Organising Industrial Activities - An analytical framework

Doctoral thesis, 1994

The way in which industrial activities are organised among firms has been a fundamental theoretical concern for a long time. In practice, firms have found these matters, referred to as make-or-buy issues, difficult to analyse. In this thesis the classical problem of vertical integration is dealt with as a matter of how to analyse and obtain efficiency in activity structures involving several actors. Three activity based concepts developed by Richardson (1972) provide the basis for this analysis: similarity, complementarity and close complementarity. By combining these activity based concepts and the network model (Håkansson, 1987), which consists of three building blocks: activities, resources and actors, a framework for analysis of activity structures has been developed. Using the framework, the structural prerequisites for efficiency in activity structures, and also the structural restraints on obtaining efficiency, can be identified and analysed. The activity based framework provides a tool to identify and analyse how activities are interrelated. Activities are undertaken in sequence, which means that they form activity chains. These activity chains are merged in different ways to form different end products. The end product related activity structures evolving can be analysed with reference to the various dependencies among the activities in terms of sequence, time, volume, technical connections, location, etc. The efficiency of a particular end product related activity structure depends partly on how the activities in it are co-ordinated and also on how the end product related activity structure is connected to other such structures. These connections require that similarities among activities are identified and captured, which makes sharing of common resources possible. One important conclusion is that analysing activity structures in terms of similarities and complementarities shed new light on the boundaries of the firm. In addition to the firm boundary, traditionally the only one considered, three additional boundaries, with profound impacts on the efficiency of activity structures, have been identified. The empirical part of the thesis consists of a single case study with four embedded cases. The four cases illustrate different aspects of the division of work among firms with regard to dependencies and similarities among their activities.