Adaptive tension, self-organization and emergence : A complex system perspective of supply chain disruptions

The purpose of this thesis was to explore how microstate human interactions produce macro level self-organization and emergence in a supply disruption scenario, as well as discover factors and typical human behaviour that bring about disruptions. This study argues that the complex adaptive system’s view of complexity is most suited scholarly foundation for this research enquiry. Drawing on the dissipative structure based explanation of emergence and self-organization in a complex adaptive system, this thesis further argues that an energy gradient between the ongoing and designed system conditions, known as adaptive tension, causes supply chains to self-organize and emerge. This study adopts a critical realist ontology operationalized by a qualitative case research and grounded theory based analysis. The data was collected using repertory grid interviews of 22 supply chain executives from 21 firms. In all 167 cases of supply disruptions were investigated. Findings illustrate that agent behaviours like loss of trust, over ambitious pursuit, use of power and privilege, conspiring against best practices and heedless performance were contributing to disruption. Impacted by these behaviours, supply chains demonstrated impaired disruption management capabilities and increased disruption probability. It was also discovered that some of these system patterns and microstate agent behaviours pushed the supply chains to a zone of emergent complexity where these networks self-organized and emerged into new structures or embraced changes in prevailing processes or goals. A conceptual model was developed to explain the transition from micro agent behaviour to system level self-organization and emergence. The model described alternate pathways of a supply chain under adaptive tension. The research makes three primary research contributions. Firstly, based upon the theoretical model, this research presents a conceptualization of supply chain emergence and self-organization from dissipative structures and adaptive tension based view of complexity. Secondly, it formally introduces and validates the role of behavioural and cognitive element of human actions in a supply chain scenario. Lastly, it affirms the complex adaptive system based conceptualization of supply chain networks. These contributions succeed in providing organizations with an explanation for observed deviations in their operations performance using a behavioural aspect of human agents

REINVENTING INDUSTRIAL STRATEGY: THE ROLE OF GOVERNMENT POLICY IN BUILDING INDUSTRIAL COMPETITIVENESS

As liberalization and globalization gather pace, some developing countries cope well but the majority do not. Diverging industrial competitiveness is one of the causes of the growing disparities in income: the potential that globalization offers for industrial growth is being tapped by a relatively small number of countries, while liberalization is driving the wedge between them and laggards deeper. This paper examines two approaches to this problem: neoliberal and structuralist. The neoliberal approach is that the best strategy for all countries and in all situations is to liberalize. Integration into the international economy, with resource allocation driven by free markets, will let them realise their .natural. comparative advantage, optimize dynamic advantage and yield the maximum attainable growth. No government intervention can improve upon this but will only reduce welfare. The structuralist approach puts less faith in free markets and more in the ability of governments to mount interventions effectively. It questions the theoretical and empirical basis for the argument that untrammelled market forces account for the industrial success of the East Asian Tigers (or the presently rich countries). Accepting the mistakes of past strategies and the need for greater openness, it argues that greater reliance on markets also needs a more proactive role for the government. The paper reviews the nature of current globalization and evidence on the growing divergence in competitive performance in the developing world. It goes on to consider the case for industrial policy, arguing that interventions are necessary to overcome market failures in building the capabilities required for industrial development. The approach adopted draws on evolutionary theories of technical change as applied to development in the technological capability approach. The paper then describes the strategies adopted by the Asian Tigers to build industrial competitiveness, pointing out the pervasiveness of selective interventions and significant strategic differences between them. The paper concludes with lessons for other developing countries: the kinds of industrial policy needed in the current international setting are clearly different from the traditional forms of inward-looking industrialisation strategies of the early post-war era, but globalization and technical change do not eliminate the need for intervention. On the contrary, given path dependence, cumulativeness and agglomeration economies, they increase the need. There is therefore a compelling need to reconsider the rules of the game constraining the exercise of industrial policy, and for international assistance in designing and implementing appropriate policies.

