematic Approach on Interviews... 3 Table 6: Ethical Issues and the reflections of this study... 4 Table 7: SME definition by the European Union... 7 Table 8: EUREKA Clusters Table 9: Members of the three airline alliances Table 10: Basic facts on Star Alliance Table 11:Ranking of European airlines... 37

10 TABLE OF FIGURES Figure 1: Positioning coopetition between pure competition and pure collaboration... 4 Figure 2: Porter s 5 forces and Nalebuff and Brandenburger s 6th force, complementors Figure 3: Coopetitive networks competing each other Figure 4: Advantages of coopetition Figure 5: Knowledge Creation Cycle on Coopetition, adapted from Ritala et al. (2009) Figure 6: Triangulation of the Research Figure 7:Eureka Projects as Dyadic and Network Coopetition Formations... 6 Figure 8: Distribution of Organizations Participating in EUREKA Projects... 7 Figure 9: Participants in Eurostars Projects... 7 Figure 10: Types of Eurostars Consortiums... 8 Figure 11: Eurostars Project Approval Process... 9 Figure 12:Eureka Clusters and forms of coopetition Figure 13:The process of cluster projects Figure 14: Advantages of coopetition mentioned at the literature review Figure 15: Consortium Requirements for Successful Coopetition Figure 16: EUREKA Label Figure 17:Direction of the Case Figure 18: Market Value of Global Airline Industry Figure 19: Competition in Global Airline Industry Figure 20: A snapshot on the market share of alliances Figure 21:Advantages of Coopetition in Airline Industry Figure 22 Global Network of Star Alliance Figure 23: Membership Process for Star Alliance Figure 24: Turkish Airlines Organisational Structure Figure 25: Facts and Figures about Turkish Airlines Figure 26: Increased competition amongst competitors Figure 27:Advantages of coopetition in both cases... 42

11 1. INTRODUCTION Coopetition is a strategic relationship, where competitors are involved in cooperation, in order to realize their specific goals (Ritala and Wegmann, 2011). Although the cooperative relationships of competitors existed before the term was coined, the concept gained popularity after Brandenburger and Nalebuff s famous book Coopetition (1996). Coopetition enables firms to combine the advantages of competitive and cooperative strategies. However, coopetition is a dynamic and paradoxical nature (Guardo and Galvagno, 2007), regarding the contradicting natures of cooperation and competition. This is the main factor making coopetition different from any other kind of collaborative relationship (Ritala and Hurmelinna-Laukkanen, 2009), (Bengtsson on and Kock, 2000). In the era of global competition, where interdependence, constant change, and instability are defining features of the contemporary business world; increasing number of firms from various industries adopt coopetitive strategies, in order to share costs and risks, or lead innovations by deploying their resources and capabilities to complement each other. In spite of the increased interest on coopetition from firms as a strategic tool, and from academic studies as a research subject, there is still no consensus on its definition. Indeed, the lack of a commonly accepted definition prevents building a strong conceptual and theoretical framework (Galvagno and Garraffo, 2007). In spite of many studies claiming the importance of the subject as a strategic tool, literature on coopetition still carries many gaps. This study provides theoretical and empirical contributions on coopetition. First, after a discussion of the contested features leading the conflict on definition of the concept, it provides a definition in coopetition. Moreover, it analyses the previous literature in order to provide a framework on the nature and advantages of coopetition. Indeed, that part provides a basis for the empirical contributions of the study, as it is not possible to carry an exploratory inquiry towards a concept without clearly defining what it actually is. 1

12 Following the theoretical part, the empirical part of the study analyses coopetition in network level, in order to gain more insights about the nature of coopetition within a more dynamic environment. With that motivation, two case studies were conducted, by searching answers for the following questions: 1. How is the nature of coopetition and what are the advantages of coopetitive strategy? 2. What is the role and importance of a coordinating organisation in network coopetition? 3. What are differences between SMEs and large companies in terms of their approach towards coopetition? The first case study on EUREKA projects enables us observing network coopetition in terms of R&D and innovation projects, which is considered to be one of the most substantial areas to coopete. Moreover, the case provides a comparison between SMEs and large companies, and exposes the importance of EUREKA as a coordinating organisation within network coopetition. The second case analyses network coopetition within global airline industry, where coopetition is an industry-defining characteristic. The case tackles the process of Turkish Airlines to join Star Alliance, and the contributions of the alliance to the company; which demonstrated the advantages and setbacks of coopetition in airline industry. The case also demonstrates the key role of Star Alliance as a coordinating organisation of the biggest coopetitive network of the industry. 2

13 2. LITERATURE REVIEW Coopetition is, with its very basic description, competing and collaborating simultaneously. (Bengtsson and Kock, 2000), (Levy et al., 2003). Within a coopetitive relationship, firms closely collaborate and intensively compete at the same time (Breznitz, 2007), in order to realize their specific goals (Ritala and Wegmann, 2011). Firms involved in a coopetitive relationship collaborate to create value, and compete to get the biggest share of the value created (Nalebuff, and Brandenburger, 1996). Coopetition concept gained popularity after Nalebuff and Brandenburger (1996) carried the concept into a more popular stage with their famous book Coopetition. Nalebuff and Brandenburger (1996) and many other studies (Dagnino and Padula, 2002), (Luo, 2007) claimed that the word coopetition was first used by Raymond Noorda, CEO of Novell Company, describing Novell s business strategy. However, the word was coined far before than Noorda did. In 1913, P.T Cherington put the words of an oyster manufacturer Kirk P. Pickett in his book, who used the word coopetition for the first time in the literature, while describing the relationship between the oyster dealers: You are only one of several dealers selling our oysters in your city. But you are not in competition with one another. You are co-operating with one another to develop more business for each of you. You are in co-opetition, not in competition (Cherington, 1913). Indeed, coopetitive relationships existed before the term gained popularity. Hamel et al. (1989), for instance, claimed that collaborating with competitors would be a great source of competitive advantage. However, coopetitive formations became increasingly popular during the last two decades. Globalisation of the business world made all economic actors interdependent on each other, even competitors (Luo, 2004). Competitors face similar challenges in the market (Chen, 1996), where managing those challenges solely with their own resources and capabilities would not be possible; even if it were, that might not be the most efficient way. The resource-asymmetries of competitors stimulate coopetition, where coopetitors can deploy their resources to complete each other effectively. As Nalebuff and Brandenburger (1996) remark, coopetition is an open-minded position that also 3

14 embraces complementary elements of competitors. In a world where firms face serious challenges of global competition, more and more firms realise the potential of advantages from cooperating with competitors, regarding their similarities in terms of resource, capability and challenges Elmuti et al., 2012), (Liedtka, 1996) Competition, Collaboration and Coopetition Coopetition is somewhere at the continuum between the pure competition and pure collaboration, (Galvagno and Garraffo, 2007), (Eriksson, 2008), which promises greater benefits than discrete competitive or collaborative strategies (Le Roy and Guillotreau, 2010), by providing firms the advantages of both competition and collaboration. (Yami et al., 2010). The involvement of competitive characteristics into a collaborative relationship makes collaboration of competitors much different than collaboration of non-competitors (Ritala and Hurmelinna-Laukkanen, 2009), (Bengsston and Kock, 2000). For this reason, it is essential to avoid approaching coopetition as a simple collaborative relationship. Indeed, coopetition is perceived as a new kind of interdependence for value creation (Dagnino and Padula, 2002), or a new type of strategic relationship (Akdogan and Cingoz, 2012), (Bouncken and Fredrich, 2012). Figure 1: Positioning coopetition between pure competition and pure collaboration COOPETITION PURE COMPETITION PURE COOPERATION Resource: Galvagno and Garraffo, Components of coopetition: Competition and Collaboration In order to obtain a better understanding towards coopetition, it is important to bring together the definitions and main characteristics of the two components of the concept Competition 4

15 Competition: The activity of condition of striving to gain or win something by defeating or establishing superiority over others. -Oxford Dictionary of English As its definition clearly demonstrates, in a competitive relationship, involving parts endeavour to defeat each other to obtain superiority over the rest. Rivalry occurs because one or more competitors either feels the pressure or sees the opportunity to improve position (Porter, 1980). The competitive way of value creation is a zerosum game, where one part s gain becomes the other part s loss. In competition strategy, the value creation takes place within the firm, whereas the interaction with other competitors take place in the distribution of the value created (Porter, 1980) Cooperation Cooperation: The action or process of working together to the same end. -Oxford Dictionary of English Following the rise of competition strategy, cooperation emerged as an alternative, regarding the interdependence of firms originated from their converging interests (Simoni and Caiazza, 2012). In a cooperative relationship, involving parts deploy their resources, capabilities, and efforts for reaching a common goal. It is a positivesum game in a formation of strategic interdependence (Dagnino and Padula, 2002). Cooperative perspective is based on the logic that firms can get superior position by developing common interests (Gulati 1998), (Abdallah and Wadhwa, 2009) Nature of coopetition: Paradoxical, Multidimensional and Multifaceted Being simultaneous competition and collaboration, coopetition possess different characteristics than cooperation of non-competitors. Regarding the contradicting natures of competition and collaboration, sleeping with the enemy (Coy, 2006) has a paradoxical nature (Guardo and Galvagno, 2007), (Schmlele and Sofka, 2007), (Bengtsson and Kock, 2000). The combination of those contradicting concepts make coopetition very dynamic and unstable, as it is shaped by constant action and reaction of the interdependent firms involved (Castaldo and Dagnino 2009). Regarding its nature summarized above, coopetition is a win-win game, however the results are changeable (Dagnino, 2009) and ambiguous (Dagnino and Padula, 2002), dependent on the actions of the involving parts. 5

16 Moreover, the number of the firms involved, the industry they operate in, which part of their business they coopete and and many internal/external factors make it impossible to generalize about whether competition or cooperation weights heavier in a coopetitive relationship. As Luo (2005) states, these contradicting elements are dynamic, the dominance of one on another constantly change regarding the changes in the external environment and the firm s needs. It can be competition or cooperation dominated, or balanced (Bengtsson and Kock, 2000). To conclude, coopetition is a multidimensional and multifaceted concept, carrying structural variability dependent on many factors and characteristics of the involving parts, which makes it difficult to provide generalizations about significant characteristics of the relationship, such as whether competition or collaboration weights heavier Increased interest on topic Increased and intensified global competition and extremely fast changing environment make increasing number of firms from various industries form coopetitive relationships, regardless of the degree of their rivalry. Markets do not consist of atomised and isolated actors anymore, but interactive systems like living organisms where actors continuously interact with each other to survive and prosper (Dagnino and Padula, 2002). Interfirm connections has become so crucial that, the competitive advantage of the firm gets dependent on its ability of building competitive and cooperative relationships better than anyone within the market (Guardo and Galvagno, 2007). In such conditions, it is not surprising that increasing number of firms choose coopetition as a strategic tool and that the interest towards coopetition as a research subject increases (Galvagno and Garaffo 2007), (Dagnino and Padula, 2002), (Lado et al., 1997), (Gnyawali and Madhavan, 2001) Lack of definition In spite of the increased interest and numerous academic studies on coopetition, there is still no consensus about its definition. The lack of a commonly accepted definition also prevents building strong conceptual and theoretical frameworks for coopetition, e.g. if there is no consensus about who is actually coopeting. As Galvagno and 6

17 Garraffo (2007) states, the situation prevents coopetition to flourish as a distinctive research area, where many studies do not go further beyond than naming, claiming or evoking it (Dagnino and Padula, 2002). First and foremost, coopetition needs a generally accepted definition, and then a strong conceptual framework defining the borders, nature and issues related. Then this conceptual framework should be strengthened with in-depth case studies from various industries Defining Coopetition This section aims to provide a definition of coopetition, by discussing the most important dissidences on definition of coopetition: the actors involved in, the period it covers, and the misuse of strategic alliance as a synonym of coopetition Who actually coopetes? There are two main approaches towards the issue of what type of actors actually coopete. The first approach has its roots from Nalebuff and Brandenburger s book Coopetition (1996). Brandenburger and Nalebuff claim that, Porter s five forces model is insufficient and there should be a sixth type of actor within the model: complementors. Complementors are actors who complement one good or service by adding value for the common users. For instance, software and hardware products are complementors to each other; and Nalebuff and Brandenburger claim that not only competitors but also complementors coopete each other (figure 2). Following this approach, Afuah (2000) claims that stakeholders are also coopetitors. Bouncken and Fredrich (2012) also define coopetition as the relationship with varying degrees of competition and collaboration that is carried out horizontally between classic competitors and vertically between up and downstream partners that collaborate but also compete about their share of the pie. 7

18 Figure 2: Porter s 5 forces and Nalebuff and Brandenburger s 6th force, complementors. suppliers Complementors potential entrants industry competitors: rivalry among existing firms substitutes buyers Source: Nalebuff and Brandenburger 1996; Porter, 1980 The second approach, which is also adopted by this study, claims that coopetition is the simultaneous competition and collaboration, where only competitor firms involve in (Bengtsson and Kock, 2000). In other words, this approach accepts coopetition as the collaboration in the horizontal level. Integrating vertical collaborations into the domains of coopetition concept would mean taking suppliers, buyers, even stakeholders as a firm s competitors; which would lead approaching every type of relationship among these actors as coopetition, which in turns, would be a logical mistake contradicting the nature of the concept itself The timing of competition and cooperation Another important dissidence about coopetition is about when actors exactly compete and cooperate. There are three approaches about the issue: 1) Competition and cooperation should be simultaneously (Ritala et al, 2009), (Luo, 2007) 2) Firms compete in one period of time and cooperate in another ; (Chien and Peng, 2005) 3) Firms can compete and collaborate either simultaneously, or sequentially (Galvagno and Garraffo, 2007), (Ritala and Wegmann, 2011) 8

19 This study adopts the first approach, considering the fact that competitor firms do not surcease their rivalry just because of they are involving in a kind of cooperative formation in a specific area. Regarding the global business conjuncture and intensified multimarket rivalry, it would not be realistic to assume that firms follow a sequence of competition and collaboration Are strategic alliance and coopetition same things? Another confusion about coopetition is the misuse of strategic alliance and coopetition, as they were synonym concepts. If the borders of coopetition were kept such wide to cover suppliers, competitors and customers, it is even possible to argue that coopetition is no different from strategic alliances. Coopetition is a collaborative formation, taking place between competitors. A strategic alliance, on the other hand, is a formation where two or more companies are involved, in order to reach a common goal (Barney 2011), (Das 2000). The important point here is, a strategic alliance can take place among any actors: between competitors, or non-competitors. If a strategic alliance takes place among vertical actors, such as a strategic alliance between suppliers and producers, that has nothing to do with coopetition. However, if the strategic alliance takes place between competitors, then this strategic alliance is a coopetitive alliance, just as many studies focused on that type of coopetitive-alliances (Khanna et al 1998), (Dussauge et al., 2000), (Bengston and Kock, 2000),(Gnyawali and Park 2009), (Akdogan and Cingoz, 2012). Indeed, the majority of strategic alliances take place in the form of coopetition. In 1998, 15 years from today, Harbison and Pekar claimed that, over 50 percent of the strategic alliances take place between competitors. Regarding the increased competition and the contemporary conditions in the global economy, it would not be a wrong estimation to claim that this ratio should have even increased. 9

20 Table 1: Matrix of strategic alliance and coopetition Competitor+Competitor Non-competitor+Noncompetitor COOPETITION YES NO STRATEGIC ALLIANCE YES YES 2.6. Definition of Coopetition Regarding the discussion in the previous chapter, the study provides a clear definition of coopetition: Coopetition is a strategic relationship, where firms from the same industry compete and cooperate simultaneously within a dynamic structure, in order to benefit from the synergies and efficiencies created through the common deployment of resource and capabilities in various areas and stages of their businesses Theoretical Background of Coopetition The literature so far has associated coopetition with Game Theory, Knowledge Based View, Resource Based View, and Network Economy View. Considering all of these theories help to enlighten different aspects of the nature of coopetition (table 2), this study adopts a holistic approach in terms of theoretical background, rather than building concept based solely on one of the views introduced below Game Theory Game theory is the study of mathematical models of conflict and cooperation between intelligent rational decision makers (Myerson, 1991). Myerson s definition clearly illustrates how game theory fits to explain the nature of coopetition, as coopetition is a continuous interplay of competitors, who become interdependent on each other. Following Brandenburger and Nalebuff (1996), who rooted coopetition on game theory in their famous book Coopetition, various studies rooted their coopetition studies on game theory (Herzog 2010), (Devetag, 2009). From the perspective of game theory, coopetition is a variable-sum game, where firms 10

21 cooperate for value creation, and compete for getting the most from the value collectively created (Brandenburger and Nalebuff, 1995). Ritala and Hurmelinna- Laukkanen (2009) claim that firms involve in value creation via cooperation, and value appropriation in competition while coopeting Resource Based View Resource based view claims that sustainable competitive advantage of the firm can be achieved through retaining (Barney, 1991), manipulating and deploying (Sirmon et al., 2007) unique resources (Gnyawali and Park 2009). Resource based-view helps to explain the importance of sharing and deployment of resources among competitors within coopetitive formations. When a firm s own capabilities are solely not enough to manage all challenges and demands of the contemporary globalised competition, the access to and successful deployment of resources gained through coopetition might play vital role for forms to survive and prosper Knowledge Based View Knowledge based view, having its roots from the resource based view (Curado, 2006), approaches knowledge as the most valuable asset that a firms holds (Dunning, 2000), (Liebeskind, 1996). Over the last three centuries, the main source of wealth in market economies has switched from natural assets (notably land and relatively unskilled labour), through tangible created assets (notably buildings, machinery and equipment, and finance), to intangible created assets (notably knowledge and information of all kinds) which may be embodied in human beings, in organizations, or in physical assets Dunning (2000). Knowledge-based view of the firm elucidates the importance of coopetition in terms of strengthening the knowledge base through inter-organisational learning, and leading innovations via coopeting, as will be addressed in more details on knowledge, learning and innovation related advantages of coopetition Network Economy Network theory is about the importance of the ties that firms create, focusing on the importance of using network relationships to access and exploit external resources, 11

22 and using them for the firm s own benefits. Tomski (2011) claims that, firms are not isolated forms like atoms; network is the concept best describing the economy of 21 st century. The existence of a network is an extremely important phenomenon because just on account of its business units to have access to the resources of another participant. In terms of coopetition, network approach provides understanding on the importance of getting access to resources outside the firm, and what types of relations serve best to the purpose Powell et al (1996). Table 2: Theories and views related coopetition Theory GAME THEORY Relation with coopetition Coopetition is a variable-sum game, where firms cooperate to create value and compete to get the most of the value created. RESOURCE BASED VIEW KNOWLEDGE BASED VIEW NETWORK ECONOMY Firms aim to obtain and deploy valuable resources to gain competitive advantage, via cooperating with their competitors Knowledge is the most valuable asset of the firm. Competitors can increase their knowledge-based capabilities via sharing of knowledge, and creating new knowledge via coopetition. Firms can access to the resources of competitors within via a coopetitive network. 12

23 2.8. Types of coopetition There are many studies providing different classifications for coopetition, in terms of the number of the parties involved, the level of integration, and the number of areas that coopetition takes place (Bengtsson and Kock, 2000), (Gnyawali and Madhavan, 2001), (Dagnino, 2009). In this study, inspired by (Dagnino and Padula,2002), coopetition will simply be grouped in two levels: coopetition in dyadic level; which is coopetition arising among two firms; and coopetition in network level, which occurs with involvement of more than two firms (table 3). Table 3: Types of coopetition Number of firms involved Two More than two Type of coopetition Dyadic coopetition Network coopetition This study focuses on network coopetition, aiming to gain substantial insights on the nature of coopetition, regarding the dynamic nature where multiple actors involved. Companies have created networks of alliances in order to command competitive advantages that individual companies of traditional two-company alliances cannot (Gomes-Casseres, 2000) Network Coopetition Network coopetition is a kind of collaborative formation, where more than two competitor firms involved, aiming to achieve superior advantages by sharing and collective deployment of resource and capabilities. As in any form of coopetition, firms involved in network coopetition collectively create value via cooperation, and compete to get the biggest share from the value created. A company in a coopetitive network has to keep its eyes on both competences which create value and capture it at the same time (Abdallah and Wadhwa, 2009). Compared to dyadic coopetition, network coopetition provides access to larger level of resources from many firms, especially in terms of knowledge and learning (Lado et al., 1997), (Bernal et al., 2002); getting informed about the developments of the 13

24 industry, and access to higher level of information about their rivals within the network (Gulati et al., 2000), (Gnyawali and Madhavan, 2000). Gulati (1999) claims that, the relationships built within networks catalyse further partnerships. In other words, the more network resources the firm accesses, the more coopetitive relationship opportunities rise. Accordingly, the increased network coopetition might turn some industries consist of coopetitive networks competing each other (Garaffo, 2002), (Gomes-Casseres, 1994), (Todeva and Knoke, 2005), as illustrated in figure 3. Figure 3: Coopetitive networks competing each other Coopetition coopetit ive network coopeitive network coopetitiv e network Coopetiti Coopetition 14

25 2.9. Advantages of coopetition Being the simultaneous combination of competition and cooperation, coopetition enables firms to reap advantages of both competitive and cooperative strategies (Yami et al., 2010). The ultimate result of all these advantages is the increase in firms competitive advantage (Hamel et al., 1989). Advantages of coopetition touched by existing literature can be categorized under three groups, as cost related, market related, and learning & innovation related advantages (figure 4). Figure 4: Advantages of coopetition COST RELATED bargaining power market standardization, lobbying economies of scale advantages of coopetition cost sharing risk sharing knowledge share increased innovation and learning 15

26 Cost Related Advantages As will be exemplified by case studies on section 4 and 5, competitors obtain cost related advantages from coopetitive strategy, such as cost sharing, economies of scope and scale on manufacturing or new product development (Luo 2005). This is a significant advantage especially for SME s, who has insufficient financial resources for purchasing of expensive machinery or equipment. (Gomes-Casseres, 1997) Market Standardization and Lobbying Regardless of the industry origin, coopetitive networks provide firms to involve in lobbying activities, in order to raise a common voice on shaping industry standards, or position against the regulations or interventions set by governments or any related organisations, in order to maximize the overall benefits of the industry (Luo, 2005), (Abdallah and Wadhwa, 2009). Another aspect of market standardization particularly takes place in terms of innovation. As Tether (2002) claims that, firms are likely to involve in coopetition for higher level innovations, in order to create pioneering technologies for that particular industry. Once an industry-shaping innovation is created, firms have chance to involve in market standardization process. Nonetheless, it is also a possible case that two or more coopeting networks to introduce such innovations, and then compete against each other to make their innovation the market shaping one. The competition takes place in the form of endeavour to attract more businesses to adopt their product and services aligned with the network s innovation (Gomes-Casseres, 1994) Advantages on Learning and Innovation As knowledge based view emphasises, knowledge base of a firm is one of the most important resources to obtain and endure competitive advantage. Why then firms consider sharing knowledge with a competitor in a coopetitive relationship? The answer is, coopetition fosters collective intelligence through knowledge and information sharing (Osarenkhoe, 2010). Knowledge sharing among competitors would lead synergies (Levy et al., 2003), (Akdogan and Cingoz, 2012), (Luo, 2005); which is claimed to be greater than the synergies generated through knowledgesharing cooperative agreements among non-competitors (Ritala and Hurmelinna- 16

27 Laukkanen, 2009). The reason lying behind that synergy is the similar resources and perspectives the competing firms have (Dussauge et al., 2000), which would complement each other to create valuable knowledge and inter-partner learning (Hamel, 1991). While coopeting, competitors gain access to the valuable resources, which would stimulate innovations that firms could not achieve alone; or could only be achieved within a considerably longer period (Von Hippel, 1987). Coopetition enables access to not only technological knowledge, but to the skills and other capabilities of the partners (Gnyawali and Park 2009), (Hamel et al., 1989), such as management and marketing skills (Bigliardi et al., 2011). Access to the knowledge of competitors foster inter-partner learning either it is a dyadic (Dussage et al. 1999), or network (Johnsen and Johnsen, 1999) coopetitive relationship (Bengtsson and Kock, 2000). Ritala et al. (2009) provides a process model of innovation and knowledge creation of coopetition, which can be summarised as follows: Once the knowledge is shared with the coopetitor, the new knowledge is combined with the firm s tacit knowledge. The more knowledge obtained and created, the more coopetitive manoeuvres take place (figure 5). Figure 5: Knowledge Creation Cycle on Coopetition, adapted from Ritala et al. (2009) knowledge shared with competitor new knowledge created internalize with tacit knowledge collective intelligence 17

