A Case Study of Isomorphism in the Airline Industry

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A Case Study of Isomorphism in the Airline Industry A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Hvass, Kristian Anders Doctoral Thesis A Boolean Analysis Predicting Industry Change: Innovation, Imitation & Business Models: The Winning Hybrid - A case study of isomorphosm in the airline industry PhD Series, No. 16.2008 Provided in Cooperation with: Copenhagen Business School (CBS) Suggested Citation: Hvass, Kristian Anders (2008) : A Boolean Analysis Predicting Industry Change: Innovation, Imitation & Business Models: The Winning Hybrid - A case study of isomorphosm in the airline industry, PhD Series, No. 16.2008, ISBN 9788759383667, Copenhagen Business School (CBS), Frederiksberg, http://hdl.handle.net/10398/6843 This Version is available at: http://hdl.handle.net/10419/208699 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc-nd/3.0/ www.econstor.eu Kristian Anders Hvass Industry Change: Innovation, Imitation A Boolean Analysis Predicting A Boolean Analysis Predicting & Business Models A Boolean Analysis Predicting Industry Change: Innovation, Imitation & Business Models The Winning Hybrid: A case study of isomorphism in the airline industry ISSN 0906-6934 The Doctoral School of Marketing ISBN 978-87-593-8366-7 CBS / Copenhagen Business School PhD Series 16.2008 A BOOLEAN ANALYSIS PREDICTING INDUSTRY CHANGE: INNOVATION, IMITATION, & BUSINESS MODELS -The Winning Hybrid- A case study of isomorphism in the airline industry Kristian Anders Hvass Center for Tourism and Culture Management Copenhagen Business School Kristian Anders Hvass A Boolean Analysis Predicting Industry Change: Innovation, Imitation & Business Models The Winning Hybrid: A case study of isomorphism in the airline industry CBS / Copenhagen Business School The Doctoral School of Marketing PhD Series 16.2008 Kristian Anders Hvass A Boolean Analysis Predicting Industry Change: Innovation, Imitation & Business Models The Winning Hybrid: A case study of isomorphism in the airline industry 1st edition 2008 PhD Series 16.2008 © The Author ISBN: 978-87-593-8366-7 ISSN: 0906-6934 Distributed by: Samfundslitteratur Publishers Rosenørns Allé 9 DK-1970 Frederiksberg C Tlf.: +45 38 15 38 80 Fax: +45 35 35 78 22 [email protected] www.samfundslitteratur.dk All rights reserved. No parts of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage or retrieval system, without permission in writing from the publisher. ABSTRACT The deregulated scheduled passenger airline industry is in a constant state of motion as managers continually adapt their business models to meet the challenging market environment. Such adaptation has led to a variety of airlines populating the industry; from the birth of low-cost carriers to the transformation of state-owned behemoths to lean and successful carriers. These dynamics challenge airline managers to continuously acclimate their business models and to understand industry evolution. This doctoral dissertation addresses the issue of industry evolution and attempts to propose future airline business models based on airline behavior. The intention is to improve understanding of industry evolution, propose a method for constructing future business models, and aid airline management in future strategic decisions. Three central themes are raised in the research: business model heterogeneity and its impact on airline performance, innovation and imitation as a justification for business model heterogeneity, and future business models grounded on airline innovation and imitation. Each theme forms the basis for the project’s three analyses. The research is categorized according to the customary industrial segmentation of full-service carriers, low-cost carriers, and regional carriers. The findings show that business model heterogeneity is evident at varying degrees in the industry, and that there is a positive relationship between the level adherence to a strategic group’s traditional business model and financial performance. This indicates that airlines that abide by their strategic group’s traditional business model perform better than those that differentiate themselves form the traditional business model. The low-cost carrier group is the most heterogeneous while the full-service carrier group is the most homogenous, which one may attribute to the historical emergence of these two groups. Results from a global survey distributed to airline CEOs show that business model differentiation is predicated on both innovation and imitation. The research shows that all airlines innovate, however business model changes based on this phenomenon may only afford an airline an advantage for a limited time period as imitation is prolific in the industry. Airline behavior indicates that airlines that populate the periphery of their strategic group are more prone to imitate other strategic groups. In addition, it is shown that airlines that closely adhere to their strategic group’s traditional business model are more likely to imitate airlines populating their own strategic group. The final analysis is based on the presence of innovation and imitation in the industry and incorporates these concepts in algebraic analyses which determine the unique combinations that continuously lead to a positive operating margin. The business model results suggest that the clear, historical distinctions between the strategic groups in the industry are becoming blurred, and that a winning hybrid may emerge. DANSK RESUME Der er en konstant bevægelse i den del af luftfartsindustrien, der arbejder med passagertransport, da dens ledere bestandigt tilpasser deres forretningsmodeller til at imødekomme de krav, der stilles af markedet. Tilpasninger af denne karakter har ført til en mangfoldig industri og en række forandringer, fra fødslen af lavprisselskaberne til transformationen af statsejede giganter til strømlinede og succesfulde luftfartsselskaber. Disse dynamikker udfordrer ledere i luftfartsbranchen til konstant at akklimatisere deres forretningsmodeller og til at forstå udviklingen i branchen. Denne ph.d.-afhandling behandler problemet om brancheudviklingen og forsøger at udpege fremtidige forretningsmodeller for luftfartsindustrien baseret på virksomhedsadfærd. Intentionen er at forbedre forståelsen af brancheudviklingen, foreslå en metode til fremtidige forretningsmodeller og styrke ledelsen af luftfartsselskaber. Tre centrale temaer rejses i forskningen: heterogenitet i forretningsmodeller og dens effekt på profit; innovation og imitation som en retfærdiggørelse af heterogenitet i forretningsmodeller; og fremtidige forretningsmodeller baseret på innovation og imitation. Forskningen er kategoriseret efter de sædvanlige brancheinddelinger af netværksselskaber, lavprisselskaber og regionale selskaber. Resultaterne viser, at heterogenitet i forretningsmodeller i varierende grad er tydelig i industrien, og at der er et positivt forhold mellem niveauet af fastholdelse af en strategisk gruppes traditionelle forretningsmodel og økonomisk performance. Dette indikerer, at luftfartsselskaber, der står ved deres strategiske gruppes traditionelle forretningsmodel, performer bedre, end dem der adskiller sig fra den traditionelle forretningsmodel. Lavprisselskabs-gruppen er den mest heterogene, mens gruppen af netværksselskaber er den mest homogene, hvilket kan tilskrives den historiske tilsynekomst af disse to grupper. Resultater fra en global spørgeskemaundersøgelse omdelt til topledere af luftfartsvirksomheder viser, at differentiering i forretningsmodeller tilskrives både innovation og imitation. Undersøgelsen viser, at alle flyselskaber innoverer, imidlertid giver forandringer i forretningsmodeller baseret på netop innovation kun et luftfartsselskab fordele i et begrænset tidsrum, da imitation knopskyder og udbredes i branchen. Adfærd blandt luftfartsselskaberne indikerer, at selskaber, der ligger i periferien af deres strategiske grupper, er mere tilbøjelige til at imitere andre strategiske grupper. Yderligere ses det, at luftfartsselskaber, der holder sig tæt til sine strategiske gruppers traditionelle forretningsmodel, er mere tilbøjelige til at imitere luftfartsselskaber, der tilhører egne strategiske grupper. Den afsluttende analyse er baseret på tilstedeværelsen af innovation og imitation i luftfartsindustrien og inkorporerer disse koncepter i en algebraisk analyse, der bestemmer den unikke
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