Pathways to diversification

A fundamental research question in regional economic development, is why some regions are able to diversify into new products and industries, while others continue to face challenges in diversification? This doctorate research explores the different pathways to diversification. It follows the three-stage modular structure of DBA for Cranfield School of Management. This thesis consists of a systematic literature review, a single qualitative case study on UAE, and a research synthesis of published cases on Singapore, Norway and UAE. The linking document provides a summary of the three projects and consolidates findings and contributions into a path creation model that provides new understanding on the pathways to regional diversifications. This research integrates existing theoretical foundations of evolutionary economic geography, institutional economic geography, path dependence, industry relatedness, economic complexity, and path creation into a unified conceptual path creation model. It generates propositions, builds a framework and develops a matrix for path creation that integrate context, actors, factors, mechanisms and outcomes shaping regional diversification. It finds that in the context of path dependence and existing conditions of a region, economic actors undertake strategic measures to influence the institutional capabilities to accumulate knowledge and trigger indigenous creation, anchoring, branching, and clustering diversification mechanisms to create complex varieties of related and unrelated diversification outcomes. The institutional collaboration capabilities are found to be instrumental in accumulating knowledge and determining the relatedness and complexity of diversification outcomes. This research further provides a set of integrated platform strategies to guide policy-makers on setting up the pathways to regional diversification

The evolution of an innovation policy in a local system of production. The case of the Regional Programme for Industrial Research, Innovation and Technology Transfer

Aim of this thesis is to analyse the evolution of a policy within a local system of production. We consider policy as standardised social technologies devoted to the coordination of the physical technologies of production. In this sense we can compare them to institutions: arising spontaneously as organic entities for the development of networks of production and then becoming pragmatic as formally embedded in laws and norms. To investigate this process we will employ as case study some industrial policies developed by Regione Emilia Romagna from the 1970s to the Regional Programme for Industrial Research, Innovation and Technology Transfer (PRRIITT) in 2003

Adaptive Capacity as antecedent to Climate Change Strategy: A Systematic Literature Review

Within the last decade research on climate change strategies and adaptive capacity emerged as the debate about climate change was intensified with the publishing of the Third Assessment Report by the Intergovernmental Panel on Climate Change in 2001. That companies are facing risks and opportunities is not new and the awareness to address these issues is growing. However, there is still need for research in the field of corporate strategic response to climate change. Recently, research focused on resilience management to address climate change. Resilience management is about being able to experience changes and remain stable getting back into the same situation before the change happen. On the contrary to resilience management adaptive capacity is about the ability to be able to adapt to uncertain and unexpected events on the long term. This includes long-term changes. This work argues that companies should think about their adaptive capacity as climate change induces short and long-term changes. Adding this dimension to the strategic planning companies need to think of how they can improve their adaptive capacity. This work investigates research in both issues adaptive capacity and climate change research and in their relation. Applying a systematic literature review this study conducted 60 references which are examined by a qualitative-quantitative analysis and answers the following questions: What is the current scientific view of adaptive capacity within strategic management literature? What are determinants of adaptive capacity? How can adaptive capacity be linked to climate change strategy and is it even antecedent to climate change strategies? The findings of this research indicate that adaptive capacity and climate change strategies exhibit a link but it cannot be proved whether adaptive capacity is antecedent. Furthermore, the term adaptive capacity is merely discussed within strategic management literature and if it is discussed and examined, several concepts and theories are applied to explain determinants of adaptive capacity. Several concepts such as dynamic capabilities, organizational learning capability, organizational learning, organizational change capacity, flexibility and more could be identified as concepts enhancing adaptive capacity. This works provides an overview of related concepts and theories

Exploring the Evolution of a Manufacturer’s Capabilities and Managers’ Mindsets When Transitioning from Closed Innovation to Open Innovation Ecosystem