28 In addition to knowledge sharing, coopetition boosts innovation by sharing costs, capabilities and risks related to innovation process (Schmlele and Sofka, 2007), (Veryzer, 1998), (Watanabe et al., 2009), (Khanna etal.,1998), (Afuah, 2000). Coopetition stimulates innovation through transfer and share of tangible and intangible resources; and combination and exploitation of complementary capabilities of competitor firms, particularly in knowledge intensive, dynamic, and complex industries (Carayannis and Alexander, 1999). Moreover, coopetition enables not only creation but also commercialization of innovation (Bouncken and Fredrich 2012), (Dagnino and Padula, 2002), Setbacks about Coopetition: Opportunism Threat and Trust Issue Alongside with academic studies emphasising and exemplifying benefits of coopetition, contradicting studies stressing on the disadvantages of coopetition also exist (Chin et al 2008), (Gyanwali et al. 2006), (Morris et al 2007). The majority of the negative concerns about coopetition are based on the threat of opportunism, claiming the likelihood of rivalry to hamper the firm s performance in a coopetitive relationship (Nieto and Santamaria, 2007), (Morris et al., 2007). The risk of critical knowledge leakage considered as one of the biggest threats, especially in terms of innovation-related coopetitive relations (Khanna et al., 1998), (Bayona et al., 2001), (Nieto and Santamaria, 2007). Moreover, Amaldoss et al. (2000) argued that the contradicting natures of competitors and threat of exploitation make coopetition affect innovation and technological development negatively. Another concern about coopetition is, regarding the difference in the learning paces and the targets of the involving firms (Dagnino and Padula, 2002), (Hamel, 1991), (Inkpen, 2000), the risk of the firm who has gained the targeted outcomes from the formation would leave before the other firm(s) set their expectations from the coopetitive formation. Trust is accepted as one of the most important factors for a coopetitive relationship to be successful (Akdogan and Cingoz, 2012), (Hamel, 1991), (Castaldo and Dagnino, 2009), (Devetag, 2009). Once trust is provided, firms would share and deploy their 18

29 resources into a coopetitive relationship, which would considerably affect the success and quality of the outcomes of coopetition (Gulati et al., 2000), (Chin et al., 2008). It is worth mentioning that, in spite of all risks and setbacks, it is possible to have positive outcomes from coopetition, once proper structures were provided and necessary actions were taken. Moreover, as (Bouncken and Fredrich 2012) claims, the positive outcomes of the effect of coopetition, particularly innovation, would outweigh all possible negative effects The importance of the coordinating organisation in Network Coopetition As previous section briefly demonstrates, trust carries utmost importance for success of coopetitive strategy. Nonetheless, trust should be strengthened with a legal structure, which would help maximizing the value created and minimizing the threat of opportunism (Abdallah and Wadhwa, 2009), (Gulati 1995), (Poppo and Todd Zenger 2002). In the presence of uncertainty and risk of opportunism, formal governing structure of a coopetitive network is essential for parties to be motivated towards involving such formation, and the continuity of the trustworthy environment where firms would utilize their resources for the collaborative value creation with competitors. However, the presence of a legal contract can guarantee neither the success nor the attractiveness of coopetitive formation. Especially in network coopetition, it is very likely that chaos to occur, regarding the contradicting interests of involving parties. In such situation, a coordinating mechanism would be essential, in order to prevent chaos and provide the smooth run of the coopetitive relationships. Bengtsson and Kock (2000) showed the importance of a network-coordinating organisation, in the case of Swedish Brewery industry. In such a case, an intermediate actor, for example, a collective association (such as the Swedish brewery association), is needed to coordinate and define how to compete or how to cooperate with each other. The intermediate actor thereby exhibits a formal logic of interaction collectively agreed upon. However, the role and importance of such intermediate actors, where this study refers as coordinating organisations remains 19

30 as an unaddressed issue in literature. Both case studies of this study exemplify advantages and importance of such coordinating organisations Comparing SMEs and large companies in terms of coopetition Another contribution of this study is the comparison it provides between SMEs and large companies, in terms of their approach towards coopetition. Augmented with case studies at the following sections, it is claimed that coopetition holds even greater importance for the SMEs, as coopetition becomes a necessity regarding their greater scarcities in terms of resource and capabilities. Compared to large companies, SMEs are more vulnerable to the external changes, regarding limited financial reserves, organisational capabilities, market presence, and customer base (Morris et al., 2007) (Levy et al., 2003). In contrast to large multinational enterprises, which can simply hire or buy such resources, entrepreneurial firms must seek resources supplied by external organisations (Lu et al., 2010). As the father of innovation Schumpeter (1942) claims, the survival of a company is only possible with innovation, and its ability to adopt the changes. Watanabe et al. (2009) also introduces the term being technopreneurial, claiming its importance in the era of mega competition. Regarding the weaknesses of SMEs mentioned above, it is possible to say that R&D is the most crucial area to coopete for SMEs. Arrans and Arroyable (2008) and Tether (2002) also claim that coopetition is the most beneficial in the high-tech areas. However, SMEs resources and capabilities would not be solely enough to be continuously adaptive and innovative (Akdogan and Cingoz, 2012). Indeed, SMEs have to race against time, in order to create innovation and recover their investments in short period of time, so that they could gain superior performance against their large and small-sized competitors (Narula and Hagedorn, 1999). Furthermore, innovation and R&D is an ambiguous process, as not any research guarantees to lead to an innovative discovery (Gnyawali and Park 2009). It is a likely case for a firm to invest big amount of money, spend years on a research, and getting no fruitful results in the end. For a large company, such case would be a significant financial loss. However, it might be the collapse of an SME, regarding its 20

31 scarce resources. All those reasons lead the conclusion that coopetition would be essential for survival of SMEs (Merrifield, 2007). Compared to dyadic coopetition, network coopetition would particularly be more fruitful for SMEs, as deployment resources of two SMEs might not be sufficient, neither. Within a coopetitive network, SMEs would reach scale and scope of resources. To summarize the advantages of coopetition for SMEs, they can share high costs, ambiguity and risks (Gnyawali and Park 2009), (Ritala et al., 2009), and shorten the innovation process via coopetition (Narula and Hagedorn, 1999). Moreover, they can reach economies of scale and scope (Gomes-Casseres, 1997), outmatch a stronger competitor, help entering new markets, and provide access to external resources (Barnir and Smith 2002). Another difference that literature detects between SMEs and large companies is that it is easier for SMEs to adapt coopetitive formations with their flexible structures. For large companies it is a more challenging task to adopt into a coopetitive formation, regarding their strict corporate structures and high level of bureaucracy with formal procedures (Gnyawali and Park 2009). 21

32 3. METHODOLOGY As Yin (1994) states, the fit of the research strategy depends on the factors such as type of research question(s) and whether it is focused on contemporary or historical phenomena and the control the investigator has over the events. Regarding the exploratory and descriptive inquiries this study carries on the coopetition concept, it adopts qualitative research. In terms of the research design, this study is divided into two main sections. In the first section of the study, with the motivation of providing theoretical contributions, previous academic studies were analysed. Subsequently, a clear definition of coopetition is provided, and a framework on the nature and advantages of coopetition were introduced. This first section provides a strong basis for the second section of the study, as it is not possible to explore the nature of a concept without clearly defining what it actually is and what its defining characteristics are. In the second section of the study, two case studies provided insights about the nature of network coopetition, and exemplified its advantages. In overall, this study seeks for the answers of the following research questions: 1. How is the nature of coopetition and what are the advantages of coopetitive strategy? 2. What is the role and importance of a coordinating organisation in network coopetition? 3. What are differences between SMEs and large companies in terms of their approach towards coopetition? 3.1. Case Study Design A case study is, with the definition of Yin (1994), an empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident. The main reason of choosing a case study over other methods is that the area is underdeveloped and has many gaps in the literature, and the boundaries of the concept are not clear. With the case study approach, it is expected to discover many aspects about the complex nature of coopetition. 22

33 This study adopts a multiple case study design, in order to demonstrate coopetition from a wider perspective, and to assess the importance of coordinating organisations in network coopetition with two different examples. By analysing primary and secondary data in a convergent and complementary manner, it is aimed to have triangulation among all types of data obtained. Triangulation is a rationale of using multiple types resources (Yin 1994), where it provides verification of the data gained through qualitative research (Osland, Osland, 2001). As figure 6 summarizes, a comprehensive research strategy is adopted, where interviews as primary data are combined with many other secondary resources such as company reports, company and organisation websites, industry reports, previous interviews and speeches of the Top Managers. Additional to providing a deeper and wider insight about the concept and its implications, it also served as the verification tool, as it provides the chance of measuring how consistent the obtained data with the other data resources is. Figure 6: Triangulation of the Research INTERVIEWS FROM DIFFERENT LEVELS NEWS, ARTICLES PUBLISHED REPORTS WEBSITES 23

34 Interviews Interviews are accepted as irreplaceable sources in case studies (Yin 1994). Parkhe (2004) claims that they are great opportunities to tap into the brain of the people, in order to see their motivations and expectations in decision-making processes. In this study, indeed, it was aimed to tap into the brains of the people who made the decisions about entering a coopetitive formation, who manage coopetitive relationships and who design and operate the coopetitive relationships of networks. Primary data of both cases were obtained through interviews conducted with officers and managers from different levels. The reason of interviewing people from different levels has been the endeavour of approaching the concept from different perspectives, and correspondingly having deeper insights about the nature of coopetition. As Welch et al. (2002) mentions, top managers are key people for gathering information; however, hierarchically lower level people sometimes provide even more in-depth information (Macdonald and Hellgren, 1999). In the Turkish Airlines Case, for instance, interviews were conducted with the General Manager of Alliances, an officer who is responsible for the coordination of alliance relationships, a regional general manager, and a regional marketing manager. In addition to interviews conducted directly related with case studies, two additional interviews were conducted at the preliminary stage of this study, carried out by the motivation of gaining more insights about coopetition. One formal and one current representative of the SME Development Agency, the biggest SME-supporting organisation of Turkey were interviewed about a subsidizing programme that the agency provides for SMEs, which aims to stimulate coopetition on manufacturing among SMEs. Highlights of the interviews are mentioned at the very end of this study, as a suggestion of future research. Interviews were conducted either face to face, or in the form of a teleconference, lasting for 30 to 90 minutes. All interviews were recorded with the interviewee s permission. In order to provide richer insights for further research, all interviews are transcribed and provided as appendices (appendix 2 to 6). Indeed, interviews conducted in Turkish are provided in original language, and translated in English. 24

35 Moreover, except the representative from the SME Development Agency, all interviewees allowed their names to be publicly published. Considering the exploratory and descriptive inquiries that interviews carry, it is aimed to provide the interviewees flexibility to shape the flow of the interview in a conversation-like, open-ended structure. However, regarding the limited time allocated for the interviews (interviewees are busy people), focused type of interviews were chosen as the best fit. In focused interviews, interviews remain open ended, however the interview is led by the set of pre-determined questions (Merton et al., 1990). Indeed, two interview sessions (interviews 3 and 4-table 4), two participants were interviewed simultaneously. This also provided great opportunity to observe the conversation/discussion between two participants, and provided deeper insights. 25

36 Table 4: Table of Interviews CASE STUDY INTERVIEW NUMBER NAME POSITION Cited As TURKISH AIRLINES Interview 1 Serhat Sarı Turkish Airlines, Scotland General Manager (Sari,2013-Interview 1) Interview 2 Fatma Basaran Çiçek Turkish Airlines Edinburgh- Regional Commercial Manager- Turkish Airlines (Cicek, Interview 2) Edinburgh Directorate Interview 3 Onur Alpan Turkish Airlines Manager- International Relations and Agreements Interview 3 Banu Ekerim Turkish Airlines International Alliances Specialist EUREKA Interview 4 Marej Jazak Impact & Portfolio Analyst ar EUREKA Secretariat (Alpan, Interview 3) (Ekerim, Interview 3) (Jazak, Interview 4) Interview 4 Piotr officer at EUREKA (Pogorzelski, Pogorzelski Secretariat Interview 4) (Yurttagul, Interview 5) (Kaplan, Interview 6) (Anonymous,2013- Interview 7) Background Interviews: SME Development Agency- Turkey Interview 5 Emre Yurttagül EUREKA Turkiey- International Project Coordinator Interview 6 Bahadır Kaplan Former SME Development Agencey Representative Interview 7 Anonymous SME Development Agency Representative 1

37 Case One: EUREKA The EUREKA case carried utmost importance in terms of observing the nature of network coopetition in R&D, which is one of the most popular areas of coopetition; and provided the opportunity to compare the SMEs and large companies in terms of their approach and motivations towards coopetition. Moreover, it had given great evidence in terms of observing the role of intermediate organisations in the success of coopetition. As primary data, 3 participants were interviewed. Two of them are from the EUREKA headquarter, Brussels-Belgium, and one of them is an experienced project coordinator from Turkey, which had the EUREKA Chairmanship with the main theme of coopetition. As secondary data, the websites of EUREKA, EUREKA Clusters, and EUREKA s Eurostars Programme websites, related reports, published documents and legal agreement templates have been the main resources Case Two: Turkish Airlines As it was mentioned in the previous sections, the reason of choosing the airline industry was that it is possible to observe coopetition in many areas among airline alliance members, where airline alliances are dominant actors in industry and competing against each other. In the Turkish Airlines case, the process of joining the biggest airline alliance, its advantages and disadvantages of being involved in such a coopetitive formation were analysed. Moreover, the importance and role of Star Alliance as the coordinating and intermediate organisation had been observed The analysis of interviews Interviews, as recommended by Miles and Huberman (1994), are analysed through the thematic approach where the pre-determined themes are used to channel the questions, as mentioned in table 5. 2

38 Table 5: Thematic Approach on Interviews TURKISH AIRLINES Company Characteristics Strategic positioning and the goals of the company Global Airline Industry Motives Behind Joining the alliance Advantages and disadvantages of the alliance Importance of Star Alliance to coordinate coopetition Competitor relationships while coopeting EUREKA Organisation information Trust issue in coopetition Importance of EUREKA in terms of coordinating coopetition Differences between the coopetition of SMEs and large companies About Eurostars and Clusters Advantages ad Challenges of Coopetition The future of coopetition The future of coopetition 3

39 3.3. ETHICAL CONSIDERATIONS This study was conducted with the ethical considerations in line with the University of Edinburgh Ethics Guidence. In table k, ethical attitudes introduced and grouped by Diener and Crandall (1978) are matched for this study and summarized in table 6. Table 6: Ethical Issues and the reflections of this study ETHICAL ISSUES by Diener and Crandall (1978) Whether there is harm to participants Whether there is a lack of informed consent Whether there is an invasion of privacy APPROACH of THIS RESEARCH Participants had no harm. None of them were forced to share any information which would put them into a contradictory position with their company/organisation, or which would jeopardize their position within the company or the organisation. All participants were fully informed about the purpose of the research, and claimed that the finalised version of the study can be shared with them once it s finished. The interviews were recorded with the interviewee s permission. Interviewee s names are used with their permission. One of the interviewee preferred to be kept anonymous. Whether deception is involved No deception was involved. Only the data which is permitted to be used is used. 4

40 4. CASE 1: EUREKA EUREKA is an international collaboration platform, focusing on supporting the research, development, innovation, and commercialization for market-oriented products and services in short run. The platform was founded in 1985 with the involvement of 18 member countries, and the European Union as the 19 th member. The main motivation for the establishment of such an organisation was to strengthen Europe against the increasing level of R&D in Asia and North America (Eureka website). The platform so far has supported more than 4000 R&D projects, and currently has 41 members, including the European Union (Appendix k). EUREKA supports research, development and innovation (thereafter R&D&I) projects by bringing small and medium-sized enterprises (thereafter SMEs), large companies, universities, and research institutes together. The reason of including EUREKA into this study is that, it is possible to observe innovation-based network coopetition, where both large companies and SMEs are involved-separately or together. Coopetition is a central concept in all EUREKA projects. As such, the main theme of the Chairmanship of EUREKA had been coopetition. As EUREKA Chairman Okan Kara declares, it is aimed to make EUREKA a flexible platform for coopetitive innovation (Kara, 2012). It is possible to classify EUREKA s activities in terms of dyadic and network coopetition structures. Individual projects are dyadic coopetition platforms, whereas Clusters, Umbrellas, and Eurostars Projects are coopetitive networks (figure 7). Within individual projects, two firms come together for an R&D&I project. EUREKA Clusters are 5

41 coopetitive platforms dominated by large firms, and aimed to lead industry-shaping innovations and market standardization. Umbrellas are thematic structures, where companies, research institutions, and related organisations take collective initiatives to facilitate the creation of more EUREKA R&D&I projects in specific sectors (Appendix t). Eurostars Programme is particularly dedicated and designed for SMEs, aiming to lead innovations within a coopetitive network. Within this case, EUREKA Clusters and Eurostars programme will be analysed and compared; in order to have deeper insights about network coopetition and its effects on innovation; and to analyse the differences of coopetition for SMEs and large companies. Figure 7:Eureka Projects as Dyadic and Network Coopetition Formations DYADIC Individual Projects NETWORK Eurostars Program EUREKA Clusters EUREKA Umbrellas EUREKA shows utmost care on the development of the SMEs in Europe, particularly the R&D intensive ones, aligned with the importance given on SMEs by the European Union (Eurostars Annual Review, 2011). As the Directorate General Enterprise and Industry of the European Union declares; more than 99% of the European businesses are small and medium sized enterprises. Moreover, SMEs provide more than two-third of the jobs in the private sector and create more than 50% of the value-added business activities within the EU (EU Directorate General, 2013). That is why; SMEs are considered as the backbone of the European economy, and are given utmost importance in the EU s agenda, so does EUREKA. As illustrated in figure 8, majority of the organizations participating in EUREKA Projects are SMEs. It is also worth mentioning that this study adopts the SME definition of the EU, which is summarized at the table 7 below. 6

42 Table 7: SME definition by the European Union Company Category Employees Turnover Or- Balance sheet total Medium-sized < m 43m Small <50 10m 10m Micro <10 2m 2 m Resource: EU DG, 2013 Figure 8: Distribution of Organizations Participating in EUREKA Projects Number of Organizations Participating in Eureka Projects 29% 15% 2% Resource: EUREKA 2011 Report Figure 9: Participants in Eurostars Projects 54% SMEs Large Company University and research institutes Other Type of participants in EUROSTARS approved R&D performing SME University Research Institute Large Company other 11% 7% 1% 13% 68% Resource: Eurostars Website 7

43 Figure 10: Types of Eurostars Consortiums SMEs only Types of consortiums in terms of participants SME + 1 Research Organisation, or University SME+more than 1 Research Organisation or University 20% 15% 28% 37% Resource: EUREKA Website 4.1 Network Coopetition in Eureka Eurostars Programme: SMEs in Network Coopetition In the Eurostars Programme, competitor SMEs come together in a coopetitive formation, by deploying their resource and capabilities and share the risks and benefits of the R&D&I endeavours. Indeed, those projects are international coopetitive platforms, as a minimum of two participants have to be from different participating countries. Additional to SMEs, research organisations, universities, and large companies also might join the Eurostars Projects (figure 10). The programme was originally founded with the budget of 400 million Euros, which of 75% from EUREKA member countries, and the rest is from the 7 th Framework Programme of European Union: the main programme dedicated on the development of SMEs and Innovation in the EU. As the successor of Eurostars Programme, Eurostar2, which is the successor of the 7 th Framework Program, will be in force by 2014 to (Eurostars Annual Review, 2011). The process of being involved into a Eurostars Project evolves as follows: First candidate SMEs apply with their project idea. After the submission, the project gets evaluated by EUREKA. In case of the project is approved, national funding bodies connected to EUREKA fund the project, as the national funding bodies are the primary fund resource. (figure 11). 8

44 Figure 11: Eurostars Project Approval Process SMEs apply for the project submit application to EUREKA project evaluation by EUREKA approved projects apply for national funding Since its announcement by the Research Commissioner Janez Potonik in October 2007, Eurostars plays a catalyser position for SME coopetition in R&D&I in an international platform. It does not only aim to develop but also to commercialize new ideas, services, and products. (Eurostars Annual Review, 2011). The projects are required to be market driven, where projects have a maximum of 3 years duration and are required to be ready to be launched in the market within the 2 years of project completion (except projects requiring trials such as biomedical or medical projects) (Eurostars website, 2013). With its flexible and close to market approach, this coopetitive programme is claimed to be the ideal model for the future of the national/international research programmes (Eurostars Annual Review, 2011) Eureka Clusters EUREKA Clusters are long term strategic formations. They are networks governed and coordinated by leading large-sized industry firms. Regarding their potential benefits and outcomes, the primary goal of these clusters is ensuring the leading position of Europe in technology and innovation (eureka website). Clusters have two main objectives: Developing generic technologies for the industry, and setting industry standards in Europe. Information and communication technologies (ICT), energy, and biotechnology are the most active R&D&I areas of clusters. 9

45 At the table 8, you can see a list of EUREKA clusters. As Pogorzelski claims(2013, Interview 4); Catrene, Celtic Plus and ITEA are the three most active clusters. Table 8: EUREKA Clusters CLUSTER NAME ACQUEAU INDUSTRY Water Technologies CELTIC+ Telecommunication, mobile technologies and internet infrastructures EUROGIA CATRENE EURIPIDES Renewable Energies ICT: Micro and Nano Electronics ICT: Smart Integrated Systems ITEA 2 ICT: Software solutions, service software, e- health, firmware MANUFUTURE INDUSTRY Manufacturing systems and technologies Resource: Eureka website Clusters: Large Companies in Network Coopetition As EUREKA Chairman Okan Kara declares, clusters are great source of coopetition (Kara, 2012). Within cluster projects, actors share risks and benefits of R&D&I endeavours, and aim to the development and exploitation of the technologies created. It is possible to see three different forms of coopetition within clusters: 1) Industry leader large companies coopete for setting industry standards 2) Large companies coopete for R&D&I 3) Large and small companies coopete for R&D&I 10

46 Figure 12:Eureka Clusters and forms of coopetition coopete in R&D&I clusters Coopetition between large companies only determine industry standards open calls for cluster projects Coopetition between large and small companies In some projects research institutes and universities are involved as well Each cluster has a technological roadmap, where the needs and the challenges of the industry are defined, and the technological areas that are needed to develop are mentioned (ITEA 3 Booklet, 2012). Those roadmaps are created by the board of management of the cluster, which consists of the leading big companies of the industry (Yurttagul, EUREKA Turkey, National Project Coordinator. Interview 5). Roadmaps are flexible and continuously adapt to the technological changes and the needs of both the markets and the society. In order to have a multidisciplinary approach for innovation, there is a collaborative formation between clusters, an intercluster committee where all EUREKA Clusters are represented in a rotating chairmanship structure (ITEA 3 Booklet, 2012). Clusters periodically open calls for the projects and collect applications of project proposals from companies with different sizes: SMEs and the large ones, accompanied by universities and research institutes. Cluster projects are expected to 11

47 be a good mixture of large, important companies, SMEs and academia (Handbook, 2011). After the assessment process, successful candidates receive the cluster label. Once the project gets the cluster label, the members of the cluster apply to their related national funding organisation in their home countries (table t). The funds are orchestrated by the cluster, and provided by the public authorities from EUREKA member countries (Eurescom, 2012). Additionally to the outsider applicants, the governing big cluster members also might introduce projects, or participate in the projects presented at the calls. Figure 13:The process of cluster projects firms apply to clusters for their project submit application project evaluation by Cluster approved projects receive cluster label apply for funding to national bodies 4.2 Analysis of the Programmes The previous section gave a brief introduction about Eurostars Programme and Eureka Clusters. In that section, the advantages of network coopetition within those programmes, and the importance of EUREKA as a coordinating and regulating mechanism will be assessed. After that, the differences between SMEs and large companies in terms of coopetition will be analysed Advantages of Eurostars and the Clusters Advantages consistent with the Literature Review of Coopetition When both programmes were analysed, it is possible to say that firms enjoy the benefits of network coopetition in terms of innovation and learning, cost related and market related advantages. Referring back to the figure 4 from the literature review section, it is possible to place the advantages listed at that section within EUREKA networks, as well (figure 14 ). 12

48 Both Clusters and Eurostars Programme stimulate knowledge sharing, new knowledge creation and innovation stimulation. Indeed, involving parties share the risk and cost (although projects are funded, finance might be needed at the initial stage). Additionally to the common advantages, Eureka Clusters also enjoy the benefits of market standardization and lobbying, which will be mentioned in details later. Figure 14: Advantages of coopetition mentioned at the literature review COST RELATED CLUSTERS bargaining power economies of scale cost sharing CLUSTERS EUROSTARS market standardization, lobbying advantages of coopetition risk sharing EUROSTARS CLUSTERS CLUSTERS knowledge share increased innovation and learning EUROSTARS EUROSTARS CLUSTERS CLUSTERS Additional advantages related to the existence of a coordinating organisation Furthermore this study comes up with other advantages of network coopetition that involved parties enjoy, which are directly related to the existence of a coordinating 13

49 organisation; which is the EUREKA Organisation itself. Those advantages will be assessed in details, and can be listed as followed: EUREKA provides the framework of the necessary structure needed for the smooth running of coopetition, and provides support and counselling on these manners. With the legal structure it requires the network to build and minimize the threat of opportunism and trust problem of involved parties. Being recognized as a EUREKA project provides a certain level of prestige. It facilitates access to the necessary institutions, and provides access to funding EUREKA helps finding partners to coopete, and stimulates international partnerships Running Coopetition Smoothly and Solving the Trust and Opportunism Related Issues Once all primary and secondary data is analysed, it turns out that the requirements candidate projects have to comply with do not only serve the purpose of choosing the best promising projects, but they also serve the purpose of realizing the smooth running of coopetition. Indeed, the legal structure that the project has to provide minimises the threat of opportunism and helps solving the trust-related issues, by making the projects built on a strong legal basis to protect the firm-specific knowledge and the property rights of the outcome of the coopetitive project (figure 15).. 14

