Organizing activities in industrial networks: The case of Volvo S80

Book chapter, 2003

This chapter addresses the organization and efficiency of activity structures. The aim is to further our understanding of how firms choose to organize their activities within industrial networks, where efficiency analysis cannot be limited by firm boundaries. As a starting point we use Richardson’s (1972) model for analyzing the activity structure for the development and production of the Volvo S80. More specifically, Volvo’s relationships with two of its module/systems suppliers are analyzed. The case shows that the actors involved strive to achieve efficiency through realizing economies of scale where possible. These potential economies of scale are, however, limited by the actors’ efforts to create unique end products. These contradictory ambitions result in a situation in which a number of different dependencies between activities need to be coordinated. Thus, the characteristics of various activity dependencies have strong implications for the organization of the activity structure.