Organizations in the 21st century have started to opt for open innovation instead of closed innovation for numerous reasons. Opting for open innovation allows organizations to decide how to orchestrate it. One popular theme of open innovation is innovation ecosystems. This study scrutinizes how a manufacturer’s capabilities and managers’ mindsets evolve when transitioning from closed innovation to orchestrating an open innovation ecosystem. To be able to scrutinize how the manufacturer’s capabilities and the managers’ mindsets evolve, it is essential to employ a microfoundational approach. This study’s theoretical background is built by examining three main concepts. First, closed and open innovation are examined, and reasons for organizations employing open innovation are explicitly looked at. Secondly, the ecosystem concept, specifically the innovation ecosystem concept, is delved into. Thirdly, the dynamic capability is examined thoroughly, and microfoundational research has a role important in this part. Altogether, the three concepts are combined for a working theoretical framework. This empirical study employs a single case study. The case organization in this study is stock-listed and was selected due to the unique innovation ecosystem it orchestrates. Furthermore, the innovation ecosystem is in the evolution phase, and this is why there are visible changes in managers’ mindsets and capabilities. Primary data was gathered through semi-structured interviews, while secondary data was gathered from annual reports, capital market days, and other publicly available information. The data analysis occurs through a within-case study. This study’s findings showcase numerous mindset, cognition, work method, process, and organizational routines, which enable open innovation in an innovation ecosystem. This study’s main contribution is building an empirical framework that can be used to understand how microfoundations aid the manufacturing organization in achieving dynamic capability when the organization transitions from a closed innovation process towards an open innovation ecosystem.2000-luvulla organisaatiot ovat alkaneet valita avoimen innovaation suljetun innovaation sijaan monista syistä. Avoimen innovaation valitseminen antaa organisaatioille mahdollisuuden päättää, miten innovointi toteutetaan ja yksi suosittu avoimen innovoinnin toteutustapa on innovaatioekosysteemi. Tässä tutkimuksessa tarkastellaan, miten teollisuusyrityksen valmiudet ja johtajien ajattelutavat kehittyvät siirryttäessä suljetusta innovaatiosta avoimen innovaatioekosysteemin organisointiin. Yrityksen kyvykkyyksien ja johtajien ajattelutapojen kehittymistä tarkastellaan mikroperusteiden näkökulmasta. Tämän tutkimuksen teoreettinen tausta rakentuu kolmen pääkäsitteen tarkastelun kautta. Ensiksi tarkastellaan suljettua ja avointa innovointia ja syitä, joiden vuoksi organisaatiot käyttävät avointa innovointia. Toiseksi syvennytään ekosysteemin käsitteeseen, erityisesti innovaatioekosysteemin käsitteeseen. Kolmanneksi tarkastellaan dynaamisia kyvykkyyksiä mikroperusteiden avulla. Nämä kolme käsitettä yhdistetään toimivaksi teoreettiseksi kehykseksi. Tämä empiirinen tutkimus on yksittäinen tapaustutkimus. Tutkimuksen tapausorganisaatio on pörssilistattu ja se valittiin sen organisoiman ainutlaatuisen innovaatioekosysteemin vuoksi. Lisäksi innovaatioekosysteemi on kehitysvaiheessa, joten johtajien ajattelutavoissa ja kyvyissä on nähtävissä muutoksia. Ensisijainen aineisto kerättiin puolistrukturoiduilla haastatteluilla. Toissijaista aineistoa kerättiin vuosikertomuksista, pääomamarkkinapäivistä ja muista julkisesti saatavilla olevista tiedotteista. Tutkimuksen tulokset osoittavat lukuisia erilaisia ajattelutapoja, kognitiota, työmenetelmiä, prosesseja ja organisaation rutiinimuutoksia, jotka mahdollistavat avoimen innovaation toteutumisen innovaatioekosysteemissä. Tämän tutkimuksen tärkein anti on empiirisen kehyksen luominen, jonka avulla voidaan ymmärtää, miten mikroperustat auttavat tämän tutkimuksen teollisuusyritystä saavuttamaan dynaamisen kyvykkyyden, kun organisaatio siirtyy suljetusta innovaatioprosessista kohti avointa innovaatioekosysteemiä

How Effective is the Invisible Hand? Agricultural and Food Markets in Central and Eastern Europe