50 Figure 15: Consortium Requirements for Successful Coopetition PROPERTY RIGHTS MANAGEMENT Consortium Non-disclosure agreement GET READY TO COOPETE & GET SUCCESSFUL RESULTS RISK MANAGEMENT CONFLICT MANAGEMENT Define risks Cover-up options define decision making and conflict resolution procedures PROJECT MANAGEMENT Define roles and responsibilities Minimising the Threat of Opportunism and Solving Trust-related Issues As it was discussed at the literature review section, almost all negative aspects about coopetition seem related to the lack-of trust between partners. Once partners do not trust each other regarding the threat of opportunism of competitors within a coopetitive network, they either do not enter such formations or even if they are already involved, they restrict the resources and capabilities shared with competitors, which prevents getting optimum results from such relationships. In order to solve these issues within EUREKA projects, Consortium Agreements carry utmost importance. The very first thing that all interviewees mentioned to the question how trust is achieved and how the ideas are protected was Consortium Agreements (Zajak &Pogorzelski Interview 4, and Yurttagul, 2013-Interview 5). Indeed, a strong and convincing consortium is a must for the project of getting approved (Handbook, 2011). 15

51 Consortium Agreements are required to define clearly the involved parties, their rights and responsibilities, and protection of property rights about the new product to be created in the end of the project. The companies that are working in a given project, before they receive funds and before the project is even approved, they have to define in a certain extent that how they are going to deal with sharing the things that they create together (Zajak, Interview 4). Building a Consortium Agreement, in other words, forming the structure of coopetition, is a back and forth process, where firms are constantly in touch with a national representative of Eureka, who counsels them in every aspect of providing necessary formation and structures (Pogorzelski 2013, Interview 4). In addition to the Consortium Agreement, a Non-Disclosure, or Confidentiality Agreement is another mandatory requirement for each project application. These agreements provide the assurance that no sensitive information will be shared with any other parties; and that in case the project proposal does not succeed or a partner to step out, the confidential information will not be further-used in a non-authorised or in a damaging way (Interview 4 and 5),. Additional to all the legal agreement framework, EUREKA advices all involving parties to get to know about the basic concepts of intellectual property rights. At the appendix, you can find confidentiality agreement and the skeleton for a EUREKA Consortium and the checklist for provided for the formation of these agreements. Providing the blueprint of the governance: Smooth governance and how to solve the conflicting issues For both Eurostars and Cluster Project application processes, it is also mandatory to provide a sound project-management structure. By doing so, EUREKA forces involved parties to create the necessary structures for the smooth running of the coopetitive process. It is expected to clearly define a management structure, which provides the roles and responsibilities about the project coordination, administrative handling, technical coordination, and operational management. However, it is mentioned that this structure should assure efficiency, but should not be overstraining (CelticPlus, 2011). 16

52 Additional to the project management, it is also expected that the project provides a sound structure in terms of managing possible conflicts. Regarding multiple competitors are involved in a coopetitive framework, it is very likely to have conflicts and those are needed to be efficiently managed to make project reach its ultimate goal of creating an innovative product. As such, EUREKA requires the candidates to provide a conflict management structure, where decision making and voting procedures are defined in addition to a conflict resolution plan. Regarding R&D&I projects involved risks, it also requirea projects to have a strong risk management structure. That is why, it is mandatory to clearly disclose the potential risks and the cover-up options related to those risks. Once those requirements are complied, it means that the candidate project has: - A management structure to keep the smooth running of the project. - A strong legal structure to protect the property rights, and firm-specific information. - Awareness of the risks of the projects and plans for risk recovery. - A strong framework to solve possible conflicts during the projects. Prestige Involving in a coopetitive formation via EUREKA provides a certain level of prestige, as having a project approved by EUREKA requires carrying a significant level of capabilities, and satisfaction and a certain level of quality standards (appendix k for the standards required). Once the project application is approved by EUREKA, the project receives the EUREKA label, which is perceived as a symbol of prestige. As it is a proof of the project s quality, regarding the project has passed EUREKA s rigorous assessment procedures; the label enhances visibility and serves as a source of confidence for the potential investors. A Eurostars Project, FlexGen s Chief Scientific Officer Joop Van Helvoort mentions in an interview that, having their project approved and partly funded by a European Programme helped them a lot to get the rest of the money from investors (CITE MAKE SURE). Another Eurostars Project, CrossJect s Chief Technology Officer Patrick Alexander mentioned in an interview that Eurostars 17

53 Programme played an essential role in counterbalancing the risk-aversion of private investors (EUREKA, 2011). Celtic Plus label, as another example, is the indication that a project successfully passed the assessment, and it is considered and recommended as Celtic-Plus project. A project that received that label is perceived by the industry leaders from that industry as promising, which in turns would make access to funding much easier (Celtic Plus Handbook, 2011). EUREKA also runs an advertising and marketing campaign on the EUREKA label. In order to increase the awareness towards the EUREKA projects and their qualities, they literally provide a branded label (figure 16), which has information about EUREKA and some cutting-edge innovations achieved within EUREKA projects (EUREKA website, 2013). Figure 16: EUREKA Label International Coopetition and Partner-Matching EUREKA projects promote coopetition on an international level. To start a EUREKA project, there has to be a minimum of one participant from minimum of two EUREKA countries. Moreover, once a minimum of two partners are from EUREKA member countries, it is allowed to have partners from non-eureka countries (Eureka Website). Indeed, EUREKA helps finding partners via its partnermatching service. France-based Eurostars Project CrossJect s Chief Technology 18

54 Officer Patrick Alexander mentions the importance of Eurostars in terms of finding a partner as: Eurostars enabled CrossJect to create a real partnership with a company with skills that could not be found in France. Facilitates Access to Public Institutions One of the biggest opportunities of EUREKA is that it provides funding to the projects, via public innovation-supporting structures. EUREKA networks facilitate access to any related institution that the involving parties might need, as there are national innovation-related institutions directly connected to EUREKA Organisation Network itself Differences between SMEs and large companies Regarding the responses of the interviewees, two main differences between SMEs and large companies are detected. First difference is, SMEs and large companies are involved in coopetition with different motivations. The second difference is that SMEs are easier to adopt into a coopetitive formation compared to large companies with their flexible nature Different intentions Consistent with the literature review analysis, SMEs approach coopetition as a necessity, where they do not have another option to access resources and capabilities required to perform research and innovation activities. However, large companies have two different motivations on joining into network coopetition. In spite of the high potential of SMEs in innovation, the hi-tech industry is extremely difficult to access, regarding the high cost levels. Those programs do not only help SMEs to access to the required funding and capabilities, but also enable them to access a network of best companies from varying sizes: this in turn would help them in both product and business development. Small companies engage in coopetition because they have to, otherwise they won t be able to reach the required capabilities for innovation or the R&D. (Zajak, Interview 4) Yurttagul (2013, interview 5) mentions that this necessity makes SMEs coopete more dynamicly and aggressively. Indeed, SMEs are more dynamic and aggressive in 19

55 terms of coopetition, as they also compete with other networks to be able to get the label. (Yurttagul Interview 5) Big companies, on the other hand, hold two different motivations on involving in coopetitive networks. The first motivation is providing industry standards. That is not only in their own interest but for everyone in the industry, and the second one is that in spite of they have enough resources and capabilities, involving in coopetition helps them to get the critical mass and access to different perspectives in terms of knowledge and innovation creation (Zajak &Pogorzelski Interview 4). This is also relevant for the technological ties for the big companies, they do not have to actually, they all have capabilities, laboratories etc. but they want to work together because they might find different things with different approaches. So they still need some critical mass for the technological part. (Zajak &Pogorzelski 2013) Level of flexibility As it was mentioned at the literature review, SMEs have more flexible structures compared to large companies who are highly corporatized, which is consistent in case of EUREKA s coopetitive networks, as mentioned by Yurttagul (2013, Interview 5). 20

56 CASE2: AIRLINE NETWORK COOPETITION - TURKISH AIRLINES IN STAR ALLIANCE At the second case of this study; Star Alliance, and Turkish Airline s Star alliance membership will be analysed. This case first introduces the main characteristics and trends of the global airline industry. Followed by a brief introduction of Star Alliance; Turkish Airlines and its Star Alliance membership process will be analysed. Finally, the analysis section will provide insights about the nature and advantages of network coopetition in airline industry, and showing to what extent the findings are consistent with the previous literature, and the additional contributions. Figure 17:Direction of the Case airline industry star alliance turkish airlines The reasons of choosing airline industry can be listed as follows: Network coopetition is a significant feature of the global airline industry, where three major alliances hold almost half of the global revenue. Within the industry, not only airlines but airline alliances compete against each other. Within alliances, it is possible to observe multiple types of coopetition, such as coopetitive agreements of cost sharing, lobbying, and standard setting. Alliance structures are great examples of coordinating and regulating mechanisms for network coopetition. 21

57 5.1. Global Airline Industry: A Snapshot The global airlines industry performs at a significant growth rate. According to Marketline 2012 Global Report, the market value increased by 10.5% and reached of $ billion, and the market volume has reached to 2.5 billion passengers. By 2016, the market value is estimated to reach $ 1,091.4 billion by growing 91.4% from The market is also expected to reach the volume of 3.1 billion passengers (Marketline, 2012). The industry consists of over 2000 airlines, which operate with over aircraft in 3700 airports. Figure 18: Market Value of Global Airline Industry (estimated) Market value ($ billion) ,091.4 Market value (number of passengers, in billion ) Source: Marketline, Alliances: Major Actors of the Industry Global airline industry is shaped by three alliances: Star Alliance, SkyTeam, and OneWorld. Those alliances hold almost half of the market share. The majority of the biggest airlines are also involved in those alliances. However, there are also big actors who prefer not joining an alliance and compete alone; such as Virgin Atlantic or Gulf Carriers. There are also airlines that indisputably have many resources, like Gulf carriers, for instance. They want to be alone because they think they don t need anyone else. (Ekerim, 2013-Interview 3) 22

58 Figure 19: Competition in Global Airline Industry Other airlines Figure 20: A snapshot on the market share of alliances 23

59 Resource: Star Alliance,

60 Table 9: Members of the three airline alliances Adria Airways Airberlin Aeroflot Aegean Airlines British Airways Aerolineas Argentinas Air Canada Cathay Pacific Aeromexico Air China Finnair Air Europa Air New Zealand Iberia Air France ANA Japan Airlines Alitalia Asiana Airlines LAN China Airlines Austrian Malaysia Airlines China Eastern Avianca Qantas China Southern Brussels Airlines Royal Jordanian Czech Airlines Copa Airlines S7 Airlines Delta Airlines Croatia Airlines EGYPTAIR Ethiopian Airlines EVA Air LOT Polish Airlines Lufthansa Scandinavian Airlines Shenzhen Airlines Kenya Airways KLM Korean Air Middle East Airlines Saudia TAROM Vietnam Airlines Xiamen Air Singapore Airlines 25

61 South African Airways SWISS TAM Airlines TAP Portugal THAI Turkish Airlines United US Airways Resources: Star Alliance, SkyTeam and OneWorld Websites The Factors Shifting Industry towards Alliances Airlines have entered into collaborative relationships with other airlines because that has been the only way to produce what many customers want, and realize greater efficiencies in operations. (IATA, 2011) The biggest factor for shifting airlines towards involving in alliance structures is the increased demand from the global passengers, who want to travel from anywhere to anywhere- either for business or leisure purposes. Airlines alone are not capable to obtain the organic growth to extend to answer the demand of flying everywhere in the world, as their network and aircrafts alone would not be sufficient. That put airlines into a position where they become interdependent on each other s networks. As Commercial Vice President of Star Alliance Korenke (2011) claims, Global travel demands linking networks. Moreover, regarding the strict foreign ownership restrictions set by host governments make airline alliances as a close substitute of cross-border mergers (IATA, 2011). Resource and capability insufficiencies of airlines to answer the demands of passengers flying all around the world, and the strict regulative environment lead the first international airline alliance, Star Alliance to emerge Star Alliance Star Alliance is the first and biggest airline alliance of the airline industry. Air Canada, Lufthansa, SAS, Thai Airways International, and the United Airlines founded the alliance in Being the largest alliance of the industry, Star Alliance currently has 28 members (Star Alliance, 2013). 26

62 Table 10: Basic facts on Star Alliance Number of: Countries Served Airports Daily Departures Daily Codeshare Flights Resource: Star Alliance Annual Review 2011, Data from rd Quarter North Central South Europe Middle Africa Asia Oceania America America&Caribbean America East Airports Daily Departures Resource: Star Alliance Annual Review 2011, Data from rd Quarter Advantages of Star Alliance You create a common value in an alliance level where everyone within the alliance obtains benefits. This is one of the biggest aims of these alliances: getting common service, using common terminals, producing seats together. Alliances provide a scale covering all related ones. (Ekerim, 2013-Interview 3) There are many academic studies focusing on the advantages of Airline Alliances such as Iatrou and Oretti (2007), Youseff and Hansen, (2004), and Oum et al. (2000). The research conducted by Iatrou and Oretti (2007) shows that airlines in general perceive network sharing agreements as the most advantageous side of airline alliances, followed by loyalty programs and cost sharing. Likewise at the case 1, it is possible to summarise the advantages consistent with the literature at figure 21, where cost and market related advantages are dominant. 27

63 Figure 21:Advantages of Coopetition in Airline Industry COST RELATED Star Alliance Star Alliance Star Alliance market standardization, lobbying Star Alliance bargaining power economies of scale advantages of coopetition cost sharing risk sharing knowledge share increased innovation and learning The coopetitive advantages that Star Alliance provides can be grouped as: Strengthened network Cost efficiency through common purchasing and facility sharing. Lobbying and standard setting Marketing airlines as a single high quality experience to the customers Network Advantages Alliances promote and facilitate code share agreements among member airlines, in order to strengthen their destination networks. A codeshare agreement between two airlines provides opportunity of selling tickets of each other s flights with their own brand. For example, with a codeshare agreement, Austrian Airlines can sell tickets to its passengers with its own brand, for a flight of Turkish Airlines. 28

64 In such condition, increase of one airline s network brings opportunity to other alliance members to reach their passengers to these points, as well. Even a small-sized airline can reach the opportunity of carrying its passengers to destinations that it could not achieve alone (Alpan, interview 3). It is like combining telephone networks. The more extensions you connect, the more useful the network becomes to the individual user. Jaan Albrecht, Chief Executive Star Alliance (2010) Figure 22 Global Network of Star Alliance Resource: Star Alliance Website Turkish Airline s growth means increased options in terms of destinations for the other airlines within the alliance, which in turn reflects in their ticket sales.the airlines within the alliance provide each other links to the destinations they do not fly (Sari, Interview 1). However, as Onur Alpan mentions, they are commercial agreements. Airlines do not share all destination they fly, indeed do not share it with every alliance member. Determining the partner and destination of codeshare agreement are all in the free choice of the alliance members (Alpan, 2013-Interview 3). 29

65 Cost Share Advantages Common Purchasing The main benefits come from savings generated from the combined purchasing power of the airlines. Tzvetina Tassovska-Fuel Purchasing Manager, Star Aliance. (Star Alliance, 2011) Cost cutting via common purchasing is one of biggest advantages that the alliance provides. In aviation, a wide spectrum of purchasing takes place. Once a new aircraft is purchased, for instance, it is only the body bought from Boeing or Airbus. Then all other parts, such as engine, wheels, seats, etc. are purchased separately (Alpan and Ekerim, Interview 3). In addition to aircraft parts, fuel is one of the biggest necessities of the airlines, which is one of the highest sources of cost. Moreover, at the supply side, the airlines do not have a big variety of suppliers, indeed the fuel prices are fluctuating (Marketline, 2012). At this stage, alliances facilitate airlines to make collective purchasing, which in turns increases their bargaining power over the suppliers and getting lower fares regarding higher levels of purchase. According to the Star Alliance Annual Review (2011), Star Alliance led annual savings of over $26 million in 2011 via common purchasing. The high cost of fuel is uppermost in the minds of all airline executives. Star Alliance has a significant role to play to help them find better ways to buy the fuel, and more efficient ways to use it. Tzvetina Tassovska-Fuel Purchasing Manager, Star Alliance. (Star Alliance, 2011) In addition to common purchasing, Star Alliance also had a project of manufacturing economy seats, by deploying a manufacturing partner. With the project, purchasing prices and maintenance costs decreased (Star Alliance, 2011). Facility Share Another source of cost cutting within the alliance membership is the agreements for bilateral or common share of airline facilities among the alliance members. One type of the facility sharing is gate or slot sharing. Once an airline is about opening a new destination, it has to get a slot/gate from the arriving airport. It is a big challenge, especially for smaller airlines, because in the popular destinations, big airlines already keep the popular slots/gates; even if not, airlines charge very high level of fees for these slots that small ones might not afford. This leads many airlines to get the off-peak time slots, or choosing a less-popular destination as arrival point; which both would turn the decrease on demand for those flights (Marketline, 2012). In such cases, the big airlines who keep the gate with the long-term agreements at that destination, may sub-let the gate to the smaller airline from the alliance (Li and Netessine, 2011). 30

66 Another type of facility sharing within Star Alliance Members is the use of common ground handling services, which led over 7,53 million in 3 years within Europe (Star Alliance, 2009). Common bag-drop check in for all member airlines is another project, which would decrease labour cost and increase the bag-drop check in (Star Alliance, 2011). Shared selfservice kiosk machines for alliance members also another source of cost saving Lobbying and Standard Setting Airline industry is a highly regulated industry, where airlines face legal compliance requirements in every destination they operate. An alliance provides advantage in terms of lobbying, as airlines raise their voices as one, and represent their opinions or react collectively where all airlines will be affected in the end (Ekerim, interview 3). Star Alliance makes airlines perceived as a single entity by the suppliers, as mentioned in the previous section. This perception also provides opportunity for member airlines to intervene with their demands in shaping future products, as well. Airbus, for instance, adjusted its aircraft design regarding the analysis made by Star Alliance (Klick, 2009), (Star Alliance, 2011) Serving High Quality of Customer Experience: Alliance Passengers Star Alliance serves all member airlines as a part of a big product: A worldwide network where alliance passengers have a certain level of quality with seamless travel experience, and privileges of being frequent flyer with loyalty program benefits. Star Alliance targets high value international travellers, passengers travelling frequently, demand the ability of flying from anywhere to anywhere, and expect to be recognized everywhere (Star Alliance, 2009). Aerospace Sector Specialist Ray Neidl: Frequent travellers are definitely paying attention to alliance airlines for both accumulating frequent flyer points and for the convenience of connectivity (Star Alliance, 2011). Within the competitive environment where low-cost airlines challenge legacy airlines with the price pressure (Marketline 2012), high quality experience provided within Star Alliance is a strong advantage to survive in competition. For those passengers, Star Alliance experience has two important components: seamless travel, and loyal customer benefits. Seamless travel means that, once the passenger is about having linking flights among Star Alliance members, he/she checks in only once and collects all the tickets, drop the luggage in the first departure point and collect it at the very final destination (Star Alliance, 2011). Seamless travel faces increased demand, particularly by passengers who have many linked flights for long distance destinations. Seamless travel carries utmost role in the increase of 31

67 the quality of the travel experience, as it eliminates the effort of collect-and drop the luggage with the stress of catching the check in or the boarding of the next flight. Star Alliance promises a passenger the seamless travel, which requires cooperation in many areas; or coinvests in those areas to provide the seamless experience, and obtaining benefits in return. (Ekerim, 2013-Interview 3) The loyalty benefits, on the other hand, provide the frequent flyer passengers the privilege of being recognised by all member airlines with the guarantee of a certain level of comfort and priorities. It is claimed that, recognition and benefits to Frequent Flyer Programs are the cornerstone of Star Alliance, in terms of the amount of passengers it attracts. According to 2011 data, Star Alliance has 20 FFP s with 187 million members, where 2 million of gold and almost 4 million of silver membership (Star Alliance, 2011). All frequent flyer passengers (FFP s) can benefit from lounges of any alliance members, regardless of which airline they currently fly. Moreover, they enjoy benefits such as priority check in and boarding, and extra baggage allowance (Star Alliance, 2009). However, the biggest advantage of the common FFP s is, as proved with surveys conducted by Star Alliance, is that passengers can collect and use their miles they gathered from any alliance member airline at any alliance member. Customers recognise that the ability to earn and burn miles across the airlines is a major benefit. Christopher Kronke, VP Commercial Star Alliance (Star Alliance, 2011). Those advantages and the common perception of quality standards of overall travel experience lead passengers to choose airlines within the alliances A loyal passenger of United for 30 years, for instance, for a destination where United does not fly to, chooses an airline within the Star Alliance instead of loads of other options. So he/she can benefit from the lounges of other Star Alliance members, for instance. (Sari, 2013-Interview 1) Furthermore, Star Alliance introduces products specially designed for different passenger segments, and member airlines involve in those products. As a popular product example, the Around the World product provides leisure travellers the option to buy a world tour experience from Star Alliance, where Star Alliance links many member s flights within that product (Cicek, 2013-Interview 2). In terms of business solutions products, for instance, Star Alliance provides simplicity to corporations by providing their travel plans to be managed with one single contract, instead of many separate flight booking arrangements and contract overloads that companies have to plan and handle (Star Alliance 2009), (Star Alliance 2011). 32

68 Joining Star Alliance: How to Become a Member Regarding the industry conjuncture, and the advantages addressed above, it is attractive for an airline to join an alliance. However, becoming an alliance member is not an easy task. In order to ensure continuity and improvement of the overall alliance quality, member airlines are required to have strong capabilities and possess high level of quality. As Jaan Albrecht, Chief Executive Star Alliance declares: Two weak partners never make a strong alliance Standards need to be set, within the given timeframe To become a member of Star Alliance, there are set of standards in almost every aspect or steps of the airline operations, with two reasons: Assuring the quality standards of the Star Alliance experience Obtaining the harmonization, making every member compatible for all operations within the alliance. An airline is approved only if It provides the increase and continuity of Star Alliance quality, and if only it satisfies the security requirements, or the whole service quality (Ekerim, 2013-Interview 3) As the analogy used by Onur Alpan, candidate airlines to join alliance are like countries that apply for the European Union membership. The airlines experience accession negotiations by fulfilling requirements of Star Alliance provides. There is a long list of minimum requirements that all candidate airlines have to comply with. Those requirements vary From the colour of the label attached to the business class passenger s luggage to be distinguished, to sharing the cost share sales reports and some other data with a determined format within determined periods. (Alpan and Ekerim, 2013-Interview 3) Finish the tasks in time All the comprehensive integration process, in other words, getting all aspects of the airline aligned with the standardization of Star Alliance, takes minimum of one year. However, this integration process carries many deadlines within a time framework, and the candidate member has to comply successfully comply. Once the candidate member does not take the required initiatives, the integration process might stop and the candidateship status might be lost. Air India, for instance, lost its candidateship status as it could not fulfil the requirements within the given timeframe (Alpan and Ekerim, 2013-Interview 3) Reputation Matters As Sari (2013-Interview 1) mentions, the reputation of the candidate airline in terms of its quality, safety, and the timing success on take-off and landings carry utmost importance. For 33

69 instance, it is not possible for an airline with many accident reports to be approved by the alliance Member Airlines State their Opinion Star Alliance member airlines hold have voting rights, declared by the founding charters. Correspondingly, member airlines also have right to express their ideas about the candidate member (Alpan and Ekerim, 2013-Interview 3). Member airlines can stand for or against the candidate member to join the alliance. It is important that members can decide with whom to coopete. As a specific example, at the code share flights, the airline wants to be sure about the safety and the service quality that their own passengers experience (Cicek, Interview 2) Decision Process At the very beginning of the process, there is a concept called White Spot. Star examines many markets on behalf of the airlines. For example, which airlines are active in Russia, which one can make a contribution, who can possibly be the new partners, etc. (Ekerim, 2013-Interview 3) Once the new candidate potential is recognised, member airlines express their opinion about the candidate. If the majority of the members approve the potential candidate, the integration process starts. The integration process of a candidate member runs transparently, where member airlines can follow, and are regularly informed by the alliance about the certain highlights about the integration process. In case of member airlines do not approve the candidate to join the alliance, the joining process stops, just like in the case of Air India, which is mentioned in the previous section. Once Air India could not finish the integration tasks within the given timeline, the member airlines voted against its membership (Alpan and Ekerim, 2013-Interview 3). Figure 23: Membership Process for Star Alliance White Spot potential member introduced Members vote integration process members vote 34

70 5.4. Turkish Airlines About the Company Turkish Airlines, with its original name Turk Hava Yollari Yatirim Ortakligi, is a Turkeybased airline company, providing domestic and international airline transport, and cargo services (Turkish Airlines, 2011). Having one of the strongest international networks and being one of the biggest airlines of Europe, the company operates in Europe, the Middle East, Africa, Far East, and North America (Marketline, 2012). The company positions itself as a mix of high quality service with competitive prices. (Sari, 2013-Interview 1) Figure 24: Turkish Airlines Organisational Structure TURKISH AIRLINES AIR TRANSPORTATION AIRCRAFT TECHNICAL MAINTENANCE PASSENGER CARGO TECHNICAL AND TRAINING SERVICES ONLINE SERVICES: E-ticket, online check in, etc. Resource: Marketline 2012 Figure 25: Facts and Figures about Turkish Airlines 35

