Why didn't it work? Factors That Led to the Discontinuation of the Interorganizational Cost Management Process in a Chain of Craft Stores

Abstract

Interorganizational Cost Management, as a voluntary cooperation tool, requires certain criteria to be aligned to ensure its effectiveness and efficiency. However, when divergences in its implementation are identified, the outcome can be negative, leading to failures in alliance formation. This research aimed to identify the factors that inhibit Interorganizational Cost Management and investigate the elements that led to the discontinuation of a cooperative network in the notions industry in Rio Grande do Sul, Brazil, based on Institutional Theory. A qualitative approach was applied using a single case study, which involved document analysis, questionnaires, and in-depth semi-structured interviews with a network consultant and four microentrepreneurs, including the last president of the association. The findings show that factors such as mismatches in trust and cooperativity, lack of formalization, and absence of shared information systems hindered information exchange among companies, potentially inhibiting Interorganizational Cost Management. This resulted in diminished network capacity to generate new benefits, impaired legitimacy, increased resistance to change, and divergences in objectives and synergies among partners, ultimately leading to the network’s discontinuation. The study makes an empirical contribution by exploring how Institutional Theory explains interorganizational networks and the pursuit of organizational legitimacy within them, especially among micro and small enterprises. It also provides evidence to help cooperative networks improve management processes, minimize potential challenges, identify the effects of the social environment, and adapt organizational practices through Institutional Theory.