Since the seminal work of Adam Smith, markets have been considered an efficient tool for co-ordinating the behaviour of economic agents. The basic characteristic of a market economy is that the complex system of interaction among individuals is not centrally coordinated. Under the assumption of profit and utility maximisation (and a whole set of assumptions about the institutional framework), relative prices and their change over time provide the signals that guide, like an invisible hand, the allocation of resources, i.e., the structure of production and the intensity of input use in the various production processes. They do this by co-ordinating the activities of economic agents, i.e., of resource owners, producers, intermediaries, traders, and consumers. After system change in the former Soviet Union and in Central and Eastern Europe (CEE) central economic planning had to be replaced by other forms of co-ordination. The general direction in all transition countries was towards a market economy, but the speed and depth of reforms towards an environment in which markets can evolve differed largely between countries, sectors and between different phases during the past 15 years. IAMO Forum 2005 focuses on this development and discusses the functioning of markets, the requirements for this, and the advantages and disadvantages of other co-ordination mechanisms under different environments in the agricultural and food sectors in Central and Eastern Europe. CEE agri-food markets deserve researchers' and policy makers' attention for several reasons. Two of them regard the high demand for support to policy decisions that aim to stimulate economic and social development in the region. In most CEE countries, the significance of the agricultural and food sector is relatively high with respect to income and employment. In particular, rural areas can benefit from the development of this branch of the economy. Also, there is marked indication that agri-food markets in CEE are not ensuring exchange as frictionless as possible. This means that large benefits can be expected if potential improvements of the economic environment are implemented and if individual agents adapt optimally to that environment. Another motivation for economic research on transition countries is that we are looking at a huge region that started almost as a vacuum with regard to institutional settings. This means that a wide range of substantially different settings were introduced in the respective countries, and were only weakly confined by political rigidities or path dependencies. From a distant perspective, the repeated fundamental shifts in recent economic policies almost evoke the impression of a trial and error approach. The consequences of distinctively different options (across countries and periods) can be observed in a way almost similar to a laboratory situation. Such unique opportunity has attracted economists, particularly those interested in institutional economics, to conduct research on CEE. However, this also means that the experiences made in CEEC can enhance the general understanding of what markets can do and what the limitations of market coordination are. This volume contains selected contributions presented at IAMO Forum 2005 and gives an overview of the major topics discussed there. Partial analyses of specific economic problems usually abstract from the general economic framework which is assumed to be more or less constant as expressed in ceteris paribus clauses. Oftentimes, the set of institutional conditions is even assumed to be sufficiently well-described by the framework used in neoclassical models. Particularly for transition countries, this has frequently led to spurious results because crucial aspects of the framework actually in place were not considered, and sometimes were not even thought of. An extreme and very obvious example is the neglect of the effects of the replacement of monetary by nonmonetary exchange in phases of a barter economy. There is no generic approach to avoid unintended omission of crucial framework conditions, but it must generally be emphasised that a broad look at the various interdependent markets and at the entire socioeconomic context of a country is needed before going into detail. Descriptive analyses of the situation in various markets form part of such a broad look. The contributions of POPP, FERTÃ et al., WILKIN et al., and HEIN in the chapter Selected analyses from CEEC provide excellent examples, and focus on market developments in new EU member countries. On the one hand, the papers show the heterogeneity of problems e.g. due to largely differing farm structures. On the other hand, several common patterns can be observed: The market shares and power of large processors and retailers (hypermarkets, etc.) are increasing. Also, international (especially intra-EU) trade in commodities has increased in response to CAP-induced price harmonisation. Both tendencies weaken the market position of farmers, particularly small entities which cannot supply in volumes sufficient for large processing and trade firms. Within the food industry concentration increased as many smaller firms could not comply with EU processing standards and had to quit the market. The increased size and specialization of large producers, as well as of large processors, made many of those firms co-ordinate business with each other through long-term contractual agreements rather than by relying on spot markets. This tendency is very distinct in the fruit and vegetable sector, as WILKINâs contribution describes. Two contributions draw attention to the institutional framework itself, mainly by looking at circumstances which prevent market allocation from leading to an optimal outcome. HOBBS describes factors that impede investment and growth by drawing on transaction cost economics. Situations typical for transition countries are highlighted where e.g. transparency is not sufficient or the existence and reliable enforcement of contract or corporate law are not