71 Number of Destinations: Turkish Airlines Number of destinations Column1 Column2 Resource: Turkish Airlines Annual Report Strong Network Flying to over 200 destinations all over the world, Turkish Airlines is the 10 th biggest company in terms of the number of international passenger it carries(iata, 2012), and the biggest company in terms of the numbers of countries it operates in (Alpan 2013, Interview 3).. 36

72 Turkish Airlines enjoy the strategic position of Istanbul, where it is possible to reach 55 countries within 3.5 hours fly (Marketline, 2012).Via this hub, east and west flights are connected more efficiently and less costly. Europe or Gulf-based airlines, which do not have such strategic hub, have to use bigger jets as they have to fly for longer destinations without a break. Those jets are difficult to fill, requiring higher fuel cost. Indeed, their size restricts the number of the airports they could get a slot. Overall, this brings Turkish Airlines a huge operational efficiency. Table 11:Ranking of European airlines Ranking Airline Number of international passengers (In Thousands) 1 Ryanair 79,649 2 Lufthansa 50,877 3 Easyjet 44,601 4 Emirates 37,733 5 Air France 33,693 6 British Airways 31,273 7 KLM 25,775 8 United Airlines 24,843 9 Air Berlin 23, Turkish Airlines 22,381 Resource: IATA website, WATS 57 th edition (WATS:World Airline Transport Statistics) 5.5. Turkish Airlines and Star Alliance All interviewees had consensus on the main motivation of Turkish Airlines joining Star Alliance, which is using Star Alliance membership as an accreditation for its quality and prestige. It enjoyed the cost or network benefits of the alliance as well, however those have been secondary benefits for the airline. 37

73 Deciding to Join Star Alliance: Decision And Integration Processes Turkey joined Star Alliance on the 1st April, As it was mentioned by all interviewees, Turkish Airlines joined the alliance with a strong dedication but no hesitation. During decision making process, Turkish Airlines Headquarter had a period of intensive analysis, in order to determine the costs and benefits of joining the alliance. Once it was decided to join, the period of accession negotiations started, which lasted approximately for one and half years (Sari, 2013-Interview 1), (Alpan and Ekerim, 2013-Interview 3). The integration process coordinated by the International Relations and Alliances Department, where Mr Alpan was on duty during that process, as well Star Alliance-Turkish Airlines Relationships International Relations and Alliances Department of Turkish Airlines is the main body running the relationships with Star Alliance. Star Alliance provides three types of memberships, where their costs, benefits and responsibilities are varying from the highest to the lowest, depending on the level. Turkish Airlines, with seven other airlines, keep the highest status of membership: which has highest involvement in the decision making process, highest level of responsibilities and highest membership fee, indeed (Alpan, 2013-Interview 3). Ekerim (2013, Interview 3) defines it as a membership type which shapes the alliance, in the mover and the shaker position Benefits for Turkish Airlines: Prestige and Increased Brand Awareness Like any member airline, Turkish Airlines also benefits from the alliance in terms of network, cost and sales effects, and the customer experience as assessed in the previous section. Turkish Airlines joined the Star Alliance by thinking that it would be extremely benefactions, as we experience its results today. You both improve your relationships with other airlines and you benefit from the whole (Sari, 2013-Interview 3) However, the greatest advantage of Star Alliance membership, which have been the main motivation to join the alliance as well, is using the Star Alliance membership as a manner of prestige. In other words, Turkish Airlines used the Star Brand to increase its brand awareness. As Alpan (2013, Interview 3) and Sari (2013, Interview 3) mentions, Turkish Airlines had its main growth thrusts independent from Star Alliance membership. Indeed, the airline has already been holding significant advantages in terms of geographical positioning and low labour costs. 38

74 One of the biggest reasons for us to join Star Alliance was increasing our brand awareness, we used it very successfully, and we still use the benefits of the Star brand. (...) Our minor targets were the ones that the alliance already serves, promises (Ekerim, 2013-Interview 3). Alpan mentions that, before joining Star Alliance, demand for the airline was less because the passengers knew neither their strong network nor high quality service. Before Turkish Airlines joined Star Alliance, Turkish Airlines was known as a local airline that carried Turkish workers living in Europe-in spite of it is not. There was a serious prejudice. (...) With Star, the more people tried, the more this prejudice had vanished (Alpan, Interview 3). We put ourselves into the Champions League by joining Star Alliance. (...) We entered into a very big group and it is a manner of prestige (Sari, Interview 1) Disadvantages of Star Alliance In spite of the advantages the airline alliances provide, becoming alliance member also has its disadvantages. It is a handicap that Star Alliance restricts the strategic interaction of member airlines with airlines from different alliances, mentioned by Alpan and Ekerim ( 2013, Interview 3). In terms of destination network, a Star Alliance member airline would like to have a codesharing agreement with an airline from another alliance, namely Skyteam or Oneworld. It might be because of there is no Star Alliance member flying to that destination, or that airline from another alliance would be a better option than any airline from Star Alliance. Star Alliance either does not allow such coopetitive agreement, or it grants a short-term exception. In such case, all Star Alliance member airlines opinions are taken. Once the consensus by members provided, the exception might be valid. It is possible to reason this restriction with competition among alliances, and the endeavour of concentrating coopetitive ties within alliance. However it is a significant setback in an industry where the destination networks carry huge importance. Turkish Airlines had to suffer from this regulation, while it was about having a commercial agreement with TAM Airlines (Star Alliance member), TAM Airlines decides merging with LAN, and becoming LATAM, and joining SkyTeam. Consequently, the negotiation process between Turkish Airlines and TAM has cancelled and Turkish Airlines is currently seeking for other potential partners. 39

75 5.6. Findings on Nature of Coopetition n Airline Industry Do All Participants Benefit Equally? It is clear that all participants benefit from coopetition. However, it is difficult to say that everyone benefits to the same extent. It is dependent on the activities airlines involve within alliance, and the size and capabilities of the airline itself. Star Alliance provides an umbrella of coopetitive benefits such as common purchasing and facility sharing, where it is airline s free will to join or not. On the other hand, in terms of destination network advantages, it all depends on the attractiveness of airline as a coopetitive partner. It is so surprising for airlines to coopete with the ones would bring the maximum returns in the end Increased Level of Competition International Air Transport Association (IATA) claims that market competition authorities are sometimes concerned about the possibility of alliances to decrease level of competition, and consequently overall customer benefits (IATA, 2011). It is actually natural to expect the competition level to decrease among coopetitor airlines. Li and Netessine (2011) also expected similarly, however their study showed the opposite. Once airlines decrease their cost levels and strengthen their networks through coopetition; they become even more competitive. The case of Turkish Airlines in Star Alliance also proves this view. Competing and partnering do not rule each other out Jaan Albrecht, Chief Executive Star Alliance Moreover, Sari (2013, Interview 1), touches another factor which accelerates coopetition. As previously mentioned, alliance provides passengers a variety of airline selections, which makes it so easy for passenger to discover another airline as an alternative carrier. Figure 26: Increased competition amongst competitors DECREASE COSTS INCREASED COMPETITIVE ADVANTAGE INCREASED MULTIMARKET COMPETITION WITHIN ALLIANCE IMPROVE DESTINATION NETWORK 40

76 Future of Coopetition in Airline Industry An interesting finding is, that airline alliances become significantly beneficial, however insufficient to answer all needs of airlines (Ekerim and Alpan, 2013-interview 3). Additional to network coopetition, dyadic agreements take place within alliances,in the form of joint ventures. It is claimed that it is a possible scenario for those joint ventures to become more dominant over alliances, and that the alliances to lose its popularity in the future. The changing conditions of the markets require different types of collaborations. Alliances do not get enough to answer the needs of the actors in every market. The concept of joint venture is currently popular. And this is a question in every airline s agenda. All airlines constantly seek for what to do, where to do and with whom to do. (Ekerim 2013, interview 3) 5.7. Conclusion This case aimed to provide an overview to the nature and benefits of network coopetition in airline industry. Consistent with the literature, this case shows that airline alliances provide advantages of network coopetition in terms of cost and market-related advantages. Airlines enjoy the benefits of cost efficiency and involving in market standardization and lobbying activities. Indeed, consistent with the first case study, Star Alliance also showed the importance of a coordinating organisation within network coopetition. Combined with the Star Alliance membership of Turkish Airlines, this case shows that becoming an alliance member provides a significant level of prestige, regarding the rigorous quality standards it sets for the member airlines. Indeed, this level of prestige enables alliance serve the airlines as a part of an exclusive global travel experience to the global-travelling passengers. The case also provided findings about the nature of coopetition. It is claimed that involving in a coopetitive relationship does not oppress the competition, even accelerates, due to the increased competitive advantages that involving parties obtain. The case also showed that network coopetition does not provide all coopetitors to benefit at the same level; as airlines decide to what type of coopetitive relationships to involve in, and to what extent. It was also another important finding that coopetition is a useful strategy, but not sufficient to answer all needs of the airlines in the global competitive industry. It was claimed that the sub-groups within coopetition keep their inner-dynamics more prior to the alliance dynamics, which might make alliances less desired and effective. 41

77 6. Cross Case Analysis This section provides a brief cross analysis of two cases, demonstrating to what extent they have similarities and differences Similarities On Advantages of Coopetition Consistent Findings with Literature Review In both cases, many advantages of coopetition mentioned by the previous literature were observed, as summarized at the figure 27. At EUREKA case, the advantages of coopetition mostly based on learning and innovation related advantages, followed by market related advantages. At the case of Star Alliance and Turkish Airlines, it is observed that advantages of coopetition are mostly cost and market related. Figure 27:Advantages of coopetition in both cases COST RELATED CLUSTERS Star Alliance bargaining power Star Alliance economies of scale Star Alliance cost sharing EUROSTARS CLUSTERS market standardization, lobbying advantages of coopetition risk sharing CLUSTERS EUROSTARS Star Alliance CLUSTERS knowledge share increased innovation and learning CLUSTERS CLUSTERS Additional Findings to the Literature Review Importance of a Network Coordinating EUROSTARS Organisation EUROSTARS 42

78 Additional to the advantages consistent with the previous literature analysis, both studies showed the importance of a regulative and coordinating organisation. In both cases it was observed that those regulating and coordinating organisations (EUREKA in case 1 and Star Alliance in case 2) provide necessary structures for the smooth running of coopetition, help to solve the trust related issues and minimise the threat of opportunism; which all in turn increase the success of the network coopetition. Moreover, the high standards set by those organisations make being a member of these networks a matter of prestige. This advantage has been observed as increased brand image in Turkish Airlines and ease to convince investors for their project in EUREKA Projects On Nature of Network Coopetition Importance of Trust Both cases augmented that trust is an important issue in coopetition. In case of EUREKA, trust issue arises as a matter of firm specific knowledge and property right protection, whereas in case of Airlines it is a matter of trusting partners to provide good quality standards for customers, or not being exploited by the coopetitors in any other way. As it was previously emphasised, the existence of a coordinating organisation helps minimizing these concerns, with legal and regulative structure and the standards they set Competition remains, even increases Both cases show that involving in a coopetitive relationship does not kill the rivalry between competitors. Indeed, once all parties get better off, they have stronger resource and capabilities to challenge each other; in turns, competition might increase. 6.2 Differences Although the findings of the two cases do not contradict each other, they carry some differences and varieties. Those varieties and differences once more show that, coopetition should be investigated through case studies from various industries to get a better understanding about its nature and dynamics Different Motivations to Coopete The cases illustrate different motivations towards involving in a network coopetition. In case of EUREKA, the main motivation is to lead innovations through coopetitive R&D&I projects; either for firms own benefit, or for the goodwill of all industry with an industry shaping and standard determining innovation. The insufficiency of the firm s own resources or the need of different knowledge and perspectives for innovation leads innovating firms to coopete. 43

79 In case of Airlines, on the other hand, the demand of passengers to travel from anywhere to anywhere, the high operating costs, and the regulative restrictions towards airline mergers are the main factors on joining in a coopetitive alliance Future of Coopetition In case of EUREKA, interviewees claimed that they think coopetition will become a more widespread strategy. Whereas at the Star Alliance case, it was claimed that alliances alone are not sufficient in responding the needs of airlines, and that dyadic agreements would be more dominant over alliances in the future. 44

80 7. CONCLUSION The coopetition strategy promises significant advantages for firms in the era of intensive global competition. In spite of the increased interest on coopetition as a research subject, it remains as an under-researched area with many gaps in the literature, including the lack of a generally accepted definition and lack of a strong theoretical framework. This study contributes to the concept of coopetition from both theoretical and empirical aspects. First of all, after the analysis of the literature on coopetition, it provides a definition of coopetition, as a strategic relationship, where firms from the same industry compete and cooperate simultaneously within a dynamic structure, in order to benefit from the synergies and efficiencies created through the common deployment of resource and capabilities in various areas and stages of their businesses. In empirical terms, two cases on coopetition provide insights about the nature and advantages of coopetition in network form. Combining the theoretical and empirical findings, this study answers its research questions as follows: 1) How is the nature of coopetition and what are the advantages of coopetitive strategy? Coopetition is a complex and paradoxical relationship regarding the contradicting natures of competition and collaboration. Companies involved in such formation because their own resources and capabilities are not sufficient to answer the demands of the market they operate in, and competitors are sometimes the best partners in that manner, with their similar resources which would complement each other. Compared to dyadic coopetition, where two companies coopete, network coopetition is even more dynamic, complex, and multifaceted. Firms involved in coopetition cooperate to reach specific goals, however they remain as rivals. It is claimed that in case of airline coopetition the increased competitive advantage through coopetition increases the level of competition among coopetitors. In network coopetition, it is also possible to observe that coopetitive networks compete with each other, just like at the airline industry. An important issue about coopetition is the importance of trust between partners. All the negative concerns about coopetition rely on the lack of trust. Once partners do not trust in each other, the concern of being exploited by the other side rises and they do not deploy their resource and efforts sufficiently. Consequently, the coopetitive formation fails. Consistent with the previous literature, it was observed in both studies that network coopetition provides cost, market, and knowledge sharing and innovation related advantages. 45

81 Moreover, both case studies showed the advantages related to the existence of a coordinating organisation within network coopetition, a subject that has not been focused on before. 2) What is the role and importance of a coordinating organisation in network coopetition? Both cases showed that coordinating organisations (EUREKA in case 1 and Star Alliance in case 2) play significant roles in the success and smooth running of network coopetition. First, it is very likely that competing partners would have conflicts while they coopete. The coordinating organisations provide necessary structures for the smooth running of coopetition. EUREKA provides this by setting management structures for the coopetitive network, and the legal agreements, which determines the roles and responsibilities of the involved parties. Star Alliance; on the other hand, provides this by taking a role of an entity protecting the overall benefits of member airlines, by preventing any airline to be worse off during coopetition, depending on the founding charters. The second important contribution of those organisations is on solving the trust issue between coopetitive partners and minimizing the threat of opportunism. Due to the legal structure of those organisations they minimize opportunism and increase trust among partners. Moreover, the quality standards they set for joining the network assure involving parties about the capabilities of their coopetitors. Moreover, those quality standards provide involving parties a significant level of prestige, as being approved as a member of the network is a proof of their quality level. It has been observed that this contribution on prestige had been the greatest advantage of Turkish Airlines, whereas EUREKA projects used that prestige to attract investors towards their projects. Moreover, the standards set by those organisations equip involving parties with vital qualifications required for the coopetition to succeed. 3) What are the differences between SMEs and large companies in terms of their approach towards coopetition? The EUREKA case illustrates the differences between SMEs and large companies on coopetition, in the areas of research, development and innovation. It was concluded that SMEs and large companies have different motivations involving in coopetition. The EUREKA case illustrates that SMEs approach coopetition towards a necessity that they involve in because they have no other chance. On the other hand, large companies involve in coopetition in spite of they have capabilities and resources (laboratories, equipment, etc), 46

82 however they need different perspectives and ideas to innovate. Moreover, large companies coopete to set industry standards, where everybody in the industry would benefit from. Compared to large companies, the level of necessity makes SMEs coopete more aggressively. Moreover, their flexible structure make SMEs adopt in coopetitive formations easier than large companies, who have more strict and corporatized structures. LIMITATIONS AND DIRECTIONS FOR FUTURE RESEARCH Coopetition literature has many gaps. The concept has a multifaceted and complex nature, where every feature of coopetition should be analysed, and be discovered more about its nature via case studies from various sectors. However, the time and length limit of this study leaves this study with the borders it has now. In this section, I would like to suggest a particular research subject about coopetition. In order to obtain background information about the concept, two interviews were conducted with the representatives of Turkey s biggest SME supporting organisation, SME Development Agency, about a coopetition-supporting programme the agency provides to SMEs. The highlight of the findings from the interviews ( interview no and no ) were, that SMEs from a certain region are reluctant to involve in coopetition in manufacturing area, as they do not trust in each other; in spite of the agency provides legal formation to protect them from opportunism. Indeed, both interviewees claimed that, lack of trust and reluctance towards involving in an interdependent structure is peculiar to the culture of people living in that region (Kaplan 2013, Anonymous 2013). It is expected these findings to inspire future research of trust issue in coopetition, and its relationship with culture. 47

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93 APPENDIX 1- TRANSCRIPTION: Interview With Serhat Sari- Turkish Airlines Scotland General Manager ORIGINAL INTERVIEW-IN TURKISH -Önce kendinizden bahsedin biraz, ne zamandır THY de çalışıyorsunuz, ne zaman Edinburgh a geçtiniz? -1 Nisan 2012 tarihinden beri Edinburgh tayım. Önceki görev yerim olan Los Angeles ta bir buçuk sene kaldıktan sonra pazarlama müdürü olarak sonrasında buraya İskoçya direktörü olarak geldim. Edinburgh hatimiz da 16 Temmuz dan itibaren faal olarak hizmet veriyor. - THY kendini endüstride/markette nasıl konumlandırıyor? Nasıl bir havayolu şirketi olarak tanımlıyor kendisini? -Sayın genel müdürümüzün bu konuda bir tanımlaması var, biz fiyatlarımızda Avrupalı şirketler gibi rekabetçi, hizmetimizde de Asyalı şirketler gibi üst düzey olacağız diye. Yani kalite ve ucuz fiyatları mix eden bir şirket olarak kendimizi konumlandırıyoruz. -Peki, önümüzdeki on yıl için THY nin hedefi nedir? -Avrupa nın en büyüğü olmak. -Star Alliance tan, Alliance çerçevesinden bahsedebilir miyiz? Türk Hava Yolları nın Star Alliance a katılma nedenleri nelerdir? -Bunun birçok nedeni var. Öncelikli olarak Star Alliance dünyadaki havayolu alliance lari içerisindeki en büyüğü ve en bilineni. Biz bir kere bu havayolu alliance ina katılarak büyük bir grubun içine girdik ve bu bir prestij aslında. Çünkü burada Lufthansa gibi, United gibi dev firmalar var. Biz de kendimizi tabir-i caizse şampiyonlar ligine çıkarttık. Bu bir bilinirliktir çünkü güven verir insanlara. Star Alliance logosunu gördüğünüz zaman dünyanın her yerinde insanlar o logoyu tanıyor. Aa Star Alliance üyeliği var diyorlar. Onun dışında alliance ın içerisindeki havayollarıyla ortaklıklar yapıyoruz. Örnek olarak mesela ortak mil kullanımı dediğimiz loyalty programlar var. Biliyorsunuz Turkish Airlines ın da Miles and Smiles Programı var. Mesela siz Türk Hava Yolları ile uçuş yaptığınız zaman o millerinizi Alliance taki başka bir havayolunda kullanabiliyorsunuz. Ya da tam tersi. Mesela Lufthansa yolcusu biriken millerini Türk Hava Yolları nda bir uçuşta kullanabiliyor. Böylelikle yolcular Alliance içindeki havayollarını tercihe bir şekilde alternatif olarak sunuluyor. Bu önemli bir şey. Onun dışında uçuşlarda da mesela diyelim ki bir yolcu United la San Diego dan İstanbul a geldi, İstanbul dan da Türk Hava Yolları ile Bangkok a devam edecek diyelim. Ayni Alliance olduğu zaman bu anlaşmaların da onunu çok rahatlatıyor. Yani bizim 58

94 costshare ve SPA dediğimiz anlaşma türleri var böylece bagajını San Diego da bağlayıp Bangkok ta mesela direk alabiliyor. Yani Alliance bu tur anlaşmaların da onunu acıyor. Böylelikle dediğim gibi hem içerideki ortak havayollarıyla ilişkilerinizi geliştiriyorsunuz hem de bütünden faydalanıyorsunuz. Yani genel olarak Star Alliance çıktısının marka bilinilirliğinden yararlanıyorsunuz. Yolculara dediğim gibi benefitleri ağırlıklı olarak var. Böylelikle mesela United ın 30 yıldır ucan bir yolcusu United la uçmadığı bir parkurda bir sürü havayolu varken Star Alliance la olan üyeyi tercih ediyor. Böylelikle ne yapıyor lounge larından faydalanıyor onu da söyleyeyim. Türk Hava yollarının mükemmel bir CIP Lounge ı var dünyada belki en iyisi. Star Alliance üyesi havayoluna ait bir yolcu mesela bu lounge dan faydalanabiliyor eğer gold ya da silver üyeliği varsa bu tür benefitler var. -Katılırken herhangi bir endişe var mıydı ya da herhangi bir Acaba? - Yo hiçbir zaman olmadı zaten onların çok ciddi fizibilite çalışmaları yapıldı, profit and loss analizi yapıldı neler kazanılır neler dezavantajlı olabilir diye. Zaten bu yapılan uzun sureli çalışmaların sonucunda bu konudaki merkez birimlerimiz çok detaylı çalışmalar yaptılar. Zaten her hâlükârda bizim için avantajlı olacağı öngörülerek girildi ki zaten bunun da sonuçlarını görüyoruz. - Peki dezavantajları ne olabilirdi su anda gayet memnun devam ediyor ama dezavantaj ne olabilirdi? - (tereddütlü) Mevcut yolcularımızı hani belki başka havayollarına bir nebze kaptırmak gibi olabilirdi ama bu bütün hava yolları içerisinde böyle bir şey olabilir, bu risk tüm havayolları için var. Ama böyle bir şey de olmadı, bu sizin vizyonunuzla alakalı. Türk Havayolları zaten dünyada büyüme üzerine kurulmuş zaten biz Star Alliance a 2008 yılında girdik 1 Nisan 2008 di yanlış hatırlamıyorsam, zaten THY nin büyüme hedefini koyduğu sene ki yaklaşık ten beri buyuyoruz da çok büyük bir atılım yaptık ilk büyük atılımı yaptık bir senede 24 hat açtık ayni anda. Zaten THY dünyanın her yerine uçmak istiyor, büyüme hedefi var bu konuda çok ambitious. Bu nedenden dolayı zaten konjonktür de bizim lehimize gitti o sebepten. -Peki, Star Alliance üyeliğine girdikten sonra diğer havayollarıyla ile evet daha fazla bir ortaklık oluyor ama paradoksal bir ilişki var rakiplerle işbirliği içerisine giriliyor. -Win-win pozisyonu diyelim. 59

95 -Peki halen rakip olarak mı is ortakları olarak görüyorlar sır ketler birbirlerini, rekabet ya da is ortaklığı daha ağır basıyor diyebilir miyiz? -Eğer ki siz rakibiniz üzerinden bir benefit elde ediyorsanız bu güzel bir rekabettir. Eğer ki birbirini yenecek gibi birey olmadığı yok edici bir şey olmadığı surece bu win-win pozisyonu sonuçta bu herkes için geçerli bir ticari şey. Su an THY nin tabi ki yani bu illa ki Star Alliance ın içinde diye rekabet ortadan kalkmadı, su an biz Lufthansa yla belki de çok daha fazla rekabetin içindeyiz. Ama zaten sonuçta Star Alliance ı oluşturan ve bunu takip eden birimler ya da yönetimler bunu zaten kendi çıkarlarının aleyhine donduğunu gördüğü zaman o tavırda adımlar atacak ve çözmeye çalışacaklardır. Ancak su ana kadar böyle bir şey olmadığı için yani dediğim gibi mesela THY nin büyümesi aslında Star Alliance ın diğer üyeleri için aleyhte bir şey değil, bilhassa lehte bir şey, yani ulaşamadığı noktaları sunuyorlar. Yani bugün atıyorum Top Portugal mesela, THY üzerinden Moğolistan a yolcu verebiliyor. Normalde belki böyle bir imkânı olmayacaktı ama THY de onların seçeneklerini arttırıyor bu da onların bilet satışlarına yansıyor. Yani o yüzden su an Alliance da böyle bir durum yok zaten dediğim gibi United, Lufthansa ve THY su an hakikatten on planda yani şu an öyle dediğiniz gibi bir çıkar çatışması diyelim su an için öyle bir şey yok herkesin kazandığı bir durum şu anda. - Peki bir havayolu şirketinin bir alliance a girdiğinde diğerlerinden daha fazla avantaja sahip olabilmesi için hangi özelliklere sahip olması gerekir? -Aslında bu alliance a üye olun ya da olmayın yani şirketin benefitleri olması için ya da daha fazla avantaj sağlaması için genel kabul gören bazı özelliklerin olması lazım. Siz çok connection veriyorsanız çok yere uçuyorsanız iyi servis verebiliyorsanız kaliteli ve bunu uygun fiyatta verebiliyorsanız zaten ister Star Alliance da olun ister olmayın avantajlı durumdasınız. Yani bu bence alliance içinde olup olmamaktan bağımsız bir durum. Yani THY bugün rakiplerine göre her gecen gün daha avantajlı duruma geçiyor. Bugün THY alliance dan çıksa da belki bu avantajları koruyacaktır. Mesela isim vermeyeyim uygun olmaz ama mesela körfez havayollarından biri herhangi bir Alliance içinde değil tek başına gidiyor ve su an havacılıkta dense ki top 5, bir tanesi o. Ama herhangi bir alliance üyesi değil. Ama nasıl yapıyor bunu? Çok iyi uçaklarla harika bir servisle falan. Yani havacılık da diğer sektörlerdeki gibi, avantajlı olmak ya da dezavantajlı olmak tamamen sizin yaptıklarınızla ilgili rakiplerinizden çok. -peki THY 200 den fazla destinasyonla uçuyor su anda oldu. 60

