The Role of Intermediation in Business Networks

Doctoral thesis, 2014

Intermediation is a central phenomenon in the business landscape, addressed in numerous settings and contexts, for example, financial intermediation, innovation intermediation and internationalization through intermediation. Commonly, intermediation concerns how firms become connected through an intermediary that bridges the gap between the provider and the user of goods and services. Hence, the focus is on who connects firms in organizational arrangements of intermediation. This study extends the view on intermediation by including what is being connected through intermediation in order to analyse the role of intermediation. What needs to be connected relates to ‘what is done’ and ‘how it is accomplished’, which generate connections, within firms and across firms’ boundaries. These connections have become increasingly important since outsourcing, specialization, customization and network-like constellations have come to characterize the business reality. The thesis relies on industrial network theory to conceptualize intermediation, which allows the established focus on actor intermediation to be supplemented by intermediation of activities and intermediation of resources. The basic research issue analysed is how one intermediate element connects other elements, and the consequences of this interrelation. The analysis first captures activity intermediation, resource intermediation and actor intermediation separately, and compares the various empirical intermediation situations in the three network layers. Second, the analysis scrutinizes how the layers of activities, resources and actors are interrelated by examining the interplay among them. Methodologically, the thesis is based on a qualitative case study of intermediation in the Swedish construction industry. It includes three subcases which each illustrate intermediation in one of the network layers. The case study includes 28 interviews in 10 firms, observations at construction sites and factories, and large amounts of secondary data and company records. The thesis demonstrates that the broader scope of intermediation enabled by industrial network theory, contributes to an improved understanding of business settings. The interplay among intermediations in the three network layers is analysed in relation to operating efficiency, division of labour and control of resources. The thesis also addresses the dynamic nature of intermediation by identifying some principal modifications of intermediation. Finally, this research demonstrates that managing intermediation is a balancing act: balancing activity interdependencies, balancing resource interfaces, and balancing actor interactions stretching across firm boundaries. In addition, this balancing act is not a ‘once and for all’ task, but a continuous managerial issue to cope with the circumstances in the business reality.