guaranteed. NUPPENAU stresses the need for the appropriate and precise formulation of land property rights, which should evoke a balance between governance and exclusion. The importance of appropriate and reliable institutions to avoid flaws is emphasised. But even with suitable institutions, transaction costs cannot be reduced to zero. The main reason for this is that since agents may gain form a head start of information, incentives to reveal their knowledge are quite restricted. Furthermore, some of the information required to make correct decisions is not available. This especially concerns information regarding all future contingencies. An uncertain future and the asymmetric distribution of information impose special problems when decisions have long-term effects and agents are linked together through investment decisions. This offers possibilities for opportunistic behaviour, i.e., when an agent behaves in a way that allows him to extract rents from the partners' activities. The friction induced in such situations may result in a market outcome that is biased by transaction costs. Mitigating this bias should be a goal of public policy but it is also in the interest of (at least some of the) private agents involved. This issue is discussed in more detail in the papers dealing with alternative governance structures. A number of contributions to IAMO Forum highlight approaches for measuring the well-functioning of markets. While studies that aim to directly measure transaction costs are very rare and are necessarily limited to comparing only very specific portions of transaction costs, most studies focus on indirect indicators. These usually start from the idea that in a well-functioning, competitive market any supply or demand shocks are reflected in price changes, not only in the particular market where the shock occurs but also in other, related markets, i.e., in different locations or at different stages of the production and marketing chain. Consequently, an approach for assessing the functioning of markets is to compare price differentials with processing-, marketing- or transfer-costs, or â since these costs are usually difficult to quantify â to observe price differentials over time. Accepting the assumption that the costs reflected by price differentials are more or less constant (or stationary) over the observed time span, any additional price changes or a lack of price co-movement is interpreted as an indication for insufficiently connected or insufficiently functioning markets. Three contributions in the chapter Analytical approaches for measuring market efficiency describe analyses which mainly focus on the vertical dimension, i.e., between market stages. BOJNEC, in his descriptive price analysis for several agricultural products in Slovenia since 1991, finds a heterogeneous development of the farm gate/consumer price spread: The processing and marketing margins increased for wheat and beef while they declined for grapes (processed to wine), sugar and poultry. BRÃMMER and ZORYA, as well as BAKUCS and FERTÃ, use cointegration analysis to describe the degree and nature of vertical price integration in the Ukrainian wheat market and the Hungarian pork market, respectively. Both studies find that price changes are transmitted vertically, that there is a tendency to "correct" any deviations from some underlying equilibrium price-relationship. However, such error correction mechanisms are found not to be a constant, universal force. In the Hungarian paper, it could only be found for a sub-period of the observed time span, excluding the highly volatile early 1990s. Also, equilibrium was found to be achieved by adjustment of farm gate prices only while the retail prices were found to be exogenous, i.e., not responding to any disequilibrium. The paper on Ukraine shows that adjustment processes between wheat and wheat flour prices cannot be sufficiently described by a constant error correction mechanism for the period 2000 to 2004. In fact, four different regimes of adjustment processes were found to have been in force, reflecting particular phases of largely differing market situations and political interventions. The functioning of markets depends on several crucial conditions. One of these conditions concerns the availability of information. Only if agents have perfect and complete information will the exchange lead to an outcome in which no individual can be better off without reducing the welfare of others. However, in the real world this condition regarding information is not fulfilled. Information is not perfect, since the future cannot be predicted with certainty. Incomplete information results from, first, not all information being revealed, and second, individuals not possessing the mental capacity to collect and process all information. Moreover, because of its asymmetric distribution, information can be regarded as a resource that can be exploited by agents. This means that there are incentives to hamper the diffusion of information to the public domain. In general, the more uncertain the future is and the more information is tacit, the worse markets will function, and the more beneficial become alternative mechanisms of coordination. Three papers dealing with this issue of organisational choice. HANF focuses on governance structures within supply chain networks that are appropriate for allowing an optimal flow of information between the involved individuals while retaining the necessary hierarchy for efficient implementation of strategic decisions. MAACKâs analysis shows that there is strong mutual interest between producers and processors of berry fruits to reduce marketing and procurement risk, respectively. This can be achieved by switching from spot market exchange to contractual supply agreements. A prerequisite for such agreements is that a well-balanced distribution of risks and risk premiums between the farmer and processor is implemented. This means that processors, who â facing a multitude of small producers â are used to opportunities