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Industry Evolution: a Comparative Study of Irish Wholesaling

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Industry Evolution: A Comparative Study of Irish Wholesaling By J. J Quinn MBA Submitted in fulfilment of the requirements for the award of the degree of Doctor of Philosophy of Dublin City University Supervisor Professor Brian Leavy Dublin City University Business School January 2002 I hereby certify that this material, which I now submit for assessment on the programme of study leading to the award of PhD is entirely my own work and has not been taken from the work of others save and to the extent that such work has been cited and acknowledged within the text of my work. Signed.^ ID No.' 96^9-1^3“ I Date. TABLE OF CONTENTS PAGE LIST OF CONTENTS i-vii ABSTRACT viii LIST OF TABLES ix-x LIST OF FIGURES xi ACKNOWLEDGEMENT xii CHAPTER ONE: INTRODUCING THE STUDY 1 1. INTRODUCTION 1 2. THE MOTIVATION FOR THIS RESEARCH 1 3. THE CURRENT STATE OF RESEARCH ON INDUSTRY EVOLUTION 2 4 STUDYING INDUSTRIES IN AN IRISH CONTEXT 5 5 THE SUITABILI TY OF WHOLESALING FOR THE STUDY OF INDUSTRY EVOLUTION 6 5.1 Description. 6 5 2 The Economic Importance of Wholesaling 7 6. THE AIM OF THIS RESEARCH PROGRAMME 8 7 THE STRUCTURE OF THE THESIS 9 CHAPTER TWO: LITERATURE REVIEW 14 1. INTRODUCTION 14 2. THEORIES OF CHANGE IN THE STRATEGY AND RELATED FIELD S 19 3. THE DRIVERS O F CHANGE 21 3.1 Transaction Cost Economics (TCE) 21 3 2 Resource Dependency Theory 22 3 3 The Industrial Network Approach 23 3 4 Population Ecology 25 3.5 The New Institutionalism in Sociology 26 i 3 6 Summary of the Literature on Drivers 28 4. THE PROCESS OF CHANGE 30 4.1 Categorising Change Process Theories 34 4.1.1 Theories of First Order Change 36 4.1.1.1 Organisation Level Theories 36 4.1.1 2 Population Level Theories 40 4.1.2 Theories of Second Order Change 45 4.1.2.1 Organisation Level Theories 46 4.1.2.2 Population Level Theories 49 4.2 Summary of the Literature on Process 51 5 RESEARCH FOCUS AND CONCEPTUAL FOCUS 53 5.1 The Main Research Questions 53 511 Drivers of Change m Industry Evolution 53 5 1.2 The Process of Industry Evolution 55 5.2 The Proposed Conceptual Framework 57 6. SUMMARY 58 CHAPTER THREE: RESEARCH METHODOLOGY 59 1. INTRODUCTION 59 2 THE CHOICE OF METHODOLOGY 60 2.1 Competing Paradigms in Social Research 60 2.2 Contextualism 62 3. RESEARCH METHOD 65 3.1 Inductive Analysis 65 3.2 The Case Study 66 4 EXECUTION OF THE STUDY 69 4.1 Case Selection 69 4.2 Access 70 4.3 Collection of Data 71 4.5 Case Development and Analysis 74 5. SUMMARY 75 li CHAPTER FOUR: IRISH GROCERY WHOLESALING 77 1. PREFACE 77 2. THE CHANGING NATIONAL CONTEXT 77 3. CASE INTRODUCTION 81 4 DESCRIPTION OF INDUSTRY 82 5. TH E INDUSTRY AT PRESENT 83 6 THE EARLY DEVELOPMENT OF THE IRISH GROCERY SECTOR 86 7. CONSOLIDATION OF POWER 1932 -1945 86 8. A BUILDUP OF TENSION 1946-1953 88 8.1 G overnm ent’s Growing Concern 88 8.2 The Changing Face of Other Channel Members 88 8.3 The Changing Face of Wholesaling 90 9 THE ENDING OF THE OLD ORDER 1954-1958 91 9.1 The Reform ing Role of G overnm ent 91 9.2 The Changing Face of Other Channel Members 92 9 3 The Declining Power of the Wholesalers 93 10. FINDING A NEW FORMULA 1959-1973 95 10.1 The Changing Face of Irish Society 96 10.2 The Role of Government 96 10.3 The Changing Face of Other Channel Members 97 10.4 The Reform of Wholesaling 98 10.4.1 The Emergence of a New Leaders 99 11. THE WHOLESALERS FIGHT BACK 1974 - PRESENT 103 11.1 The Intensifying Role of Government 104 11.2 Changes Among Other Channel Members 105 11.3 The Regeneration of the Wholesalers 106 11.3.1 Re-building Collective Power 106 11 3.2 The Leading Wholesalers - 1974 to Present 109 CHAPTER FIVE: IRISH BUILDERS’ MERCHANTING 121 1. INTRODUCTION 121 2. DESCRIPTION OF INDUSTRY 122 in 3. THE INDUSTRY AT PRESENT 124 4 THE ORIGINS OF BUILDERS’ .MERC HAN TING IN IRELAND 124 5. TEDE GROWING POWER OF THE ‘A’ MERCHANTS- 1932-1945 125 6 THE GROWING TENSION IN THE INDUSTRY* 1946-1953 127 7 THE ENDING OF THE OLD ORDER-1954 -1964 128 7.1 The F air T rade Commission Inquiry 129 7 2 The Decline of the ‘A’ Merchant System 130 8. THE EMERGENCE OF A NEW STRUCTURE: 1965-1974 131 8.1 The Establishment of Merchant Owned Co-ops 132 8.2 The Emergence of New Leaders 132 8.3 A Period of Reconfiguration 136 9 CONSOLIDATION AND RATIONALISATION. 