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Embeddedness and the Dynamics of Strategy Processes: the Case of AMUL Cooperative, India

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Embeddedness and the Dynamics of Strategy Processes: the Case of AMUL Cooperative, India Embeddedness and the Dynamics of Strategy Processes: The Case of AMUL Cooperative, India Abhijit Ghosh Desautels Faculty of Management McGill University, Montreal August 2010 A thesis submitted to McGill University in partial fulfillment of the requirements of the degree of Doctor of Philosophy © Abhijit Ghosh, 2010 Abstract Strategy scholars point to the need for developing more dynamic views of strategy formation that can transcend the paradox between agency and change. This thesis sets out to understand the embeddedness of strategy making, which recognizes the agency of actors in interaction with intra- and extra-organizational contexts. Social enterprises provide an ideal context for studying an embedded view of strategy, as they embrace both social and economic goals and adopt unconventional business models that allow for greater participation of constituents at multiple levels. Though they are ubiquitous, few strategy formation studies have been conducted in social enterprises. Given the scope for better understanding how organizational strategy is embedded in the larger context, this study focuses on an exemplary social enterprise, AMUL, India’s most successful cooperative, organizing millions of milk producers. Among the most trusted indigenous brands, it has competed successfully with bigger multinationals. This study provides a rich analysis of the strategy process in this organization and its evolution. I make three contributions to the extant strategy process literature. First, using social movement theory, I show how organizational formation interacts with the political and social contexts. As strategies implicated in the organizational formation process are under-theorized, this study fills that gap. Second, I provide a contextual understanding of the processes by which social enterprises grow to achieve scale and scope economies. The study shows the interactive dynamics of AMUL’s strategic intent and the government, and the effects on AMUL’s growth through product diversification. Third, I depict the interaction of planning and emergent processes that set AMUL on an extraordinary growth path, through active social embedding of AMUL in relations with its members. The interactive intra-organizational dynamics between the middle management, boundary actors, and members is documented to enhance our understanding of processes that underlie the achievement of economies of scale and scope typically taken for granted as being achieved without explaining how. ii Résumé Les chercheurs en stratégie soulignent la nécessité de développer des approches stratégiques plus dynamiques qui permettent de dépasser le paradoxe existant entre la capacité d’action des acteurs et le changement. Cette thèse vise à comprendre le processus de formation de la stratégie en relation avec un environnement qui tient compte des interactions entre la capacité d’action des acteurs avec les contextes intra- et extra-organisationnels. Les entreprises sociales, qui visent à la fois des objectifs sociaux et économiques et adoptent des modèles d'entreprise non conventionnels, permettant une participation plus importante de leurs parties prenantes à de multiples niveaux. Bien que les entreprises sociales soient omniprésentes, peu d'études se sont penchées sur la mise en place de stratégies au sein de ces organisations. Guidé par le besoin de comprendre comment une stratégie organisationnelle s'inscrit dans un contexte plus large, cette étude porte en particulier sur le cas d’une entreprise sociale, AMUL, la coopérative la plus reconnue en Inde et qui s’occupe de la gestion de millions de producteurs de lait. Cette entreprise a réussi à rivaliser avec succès avec de plus grandes entreprises multinationales et est aujourd’hui parmi les marques autochtones les plus réputées. Cette étude fournit une analyse riche du processus de formation de la stratégie de cette organisation, ainsi que de l’évolution de cette entreprise. Cette thèse présente trois contributions majeures déjà la littérature existante en matière de processus de formation de la stratégie. Premièrement, en utilisant la théorie du mouvement social, je montre comment l’établissement de l’organisation interagit avec des contextes sociaux et politiques. Cette étude vient combler le manque de théorie relative aux stratégies impliquées dans le processus de formation organisationnels. Deuxièmement, je présente une analyse contextuelle des processus par lesquels les entreprises sociales se développent pour atteindre une économie d’échelle et d’envergure. Cette étude montre la dynamique d'interaction entre la vision stratégique d'AMUL et le gouvernement, et ses effets sur la croissance d'AMUL via la diversification de ses produits. Troisièmement, je décris l'interaction entre la planification et les processus émergents qui ont placé AMUL sur une trajectoire de croissance hors du commun, entre autre grâce à l’implication sociale active d’AMUL avec ses membres. La dynamique interactive et intra-organisationnelle développée entre