for exerting market power, have to agree to cover part of the production risk through appropriate contractual clauses. Finally, BALINT looks at the various marketing channels used by Romanian farmers and finds that a self-enforcing dualism exists. For commercially-oriented farmers who can supply large quantities, marketing directly to traders, wholesalers and processors is most favourable and involves relatively low transaction costs. Although this form of supply-relationship is usually not based on contractual agreements, it can still be characterised by a certain stability over time. In contrast, small farmers whose production does not considerably exceed the subsistence level incur relatively high (per unit) transaction costs in selling their produce on local markets and to other farmers. Another aspect of organisational choice is the question of whether ownership of production factors is transferred or only the right to use them temporarily. The uncertainty of future developments implies that the possession of resources cannot be only regarded from the point of view of income generation at a certain point in time. With perfect foresight, there is no difference whether a factor is rented or purchased, because the remuneration would be the same. This perfect substitutability is no longer given when the future is uncertain. Income generation, then, is only one feature of ownership. Additional aspects such as insurance, wealth, and speculation as motivations for possession affect the value of ownership and thus shift the demand and supply curves of the factor. HURRELMAN picks up this issue in her analysis of the Polish land market and shows the impact of additional grounds for valuing property on the decision to rent or to buy land. Uncertainty may also affect the specialization of factor use. Allocating a factor of production to different production activities reduces the risk of income instabilities, but at the cost of specialization gains through economics of scale. Moreover, the decision on income combination is â besides risk â affected by a complex interaction of other determinants. GLAUBEN et al., analyse these interactions for the case of part-time farming in China and show how the decision of income combination is affected by household characteristics, human capital and other variables. Incomplete and imperfect information not only causes individuals to choose optimal governance modes, often it is also understood as a call for government intervention. The selected papers in the chapter on policy intervention plead for careful selection and coherent implementation of policy instruments. BENNER, as well as KUHN, highlight the significance of information diffusion and argue in favour of government intervention in this area. However, both emphasise that these interferences should be used carefully and be adjusted to specific market failures. Both argue that setting up information systems would improve the functioning of markets. BENNER also discusses possible negative impacts if governments that engage in setting up and enforcing product and process standards try, at the same time, to foster a sector like agriculture through support in marketing. The latter activity affects the governmentâs (crucial) credibility in the first activity. KUHN points to negative welfare effects and budgetary requirements of an intervention system which is implemented to increase price stability. Moreover, when a government intervenes in market allocation or intends to provide rules that should facilitate the exchange on markets, it has to take into account that the new regulation has to be implemented in a coherent manner. This requires the various policy regulations and institutional settings to be complementary and not cause frictions which hamper the functioning of the system. LERMAN and SHAGAIDA highlight this aspect in their discussion of the Russian land market, where bureaucracy and high costs for the registration of property rights can be regarded as a major cause of the low number of land transactions. However, since economic activities take place in a dynamic environment, the comparative static point of view may lead to inappropriate policy formulation. WANDEL discusses this aspect in the context of competition policy. From a comparative static point of view, market power has to be assessed negatively because of the distortions of resource allocation. However, monopoly profits are an indicator of extra rents and thus provide incentives for market entry. On the one hand, this thread may lead to special pricing schemes and/or to the accelerated development of technological change so that a monopolist can consolidate its market position. But it is possible, on the other hand, that market entry may in fact happen. In this case, one would observe structural change, which would be accompanied by an improved use of resources. This in turn means that competition policy should not be oriented towards an optimal market structure but towards the facilitation of market entry so that competition can discover market opportunities and determine the optimal structure of the market. The present volume shows the wide range of interesting and controversial topics that are concerned when looking at co-ordination, particularly on markets in CEE agri-food sectors. It remains a hope that the heterogeneity and dynamics of the developments will decrease as successful constellations of framework conditions, organisational choices and individual behaviour become more and more obvious and widespread in the region. Conversion to sustainable, balanced patterns might take place, but this cannot be taken for granted. However, chances for such development are better the more stable and balanced political developments, as well as international co-operation, become. We hope that the academic community will contribute towards such goal.Agribusiness, Community/Rural/Urban Development, Industrial Organization, International Development, Labor and Human Capital, Land Economics/Use, Political Economy,