=Paper=
{{Paper
|id=Vol-2383/paper1
|storemode=property
|title=Capability Agreements and Risk
|pdfUrl=https://ceur-ws.org/Vol-2383/paper1.pdf
|volume=Vol-2383
|authors=Glenda C.M. Amaral,Giancarlo Guizzardi,Nicola Guarino,Daniele Porello,Tiago Prince Sales
|dblpUrl=https://dblp.org/rec/conf/vmbo/AmaralGGPS19
}}
==Capability Agreements and Risk==
https://ceur-ws.org/Vol-2383/paper1.pdf
Capability Agreements and Risk
Glenda C.M. Amaral1, Giancarlo Guizzardi1, Nicola Guarino2, Daniele Porello2,
and Tiago Prince Sales3
1Free University of Bozen-Bolzano, Bolzano, Italy
glendacarla.mouraamaral@stud-inf.unibz.it
giancarlo.guizzardi@unibz.it
2ISTC-CNR Laboratory for Applied Ontology, Trento, Italy
nicola.guarino@cnr.it,daniele.porello@loa.istc.cnr.it
3University of Trento, Trento, Italy
tiago.princesales@unitn.it
Abstract. In this paper we analyse the ontological nature of capability agreements and discuss
the relation between capability delegation, vulnerabilities and risk.
Keywords: capability, vulnerability, risk, ontology
1 Introduction
Since the early 1980s, the proliferation and increasing importance of interfirm alliances
have received considerable attention in the strategic management literature [7]. As the
study of alliance networks has gained popularity, theoretical analysis of the competitive
advantage of organizations participating in alliances have been developed, focusing on
resource-centric theories [2]. Nevertheless, research has shown that it is the services
that resources provide, not resources themselves, that generate value for the firm [8].
Consequently, ownership or control of resources is not a necessary condition for com-
petitive advantage. In this sense, capability-based theories, which focus on “adapting,
integrating, and reconfiguring internal and external organizational skills, resources, and
functional competences toward a changing environment” [9], have taken shape.
Despite the relevance of capabilities to the success of enterprises, little attention has
been given to the theoretical analysis of this concept in the context of interfirm alli-
ances. In this paper, we tackle this issue by analyzing the ontological nature of capabil-
ity agreements, taking into account the broader implications of incorporating external
capabilities embedded in the firm's alliance network. To accomplish that, we conduct,
in Sections 2 and 3, an ontological analysis of capability agreements, under the princi-
ples of the Unified Foundational Ontology [4]. As we shall see, our analysis shows an
important result: capability agreements expose external dependencies and reveal new
vulnerabilities, which may enable the occurrence of risk events. Therefore, we can state
that capability agreements imply a relation of duality between capabilities and vulner-
abilities: at the same time that it creates a chain of dependencies on capabilities through-
out the alliances network, it forms a chain of vulnerabilities, due to the possibility that
one or more participant nodes fail to fulfill their commitments. We conclude and pre-
sent final considerations in Section 4.
2
2 Capability and Capability Agreement
The term capability is used in a variety of contexts with different meanings and in-
terpretations. However, most views on capability agree that possessing a capability
means to have competence and ability (and also the right resources in adequate amount)
to do something. Sandkuhl and Stirna [11] define capability as the ability and capacity
that enables an enterprise to achieve a business goal in a certain con-text. In The Open
Group Architecture Framework (TOGAF) [12] capability is defined as the ability that
an organization, person, or system possesses. In this paper we adopt the interpretation
of capability proposed by Azevedo [1], which defines ca-pability as the power to bring
about a desired outcome.
We use the UFO semantics of modes (more specifically, of dispositions) defined in
Guizzardi [6] to represent capabilities. In UFO, a capability is a specific type of dispo-
sition that endows their bearers with the potential of exhibiting some behavior or bring-
ing about a certain effect under certain conditions.
When an alliance is formed, a capability agreement is established, and the partici-
pants endow a subset of its capabilities to the alliance with the expectation of generating
common benefits. Fig. 1 shows an OntoUML [4] model representing a capability agree-
ment for a single dyadic alliance in which a FOCAL AGENT is endowed with capabilities
offered by a PARTNER AGENT. AGENT is a rolemixin [4], since it represents roles played
by entities of different kinds, e.g., persons and organizations. In our model, both the
FOCAL AGENT and the PARTNER AGENT represent organizations.
Fig. 1. Capability Agreement.
The CAPABILITY AGREEMENT mediates the relation between the FOCAL AGENT and
his partner by being a social relator [5] composed of the PARTNER AGENT’s commit-
ments and the FOCAL AGENT’s claims with respect to the capabilities offered. Intentions
are mental moments [5] that inhere both in the FOCAL AGENT and in the PARTNER
AGENT and are tied to the motivation for establishing the agreement. The propositional
contents of AGENT’s intentions are his goals. By virtue of the capability agreement, the
3
PARTNER AGENT commits to perform actions to achieve the results determined in the
agreement. Fig. 2 represents the execution of these actions.
Fig. 2. Capability Agreement Execution
3 Capability Incorporation and Risk
As a result of the capability agreement, the capabilities offered by the PARTNER AGENT
are aggregated to the set of capabilities of the FOCAL AGENT, as well as some of the
PARTNER AGENT’s non-offered capabilities, the latter being derived from opportunities
that range beyond the capability agreement immediate scope (for example, an agent
may benefit from the partner’s reputation, which is not part of the agreement).
