Paper info

Organizing activities in industrial networks - The case of Volvo S80

Anna Dubois , Fredrik von Corswant and Peter Fredriksson

The paper was published at the 17th IMP-conference in Oslo, Norway in 2001.

Based on an efficiency model presented by Richardson (1972), this article addressesthe efficiency and organizing of activity structures. While Richardson's model isactivity based, it allows analysis of the efficiency in industrial networks whereboundaries other than firm boundaries delimit the unit of analysis.Richardson's model is used here for analyzing the activity structure created for thedevelopment and manufacture of the Volvo S80. More specifically, Volvo's relationswith two of its module-/systems-suppliers were studied. The cases show that theactors involved strive to achieve efficiency through realizing scale benefits wherepossible. These potential scale benefits are, however, limited by the actors? striving tocreate unique end products. These contradictory efforts lead to a situation in which anumber of different dependencies between various activities need to be coordinated.The characteristics of the activity dependencies thus have strong implications for theorganizing of the activity structure.In contrast to traditional economic theory, the present analysis shows that strongdependencies between activities need not necessarily be coordinated within the firmboundary, i.e. through hierarchy. Instead, the analysis reveals that both formal and informalorganizational units, some temporary and others more long term, can becreated to coordinate strong activity (inter-)dependencies through relationshipexchange. It is also concluded that alternative organizational solutions always exist,thus generating dynamics that continuously develop the network. Each organizingmode thus creates new possibilities for technical and organizational innovations.