96 -Bunlardan kaçı Star Alliance ile link oluyor, kaçı sadece direk THY tarafından gidiyordur? - Çok teknik bir soru bu. Binlerce origin destination var. Mesela biz Amerika da Boston a uçmuyoruz. Boston-Beyrut diyelim. Simdi bizi kullanabilmeleri için dediğim gibi bağlantı veriyor olması lazım. Mesela Boston dan İstanbul için inen uçağın Beyrut a inebiliyor olması lazım. Su konuda çok netim, THY çok çok iyi bağlantılar veriyor o yüzden yüzlerce vardır onu söyleyebilirim. Tam rakam atıyorum 1872 gibi bir şeyi ilgili birimden almanız lazım. -Bir havayolu şirketi bir alliance a katılmayı reddetse neden reddetmiş olabilir katılmayı istememesinin nedeni ne olabilir mesela? - Şimdi karşılıklı sonuçta ortak uçuşlar oluyor. Ve bir havayolu diğer havayolunun yolcularını çekebilir, simdi sonuçta siz aslında nasıl şöyleyim size tam bir serbestleşme oluyor yani herkes birbirinin uçuşlarında uçabiliyor, belli bir sure sonra mesela bir havayolunun sadık müşterileri o havayolundan daha iyi bir havayolu olacağını keşfedebiliyorlar ve böylelikle müşteri kaybı olabilir birbirlerine. Star alliance a gelirsek tek kayıp bu olabilir mesela söyle de bir şey; sizin bir hedefiniz vardır, nedir Asya da büyümektir. Ve bir Alliance a üye olurken orada güçlü olan networku güçlü olan bir Alliance a girerseniz bu sizin avantajınız olur doğal olarak. Diyelim ki benim hedeflediğim bölgede güçlü olan taşıyıcılar bir alliance ın içinde yoksa sonuçta One World de bir Alliance, ben Star alliance ı reddedebilirim derim ki benim hedefim vizyonum buralarda büyümek ve buralarda büyümem için bu havayolları üzerinden buyurum ve bu Alliance benim için avantajlı değil. Yani insanlar daha çok uçmadıkları noktalarda networku güçlü olan havayollarıyla link kurmak istiyorlar. Ki oralara bilet satabilsinler. O yüzden bu bence en büyük nedenlerden biri yolcu kaybı ve vizonuna uyuşmaması. -Ya da benim networkum en kuvvetli networktur ben bu alliancea girdiğimde diğerleri benden daha fazla benefit edecektir, ben 3 kazaniyorsam onlar ben 3 destinasyon arttırırken onlar 7 ya da 8 arttiriyor diyelim, bu yönde endışeler oluyor mu> -Bu manteliteyle pazardaki hiçbir büyüğün girmemesi lazım, büyük de daha fazla büyümek için de girebilir. Büyük kendine güveniyordur servisi iyidir ücretleri iyidir öbürlerinden pay da alabilir bu çift taraflıdır. -Her zaman win-win diyorsunuz yani? -Kesinlikle her zaman win-win. Aksi takdirde kimse girmezdi. Alliance larda çok küçük havayolları da var çok büyük havayolları da var. 61

97 -Genelde bu alyanslara girmek için havayolları seçiliyor mu yoksa seçiliyor mu seçiyor mu? -Genelde seçiliyor havayolu şirketleri alliancelar tarafında. Genelde havayolları başvuruda bulunuyor, Star Alliance da iste şartlara bakiyor: havayolunun sabıkası büyük mü - güvenlik anlamında kaza kırımları vs. var, Star Alliance bunu reddeder. Havayolunun repütasyonu, networku, hepsi dikkate alınıyor sonuçta bu Star Alliance ın ilgili birimleri değerlendiriyor ve sonrasında bir karar veriyorlar. Yani genelde Star Alliance teklif götürmez, tam tersi havayolları alliancelara girmek için caba gösterirler. TRANSLATION to ENGLISH - First of all, can you talk about yourself a bit: How long you ve been working for Turkish Airlines, when did you come to Edinburgh? - I am in Edinburgh since the 1 st of April, After staying in LA as the marketing director for 1,5 years, I came here as the Scotland Director. And Edinburgh line is on service since the 16 th of July, How does Turkish Airlines define and position itself in the airline industry? - Our Dear Mr General Manager has a definition for this: We will be competitive with our prices like European Companies, and will be providing high quality service like Asian Companies. So THY positions itself as a company mixes quality with low prices. - What is the objective of Turkish Airlines for the next decade? - Becoming the biggest airline of Europe. - Can you talk about Star Alliance and the alliance borders? What are the motivations of Turkish Airlines to join Star Alliance? - There are many reasons to join Star Alliance. First of all, STAR ALLIANCE is the most known and the biggest airline alliance. So firstly, we entered into a very big group by joining this airline alliance and actually it is a matter of prestige. Because this alliance has huge airline companies such as Lufthansa and the United. So in a manner of speaking we pushed ourself upwards to the Champions League. It is a 62

98 matter of being known as people recognize the Star Alliance logo all around the world. They say oh this airline has the star alliance membership. Addition to that, we have different forms of collaborations with the airlines within the alliance. There are loyalty programs called as common mile use. As you know Turkish Airlines has such a loyalty program called Miles&Smiles. Once you fly with Turkish Airlines, you can use the miles you earned with Turkish Airlines at your another flight with any airline company within the alliance. Alternatively, vice versa. For instance, a Lufthansa passenger can use his/her miles. This leads passengers to choose the airlines within the alliance. This is something important. - Addition to this, lets assume that a passenger came to Istanbul from San Diego via United, and will continue his/her journey TO Bangkok via Turkish Airlines. As those airlines are from the same alliance, it is easier to have some agreements such as cost share and SPA, which makes that passenger take his/her luggage directly from Bangkok. Alliances makes those agreements easier and accelerates the agreement procedure. - So as I mentioned before, you both improve your relationships with other airlines and you benefit from the whole. I mean you generally you benefit from the famous and prestigious brand image of the Star Alliance output. - As I mentioned before, the majority of the benefits are towards the passengers. That is why, a loyal passenger of United for 30 years, for instance, for a destination where United does not fly to, chooses an airline within the STAR ALLIANCE instead of loads of other options. So he/she can benefit from the lounges of star alliance member airlines, for instance. TA has a fantastic CIP Lounge, probably the best one in the world. Any passenger from an airline from the SA can benefit from TA s lounge if she/he holds a gold or silver membership. - Dir TA carry any worries or doubts on joining the STAR ALLIANCE? - No, that never happened. As intense feasibility studies and profit/loss analysis took place in order to see what the benefits and the advantages could be. Our departments at the headquarter had intense and detailed research about the manner. TA joined the SA by thinking that it would be extremely beneficious, as we experience its results today. - What any possible disadvantage could be? 63

99 - (hesitates during the answer, thinks a bit) We might lose our current passengers to the other airlines but this is a risk relevant for any airline company joining the alliance. But such thing never happened. This is about the vision of the company. TA is a company already founded towards the aim of the growth, we are growing significantly since and we joined the STAR ALLIANCE at 2008, it was 1 st of April on 2008 if i don t remember wrong. In 2006 we made the first big growth step by opening 24 destinations simultaneously. TA aims to fly everywhere in the world, it has growth targets where it is extremely ambitious about this manner. That s why the conjuncture went towards our favour. - After the Star Alliance membership you say you had more collaborative relationships with the other airlines, however it is a paradoxal relationship as the competitors fall into a collaborative relationship. - Lets name it as win-win position. - Do these airlines still perceive as competitors, or can we say that either competition or collaboration is more dominant in this relationship frame? - If you gain benefit from your competitor, this is a good competition. It is a win-win position as long as there is no destroying threat, or one side to defeat the other one. And this is relevant for everyone within this relationship. Of course STAR ALLIANCE did not lead the competition to disappear, indeed we for instance in competition with Lufthansa more than ever before. Indeed, if any danger for any part of the alliance takes place, both the STAR ALLIANCE and the departments who run the relations with SA will make steps towards solving the issue. However, such things never took place. The growth of TA, for instance, is not a disadvantage, indeed a beneficial thing for the other alliance member airlines, as the airlines within the alliance provide each other links to the destinations they do not fly. For instance, Top Portugal can give passengers to Mongolia via TA. Normally it could not have such opportunity without the alliance. So TA s growth means the increased options in terms of destinations for the other airlines within the alliance, which in turn reflects on their ticket sales. United, Lufthansa and TA are the pretty active ones and as I mentioned before, it is a statement that everyone is better off, so theres no conflict of interest right now. 64

100 - What characteristics/features should an airline company possess in order to be more advantageous compared to the other airlines within an alliance? - Regardless of being a member of an alliance, there are some generally accepted significant features that an airline should have, in order to possess more benefits and advantages. You already keep a significant advantage if you give many connectionsif you fly to many destinations, if you can provide high quality service and if you can give it to good price- regardless of you are a member of an alliance or not. So I think this is independent from being a member of an alliance or not. Today TA becomes in a more advantageous position every single day. It might even keep this position even if it leaves the alliance. For instance, a Gulf area airline company-i wont give the name as that would be inappropriate- is not associated with any of the airline alliances, but it is one of the top 5 airlines of the world. How does it succeed it? With very good planes and with very good service, etc. To conclude, as in every other industry, success in airline industry also depends on what you do, rather than what your competitors do. -TA currently flies over 200 destinations - its been How many of these destionations are via TA purely and how many of them via the link with a SA member? - Its been a too technical question. There are thousands of origin-destinations. But I cannot say an exact number. For instance, we don t fly to Boston in America, lets say the destination would be Boston-Beirut. In order to use TA, we have to be giving a link to the destination. The flight came from Boston to Istanbul should be link-able to Beirut. - However I am so clear about that TA gives so many good links so I can say there are hundreds of them. - If an airline company refuses joining an alliance, what might the reason be? - There are common flights across each other, and an airline can attract the passengers of another airline. There is a complete free atmosphere, I mean everone can fly with everyone s flight. This is how a loyal customer of an airline might discover that there is a better airline which leads missing the customer to another airline. This might be the only loss in the SA. 65

101 - Another reason is about your vision. If you target growth in Asia, for instance, you prefer an alliance where it has airlines have strong networks in Asia. If the carriers who are active in the area that I want to grow in are not within an alliance, OneWorld is another alliance for instance, I might reject Star Alliance, as it would not be advantegous for me. - What I mean is airlines want to link with the airlines who has strong networks towards the points that they do not fly, so that they can sell tickets towards these destinations. So I think the biggest reasons of not joining an alliance would be the worry of losing passengers and the network of the member airlines not to fit with the vision of the airline company. - Or is it possible to have a worry towards other airlines benefit more than my company does in the alliance? Lets say I can increase my destinations by 3 but others do by 7, 8? - With this logic none of the big airline companies should have joined to any alliances. The big airlines also might enter into alliances with the growth targets. The big one has confidence towards itself with its good service and prices, so it might take share from the others (via new destinations). So it is a two-sided relationship. - So you say it is always a win-win relationship. - Definitely, always win-win. Otherwise no one would have joined the alliances. There are noth small and big airlines within alliances. - Do airlines choose the alliances or do the alliances choose the airlines to join? - In general airline companies are chosen by the alliances. Airline companies apply for joining, and SA looks for the criterias: Are there bad records of the airline (in terms of accidents), the safety conditions are important. If the airline has accident history, the SA would reject the application. Reputation of the airline, its network, all of them are considered and assessed by the relative departments of SA and decision is made accordingly. - So SA does not offer to the airlines, the airlines show effort to join SA. 66

102 APPENDIX 2- TRANSCRIPTION: Interview with Fatma Basaran Çiçek, Turkish Airlines Edinburgh-Regional Commercial Manager- Turkish Airlines Edinburgh Directorate ORIGINAL INTERVIEW-IN TURKISH THY PAZARDA KENDİNİ NASIL TARİF EDER THY giderek büyüyen networkunu genişleten her gecen gün yeni destinasyon ekleyen bir havayolu bu nedenle marketteki payımız küçükten büyüğe sürekli artmakta ve yeni destinasyonlar nedeniyle yeni pazarlar sayesinde tabi gelir ve müşteri potansiyelimiz ve çalışmakta olduğumuz acente tipleri değişmekte ve artmakta. Ki bu nedenle pazardaki pozisyonumuzu çok iyi buluyorum ve giderek gelişmekte olduğunu düşünüyorum. Hedeflerimiz yüksek, sene sonunda 250 destinasyona uçmayı hedefliyoruz. Bu her açıdan bizim için önemli çünkü dediğim gibi her yeni destinasyon bize yeni Pazar getiriyor. Eğlence pazarı ayrı, business pazarı ayrı, ya da bunların ikisinin ortak olduğu pazarlar ayrı. Bunların üzerinde uzmanlaşmış olan acenteler da var bu acentalara her gittiğimizde yeni destinasyonumuzla gittiğimizde regional olarak UK de buradan çıkış noktalarımız da çok fazla olduğundan daha çok Kabul görüyor ve daha çok bizimle çalışmak istiyorlar, daha çok satıyorlar ve bu yüzden bu Pazar payımızın büyümesi ve konumu hakkında mutluyuz, Brand olarak kendimizi nasıl tarif ederiz Modern demek istiyorum, gelişmekte, sürekli müşteri ilişkilerine odaklanan, özellikle müşteri ilişkilerinde bagaj kayıplarına ve müşteri memnuniyetine odaklanmış bir şirket olarak tanımlayabiliriz. Su anda tabii ki eksiklerimiz var ama sürekli bunları gidermek için çalışıyoruz bu nedenle iyi bir konumda olduğumuzu ve insanların hakkımızda iyi düşündüklerini düşünüyorum. Next decade için mission Müşteri memnuniyetini sağlayarak büyümek olduğunu düşünüyorum çünkü bu bir hizmet sektörü. Çünkü ne kadar urun de satsanız müşteri memnuniyetini sağlayamadıktan sonra hiçbir urunun kıymeti yok bana kalırsa. O yüzden müşteri memnuniyetini sağlayarak bilinçli büyümek olduğunu düşünüyorum. Star Alliance ile ilgini vereceğim cevaplar havada kalabilir, daha bu konuda uzmanlaşmış birinden ki sana Serhat Bey bu konuda yardımcı olacak, Peki, Star Alliance in uyguladığı bazı müşteri memnuniyeti için kriterler var mı ya da Star Alliancea üye olmak müşteri memnuniyetini arttırdı mı bir etkisi oldu mu? 67

103 Tabi ki. Star Alliance in merkezi Londra da. Star Alliance in her ay ya da belirli dönemlerde toplantıları olur, bütün havayollarını bir arada toplayıp kendi ürünlerini gelişimlerini ya da müşteri ilişkileri olsun bütün Star Alliance üyelerini topladığı toplantılar yapıyor ve bunlara katılıyoruz. Ben bir defa katildim buna, bir urunun tanıtımı (Star Alliance ın) ve değişikliklerini. AMA dediğim gibi Star Alliance hem sürekli ürünlerini yeniliyor hem de sürekli havayollarını bir araya getirerek havayollarını bilgilendiriyor bilgileri tazeliyor. Evet, Star Alliance da olmamızın çok büyük faydaları var, zararlı olduğunu düşünmüyorum çünkü her zaman birlikten kuvvet doğacağını düşünüyorum. Yararları çok çünkü Star Alliance bilinen bir herkes Star Alliance biliyor yolcusuna kadar, Star Alliance I duyduğu zaman kendini güvende hissediyor. ( kendi notum: dolayısıyla birbirlerini iyi olmaya zorlarlar çünkü sen yolcunu emanet ediyorsun. Rakibin iyi olsun iyi is yapsın diye uğraşıyorsun resmen) Yolcu diyor ki eğer Star Alliance üyesiyse bu doğrudur, bunu tercih ederim diyor. Ya da uçak iptal olsa bile alternatifim var diye düşünüyor ki doğru hemen yolcularımızı diğer Star Alliance üyesi havayollarıyla uçurabiliyoruz. Bizim için faydaları çok çok fazla ürünleri farklılık gösteriyor o nedenle bir kotu bir tarafının olduğunu düşünmüyorum imaj olarak da bize katisinin olduğunu düşünüyorum herhangi bir risk benim bildiğim kadarıyla yok. Markamız acısından da bir risk oluşturmuyor. Yani aslında bir tur akreditasyon gibi değil mi, bir kalite Standard belgesi gibi Star Alliance bir yandan da, değil mi? Tabi onun kalite standardını tutturmak zorundasın ki biz onun içindeki bir suru havayolundan daha yüksek kalitedeyiz. Su anda biz Avrupa nın dört yıldızlı tek havayoluyuz. Beş yıldızlı olmasına çalışıyoruz. Zaten oradaki birçok havayolundan daha iyi standartlarımız ama yine de onların getirdiği standardizasyon sayesinde kendimizi o anlamda o düzeye tasdik geçmişten beri su an çok üstündeyiz onların taleplerinin ama yine de onların belli bir Standard olması ve diğer havayollarının da bu Standard uyum sağlaması iyi birse çünkü biz yolcularımızı bazen bu havayollarına yönlendiriyoruz ya da code share ucuzlarımız oluyor o nedenle bize herhangi bir faydası olmayan tarafını görmüyorum. Peki bu Star Alliance ta üründen kastettiğiniz ne? az önce Star Alliance in ürünleri demiştiniz. Mesela around world tour diye bir urunu var. Yani Star Alliance in web sitesinden de girip görebilirsin. Turk Hava yolları, Lufthansa gibi birkaç Star Alliance üyesi havayolunu kullanarak tüm dünyayı farklı iyi bir ücretten dolaşabiliyorsunuz. Mesela farkli urunleri de 68

104 var. Daha doğrusu yolcuların birkaç airline kullanarak yaptığı uçuşlarda genellikle Star Alliance devreye giriyor bu tarz ürünleri var ki biz bunlara dahil oluyoruz Peki, bu ürünlere dahil olmak için bir rekabet var mıdır? Diğer havayolları arasında havayolları bir üründe yer almak için rekabet ediyorlar mı? Bireysel olarak her zaman birbirimizle rekabet halindeyiz ama Star Alliance üyesi olarak birbirimizle rekabet halinde değiliz. Çünkü Star Alliance birbirimize desteğimiz var bizim uçmadığımız noktaya diğeri uçuyor ya da diğerinin uçmadığı noktaya biz götürüyoruz, her iki taraf için de iyi oluyor. O yüzden o tarafta birse yok ama ayni yere iki ayrı havayolu uçuyorsa o zaman tabi ki bir rekabet var. Ama dediğim gibi bu her zaman söz konusu değil. Bizim uçamadığı yerlere-ki artık çok azaldı- bizim için hala faydalı. O yüzden hala bir riski ya da bir eksisi olduğunu düşünmüyorum. Ama diğer havayollarından her zaman daha iyi servis ve daha iyi ücret vermeye çalışıyoruz. Bunları sen de biliyorsun çalışmaları yaparak değerlendirme altında sürekli. Onun haricinde neden airline alliance a girmek istemez? Bence alliance onu almıyordur çünkü standartları sağlayamamıştır. Yani havayolundan ziyade Star Alliance in onu Kabul etmemesi daha muhtemel. THY nin su anda Star Alliance dışında, isim vermeyerek, Star Alliance olmasa onun dışında katılmayı istemeyeceği bir alliance olabilir mi? diyelim ki X Alliance indan Türk hava yollarına teklif geldi, THY de hayır teşekkürler biz tercih etmiyoruz dedi. Star Alliance dan daha büyük olanı yok. Diğer alliance lar da var ama STAR ALLIANCE dan daha kapsamlı benefiti daha fazla olan yok. Çünkü ne kadar çok iyi havayolu varsa o allianceda, biz bunlara yolcularımızı emanet ediyoruz. Bundan daha iyi bir alliance olsa belki genel müdürlük tarafından değerlendirilir ama dediğim gibi böyle bir opsiyon yok. Cok teşekkür ederim Fatma Hanim. TRANSLATION to ENGLISH How does Turkish airlines define itself in the global market? 69

105 TA is an airline company which grows day by day widens its network by adding new destinations every single day that s why our share in the market is constantly increasing and with the effect oft he new destinations and markets so does our income and consumer potential and the agency types that we work with change and increase. That s why I find our position within the market very well and I think it is improving constantly. Our targets are high, we target to fly to 250 destination by the end oft he year. It is important for every single aspect because as I said before every destination brings us new market like entertainment markets or business markets or both oft hem. The more we increase our destinations the more agencies show demand to us because they sell more with our increased destinations that s why we are happy about the increase in the market share and the position oft he company. How do we define ourselves as a brand? I want to say modern, improving, always focusing on customer relationships especially luggage losses. Of course we have parts to improve but we are constantly improving ourselves that s why I think that we are in a good position and people have good ideas about us. What is the mission of Turkish Airlines of the next decade? I think it is growing by providing customer satisfaction because we are in the service sector. I think that the products have no value if you cannot provide customer satisfaction. Does Star Alliance has criteria for customer satisfaction and did the Star Alliance membership have any impact on the customer satisfaction? Yes, of course. Star Alliance constantly refreshes its products and works for customer satisfaction and keeps all airlines up to date with the meetings it conducts at their HQ in London. 70

106 What are the advantages and disadvantages of joining Star Alliance? I think we don t have any disadvantages but many advantages. Every passenger knows Star Alliances and feels comfortable with it. The passenger thinks that Star Alliance member airlines are the right choice because he / she knows that he / she has an alternative even if the flight is cancelled. In such cases of flight cancellation we can directly channel our passenger to other member airlines. It has many benefits for us because Star Alliance has many different products. I also think that it has a big contribution to the brand image. As far as I know it doesn t carry any risk and neither for our brand. So can we say that being member of Star Alliance is like holding a quality standardization document or a kind of accreditation? Yes of course. The airlines have to keep the quality standards that Star Alliance sets and we are already in a higher quality level than many member airlines. We are currently the only four star airline of Europe and working for having five stars. Our standards are way better than many member airlines but this level shift is gained through the standardization that Star Alliance provided in the beginning. These standard requirements are very important because sometimes we channel our passenger to those member airlines or we have code share flights with member airlines. To conclude I don t see any non-beneficial part. You just mentioned Star Alliance products. What did you mean by Star Alliance products? For instance it has a product called Around world tour. The passengers can travel the entire world by using a few Star Alliance members such as TA and Lufthansa with a very good price. It has many different products. In general Star Alliance intervenes hen passengers are flying with multiple member airlines. Is there a Co-opetition involved in these products? Do member airlines compete to take place in these products? 71

107 As individual airlines we always compete with each other but as Star Alliance members we do not. Because we support each other within Star Alliance because another member airline flies to the destination we do not fly to or vice versa. So it is a winning situation for both sides. There is no competition if only one airline is flying into one destination but competition takes place if there are two airlines flying to the same destination. We always carry endeavor of providing better service and better prices as you also know. Why would an airline prefer not to join an alliance? It is more probable that the alliance does not accept this airline because it couldn t provide the required standards. Let s assume that alliance X proposed TA to join and TA rejected this offer. What could be the reason? There are also other airline alliances but Star Alliance is the biggest and most beneficial one. If there were a better alliance maybe the HQ would consider changing but as I said before there is not such an option. APENDIX 3- TRANSCRIPTION: Interview with Onur Alpan-Turkish Airlines, Internatonal Relations and Agreements Manager; and Banu Ekerim- Turkish Airlines International Alliances Specialist ORIGINAL INTERVIEW: IN TURKISH Ben öncelikle sizleri tanımak isterim, ne zamandır bu pozisyonda çalışıyorsunuz, THY de ne zamandır varsınız? Banu: THY ye 98 yılında yer işletmede başladım üniversite öğrenicisiyken. Daha sonra yer işletmenin başka bir bolumu olan X anlaşmalarda çalıştım Ağustos tan beri de buradayım. Uluslararası ilişkiler ve anlaşmalarda hem ticari anlaşmalar hem de ittifaklar bolumunu takip edip koordinasyonu sağlıyoruz. İttifaklardan kasıt tabi ki SA tabi ki bir de üyesi olduğumuz uluslararası organizasyonlar var IATA gibi bu ve benzeri kuruluşlarla ilgili günlük operasyonel takip ve üst düzey raporlama olarak özetleyeceğimiz isi yapmaya çalışıyorum. 72

