Power games in industrial networks

The most nerdy activity of academia is publishing papers, and the joy of having a paper accepted by a good journal is difficult to share with people outside the trade. Anyway, a couple of weeks ago we had a paper accepted for publication in the Journal of Business Research, and it has now been published online.

In the paper we analyse the business interactions between a set of foor product suppliers and a set of retail chains in Norway. It is based on the legal documents from the court case between the Norwegian Competition Authority and the agricultural cooperative TINE SA. Tine was accused of abusing its market power to squeeze its competitors out of the supermarket shelves of the major retail chain Rema 1000. In the end Tine won the case with 3 against 2 votes in the Norwegian Supreme Court.

More interesting than the court ruling, however, is how the legal documents contain extraordinarily rich documentation of business interactions (negotiations, dialogues, collaborations, economic mechanisms, etc etc) between a number of the major players in the Norwegian food sector. The investigators have done a very thorough job, I must say, and the result (which is openly available online, although in Norwegian), is highly interesting for industrial network researchers.

In the abstract of the paper we write:

“Power is a long standing theme in inter-organizational research, yet there is a paucity of studies about how power emerges and is constructed over time at the network level. […] Three power mechanisms are identified, gatekeeping, decoupling and resource allocation, which form the basis of a model of networked power dynamics. […] The paper extends current understandings of power as ‘conflict and coercion’ to include influencing, leveraging and strategic maneuvering in the actual performance of networked power.”

In short, we find that a few of the major players (on the retail side in this case study) are capable of mobilizing, maintaining and increasing their inter-organizational power over time, and utilize this to systematically increase their profits. Inter-organizational power and the following economic advantages seem to be produced via (1) mobilizing resources across companies, (2) controlling access to the marketplace, and (3) mobilizing alternative solutions enabling their de-coupling of certain other actors. Currently, Norgesgruppen (with the retail chains Kiwi, Meny, Ultra, and a number of others in their portfolio) seem to, by far, outperform their suppliers and competitors in the Norwegian food sector power games.

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About Thomas Hoholm

Associate Professor at BI Norwegian Business School. Researching and teaching organization, innovation and entrepreneurship. Also interested in music, film, and literature. https://helseledelse.wordpress.com/ https://organizinginnovation.wordpress.com/ http://entstudent.wordpress.com
This entry was posted in controversy/tension/friction, food industry, markets (making of), network, power. Bookmark the permalink.

2 Responses to Power games in industrial networks

  1. Pingback: Hvorfor er det så tøft i matvarebransjen? « Entreprenørskapsbloggen

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