Growth strategies and governance of horizontal business networks: the case of the biggest German cooperative food retail network

Abstract

Several growth strategies may be adopted by cooperative retail networks, but these strategies create dilemmas about how to organize business networks with a large number of participants and the adjustments in the governance system that are necessary to facilitate growth. The article examines the relations between the growth strategies adopted by a horizontal business network and its governance system. We analyze the case of Edeka, a centennial cooperative network, leader in food retail in Germany, showing its growth strategies and implications for the network structure. The case study was based on various secondary data sources and focuses the whole network – and not the networked firms – as the unit of analysis. Results indicate that, in order to grow, the network changed its governance structure and the process of participation of members in decision making, creating a hierarchical structure with professional management. The paper contributes to the discussions on cooperative governance and demonstrates that governance systems are transient and adapt to the network strategies. From a management viewpoint, the results show the effects of the growth strategies adopted by business networks, regarding the role of network managers and entrepreneurs in network management.