Economizing on supply network development

Doctoral thesis, 2015

This thesis deals with economizing on supply network development. The problematization in this thesis builds on two starting points. First, the ever-increasing importance of purchasing as a function and the role of suppliers as resource providers means that the supply side of firms has become a spring of opportunities for various types of benefits. In business networks, the firms, individuals, what they do, and what they use are all related. Nothing happens in isolation and nothing in the business world stops changing. The interconnectedness and dynamism in business networks reveals the importance of network developments for the firms involved. Consequently, it is important for firms to understand developments in their supply networks. The second starting point for this study is the concept of economic sense-making, which is used to define ‘economizing’ as a concept with which to study the phenomenon of supply network development. The aim of the study is to develop a framework for analyzing how a firm economizes on supply network developments, and to develop an understanding of supply network development from a firm’s perspective. This study centers on a single qualitative case of the development of a Swedish firm’s supply network over a period of almost 13 years. The firm is an automated production flow solutions provider that has a wide network of suppliers spread around the world. Systematic combining has been the underlying methodological approach throughout the study, adjusting and matching the researcher’s selection of the theoretical and empirical worlds, resulting in the formulation of the conceptualization of the phenomenon. The frame of reference is based on the industrial networks approach. Supply networks are analyzed in terms of actors, resources, and activities, all of which are interrelated. Developing a supply network involves developing those elements and their interconnectedness. The analysis uses those concepts to analyze the focal firm’s developments in its supply network. The main result of the analysis is a framework that breaks down developments in a firm’s supply network into changes that can be analyzed in terms of the following three dimensions: the focus of the change (that is, the change of relatedness among particular network elements); the direction of the change (that is, the improvements in the network elements, pursued by the change); and the scope of the change (that is, whether the change is of a relational character or concerns connected relationships). Based on these three dimensions, the framework suggests a way to explain how a firm economizes on supply network development in terms of economizing on scale and scope, integration, and innovation. The framework recognizes the dynamic features of economic sensemaking by discussing relativity in networks and the effects that a change in one part of the network can have on the others. That discussion is complemented by a set of managerial implications with regard to strategizing in supply network development, and positioning of the study in relation to the streams of research on sense-making and opportunity development to raise research implications. The study ends by presenting three methodological reflections regarding the researcher’s use of the systematic combining approach in case research.