108 Onur: Ben 2000 de başladım THY de çeşitli bölümlerden sonra 2003 sonunda bu bolüme geçtim. O tarihten bu yanda da Uluslararası İlişkiler ve Anlaşmalardayım. Neler yapıyoruz Uluslararası İlişkiler anlaşmalarda? Öncelikle iki ana konumuz var: Havayollarıyla olan ilişkiler ve devletlerarası ilişkiler. Eğer THY ni TC olarak görürsek burası dışişleri bakanlığı gibi çalışan bir bolum. Bir havayolunun bir ülkeden başka bir ülkeye uçabilmesi için öncelikli olarak devletlerin kendi aralarında bir anlaşma imzalaması gerekiyor. Bu anlaşmaya istinaden havayolları seferler gerçekleştirebiliyorlar. Bu anlaşmaya hava ulaştırma anlaşması diyorlar ve ulaştırma bakanlığına bağlı sivil havacılık genel müdürlükleri bu anlaşmaları imzalıyorlar. Bu anlaşmalar tabi ki direk olarak tüm havayollarını etkileyen anlaşmalar olduğu için haftada kaç sefer uçacağız nereden nereye uçacağız hangi uçak tipiyle uçacağız koltuk kısıtlaması olacak mı olmayacak mı direk havayollarını ilgilendirdiği için biz de bayrak taşıyıcı havayolu olarak bu toplantılara katılıyoruz birinci yaptığımız is bu. İkincisi havayolları nezdinde olan ilişkiler ticari anlaşmalar uluslararası havayolları organizasyonları iste bunların bir kısmi IATA gibi European Airline Association, Arap Carrier Organization, Güney Amerika Havayolları Birliği gibi uluslararası havacılık organizasyonları, kimisi de daha ticari: yani SA gibi birlikler. Biz 1 Nisan 2008 de Star Alliance a girdik. Bunun öncesinde çok ciddi bir karar verme sureci ve karar verildikten sonra da Star a girebilmek için bir uğraş vardı. Aynen AB ve TR arasında üyelik müzakere sureci gibi, Star Alliance la Türkiye arasında böyle bir müzakere sureci geçti. Buna benzer (küçük ve kalın bir kitap gösteriyor) bir minimum şartlar kitapçığımız var, listesi var, bu şartları THY ya da herhangi bir aday havayolu yerine getirmeden SA a üye olamıyor. BANU: Integration Process denen bir yıldan az olmamak üzere bir süreç geçiriyor. Onur: Biz müdürlük olarak bu entegrasyon surecinin THY deki koordinasyonu yaptık. Çok çeşitli şartlar var, örnek veriyorum business class yolcunun bagaj etiketine onun bagajını ayırt edebilmek için renkli bir etiket takmaktan tutun da Banu: belirli raporlamaların cost share satış raporlarına dair bir takım verilerin belirli periyotlarda starla paylaşılmasına kadar. -peki, bu müzakere sureci ne kadar surdu THY de? Onur: Bir buçuk sene kadar surdu, 2006 sonunda başladı, bir buçuk iki seneye yakın bir süreç. Ve biz 8 üye olduk 3 farklı üyelik tipi var, bunların aidatları ve söz hakları farklı. Galaksilerden alınan üç takım yıldızından alıyor bu guruplar isimlerini: olux, castor ve vasat. Olux en yüksek üyelik: üyelik aidatının en yüksek olduğu ama ona göre de söz hakkinin en fazla olduğu ve sorumlulukların çok yüksek olduğu bir üyelik tipi Banu: İttifaka yon veren bir üyelik tipi seklinde özetleyebiliriz. 73

109 Onur: THY bu üyelik tipinde. Polux üyeyiz biz. Bütün toplantılara 100% katilim gerekiyor, minimum şartları en az %70 alanında yerine getirmek gerekiyor, bu şartları yerine getirme oranınız %70 altına düşerse, starın size bir alt üyelik tipine düşürüp bir üst üyelik tipindeki aidata devam ettirme seklinde yaptırımı var. Tabi ki bir üst üyelik tipinin aidatı önemli değil önemli olan burada havayolunun prestiji. Shame and blame olayı var. Çok fazla Vassat havayolu yok, genellikle böyle büyük havayollarının alt kuruluşları ya da yüzde yüzüne sahip olduğu küçük havayolları örnek Lufthansa nın yüzde yüzüne sahip olduğu, SN Brussels, Avusturya Havayolları gibi havayolları en alt gurubunda çünkü onların sahibi olduğu Lufthansa her hâlükârda onların yerine karar verip konuştuğu için o havayollarının herhangi bir söz hakki yok. Yani şeye benzettim bunu, mandacılık sisteminde manda altında hayatlarına devam eden ülkeler gibi. Banu: bu arada is tanımında bir şey atladık Müdürlük olarak yaptığımız personelin gerek görev gerek tatil seyahatlerinde yabancı havayollarından ücretsiz ya da indirimli bilet almasını sağlayan ticari anlaşmalarımız var bunları yapıyoruz, sistemlerin implement etmesi ve internete koyduğumuz sistem var,.. - Peki, bu star alliancea katılırken bir endişesi var mıydı herhangi bir negatif kısmı bir hesitationu var mıydı? - Banu: öngörülen maliyeti çok belli zaten anlaşmalarda yazan, bunun dışında bir havayolu için ittifaka katılmanın en önemli amacı costlari düşürmek zaten ve bunu büyük ölçüde de star alliance ya da başka alliancelarda bi contribution sana bir destek bir katilim katkı bir added value sağlayacağını sana teyit ediyor ve bunu da büyük ölçüde yerine getirmiş oluyor. Bizim THY olarak SA a girmemizdeki en önemli etkenlerden birisi marka bilinirliğini arttilirmasiydi ki bunu büyük ölçüde sağladık ve bunu hala çok iyi bir şekilde kullanmaya devam ediyoruz star markasını kesinlikle yan amaçlarımız da vardı cost cutting gibi cost cutting çok önemli bir şey, network effect sales effect dediğimiz, zaten ittifakların vadettiği ürünlerden ve hizmetlerden kaynaklanan gelirler diyelim bunlar sağlanıyor bir şekilde. ONUR: örnek verelim mesela bütün hava yolları biraya gelerek.. Simdi uçak çok enteresan bir makine alet bir araç ne diyorsak, siz Boeing den, Airbus tan sadece uçağın gövdesini alıyorsunuz. Motorlarını başka bir firmadan alıyorsunuz: Rolls Royce dan alıyorsunuz, General Elektric ya da başka bir firmadan; koltuklarını başka bir yerden alıyorsunuz lastiklerini başka bir yerden alıyorsunuz. Banu: Yapabiliyorsanız kendiniz yapıyorsunuz, Onur: Sımdı star alliance da bunu soyluyor: biz havayolu havayolu olarak bu koltuk üreticileriyle ayrı ayrı pazarlıklar yapıyoruz. Onun yerine gelin birleşelim bin koltuk yerine 74

110 10000 kolduk koltuk alalım daha çok pazarlık gücümüz olsun ya da bu koltuğu kendimiz üretelim. Star Alliance bir proje başlattı, Economy Seat projesi altında kendi koltuğunu kendisi üretti. Ve bazı havayolları bu zorunlu bir uygulama değildi-isteyen star üyesi havayolları da bu starın teşvikiyle üretilen koltuklarını uçaklarında kullanmaya başladılar. -THY dâhil oldu mu buna? THY dahil olmadı çünkü SA in ürettiği koltuk bizim standartlarımızın altında bir koltuktu. Biz daha farklı bir koltuk modeli tercih ediyoruz, yolculara maksimum rahatlık sağlayacak. Her koltukta ekran olacak falan, bizim standartlarımız daha farklıydı: biz kendi koltuğumuzu kendimiz üretmeye başladık, birim maliyetlerimiz çok daha düşük oldu başka bir firmayla joint venture kuruldu. Ve kendi koltuğumuzu kendimiz üretiyoruz ama bu sadece bir örnek bunun yansıra akaryakıtta, bazı ikram malzemelerinde Star ın bir araya getirerek oluşturduğu bazı ihaleler alımlar var burada THY da bu grubun içinde yer alıp zaman zaman ciddi cost saving elde edebiliyor. Banu: Onur Bey in bahsettiği gibi uçağı tek bir şey olarak düşünmemek lazım onunla ilgili hizmetleri de düşünmeniz lazım yani tek başına uçağı düşünmek yeterli olmuyor ayni zamanda yer hizmetleri ikram hizmetleri uçuş hizmetleri terminal ona bağlı hizmetlerin bütününe. Bir yolcuya starın taahhüt ettiği seamless travel yani kesintisiz hizmeti sağlamak için birçok alanda gerekiyorsa işbirliği yapmak, bu alanda ortak yatırımlar yapmak ve bu sayede üyelere belli kazanımlar sağlamak. Tabi ki ortak çıkarlar altında toplanan ve herkes için kazanım sağladığınızda siz ittifakın bütünü içinde ortak bir değer yaratmış oluyorsunuz. Zaten ittifakların en önemli amaçlarından bir tanesi de bu: ortak hizmet almak, ortak terminal kullanmak, ortak yakıt ihalelerinde bulunmak, ortak koltuklar yapmak gibi bu tarz hizmetlerin bütününü duşunun, sadece uçağın kendisini değil. - Ayni zamanda uçuş destinasyonlarında da bir avantaj sağlıyor mu? - Banu: diğer başlıklarda direk olarak havacılıkla ilgili olan network, sales, vs. ffb dediğimiz sadakat programları, onlar da ticari işbirliklerinin bir parçası. Oradaki işbirlikleri havayollarının birbirini desteklemesi anlamında birçok kalemde etkin ayni zamanda da lobi faaliyeti. Herhangi bir IATA için de böyle Aea ıcın de böyle havayollarıyla ilgili olarak onların operasyonlarını, ticari islerini etkileyecek ulusal ya da uluslararası anlamda alınan kararlara ortak cevap vermek, ortak tavır almak gerekiyorsa, değiştirilmesi gerekiyorsa buna müdahil olmak. IATA bunun için var örneğin. Dolayısıyla bu tarz kuruluşların etkinliği havayolları için önemli. - -peki, bu Star Alliance çerçevesinde rakiplerle işbirliğinde bulunuyorsunuz, Bu paradoksal bir ilişki aslında. 75

111 - Banu: ticari işbirliği mustlardan biri aslında. İttifak içinde işbirliği yapmak zorunlu zaten. İttifak dışında olmaktansa üyelerin ittifak içinde maximum işbirliği yapması sürekli desteklenen sürekli Support edilen sürekli altı çizilen bir husus. Ne kadar başarıldığı becerildiği konusu da belki tartışmalı olabilir ama bu insan hayatındaki gibi inişler çıkışlar gösteren, sadece iki kişinin ilişkisi sadece ikimizden ibaret değildir çevresel faktörler de çok önemlidir. Avrupa Birliği nin mesela ya da dünyada yaşanan ekonomik krizlerin yarattığı bir takım ortamlarda ittifak içindeki havayolları örneğin başka kanallara gitmiş olabilirler, o dönemde baktığınızda Intra-Star net işbirliğinin düştüğünü, insanların dışarı kaçtığını görebilirsiniz ama bunlar değişken şeylerdir, değişir zaman zaman. - Bazı akademik makaleler incelediğimde görüyorum ki alliance içine giren bazı şirketlerin, yani alliance dan sonra ayni alliance içinde birbirleriyle olan rekabet seviyesinin aslında arttığı görülüyor. Siz bu konuda ne düşünüyorsunuz? Örnek vereyim Lufthansa ile mesela, alliancedan sonra biz daha fazla rekabette bulunuyoruz aslında ya da rekabet daha kızıştı diyebilir miyiz? - Onur: Diyebiliriz. Alliance a girdiğimiz zaman aslında rekabet hiçbir zaman bitmiyor. Yani ne kadar ticari işbirliği içinde olsa da aslında alliance içindeki herkes bizim rakibimiz. Partnerimiz ama rakip partnerimiz. Lufthansa bunun için güzel bir örnek ama son 5 yılda havacılıktaki gelişmeler ve dünya konjonktüründe olan gelişmeler, Türkiye de olan değişim bunların hepsinin çok büyük etkisi var çünkü biz 2008 de THY olarak SA a girdiğimizde 64 uçağımız vardı. Su an baktığımızda 220 kusur. O dönemde çok daha az uçuş noktamız vardı, su an 100 kusur ülkeye uçuyoruz ve dünyada ülke sayısı bakımından en çok ülkeye ucan bir numaralı havayoluyuz. Sektör bakımından uçulan şehir bakımından bizden daha fazla noktaya ucan havayolları var, örneğin Amerika var ama Amerika bizden çok daha fazla şehir olduğundan onların iç hat networkleri çok büyük olduğundan dolayı otomatikman onların yüksek oluyor ama ülkeye batiğiniz zaman THY bir numara. THY uçtuğu nokta olsun, filo sayısı olsun, taşıdığı yolcu olsun. Transit yolcu burada çok önemli. Yani su anda biz öyle noktalar acıyoruz ki Türkiye deki insanları boş verin bizim duymadığımız noktalara biz sefer düzenlemeye başladık. İnsanlar soruyorlar: İstanbul dan Afrika nın su noktasına kim gidecek, siz bu seferleri niye acıyorsunuz? Biz artık sadece point to point traffic dediğimiz yani İstanbul dan alıp bir yolcuyu başka bir noktaya götürmek oradan da alıp İstanbul a getirmeye bağlı değiliz. Doğudan alıp İstanbul üzerinden Batıya götürmek, batıdan alıp İstanbul üzerinden doğuya götürmek bizim yaptığımız en önemli islerden bir tanesi de bu. Tabi THY bu kadar büyüyüp networkunu bu kadar genişletip, yolcu sayisini deki rakamı hatırlamıyorum ama 2012 de 30 kusur 76

112 milyon yolcu taşıdık senelik, bu kadar en az 2 a da 3 kat artış olması lazım- veriler bu kadar 2 digit artışlar olunca. Biz tabi Lufthansa ile, ve diğer Star Alliance partnerlerimiz ile çok ciddi rekabet etmeye başladık. Bazı havayolları bundan memnunken bazıları da bundan şikâyet ediyor, bu çok doğal bir durum. Çünkü Avrupa da biliyorsunuz çok ciddi bir ekonomik kriz var, bir suru havayolları iflas etti. Spinair iflas etti Mani? İflas etti, Ukrayna da aeroswift?? İflas etti, satın alınanlar oldu, British mid??? Satın alindi, BA tarafından, star alliance daydi çıkmak zorunda kaldı, zorluk yaşayıp SAS gibi, LOT gibi, Hırvatistan havayolları gibi devlet sübvansiyonuyla tekrardan ekonomik durumlarını düzelten veya geçici olarak diyelim düzeltenler oldu. Bu şartlar altında Türkiye nin ekonomik durumu ve THY nin büyümesi çok pozitif olduğundan dolayı tabi THY nin basarisi haricinde bunlar da bizi rakiplerimizin bizi olumlu onları olumsuz şekilde etkiledi. - Ama bir yandan da THY nin destinasyon ağının genişlemesi onlar için de bir yandan olumlu değil mi? - Bizim yapmış olduğumuz cost share dediğimiz anlaşmalar sayesinde THY nin uçup da onların uçmadıkları noktalara kendi sefer kodlarını koyarak kendi seferleriymiş gibi satış yapabilme imkânlarına sahip oluyorlar. Tabi bu THY nin networkunu büyütmesi onlara bu anlamda bir avantaj sağlayabiliyor. Ama bunlar ticari anlaşmalar, uçtuğumuz her noktada böyle anlaşmalar yapmıyoruz, ticari bir karar, 2 havayolu bir araya gelip nerelerde ne gibi bir anlaşma yapacağını veya o anlaşmayı yapıp yapmayacağını star alliance içindeki bütün üyelerle bizim böyle anlaşmalarımız yok. Olanlar var, olanlarla da tüm network çapında yapmıyoruz, bazı hatlarda bazı seferlerde yapıyoruz. Ama tabii bu açıdan bakarsak onlar için ilave-offline nokta diyoruz bu noktalara-offline noktası iken o havayolu sanki kendi seferiymiş gibi satış yapabiliyor, bu offline nokta sayisini arttırabiliyorlar, biz de ayni şekilde kendi uçmadığımız noktalara bu anlaşmalar sayesinde offline noktaları online a çevirebiliyoruz. - - Peki, alliance içerisinde bazı şirketler bazı havayolları daha fazla avantaj sağlarken diğerlerinin benefitinin daha az olması, herkesin bu alliance dan eşit şekilde benefit etmemesi durumu söz konusu mu bu durumda? - Eşit olunmasına çalışılıyor, ama tabi arada farklar olabilir böyle şeyler doğabilir. Konuya göre, yapılan işbirliğine göre de değişebilir. Örneğin küçük bir havayolu, biraz önce anlattığım bu offline noktaları online noktalara çevirme anlamında daha çok avantaj sağlıyor. Çünkü networku küçük, büyük havayollarıyla işbirliği yaptığı zaman networkunu daha çok genişletebiliyor. Ama zaten networku büyük bir havayolu, o networku küçük havayollarıyla işbirliği yaptığında networkunu 77

113 genişletemiyor. Ama onun da farklı bir avantajı oluyor, büyük firma küçük havayolunun daha çok yolcusunu alıp seferlerinde taşıyabilirken, küçük havayolu büyük havayolunun yolcularını çok fazla alıp kendi seferleriyle taşıyamıyor-neden, çünkü büyük havayolu zaten kendi uçaklarıyla her yere götürebiliyor. Yani ele aldığımız konuya göre kimin ne kadar avantaj sağlıyor, kim artıda kim ekside değişir tartışılır. Ama genel overalla bakarsanız aşağı yukarı, elbet genelde farklılıklar vardır, herkes ayni durumda diye bir şey söyleyebiliriz. Sunun da tabi etkisi var buna tabi yüzdesel bakmamak lazım, THY nin toplam taşıdığı yolcunun ne kadarı star alliance ile taşınıyor, çok küçük bir örnek Adria havayollarının yolcularının yüzde kaçı star alliance ile taşınmış, fark eder. Yani senede yolcu taşıyan bir havayolu için senede 1000 star alliance ile taşınan yolcu %10 yapar ama 30 milyon taşıyan bir havayolu için 10 bin değil 100 bin gelse yine de küçük bir yüzde olarak kalacak. Dolayısıyla hep bunlar göreceli kavramlar. - Peki, THY nin en büyük avantajı Star Alliance da marka bilinirliği, network artış mı, hangisi? - Marka bilinirliği demek daha doğru olabilir çünkü networkumuzu biz Star çerçevesinde genişletmedik. Costta da çok ciddi bir avantajımız yok çünkü THY nin şansı şu, aslında Türkiye nin şansı, Avrupa ile kıyaslarsanız bizim maliyetlerimiz çok düşük, özellikle personel maliyetlerimiz. Biz neredeyse Avrupa daki Easyjet, Rjanair, gibi low cost havayollarıyla ayni maliyet seviyesine sahibiz. Bizimkisi onların üstünde ama iste Lufthansa gibi, BA, Air France, KLM gibi havayollarına baktığınızda bizim maliyet seviyemiz çok düşük bunun avantajını taşıyoruz. Bence en büyük avantaj reklam, marka bilinirliği üzerine oldu çünkü biz Star a girmeden önce THY Avrupa da Türkiye ile Almanya arasında gurbetçi vatandaşları, isçileri taşıyan yerel, bölgesel bir havayolu olarak biliniyordu, öyle olmamasına rağmen. Ciddi bir önyargı vardı. Kimse denemediğinden dolayı seferlerimizi, ikramımızın, servis kalitemizin, uçaklarımızın ne gibi bir seviyede olduğunu bilmiyordu. Star sayesinde insanlar denedikçe, THY ile uçtukça bu önyargı kırıldı. Tabi biz THY olarak da çok şey yaptık, Manchester United la, Barcelona yla, Kobe Bryant la, Hollywood Starı Kevin Costner la olan reklamlar ( ki bu ilk onunla başladı ) THY nin imajını değiştirdi Euroleague Basketbol şampiyonası böyle böyle reklam anlaşmalarıyla her yerde THY nin adı çıkmaya başlayınca Star Alliance in katkısıyla birlikte, tabi böyle bir marka bilinirliği artarak devam etti. Zaten ölçümler de bunu gösteriyor. En son dönemde Paris te Air Show da Startrek Ödüllerini üçüncü kez kazımamamız yolcuda alınan feedbackin en önemli ölçümlerinden bir tanesi Startrex markası biliyorsunuz. 78

114 Yine 3. Kez odul aldik, bilinirliğimizin artması çok çok önemli alliance bize bunu bu anlamda sağladı zaten bizim amacımız da büyük ölçüde buydu. - Dediğim gibi yan amaçlarımız da zaten ittifakın sunduğu şeylerdi zaten bunları zaten bize taahhüt ediyordu tüm havayollarında olduğu gibi. Biz de bunları ne ölçüde kullanırsak çünkü onlar manageable şeyler. Siz ne kadar ortak initiavelere katılırsanız, ne kadar ortak alımlara katılırsanız onlar sizin karar vereceğiniz şeyler. Dolayısıyla sales effect dediğimiz, ortak satış ürünlerine katılırsanız oradan size zaten mutlaka geri dönüş olacak o kaçınılmaz. - - Peki, Star Alliance a yeni bir havayolu şirketi katılırken SA üyesi havayollarının görüsü alınıyor mu ya da reddetme hakki var mı? - Air India örneğini verelim. - Öncesinde White Spot denilen bir kavram var. Star, çeşitli pazarları üye havayolları adına inceliyor. Mesela Rusya da kim var, kiminle is birliği yapılabilir, oradan kim katkı sağlayabilir, yeni bir havayoluyla is birliği yapmak iyi midir, doğru mudur üyeler açısından ve ittifakın bütününe sağlayacağı katkı bakımından değerlendirilir. Bireysel tabi ki havayolları kendi çıkarları için konuşurlar ama Star değerlendirmeyi bütün havayolları için ortak genel fayda açsısından bakar. SA zaten tüm havayollarının çıkarlarını korumak için kurulmuş bir işbirliği onun için dolayısıyla Onur Bey in söylediği gibi biliyorsunuz Hindistan Pazarı çok önemli bir Pazar ve o pazarın en önemli aktörlerinden bir tanesi Air India. Air India devlet merkezli bir havayolu, devlet tarafından idare olunan bir havayolu. Avrupa ile Hindistan ın bağlantıları, tarihten gelen işbirlikleri, tarihten gelen o derin bağlar ışığında böyle bir pazarın durumu iste ülkenin her havalimanına sonsuz sayıda uçuş gerçekleştiğini düşünürseniz orada ciddi bir potansiyel olduğunu, air india önemli bir örnek olarak Star in gündemine gelmiş idi. Bununla ilgili bir takım çalışmalar yapıldı, hatta bir entegrasyon surecine girildi normal bir üye gibi. Biz buna uygun olduğunu düşünüyoruz ne düşünüyorsunuz diye üyelere soruldu, üyeler çoğunlukla olumlu oy verdiler, olumlu karar alindi ve entegrasyon sureci başlatıldı. Tüm diğer havayollarında olduğu gibi bu süreç başlatıldı, bir timeline oluşturuldu, ve bütün gelişmelerden üyeler düzenli olarak bildirildi, çeşitli toplantılardaki çeşitli düzeylerdeki toplantılar vasıtasıyla. Fakat maalesef süreç tamamlanamadı ve bir kesinti gerçekleşti, en önemli sorunlardan bir tanesi Air India nin gerekli zamanlarda gereken aksiyonları alamamasıydı. - Onur: Yani bu minimum şartları Air India bir turlu yerine getirmedi. - Bu da tabi havayollarının diğer üyelerinin itiraz ettiği bir duruma donuştu ve kesildi. Yeniden üye olmasının gündemde olduğunu az çok biliyoruz ama yine de net bir şey 79