The UFO concept of disposition is also applicable for the external capabilities. When
an agent delegates to another agent the performance of certain processes that realize a
capability, he can still, in a sense, to be considered as having that capability, because
he acquires that capability grounded in a relation of delegation [5]. This is related to the
idea of what an agent can “socially perform”: If A has a commitment from B to execute
S, then A (socially) can do S. An object can have dispositions which arise from its parts,
or from the network of its delegation relations [5]. In our example, if the FOCAL AGENT
has a commitment from the PARTNER AGENT with respect to (w.r.t.) the offered capa-
bilities, then the FOCAL AGENT (socially) has these capabilities.
A further important aspect, related to the motivation behind the establishment of the
capability agreement, is the FOCAL AGENT’s awareness of his dependence on external
agents to satisfy the desire of achieving a certain goal G. With the (social) commitment
of the PARTNER AGENT, this desire becomes an intention to G inhering in the FOCAL
AGENT. Considering that intentions are self-commitments [3], the FOCAL AGENT be-
comes more vulnerable and may be exposed to unanticipated risks. We may get until a
much higher level of vulnerability if, believing he has the social capability w.r.t. G, the
FOCAL AGENT makes a commitment to someone else (e.g. a THIRD AGENT) to employ
this social capability to achieve G. In this case his vulnerability is bigger because, if the
PARTNER AGENT doesn’t fulfill his commitment on G, not only the FOCAL AGENT’s
self-commitment to G is frustrated but also his social-commitment to G is frustrated.
Moreover, if it is true that a commitment without a corresponding capability entails
liability then, if the THIRD AGENT decides to exercise his claim towards the FOCAL
4
AGENT w.r.t. G, not only G but other goals of the FOCAL AGENT may be dented (e.g.,
the FOCAL AGENT might be subject to legal or social sanction from the THIRD AGENT).
We analyze the relation between external capabilities and risk, based on the Com-
mon Ontology of Value and Risk (COVER) defined in Sales et al [10]. COVER pro-
poses an ontological analysis of notions such as Risk, Risk Event (Threat Event, Loss
Event) and Vulnerability, among others.
When a capability agreement is not successfully executed, because the PARTNER
AGENT fails to fulfill its commitments, the RESULTING SITUATION (i.e., the one satisfy-
ing the FOCAL AGENT’s corresponding goal) may not be obtained, and consequently,
the FOCAL AGENT may not be able to achieve his goal. In the worst case, the RESULTING
SITUATION is a threatening situation that may trigger a THREAT EVENT, which is the
one with the potential of causing a loss. The LOSS EVENT is a RISK EVENT that impacts
intentions in a negative way, as it hurts the FOCAL AGENT’s intentions of reaching a
specific goal. Fig. 3 represents the relation between external capabilities, vulnerabilities
and risk.
Fig. 3. Shared Capability and Risk
4 Conclusions
In this paper we presented an ontological analysis of capability agreements in the con-
text of interconnected organizations. We propose that capability agreements imply a
relation of duality between capabilities and vulnerabilities: at the same time that it cre-
ates a chain of dependencies on capabilities throughout the alliances network, it forms
a chain of vulnerabilities between the participant nodes, that may enable the occurrence
of risk events. As a next direction, we plan to expand the presented analysis to broader
agreements, in which two or more participants endows a subset of its capabilities to the
alliance.
Acknowledgement
Our thanks to CAPES PhD scholarship (process 88881.173022/2018-01).
5
References
1. Azevedo, C. et al.: Modeling Resources and Capabilities in Enterprise Architecture: A
Well-Founded Ontology-Based Proposal for ArchiMate, Information Systems, Oxford
University Press (2015)
2. Barney, J.: Firm resources and sustained competitive advantage. Journal of Management,
17: 99-120 (1991)
3. Castelfranchi, C.: Commitments: From Individual Intentions to Groups and Organizations.
In Proceedings of the First International Conference on Multi-Agent Systems. AAAI-Press
and MIT Press, 41– 48 (1995)
4. Guizzardi, G.: Ontological foundations for structural conceptual models (2005)
5. Guizzardi, R.; Guizzardi, G.: Ontology-Based Transformation Framework from
TROPOS to AORML. Social Modeling for Requirements Engineering, Cooperative
Information Systems Series: 547–570 (2011)
6. Guizzardi, G., Wagner, G., Falbo, R.A., Guizzardi, R.S.S., Almeida, J.P.A.:
Towards Ontological Foundations for the Conceptual Modeling of Events, 32nd Interna-
tional Conference on Conceptual Modeling (ER) (2013)
7. Lavie, D.: The competitive advantage of interconnected firms: An extension of the resource-
based view. Academy of Management Review, 31(3), 638-658 (2006)
8. Penrose, E.T.: The Theory of the Growth of the Firm. New York: Willey (1959)
9. Teece, D.; Pisano, G.: The Dynamic Capabilities of Firms: An Introduction. Industrial
and Corporate Change 3: 537–556 (1994)
10. Sales, T.P., Baião, F., Guizzardi, G., Guarino, N., Mylopoulos, J.: The common ontology of
value and risk. In: 37th Int. Conf. on Conceptual Modeling (ER) (2018)
11. Sandkuhl, K., Stirna, J.: Capability Management in Digital Enterprises, Springer, Cham
(2018)
12. TheOpenGroup: TOGAF “EnterpriseEdition” Version9.http://www.togaf.org (2009)