les cadres intermédiaires, les acteurs frontaliers et les membres de l’entreprise est également documentée afin d’améliorer la compréhension des processus sous-jacents à la réalisation d'économies d’échelle et d’envergure, qui sont généralement pris pour acquis mais dont les processus d’accomplissement demeurent généralement sans explication. iii Acknowledgements This dissertation would not have been possible without the help and support of numerous individuals. I express my gratitude to my advisor Professor Paola Perez-Aleman. My dissertation has been greatly shaped by Paola‟s developmental orientation and her ongoing critique of my work. Paola has systematically guided me through my PhD Program and the dissertation. She guided me through the field research phase, how to do qualitative fieldwork, data analysis, writing up cases and outlines, and idea development during the dissertation writing. She has written multiple letters of recommendation for scholarships within and outside McGill. She has given me financial support for five years with funds from her SSHRC and FQRSC grants. I greatly appreciate her extremely thorough readings of my numerous drafts and her prompt feedback. I have learned a lot from her inspirational mentorship. It was a privilege having you as my advisor. I thank Professor Abhirup Chakrabarti for agreeing to be on my committee soon after he joined McGill. He has been a great help especially during my moments of confusion during my thesis writing. I have learned a lot from Abhirup. Thank you for being a mentor and critic and for your prompt and insightful feedback. I express my gratitude to Professor Jorge Niosi for serving as an external member. Jorge, through his insightful analysis helped to improve my thesis. I have had endless conversations with people in two of the finest institutions of India – Kaira Union (AMUL) and IRMA. AMUL‟s Managing Director Rahul Kumar, has had a tremendous influence on my dissertation process. Rahul was not just a special friend, but also a mentor, helping me understand what seemed cryptic at the time. Thanks to Dr. Verghese Kurien for describing in amazing detail his memorable journey at AMUL. You have always been a source of inspiration. I also express my gratitude to Dr. Vivek Bhandari (Director, IRMA), one of the finest persons I met during my fieldwork. Thank you for facilitating my entry into AMUL and for your valuable inputs. Thanks to Dr. Amrita Patel for her tremendous help. You will remain for me a true source of inspiration and I am truly in awe of your ability to combine business with humility. I would like to thank Mr. Ramnathan, and Mr. Sundaran for their special help. I sincerely appreciate Dr. U.V. Vyas, Dr. Amrish Patel, Dr. Baikare, Dr. R.H. Umale, Dr. Sanjay Patel, Dr. Gopal Shukla, Dr. Hadia, and all the veterinarians of AMUL and ARDA who work tirelessly helping the farmers. Thanks to everyone in AMUL who provided me with valuable information. iv At GCMMF, I would like to specially thank Mr. Amol Bhattacharya, Mr. Jayen Mehta, Dr. S.T. Desai, and Mr. Sodhi . I appreciate the help from Narendrabhai Patel, Mr. B.K. Bakshi, Dr. H.C. Gupta, Dr. A.R. Sheth, Dr. Sabnis, Dr. S. Mittal, Dr. Chothani, Dr. K.O. Matthew, Mr. Ajit Talati, Mr. N.G. Trivedi, Mr. Siddhrani, and other „AMUL pioneers‟ for offering their insights. I profoundly thank AMUL‟s farmer members and directors for their warm welcome to me during my field trips. My special thanks to Professor Somjee and Professor D.K. Desai for sharing with me their insights about AMUL. I would like to thank institutions that have so benevolently supported my dissertation through their funding. This includes the International Development Research Centre (IDRC), Canada, the Centre for Developing Area Studies (CDAS), McGill, and the Centre for Strategy Studies in Organizations (CSSO), McGill. Also thanks to Institute of Rural Management (IRMA), Anand, AMUL, and AMUL Research and Development Association (ARDA), Anand for institutional support. At McGill, I thank Professor Robert David for initiating me into the field of „Organizational Theory‟. While every course I took at McGill was memorable in some way, it was Professor Frances Westley‟s course that inspired the „seeds of empathy‟ in me. During my brief association with Frances, I learned a great deal. Frances‟ unique ability to transcend disciplinary boundaries still amazes me. The course “New Paradigms in Strategic Management” offered by Frances set me thinking about studying AMUL for my dissertation. I feel a deep sense of gratitude for all her guidance and help. Thanks to Professor Alex Whitmore for helping me to bring this dissertation to completion. Thanks to Professor Mary Dean Lee for providing me with unique insights into qualitative research. Thanks to Professor Henry Mintzberg for his help. I would like to take this opportunity to thank the PhD program, Professors Jan Jorgensen, Kris Jacobs, and Stella Scalia. Staff at the Faculty – Hector Cantor, Pierre Cambron, Linda Foster, Lorraine Vezina, Rosalind Finlay, Gail Veli, Peter Martinek and every other staff member have been very kind. To Sohini Guha my heartfelt thanks for being one of my best friends at McGill, with whom I have spent memorable times.
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