115 yok ortada, dediğim gibi aday havayolunun güvenlik Sartlarını Star Alliance ın ortak olarak sunduğu o hizmet bütününü sağlaması ve o kaliteyi artarak devam ettirmesini sağlayacaksa havayolu, havayoluna okey veriliyor. Buna inanılmıyorsa oylama yapılıyor ve üyeler bunun uygun olmadığına karar veriyorlar ve o üye kesinlikle ittifaka kabul edilmiyor. Bununla ilgili idari süreçlerden geçiliyor tabi ki. Normalde Star Alliance ile üye havayolunun imzaladıkları kurucu anlaşmalarda detayları belirlenen seçme, seçilme isleyiş süreçleri var. Belirli zaman dilimlerine dağılan şeyler var, bunlar uygulanıyor. Ve aday üyeler kabul ya da ret olunuyor, çok şeffaf her sureci takip edebildiğiniz asamalar silsilesi diyebiliriz buna. - Bir alliance üyesi olmayan havayolu şirketleri de var, üye olmamayı tercih eden. Sizce üye olmamalarını tercih etme nedeni nedir? Tek baslarına bulunmayı tercih etme nedenleri. - Her kararda olduğu gibi alliance a girme kararının da avantajları ve dezavantajları var. Biraz önce avantajlarını sıralamaya çalıştık. Dezavantajları neler, sonuçta biz bir ticari şirketiz. Alliance in getirdiği ve ticaret yapmayı engelleyici kısıtlayıcı şartlar var. En önemlisi su, diğer rakip alliance lar, kim bunlar: Star Team ve One World. Bu alliance lara üye herhangi bir havayoluyla ben ortaklık yapmak isteyebilirim. Yani ticaret gereği ticari karar gereği ben herhangi bir alliance partnerim yerine, aslında One World e ya da Sky Team e üye bir havayolu ile ticari işbirliği yapmak isteyebilirim. Ve bazı durumlarda gerçekten bu durum gerekebiliyor. Örnek veriyorum, Rusya da herhangi bir Star Alliance üyesi havayolu yok. Sibirya havayolları var, One World üyesi, Aeroflot havayolları var, Rusya nın milli taşıyıcısı, Skyteam üyesi. Bunlar Rusya nın en büyük iki taşıyıcıları. Ve ben Rusya da kendime bir partner aradığımda ilk tercihim Aeroflot ya da Sky team oluyor. Ve Star in getirdiği kısıtlama dolayısıyla ben onlarla ticari bir işbirliği içine giremiyorum. Benzer şey Güney Amerika da var. Lan çok büyük bir havayolu orda, bi de Tan var. Biz Tan la ticari işbirliği yaparken Tan Lan la birleşme kararı aldı ve Latam oldular. Ve One World e girme kararı aldılar. Tan, Star Alliance dan çıkma kararı aldı. Bu çok büyük bir boşluk yarattı(banu). Ve bu sebep dolayısıyla da bizim müzakere surecinde olan anlaşmamız da yarım kaldı ve biz su anda Güney Amerika da kendimize partner bulmakta çok zorlanıyoruz. Bunlar oradaki herhangi bir Star üyesi olmamasından kaynaklanan sorunlar. Veya öyle bir örnek olabilir ki bir bölgede ben bir Star partnerimle ticari anlaşma yapmak istemeyebilirim, Çünkü dediğim gibi bu bir ticaret, kimse kimsenin kara kaşına kara gözüne göre işbirliği yapmıyor, şartlar öyle gerektirir ve ben star partnerim yerine oradaki one World y33;08 ya da sky team üyesi 80

116 havayollarıyla işbirliği yapmak isteyebilirim, çıkarlarım bu doğrultudadır, Star Alliance buna izin vermiyor. - Banu: vermiyordu diyelim - Onur: vermiyor diyelim. Ha bunun özel koşulları var. Star Alliance dan iki yıllık bir sure için exception alınabiliyor, geçici izin veriyorlar ama tüm üyelerin bunu kabul etmesi lazım. Eğer bir üye bile bunu kabul etmezse siz bu anlaşmayı yapamıyorsunuz. Su anda 28 üye oldu galiba dun itibariyle. 28 üyenin de sizin anlaşmanıza onay vermesi, çekimser ya da negatif oy vermemesi gerekiyor artı bu sure de 2 yıl için. 2 yıl bitince sizin gerekçelerinizle Star dan tekrar onay almanız gerekiyor. Siz büyük bir havayoluysanız ve kendinizi bu anlamda kısıtlamak istemiyorsanız alliance a girmiyorsunuz, bunun örnekleri var. - Banu: Ya da çok büyük, zaten tartışmasız bir suru kaynağı olan körfez taşıyıcılarından örneğin onların da eğilimlerinin değişmesi yönünde sinyaller var ama onlar da tek baslarına takılmak isliyorlar çünkü kimseye ihtiyaçlarının olmadığını düşünüyorlar. O da başka bir şey. O bölgelerinin getirdiği kendi konjonktürlerinin yarattığı bir şey, kesinlikle tercihe bağlı bir durum. Bizler ticari merkezli yapılar olduğumuz için ona göre hareket etmek birincil. - İleride peki bu bir mecburiyet haline gelebilir mi sizce, bir alliance a girmek? - Hayır olmaz, ama söyle bir şey olabilir, alliancea girmeyen havayolları dışarıda tek baslarına kalırlar, çok ticari açıdan kendilerini tek hissedip işbirliği anlamında geri kaldıklarını hissederlerse böyle bir durum ortaya çıkabilir ama; benim şahsi görüşüm alliancelarin da önemi gittikçe azalıyor. Çünkü alliance içinde başka alliancelar oluyor Lufthansa, Avusturya Havayolları, Swiss, SN Brussels bunlar star alliance içinde başka küçük bir alliance. Bazen bu havayollarının kendi içindeki işbirlikleri Star la ters düşebiliyor. Veya joint venturelar: United Airlines, Air Canada, Lufthansa Air plus plus adında bir joint venture kurdular transatlantik trafiğini yönlendiren-avrupa ve Amerika arasındaki bütün uçuşlarda hangi seferde hangi havayoluyla yolcular uçarsa uçsun parayı yüzde elli yüzde elli bölüşüyorlar. Dolayısıyla o yolcu Air Canadayla mi uçmuş Lufthansayla mi uçmuş hiç önemli değil. Birbirlerini destekliyorlar çünkü birinin zararı diğerinin de zararı, birinin kari oburunun de kari. Dolayısıyla başka bir havayolu bu havayollarıyla işbirliği yapmak istediğinde öncelikli olarak kendi aralarında görüşüyorlar: yapalım mi yapmayalım mı? Dolayısıyla onların içindeki alliance Star in üstünde bir işbirliği oluyor ve bu gibi joint venture lar gün geçtikçe artıyor. Dolayısıyla artık bir gün gelecek ki artık bu alliance in içindeki alliance lar yani joint venturelar alliancelarin önüne geçecek ve alliancelarin çok da bir önemi kalmayacak. Bu sefer alliance a girmeyen havayolları 81

117 veya girip de memnun kalmayan havayolları biraz da venture larin pesinde koşacaklar durum oraya doğru gidiyor. - -Banu: İttifakların sonu geliyor mu sorusu gündemde - Onur: İttifakların sonu geliyor mu bu soru çok konuşuluyor, joint venturelar ittifakların yerini alabilir mi, alamaz alabilir tartışmalar yapılıyor. Ama durum şöyle gösteriyor ki böyle şeyler olacak. Ne kadar zamanda olur beş sene on sene 20 sene. Ama bu durum değişecek yani alliancelarin da bir gün modası geçecek bence. - Banu: Pazarların değişen şartları farklı tür işbirliklerini gerektiriyor. Yani alliance lar yeterli olmuyor her pazarın ya da o pazarın aktörlerinin ihtiyaçlarını karşılamaya. Dolayısıyla joint venture denilen kavram son günlerde daha popüler ve bu da her havayolunun gündeminde olan bir soru aslında. Neyi, nasıl, nerde kiminle yapılabilir diye araştırmalar yapılıyor, bununla ilgili çok makale var. TRANSLATION to ENGLISH - I would like to get to know you first, for how long have you been working in this position, and in Turkish Airlines? - Banu: I started in 1998 at the ground operations while I was a university student. After graduation I worked at a department related to agreements in ground operations. Since 2008 I ve been working in that department. Here in the department of International Relations and Agreements department, we are responsible for both commercial agreements and alliance relationships in terms of continuity and coordination. By alliances I mean Star Alliance and international organisations such as IATA and AIA. Here I am responsible for daily operational tracking and highlevel reporting. - Onur: I started working for Turkish Airlines in 2000, and after several departments I came to this department in Since then I am at the international Relationships and Alliances Department. What do we do here? First of all we have two main subjects: Relationships with airlines and international relationships. If we see Turkish Airlines as the Republic of Turkey, here is a department equivalent for the Ministry of International Affairs. For one airline to be eligible to fly from one country to the another, first of all, countries have to sign an agreement amongst each other. Regarding this agreement, airlines become eligible to organize flights. These agreements are called Air TransportationAgreement and Directorate General of Civil Aviations, who are dependent on the Ministry of Transportation sign these 82

118 agreements. We attend all these relating meetings as the leading airline company; as those agreemtns directly affecting all airlines; regarding the weekly frequency, origin and destination determination, whether there will be any restriction at the number of seats etc.. This is our first duty here. Second part of our job here is about the all commercial agreements, all the relationships regarding with all other airlines and interorganizational structures such as IATA, European Airline Association, Arab Carrier Organization, Association of South American Airlines-those are international aviation organisations; and Star Alliance, which is more commercial relationships organization. We joined Star Alliance in 1 st of April, Prior to that, there was a serious period of decision making, and a big endeavour to join the alliance once joining decision was made. Just like the EU joining negotiations of Turkey, Star Alliance and Turkish Airlines had such a joining negotiation process. We had a booklet of minimum requirements similar to that size book ( showing a small but thick book), and all airlines have to fulfil that list of requirements to become a Star Alliance member. -BANU: All airlines experience an integration process, not less than one year long. -ONUR: As the directorate, we had the coordination of this integration process of the Turkish Airlines to the Star Alliance. There are many variety of requirements: For example, from the color of the label attached to the business class passenger s luggage to be distinguished -BANU:..or sharing the cost share sales reports and some other data with a determined format within determined periods. - How long did this integration process take in Turkish Airlines? - ONUR: It took approximately 1 and half years, starting at the end of And we became one of the 8 airlines who has the highest level of the membership type. There are 3 different types of memberships, where they have different levels of power in the alliance dynamics. These memberships take their names from the 3 star clusters in the galaxy: Pollux, Castor and Vassat. Pollux is the highest membership type, which has highest membership fee, but in terms highest level of rights and responsibilities. -BANU: Can be summarized as the membership type which shapes the alliance, in the mover and the shaker position. -ONUR; And Turkihs Airlines keeps this type of membership. It requires 100%attendence to all meetings, minimum of 70% satisfaction of all requirements of the alliance. If your 83

119 satisfaction level of these requirements falls below 70%, Star has sanction of decrease your membership type to one-lower level but keeping the highest level membership fee. Of course what matters in such case is not the membership fee but the prestige of the airline, it s a matter of shame and blame. There are not many airlines in the lowest membership type, the ones in that level of membership are the ones who are belong to the big airlines, who are also already Star Alliance members- such as Brussels, Austrian Airlines, of Lufthansa. As these big parent airlines make the decisions on their own, they don t need higher level of membership status with higher participation right in the decision making process. They are just like mandartory countries under the control of the big ones. -BANU; By the way, we forgot some other duty in our job description part ( they both explain about trade agreements which provide cheaper travel tickets for Turkish airline employees from other airlines) - Did Turkish Airlines have any concerns or any hesitation in joining the Star Alliance? BANU: Estimated cost of joining is well determined in the agreements. For an airline company, the biggest motivation of joining an alliance is decreasing the costs, and Star Alliance or another alliance guarantee with written agreements that it will bring added value and contribution; and makes it true mostly. One of the biggest reasons for us to join Star Alliance was increasing our brand awarenessthat we used it very successfully, and we still use and enjoy the benefits of the Star brand. We also had secondary targets such as cust cutting and network effect and sales effect. The revenues obtained from the products of the alliances they offer provides all these benefits. ONUR: Lets give an example. What we call the aircraft is a very interesting device, vehiclewhatever we call it. You buy only the body of the plane from Airbus or Boeing. You buy the engines from another firm: Rolls Royce, General Electric, etc., you buy the seats and the wheels from another firm. BANU: Or self-manufacture the parts if you can. ONUR: Here Star Alliance intervenes and says: As all airlines make separate barganings with seat produces. Instead, lets unite and instead of buying 1000 seats each of us, lets buy or seats, so we would have higher level of bargaining power. Or, lets manufacture seats together. Star Alliance issued a project called Economy Seat Project, and produced its own seats. And some member airlines-it was not a compulsory project- used these seats which produced with Star Alliance initiative. -Did Turkish Airlines participate in this project? 84

120 - ONUR: No, because the manufactured seats were below the quality standards of Turkish Airlines. We prefer a different seat model, to provide maximum comfort to the passengers. We have different standards, such as screens at every seat, etc. We also started producing our own seat, by having a joint venture with a firm; which would decreased our unit costs. But seat is only an example, additional to that Star also initiates purchasing biddings for fuel and food service inputs, where Turkish Airlines also participates from time to time and providing serious level of cost savings. -BANU: As Mr. Onur mentions, plane should not be perceived as a single entity, it is also important to consider the related services as well: ground services, flight services or all services related in the ground. Star promises a passenger the seamless travel, which requires cooperation in many areas, or co-invest in that areas to provide this seamless experience, and obtaining benefits in turns. You create a common value in alliance level when everyone within alliance obtain benefits. This is one of the biggest aims of these alliances: getting common service, using common terminals, producing seats together etc. alliances provide a scale covering all related ones. - Does Star Alliance provide advantages in terms of flight destinations? -BANU: Network, sales, and loyalty programs are also parts of those commercial cooperations, also lobbying as well. Such organizations as well as IATA, AEA exist to involve in decisions effecting the operations and commercial aspects of member airlines: to be one single voice against the decisions made, or react collectively where required. That is why such organisations carry utmost importance for airlines. - You are within a cooperative formation within Star Alliance membership, which is actually quite paradoxal. - BANU: Commercial cooperation (of competitors) is one of the musts. Within an alliance cooperation is compulsory. It is continuously supported and made stress on having maximum cooperation among alliance members. To what extend it is successful, this might be discussed. But just like in people s lives, theres rising and going-down times, and it is not only dependent on the involving parties; as external factors also play important role. During the economic crisis in European Union or other economic crisis in the world, during these times the member airlines might have got more isolated from each other or chosed other methods rather than cooperating with the alliance members, during these times you might see that the level of cooperation within star alliance network decreased; however those are temporary issues. 85

121 - Is it possible that once firms involve within an alliance network, the competition level between each other increases? For example, Lufthansa. Did competition with Lufthansa become more aggressive after the alliance formation of Turkish Airlines, or vice verca? - ONUR: We can definitely say that the competition got more aggressive. Competition does not finish once you enter in the alliance. All members within the alliance are our competitors. They are our partners, but competitor partners. Lufthansa is a good example for that. However, not only the alliance membership but the improvements in the aviation sector in the last 5 years, changes in the world conjuncture, change that Turkey had have all important effects in the increase in competition. Once we joined Star Alliance, Turkish Airlines had 64 aircrafts. Now it is more than 220. In that period we had lower number of destinations, we currently fly over 100 countries and we are number one airline in the world, flying to the maximum amount of countries. There are other airlines who fly to greater number of cities compared to us, such as USA as the have a very huge number of cities they fly, so this number dependent on their number of domestic destinations. However, in terms of the number of the countries, Turkish Airlines is the number one. In such case, transit passengers carry utmost importance. We currently fly to such new destinations that to the destinations even we have not hear before. People ask us: Who would go to that point of Africa from Istanbul? The answer is, we are not only dependent on point to point traffic, which is taking one passenger from Isanbul and taking to another destionation, and turning back to Istanbul. One of the most important things we do is taking the passenger from east to the west via Istanbul, or vice versa. So, Turkish Airlines significantly grew and strengthened its network, and increased the number of passengers with two digit percentages- I don t remember the number in 2008 but in 2012 we carried more than 30 million passengers. As a result, we began to compete with Lufthansa and other member airlines seriously. Some airlines are happy with that some of them complain about it, which is very natural. As you know in Euope there is a serious economic crisis, lots of airlines declared their bankruptcies. Spinair, Mani.., Aeroswift in Ukraine, all had bankruptcy. Many airlines had acquisitions, many had been survived-temporarily with the governments subventions. Under all these conditions, Turkey s economic condition and Turkish Airline s growh had been so positive, which affected us positively, but affected our competitors negatively. - Isn t the increase in the network of Turkish Airlines on the benefit of the other member airlines? - We make agreements called code share agreements. With these agreements, an airline who does not flight to a specific destination that Turkish Airline flies, can put their own flight code and sell tickets as if it is their own flight. The growth in the network of Turkish Airlines 86

122 provide advantage for member airlines in such way. However these are commercial agreements, and we do not set such agreements in every destination we fly. Two airlines can discuss whether and where to have such agreements. Indeed, we do not have such agreements with every Star member. And we make these agreements in only some destinations. This shifting offline-destinations to online destinations is an opportunity for all alliance members, we also shift our offline destinatons to online with such agreements as well. - Is it possible to say that not every airline benefits in the same level from the alliance, that some airlines benefit more than the others? - It is tried to make it equal for every member, but of course it is possible to have differences in terms of benefits gained. It might vary depending on the subject and the type of the cooperation. For instance, a small airline company gains more advantage in terms of turning offline points into the online points. It has a small network, but it can strengthen it via cooperating with big airlines. But the big airline, who already has a wide network, cannot strengthen its network as the result of the agreement with the small airline. However, the big one has other kind of advantages. As it is capable to carry more passengers from the small airline and carry, where the small one cannot take many passengers from the big airline, as the big one is already capable of taking its passengers to everywhere with its big aircrafts. So, who benefits more and less depends on the subject and area of the cooperation. In overall, of course there are differences in terms of the benefits. On the other hand, it is important not to look on very surface. It differs what percentage of Turkish Airlines and Adria Airlines are carried via Star Alliance. For an airline carrying passengers, 1000 passengers a year means its 10%. However, for an airline carrying 30 million passengers, not but even passengers would stay as a small percentage. So these are all relativistic concepts. - What is the biggest advantage of Star Alliance for Turkish Airlines? Brand awareness, network strengthening, which one? - We can say that it is the brand awareness, as we didn t widen our network with Star Alliance. We also don t have a serious advantage in terms of cost neither as a big advantage, compared to Europe, Turkey has significantly low costs-particularly in terms of personels. We almost have the same cost levels with the low-cost airlines in Europe such as Easyjet and Ryanair. Of course our cost levels are higher than those airlines, but compared to British Airways, KLM or Air France, our costs are relatively so low. I think the biggest advantage had been on the brand awareness and advertisement. Before we joined Star Alliance, Turkish Airlines was known as a 87

123 local airline who carries Turkish workers living in Europe-in spite of it is not. There was a serious prejudice. Noone knew about the quality of our service, food, flight experience as no one used to try it. With Star, the more people tried, the more this prejudice had vanished. Of course as Turkish Airlines, we made a lot of steps to defeat this prejudice as well: Campaigns with Manchester United, Barcelona, Kobe Bryant, Hollywood Star Kevin Costner (that it was the beginning of the big campaigns) changed the image of the Turkish Airlines. Euroleague Basketball Championship as another example as well. This is how the brand awareness increased. The measurements prove this as well. As a great evidence of the feedback taken from the passengers, we took the Startrax Prize as the third time at the Air Show Paris. Startrax is the most important brand in that manner, in terms of the feedback provided from the passengers. Alliance provided us this increase in the brand awareness, which was the biggest aim on joining the star alliance. - Our minor targets were the things that the alliance already serves-promises. And it depends on to what extent we use these things as an airline, because they are all manageable things. It all depends on the airlines decision to join collective initiatives, or collective procurements. - In the end, you absulutely enjoy the benefits of the sales effect once you join the collective procurements. - Do they take the opinions of the member airlines once another airline is about joining Star Alliance? - Lets give Air India Example. - At the very beginning of the process, there is a concept called White Spot. Star examines many markets on behalf of the airlines. For example, which airlines are active in Russia, which one can make a contribution, who can be possibly be the new partners, etc. And the new potential partner gets assessed in terms of the overall contribution it could make to the alliance. Of course member airlines speak for their own rights, but when Star talks, it talks for the benefit of the all airlines. So Star makes the assessment in terms of the contribution it could make for all airlines common benefits. - Banu: Star Alliance is an establishment to protect the benefits of all member airlines, as Mr. Onur said. Indian market is a very important market and Air India is one of the most important actors of that market. It is a public-centered airline, I mean it is governed by the state. Air India came to the agenda of Star Alliance, regarding the significant passenger potential; where there are huge numbers of arrivals to the every single airport of the country, the economic condition of the country, the cooperations 88

124 between Europe and India with a great history, etc. There had ben some studies about it, and the integration process started just like any candidate member has the process. It was asked the opinions of the member airlines, and majority of the members supported the idea of Air India to join Star Alliance. Just like it is in every integration process, the process started and a timeline was created. And all member airlines were informed about the important highlights of the process, via meetings at the different levels. However, unfortunately, the process could not be completed and there had been a break at the process. One of the biggest reasons was that Air India could not take the required actions within the required timeframe. - Onur: With other words, Air India somehow could not satisfy the minimum requirements. - Banu: Which has turned into a situation where other airlines have refused, so the integration process has stopped. We slightly know that Air India might apply for membership again, but it is not clear and certain yet. An airline is approved only if it provides the increase and continuity of Star Alliance quality, and if only it satisfies the security requirements, or the whole service quality. If it is not believed so, as the result of the voting among members, and members decide that it is inappropriate, so that the airline does not get accepted to the alliance. - So there are many administrative process related. There are rights about electing and to be elected, and also voting, which are clearly defined in the founding charters. There are time limits where the airlines have to fulfil the requirements. So the process of a new airline to become a member is a very transparent process where member airlines can observe the process, and can vote in the end for the new member. We can say that integration is a series of many stages that we can all follow-up. - There are also member airlines who prefer not to be a member of any alliance. What do you think the reasons are not to join an alliance? Why do they prefer to be alone? - Like in every decision, joining an alliance also has advantages and disadvantages. We just tried to list its advantages. What are the disadvantages, well in the end we are commercial companies. There are some limiting terms that the alliance brings, which restricts doing business. The biggest limitation it brings is: Well Star Alliance has two big competitors: One World and Sky Team. I might want to have a commercial collaboration with an airline who is a member of one of these two alliances. And there are some conditions where it becomes really necessary. For example, there is no Star Alliance member airline in Russia right now. There is Syberian Airlines: One World Member. There is Aeroflot Airlines, the national 89

125 carrier of Russia: Skyteam Member. Those are the two biggest carriers of Russia. Once I look for a partner for myself in Russia, my first two choices become either Areoflot of Syberian Airlines. However, I cannot get into a commercial agreement with those airlines regarding the restriction that Star Alliance brings. The similar case also happens in South America. LAN is a very big airline company, and there is also Tam Airlines. While we were about making a commercial collaboration with Tam, Tam decided to merge with Tan, they become Latam Airlines. Then they decided to join One World Alliance. So that Tan left Star Alliance. - Banu: And it created a big hole. - Onur: Because of these reasons our agreement, which was at the negotiation process, couldn t be completed. And currently we have serious challenges of finding ourself partners in the South America. These are problems sourced from there is no Star Alliance member airlines at the South America. Or there might be such a case that, I might not want to make a commercial agreement with one of my Star partners, as I said before this is business. No-one makes collaborative agreements with emotional decisions, it is all logical. The conditions, my own benefits might make me want to have a collaborative agreement with a Sky Team or One World. However Star Alliance does not allow this. - Banu: It didn t used to allow, lets say. - Onur: It does not allow, lets say. But there are special conditions. It is possible to get a temporary exception from Star Alliance for two years for such agreements. However all other member airlines have to accept that. Even if one of the Star Alliance member airline rejects it, you cannot make that agreement. All 28 members have to approve your decisions, even if one of them gives abstaining vote you cannot make this agreement. Indeed, this exception is only for two years. In the end of two years, you have to present your reasons and ask for permission from Star Alliance again. If you are a big airline who does not want to restrict itself with such conditions, you prefer not to join any alliance, which we have examples. - Banu: There are also airlines who indisputably have many resources, like Gulf Carriers, for instance. They want to continue alone because they think they don t need anyone else. However, there are also signals about their approach might change as well. It all depends on the self-decision of the airlines. Something that their conjuncture brings. It is primary for us to move with our business benefits, as we are commercial formations. - Do you think that becoming an alliance member can be a necessity or obligation in the future? 90