1974-1988 138 9 1 The Development of the Mam Industry Groupings 139 10. CONSOLIDATION AND GROW TH: 1988 to 2000 143 10.1 The Development of the Mam Industry Groupings 144 CHAPTER SIX: IRISH HARDWARE WHOLESALING 150 1. INTRODUCTION 150 2 DESCRIPTION OF INDUSTRY 150 3. THE INDUSTRY AT PRESENT 152 4. THE ORIGINS O F IRISH HARDW ARE W HOLESALING 153 5. THE STRENGTHENING POSITION OF THE WHOLESALER 1932 -1945 154 5 1 The Influence of Government Policy 155 5.2 Change in the Supply Base 155 5 3 The Structure of the Wholesalers’ Customer Base 155 5.4 The Structure of Wholesaling 157 6. A GROWING TENSION 1946 -1953 158 6.1 The Growing Impact of Government 159 6.2 Changes Withm the Supply Base 160 6.3 Changes Within the Customer Base 160 6.4 The Changing Face of Wholesaling 161 IV 7 THE PASSING OF THE OLD ORDER: 1954-1961 162 7.1 A Change in G overnm ent Economic Direction 162 7.2 The Changing Power of Other Channel Members 163 7 3 The Declining Pow er of W holesaling 165 8 THE EMERGENCE OF A NEW INDUSTRY STRUCTURE: 1962-1977 166 8 1 The Receding Role of Government 167 8 2 The Growing Impact of Channel Change on Wholesaling 167 8.2.1 Changes in Manufacturer Strategy 167 8.2.2 The Modernisation of Retailers and Merchants 168 8.3 The Restructuring of Hardware Wholesaling 169 9. A PERIOD OF CONSOLIDATION* 1978 - PRESENT 173 9.1 Changes in the Channel S tructure 174 9.1.1 The Growing Diversity in Supply 174 9.1.2 The Growing Diversity in Buyer Types 174 9.2 The Ongoing Development of Wholesaling 177 CHAPTER SEVEN: THEMATIC ANALYSIS OF THE CASE STUDIES 184 1. INTRODUCTION 184 2 THE DRIVERS OF CHANGE IN INDUSTRY EVOLUTION 184 2.1 The External Context 184 2.1.1 The Influence of G overnm ent 185 2.1.2 The Influence of New Technologies 191 2 1.3 The Im pact of Social Change 194 2.1.4 The Influence of Economic Disturbances 196 2.1.5 The Influence of Changing Channel Power 198 2.2 Social Action 201 2.2.1 The Impact of Collective Action 201 2.2.2 The Influence of Leadership 206 2.3 History 212 2.3 1 The Influence of Ownership and Parenting 212 2.3 2 The Influence of Resources and Capabilities 212 v 3. THE PROCESS OF INDUSTRY EVOLUTION 221 3 1 A Phase Pattern of Industry Evolution 222 3.4.1 Structural Reinforcement 223 3.4.2 Structural Tension 225 3.4 3 Structural Fracture 226 3 4.4 Structural Reconfiguration 228 3.4.5 Structural Consolidation 230 4. CONCLUSION 232 CHAPTER EIGHT: CONCLUSIONS AND RECOMMENDATIONS 233 1 INTRODUCTION 233 2. THE DRIVERS OF CHANGE 233 2.1 Linking the Empirical and Conceptual Drivers 233 2.1.1 Efficiency as a Driver of Industry Evolution 236 2.1.2 Differential Power as a Driver and the Efficiency-Power Debate 238 2.1.3 Institutional Power as a Driver of Industry Evolution 241 2.1.4 ‘Thymos’ as a Driver Of Industry Evolution 242 2.2 Action and Context 245 2.2.1 Efficiency and Power - Context and Action 246 2.3 Government and Industry Evolution 248 2.4 Trade Associations and Industry Evolution 253 2.5 Leadership and Industry Evolution 259 2.5.1 Industry Entrepreneurship and Industry Statesmanship 259 2.6 Implications for the Leadership Literature 263 3. THE PROCESS OF CHANGE 267 3.1 The Phase Model of Industry Evolution - An Interpretation 269 3.1.1 Convergence and Continuity - Three Phases 269 3.1 2 Discontinuity - Two Phases 273 3.2 The Phase Model - Implications for the Literature 278 3.2.1 The Phase Model and Industry Life-cycle 279 3 2.2 The Phase Model as a Punctuated Model 280 3.2.3 The Phase Model and Path-dependence 281 VI 3.3 Limitations of the Phase Model Findings 283 4. THE IMPLICATIONS OF THIS STUDY 283 FOR MANAGERIAL PRACTICE 4.1 Collective Sector Strategies 284 4.1.1 Managing the Relationship with Government 284 4.1.2 The Need to Manage Relationships with Adjacent Industries 285 4.1.3 The Need to Exercise Restraint 285 4.2 Understanding the Nature and Impact of Punctuated Change 286 4.2 1 Environmental Punctuation and Collective Inertia - The Risks to Leading Companies 286 4.2 2 The Importance of Business Strategy Innovation for Industry Well-being 287 4.3 Poor Corporate Parenting 287 4.4 The Human Spirit Matters 288 REFERENCES 289 APPENDICES A. Interviewees 1-5 B. Range Stocked by Tesco Ireland 1 Vll ABSTRACT Industry Evolution: A Comparative Study of Irish Wholesaling By J.
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