126 - Onur: No, I don t think that it would. There might be a situation if airlines who do not join an alliance stay alone commercially and feel theirselves alone and they had a disadvantageous situation in terms of business collaboration. However, in my personal opinion, the importance of the alliances are decreasing. Because within alliances, other small alliances take place. For instance, there is a small alliance within Star Alliance, consist of Lufthansa, Austrian Airlines, Swiss, and Brussels Airways. Sometimes the collaboration between those airlines get contradicting with the collaborative benefits of Star Alliance. There are also joint ventures. United Airlines, Air Canada, and Lufthansa have established a joint venture called Air Plusplus. This venture is yonlendiriyor the Transatlantic traffic. At the flights between Europe and America, regardless of which of these airlines fly: they share the revenue. So it is regardless of the passenger flew via Air Canada or Lufthansa. They support each other because revenue of one is revenue of the others, or the cost of the one is the cost of the others. In such case, once another airline wants to have cooperative agreement with one of these airlines, they initially discuss among each other: shall we or not. So the cooperation they have among each other becomes dominant/superior than the cooperation within Star Alliance. Indeed, such joint ventures become more widespread. To conclude, I think one day those joint ventures within the alliances will be dominant over the alliances and alliances wont have any significance anymore. So once airlines get unsatisfied from the alliances with the reasons I mentioned above, will seek for joint ventures. - Banu: The question that whether the end of the alliances are coming is on the rise. - Onur: It is discussed a lot that whether the end of the alliances are coming, there are discussions of whether joint ventures can replace alliances all. I think that the current position gives signals that such things will happen. I don t know whether it happens in the next decade or in twenty years. I personally believe that the alliances will lose their popularities one day. - Banu: The changing conditions of the markets require different types of collaborations. So the alliances don t be enough to answer the needs of the actors in every markets. So the concept of joint venture is currently popular. And this is a question in every airline s agenda. All airlines constantly seek for what to do, where to do and with him to do. There are many research going on about this manner. 91

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128 APPENDIX 4- TRANSCRIPTION: Interview with Marej Jazak, Impact & Portfolio Analyst ar EUREKA Secretariat and Piotr Pogorzelski, officer at EUREKA Secretariat, and Lecturer at European Institute of Public Administration I have a few questions for my dissertation; about you know I am writing about the concept of coopetition, which really fits with the concepts of EUREKA, both in terms of the EUREKA Clusters and the Eurostars Program. As I am handling with the both the multinational side and SME side of coopetition, and will have some questions about that manner. My first question is what are the differences between EUREKA clusters and the EUROSTARS Program in terms of perceptions and approaches of the firms involving because there are serious maybe trust issues, or how to collaborate as competitors, etc. - Well let me start with EUROSTARS we have a very.. one because when they apply for the funds, they have to give us a definition on how they plan to share the property rights a colleague of mine just walked in, he knows a lot of stuff he knows about the coopetition. - So just I am describing EUROSTARS and how they are different than EUROKA Clusters. - Good morning, hello. Can you hear me okay now? The thing about EUROSTARS is, how to deal with competing companies are working at the same project and how to deal with the competitive aspect working together. I was explaining actually how they define what we call the Consortium Agreement The companies that are working in a given project, before they receive funds and the before the project is even approved, they have to define in a certain extent that how they are going to deal with sharing the things that they create together. Is that clear and make sense for your question? - Definitely. But the problem is, how do they define it? They define it with the help of EUREKA or they just come together, decide and then come to EUREKA and say hey we are here and we have this project? - Well it is kind of a back-and forth process, because each company is in touch with a national representative, who helps them to defined the specific elements of the Consortium Agreement. It is a back and forth process and the national representative of EUREKA say maybe it is better to say it that way, or maybe you should watch out of this aspect of PR etc. 93

129 - Consortium agreement that you can find in the internet and copy paste on your work, it would be so helpful for your research. -Essentially within projects that are uniting companies that are basically competitors. In any cluster companies involve who normally are competing with each other, even the very big companies. The reason why they involve together in such projects is that they will define standards that every company will use which have to agree anyway. And by defining the standards in Europe, they all make sure that they don t have to using standards that have been decided in other parts of the world; at America, or Japan. That cluster 2 work on software, a cluster called ITEA2, clusters work on telecoms telecommunication including mobile phones and the internet that you use in the smart phones that s the cluster called CELTIC Plus, then the cluster working on electronics: chips on you can use on your computers, laptops, that cluster is called catrine.those are the 3 clusters we have, the most successful ones. The other clusters might work a bit differently; they keep the aspect of big companies all together for standards setting. Also they come together to set standards in areas such as how useful is to build a windmill to have energy on the sea, for example or water sector on the quality of water, and this is not something to set in the market in united states, for example. That s how it works for the clusters. - But as you said, clusters are mainly for the big companies, right? -Interesting idea is that, clusters originally set by big companies together with national selling agencies as a part of EUREKA Network. Since the very start involved in the industry the very big now the companies. The big companies are not the ones participating these projects. Cluster projects are occasions for very small companies, and for universities to work with those big companies. That is interesting for them because the big companies can become clients for them. And then the others have to reduce to manufacturing products because small companies can never be able to invest in millions for building big factories. - What are the challenges for the small companies to be in such a formation with the companies? I mean it is a huge benefit to be able to work with them, but what are the challenges? Do they have any worries about exploitation, or knowledge leakage if we are talking about a very knowledge intensive sector? Do they face such challenges by working with the big ones? -I would say that the big companies would work with the very best of small companies. On the other side, big companies always work with the small companies ( ) There is a trend that big companies delegate the part of their work which is not very profitable for them to the smaller companies. Pressures from shareholder, etc. make them do not have risk in their 94

130 companies. They delegate risky parts of their works to the small companies: such as innovation, R&D. So they make small companies work for them for research and innovation. Sometimes, in pharmaceutical companies for instance, there are several small companies which the big company would invest, and at the end they will just send the results of the small company that in the medication development. That is one way to look at it. So that is not much a challenge necessity for big companies to work with small companies, but the small companies have to be very best to work with the big ones. Now clusters are made of big companies working together but actually the way of management in to make it more democratic process is that the similarity with what is happening in EUROSTARS. Twice a year every cluster launches a call to small companies or universities to join to a big project, who are at their best. And very often, at the end of every project small company continues working with for those big companies, where the big company would become a client of the small company. If you compare them, big companies and the small companies involving in the coopetition, competing and collaborating at the same time; what are the differences we can say, in small ones and the big ones? For instance SMEs or MNCs are more flexible, or what are the other features? I think that there are many differences. I think the main difference would be that big companies set standards for the whole industry, they work together for the incentives?. They will cover slightly cover different markets otherwise technical.. would be same Marek: There is a difference that the big companies coopete for setting standards where in the end anyone would benefit, but the small companies engaging coopetition-its kinda like just like in the game theory where you have collaborating in a given amount of time for the optimum strategy, but after one point there is actually going to be a definite winner, so I think of coopetition is way more aggressive between small companies, they are engaging in coopetition because they have to; orherwise they wont be able to reach to the maximum profit. Once its done, there will be pure competition. -Other collegue: I THINK CONCEPT OF CRITICAL MASS definitely applies for the fis what I ll say now: This is also relevant for the technological ties for the big companies, they do not have to actually, they all have capabilities, laboratories etc but they want to work together because they might find different things with different approaches. So they still need some critical mass for the technological part. 95

131 - So you both said that from the SME side it is more aggressive for necessities to survive or prosper; however in big companies it is like to make things better in terms of the standardization, or lobbying, etc. I get it right? - Also in terms of technology as well, I will send you some examples. -What do you think about the future of coopetition? When I make some research I see that there are two approaches: that one of the approaches see coopetition as the future, that its gonna be dominating and wide-spread in industries; especially in technology related secotrs; on the other hand; the other approach says that; as the competition is really dominant, coopetition will stay only as a temporary phase. What do you think about its future? -I think even more competitive environment will take place and that wil still be the coopetition between small and the big companies. 96

132 APPENDIX 5- TRANSCRIPTION: Interview With Emre Yurttagul, EUREKA Turkey- International Project Coordinator ORIGINAL INTERVIEW: IN TURKISH - Öncelikle kendinizden bahseder misiniz ne zamandır EUREKA da ve ne zamandır bu görevde devam ediyorsunuz? - Ben son dört senedir EUREKA Programı içerisindeyim. EUREKA Programı proje sorumlusu olarak başladım 2009 da, sonrasında Almanya Donem Başkanlığından sonra Israil, Macaristan ve son olarak Türkiye Donem Başkanlığı sırasında Ulusal Proje Koordinatörü oldum. Donem başkanlığımızı 21 Haziran da tamamladık ve Norveç e devrettik. Sonuç olarak son 4 senedir aktif olarak EUREKA için çalışıyorum. - EUREKA Cluster larinin yapılarından biraz bahseder misiniz? Sınırları, katilim nasıl oluyor diye? - EUREKA Programı altındaki pillar larindan 3 önemli ayaklardan bir tanesi kümeler. EUREKA Kümeleri belirli teknoloji alanında faaliyet gösteren yapılar ve her küme belirli bir teknoloji alanında faaliyet gösteriyor ve kümeler o teknoloji alanında Avrupa daki lider firmalar etrafında oluşturuluyor. Örneğin ITEA2 kümesi simdi artık önümüzdeki sene ITEA3 olarak devam edecek, Airbus gibi, Daimler gibi çok büyük oyuncuların bir araya gelerek kurduğu yapılar. Bu kümelerin amacı da ayni teknoloji alanında faaliyet gösteren firmaların bir araya gelerek yapacakları ARGE çalışmalarında risk paylaşmak ve geleceğin teknolojilerine yon verebilmek adına bir network oluşturmak. Yani kümeler aslında networkler belirli teknoloji alanında faaliyet gösteren. Burada benzer çalışmalar yapan ama ayni zamanda rakip olan firmalar bir araya gelerek ortak teknoloji üretmeye çalışıyorlar. Kümeler bir fon kaynağı değil, sadece bir platform: bu platformda ortak proje sunan firmaları da ülkeler destekliyorlar Türkiye olarak da biz küme projelerini destekliyoruz, yani fon ayırıyoruz, bütçe ayırıyoruz ve destekliyoruz. Ama her ülke bunu yapmıyor tabii ki. Her ülkenin bunu destekleyen daha doğrusu her kümeyi destekleyen ülkeler var, bunlara da ülke kümelerin web sayfalarından ulaşmak mümkün. Kümelerin de biliyorsunuz her kümenin belirli bir çağrı takvimi var, o çağrı takvimi doğrultusunda projeleri Kabul ediyor; her kümenin de bir teknik değerlendirme komitesi var, önce uluslararası değerlendirmeye tabi tutuluyor sunulan projeler, ondan sonra eğer proje kümenin stratejik workbook una uygunsa küme etiketi almaya hak kazanıyor, küme etiketi alan projeler de fon alabilmek için kendi ülkelerine başvuruyorlar çünkü küme projelerinde de ulusal fonlarla projeler destekleniyor. Dolayısıyla fon alabilmek için küme etiketi almış projelerin partnerleri gelip kendi ülkelerine ulusal 97

133 fon başvurusunda bulunuyorlar ve bazı ülkeler küme etiketi alan projeleri doğrudan fonluyor ama Türkiye gibi birkaç ülkede proje küme etiketi alsa dahi kendi ulusal değerlendirmesini yapıyor. Ulusal değerlendirmesi negatif olursa proje küme etiketi alsa dahi projeyi desteklemeyebiliyor. Onun için hani hem projenin küme uluslararası değerlendirmesinden hem de fon alabilmesi için de ulusal değerlendirmesinden geçmesi gerekiyor. - Peki, bu kümelerde sadece büyükler mi bir arada oluyor, KOBİ lerin de katilimi söz konusu mu? Ya da Kobiler için ayrı kümeler mi söz konusu oluyor? - Kobiler için ayrı kümeler söz konusu değil, Kobiler de istedikleri kümeye proje başvurunda bulunabiliyorlar? - Bu peki yaygın mı? - Yaygın aslında. Türkiye den ITEA da özellikle birçok Kobi ITEA projelerine başvuruyor ve destekleniyor. Kümelerin yönetim kurulları var. Burada Kobilerden ziyade büyük oyuncular bu yönetim kurulunu oluşturuyorlar, yönetim kurulunda olmanın avantajı veya dezavantajı söz konusu değil proje değerlendirmesinde ancak hani bu yönetim kurulundaki firmalar kümenin stratejik çalışma kitabini-stratejik workbookunu oluşturuyor, bazı kümelerde yönetim kurulunda yer alan firmalar proje değerlendirme komitesinde de yer alabiliyor, bu küme yönetim kurulunda yer alan firmalar Kobilerden gelen projelerin içinde yer almak isteyebiliyor, her projeden haberdar oldukları için o tarz bir avantajı var: kimi zaman doğrudan kendileri proje sunuyorlar, kimi zaman sunulan projeye kendileri ortak olmak istiyorlar, ama dediğim gibi KOBİ ler yönetim kurulunda yer alsın almaşın, istedikleri kümeye proje sunabiliyorlar. - Yani büyüklerle oynamaktan çekinmiyorlar diyebiliriz bu durumda, değil mi? - Tabi ki, tabi ki aynen öyle. - Peki, bu özellikle ARGE alanında, ARGE alanları özellikle bilgi akışı ya da knowledge leakaga dediğimiz olay bakımından, güven nasıl sağlanıyor özellikle büyüklerle küçükler bir araya geldiklerinden. Küçükler diyor mu büyüklere bize bir ait olan inovasyon kaptırma durumu olabiliyor mu? - Genel olarak zaten non-disclosure agreementlar ya da consortium agreementlar imzalanıyor projeler başlamadan önce. Hatta proje başlamadan önce consortium agreement, proje fikrinin paylaşılmasında consortium oluşturulması sırasında nondisclosure agreementlar imzalanıyor, dolayısıyla bir fikrin çalınması ya da projenin tamamlanmasından sonra projenin sonunda çıkan yenilikçi urunun çalınması gibi bir durum söz konusu olmuyor. Bu tarz hukuki anlaşmalarla bu proje fikirleri olsun, ya da proje sonunda çıkan ürünler olsun güvence altına alinmiş oluyor 98

134 - Yani resmi olarak güvence altına alıyor güven ortamı diyorsunuz - Evet, güven ortamı böyle sağlanıyor. - Peki, sizce Kobilerde özellikle, en büyük dezavantajı ne olabilir, dezavantajı var midir bu cluster larda yer almanın-ya da iyi bir şekilde bundan yararlanmak için ne gibi özelliklere sahip olması lazım? - Kobilerin ilk finansın sağlanmasında bir sorun olabiliyor belki. Ama benim önerim KOBİLER üzerinde yoğunlaşmak istiyorsanız Cluster lardan ziyade Eurostars Programina yoğunlaşmanız. Eurostars daha çok KOBİ lere yönelik bir program. - Sizce coopetition un geleceği ne olacak? 2 görüş var bu konuda, birincisi rekabetin ağır basıp bu konseptin kısa sure uygulanan bir kavram olacağı yönünde, diğer ikincisi ise gelişen koşulların coopetitionu daha da önemli kılacağı ve geleceğin dominant stratejisi olacağına dair. Siz ne düşünüyorsunuz bu konuda? - Ben ikinci kısma inananlardanım, bakin Güler Sabancı mesela en büyük rakiplerden biri olan SIEMENS yönetim kuruluna davet edildi. Günümüzde rakip firmaların yönetim kurulu üyeleri birbirlerinin yönetim kurullarında yer alabiliyorlar. Rakipler günümüzde işbirliği yapmak zorunda. - Peki, bu EUREKA projelerinde collaboration mu daha ağır basıyor, competition mu? - Bu projenin yapısına, hazırlanana consortiumun nasıl sağlandığına bağlı olarak değişiyor. Kimi projelerde daha competition ağır basarken diğerinde daha collaboration bazlı olabiliyor. - Sizce KOBİ lerle büyük şirketlerin arasındaki coopetition farklılıkları nelerdir? - Genel olarak baktığımızda KOBİ ler yapıları gereğince daha esnekler, bu coopetition formuna bürünmede, uyum sağlamada diyeyim. Tabi ki hem KOBİ hem de büyük firmalarda coopeitionu gözlemliyoruz, çok da başarılı inovasyonlar çıkıyor ortaya gerek Cluster larda gerekse Eurostars projelerinde; ama bir bütün bir genelleme olarak bakacak olursak; büyük firmalar önemli bir competency gördüklerinde başka bir firmada; eğer alabiliyorlarsa satın alma yoluna gidiyorlartıpkı Google örneğinde olduğu gibi. Ya da kimi büyük şirketler kendileri gerekli ARGE& Inovasyon çalışmalarını bağımsız olarak yapmak yoluna gidebiliyorlar. Burada KOBİ lerde o yüzden coopetitionu daha yaygın görüyoruz diyebilir miyiz, diyebiliriz bence. Ha bunun yanında, Kobiler coopetitionda daha dinamikler, çünkü diğer networklerle de yarışıyorlar patent alabilmek için. Büyük firmaların belki hepsine patent verilebilir fakat küçük firmaların en iyisine veriliyor ve bunu alabilmek en iyisi olabilmek için diğer networklerle de yarışıyorlar, bu yüzden Kobiler coopetitionda daha dinamik daha aktifler diyebiliriz. 99

135 TRANSLATION to ENGLISH -Can you please talk about yourself? How long have you been working in EUREKA and in this position? - I am working within EUREKA Programs for 4 years. I started as EUREKA Project Manager, then I have been the international project coordinator during the Chairmanships of Germany, Israil, Hungary and Turkey. We finished our chairmanship year and shifted the chairmanship to Norway. So I have been working for EUREKA actively for 4 years. - Can you please talk about the EUREKA Clusters? How do they work, what is the process, borders, etc? - Clusters are one of the 3 important pillars of EUREKA. EUREKA Clusters are formations which are active in a specific industry, and those clusters are formed around the large companies of Europe. For instance ITEA2 Cluster, where ITEA3 Cluster will be its successor next year; is founded by very important players such as Daimler and Airbus. The aim of those clusters are those firms to come together and sharing the risks of the R&D projects, and creating a network to be able to shape the future s technologies. So we can say that those clusters are networks who are active in a specific technology area. In those networks, companies who are active in and perform research about similar areas come together, and try to collaboratively create technologies. Those clusters are not resource of funding, but just platforms. Countries support the firms which present collective projects within those platforms. Turkey also provide funding to cluster projects, I mean we have a separate budget especially for supporting those projects. However, not every country (EUREKA member countries) supports those projects. Every cluster has a separate calendar for calls. Every cluster accepts the projects aligned with this calendar. Every cluster has a technical assessment committee. The projects received at the calls are assessed by the international assessment first. If the project is found well-suited to the strategic workbook of the cluster, it gains the cluster label. The projects which get cluster labels apply for their own countries to take funding, because those projects are supported by national fundings. Some countries directly provide funding to the projects once they receive the cluster label. However a few countries, such as Turkey, also make their own national assessment for the projects, and decide funding accordingly. So, if the national 100

136 assessment result is negative, even the project gets the cluster label, might not be able to get the national funding. To conclude, projects have to positively pass both international and national assessments. -Do these clusters only consist of large companies? How about the SME s? Are there special clusters only for SMEs? -No, there are no special clusters only for SMEs. SMEs also can apply for involving any cluster projects they would like. - Is that common? -In fact, it is common. For instance, there are many Turkish SMEs apply for cluster projects, especially to the ITEA Cluster. Each Cluster has its board of management, however those boards are consist of the large players, not SMEs. There is no advantage of disadvantage of participating in the board of management, in terms of the assessment of the projects. Firms at the board of management create the strategic workbook of the cluster. Sometimes the firms who involve in the board of management also involve in the Project Assesment Committee. Sometimes those members might like to get involved in the projects presented by the SMEs. So the only advantage of involving such commitees would be the getting to know about projects in advance. Sometimes large firms directly present projects at the calls, and sometimes-as I mentioned before- they would like to involve in the projects presented by others. But as I mentioned, SMEs can apply for involving any projects: not getting involved in board of management has nothing to do with that. -So, can we say that small firms don t have hesitation on playing with the big ones? - Definitely, they do not. - R&D is such a sensitive area in terms of the critical knowledge the firms keep. Don t the SMEs have any hesitation of being exploited in terms of the knowledge leakage? How the trust environment is provided? - Even before the projects start, Consortium Agreement and Non-disclosure Agreements are signed. To be clear, Consortium agreement before the project starts, and non-disclosure agreements before and during the projects are signed. So there would be no chance of an idea leakage, or the stealth of the innovative product achieved in the end of the project. Those kind of agreements get ideas and the innovative products under legal protection. This is how the trust provided. - What are the disadvantages of SMEs at involving those projects? Or in other words, what do SMEs need to benefit the most of these clusters? 101

137 - There might be a problem to access to the initial funding, except that there are very capable SMEs to involve in clusters very successfully and making important contributions in terms of creating the innovative product. It is about the own capabilities of the firm and how deploying those capabilities, how to work with other large and small companies. However, if you are about focusing on SMEs only, I recommend you to focus on Eurostars Programme, which is specially designed for SMEs. In Eurostars Programme, SMEs come together for R&D projects. - What will be the future of coopetition you think? There are two main views about that. First view is that coopetition will only be a contemporary concept and competition will destroy coopetition, and the second view is that coopetition will get even more important in the future and that coopetition will be the dominant strategy of future. What do you think about that? - I believe in the second option, that coopetition will be the dominant strategy of the future. Today, many competitors have to involve in coopetition. As an example, Guler Sabanci has invited to the board of management to SIEMENS, where they are very big competitors actually. Today even competitor board of management members get member exchange. So I believe that coopetition will even increase. - Does competition or collaboration weight heavier in EUREKA projects? - It completely depends on the nature of the project, and how the consortium is shaped. In some projects it is more competitive, and some of them are more collaborative. - What are the differences between the coopetition for SMEs and coopetition for large companies? - In general, SMEs are more flexible and faster to adopt in coopetition. Of course we observe very successful forms of coopetition both in SMEs and big companies, but if we make a generalization by looking at overall picture; large companies prefer to buy the small company once they realise a competency. Just like Google does. Or if the big company is capable, it might prefer to perform all its R&D alone. So can we say that coopetition is more widespread among SMEs, I think we might. Indeed, SMEs are more dynamic and aggressive in terms of coopetition, as they also compete with other networks to be able to get the label. Any big company project might 102

138 get the label, but for the small firms, they have to be the best one to be able to get the label

139 APPENDIX 7- EUREKA Historcal Evolution of EUREKA Adoption of the Hannover Declaration outlining the principles of the EUREKA framework. Establishment of procedures and infrastructure. Growth of Network including all Western Europe and Turkey Generation of 221 new projects and creation of two Umbrellas Opening to Central and Eastern Europe Creation of Lillehammer Award First winner E!160 FERMSEP Generation of 887 projects and creation of three Umbrellas Responding to globalisation Introduction of guidelines for Cluster projects Generation of 999 projects and creation of six Umbrellas and eight Clusters Shaping the European Research Area Inventory of national evaluation procedures Generation of 171 projects and creation of two Umbrellas Reaching a common understanding on the quality of EUREKA projects Increasing the efficiency of EUREKA s organization and decision-making Proposing New Safer Medicines Faster', a European 104

140 Research Area pilot project in biotechnology Generation of 168 projects and creation of one Umbrella Working towards the EU 3% Barcelona objective Supporting SMEs through an agreement with a European network of business angels Improving EUREKA s decision-making procedures (unanimity replaced by qualified majority) Generation of 206 projects and creation of six Clusters Marking 20 years of pan-european innovation Improving complementarities with EU Research Framework Programme Establishing political and industrial dialogue to improve overall EUREKA performance Setting up permanent independent external project evaluation to strengthen EUREKA quality label Generation of 181 projects, 57 Cluster projects and creation of three Umbrellas Launching of the EUROSTARS program in partnership with the European Commission EUREKA brings now together 40 members including the European Union (Resource: EUREKA Website) 105

141 EUREKA MEMBER COUNTRIES Year of Joining Country 1985 Austria, Denmark Belgium Finland France Germany Greece Italy Luxembourg The Netherlands Portugal Norway Spain, Sweden Switzerland United Kingdom Ireland Turkey European Commission 1986 Iceland 1992 Hungary 1993 Russian Federation 1994 Slovenia 1995 Czech Republic Poland 1997 Romania 1999 Lithuania 2000 Israel Latvia Croatia 2001 Estonia Slovak Republic 106

142 2002 Serbia Cyprus 2005 Monaco San Marino 2006 Malta Ukraine 2008 Macedonia 2010 Bulgaria 2012 Montenegro EUREKA Associated Countries Canada Republic of Korea EUREKA Network Information Points Albania Bosnia and Herzegovina 107

143 EUREKA UMBRELLAS Umbrellas are thematic networks, focusing on specific technologic areas or industries, and aim to increase and facilitate the formation of EUREKA projects. Umbrealla activities are coordinated and implemented by EUREKA Representatives and industry experts (EUREKA website) UMBRELLA OBJECTIVES EUREKA Tourism Bringing tourism, hospitality and culture companies together, in terms of development of tourism sector and development of service technologies Euro Agri Food Chain Improve the position of agri-food sector by supporting innovation and technologies E!Surf Fostering cooperation among industrial enterprises and research organisations in order to developing new technologies in surface engineering. PRO-FACTORY Development of R&D in manufacturing technologies and robot-science; aiming to increase competitiveness and sustainability Eureka Build 2 Generating and Supporting Projects in construction area, aiming resource efficiency, sustainability in transportation and service netowrks, increasing job safety and having more environmental friendly solutions. Resource: Umbrella Websites 108

144 SAMPLE CONFIDENTIAL AGREEMENT 109

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148 EUROSTARS CONSORTIUM SKELETON 113

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152 A Sample Project Management Structure, from Celtic Plus 117

153 Eurostars Programme Funding excellence in innovation Eurostars Application Assessment Guidelines,

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169 Appendix 8: Turkish Airlines Financial Statement 134