Institutional Arrangements and Competitive Posture: Effects of Company Structures in the Commercial Printing Industry
Total Page:16
File Type:pdf, Size:1020Kb
Thomas Mejtoft Institutional Arrangements and Competitive Posture: Effects of Company Structures in the Commercial Printing Industry Doctoral Dissertation in Media Technology and Graphic Arts Royal Institute of Technology • Stockholm • Sweden • 2008 Institutional Arrangements and Competitive Posture: Effects of Company Structures in the Commercial Printing Industry Copyright © 2008 Thomas Mejtoft. No parts of this dissertation may be reproduced without the written permission of the author. Art work on page xiv, 4, 20, 68, 110 and cover art reproduced by courtesy of Sara Mejtoft / www.s-form.se. TRITA-CSC-A 2008:16 Royal Institute of Technology (KTH) ISSN 1653-5723 School of Computer Science and Communication ISRN KTH/CSC/A--08/16--SE Media Technology and Graphic Arts ISBN 978-91-7415-148-0 SE-100 44 Stockholm Sweden www.kth.se Thesis for the degree of Doctor of Technology to be presented with due permission for public examination and criticism in Sydvästra galleriet, KTHB, Osquars backe 31 at the Royal Institute of Technology (KTH) on November 11, 2008, at 13:00. Supervisor: Prof. Nils Enlund, Media Technology and Graphic Arts, KTH. Opponent: Prof. Robert G. Picard, Jönköping International Business School, Sweden. Examination committee: Prof. Saara Taalas, Turku School of Economics, Finland. Prof. Dimitrios Zevgolis, Hellenic Open University, Greece. Associate Prof. Stefan Melesko, University of Kalmar, Sweden. Printed in 2008 by US AB, Stockholm, Sweden. To the ones who are always there. Abstract The research objective of this dissertation is to investigate the impact of institutional arrangements, with respect to vertical integration and cooperation, on competitive advantages within the commercial printing industry, with specific focus on digital printing. This dissertation comprises six research papers, based on four qualitative case studies and a quantitative survey study, all carried out in Sweden in the years 2004-2008. The results show that vertical integration is a way to achieve competitive advantages in the commercial printing industry and is a widely used strategy in Sweden. Being able to contract full service companies is appreciated by customers to printing houses, especially direct customers, due to their need for a supplier of complete solutions for printed matters. Consequently, a vertically integrated company can provide value added services which makes it possible for customers to minimize their organization regarding production and purchasing of printed matters. Other reasons for vertical integration are the need to ensure fast deliveries to customers and having a steady supply of appropriate jobs. Despite the believed strategic importance by the industry, the results show that the level of vertical integration has no significant impact on profitability. Vertical integration is strategically important for digital printing houses in order to develop their business because digital printing allows for fast deliveries, on-demand printing and variable data printing. Despite the commoditization of printed matter, the findings indicate that the industry, in general, focuses on providing a high service level even though it means having to set higher prices. Furthermore, the results point toward that this strategic positioning is beneficial for digital printing houses because they experience a lower degree of competition and a lower price pressure. Vertical integration can, however create inflexibility due to ownership and employment. The findings suggest that cooperation can be used to achieve fast access to valuable resources, such as production equipment and knowledge, and, hence, increase printing houses’ resource flexibility. Even though internal control of resources is regarded as important to be able to satisfy customers’ needs and produce customers’ orders on time, cooperation with partners can create similar strategic effects. Furthermore, cooperation can give cost and flexibility advantages compared to vertical integration by reducing internal need for production capacity and allowing access to complementary resources. Nevertheless, it is common to combine vertical integration with cooperation to create competitive advantages and make a company more flexible and dynamic toward market changes. Keywords: business strategy, cooperation; customer value, institutional arrangements, printing industry, vertical integration Institutional Arrangements and Competitive Posture v Sammanfattning Denna doktorsavhandling har till syfte att studera hur institutionella strukturer, såsom vertikal integration och samarbeten, påverkar konkurrensfördelar i den kommersiella tryckindustrin, med fokus på digitaltryckerier. Den här avhandlingen består av sex forskningsartiklar baserade på fyra kvalitativa fallstudier och en kvantitativ enkätundersökning, genomförda i Sverige under åren 2004-2008. Resultaten visar på att vertikal integration både är ett sätt att uppnå konkurrens- fördelar inom den kommersiella tryckindustrin och är dessutom en allmänt använd strategi i Sverige. Att ha möjlighet att kontraktera ett fullserviceföretag är uppskattat av kunder till tryckerier, speciellt direktkunder, på grund av deras behov av att ha en leverantör av kompletta lösningar för trycksaker. Ett vertikalt integrerat företag kan erbjuda värdehöjande tjänster som gör det möjligt för kunder att minimera sin organisation kring produktion och inköp av trycksaker. Andra anledningar till vertikal integration är behovet av att möjliggöra snabba leveranser till kunder och få tillgång till lämpliga arbeten. Trots den tilltro som industrin visar för den strategiska betydelsen av att vara vertikalt integrerad, påverkar inte nivån av vertikal integration den procentuella vinstnivån. Vertikal integration är strategiskt viktig hos digitaltryckerier för att utveckla deras affärer då digitaltryck är mest lämpligt för snabba leveranser, korta upplagor och variabeldatatryck. Trots att tryck anses som en produkt med mycket små skillnader mellan olika leverantörer, visar resultaten på att tryckindustrin generellt har fokuserat på att hålla en hög servicenivå men den konsekvensen att behöva ha en högre prisnivå. Vidare indikerar resultaten att fokus på en hög servicenivå har gjorts mer fördelaktigt av digitaltryckerier eftersom dessa upplever en svagare konkurrenssituation och en lägre prispress från marknaden än konventionella tryckerier. Vertikal integration kan dock minska flexibiliteten på grund av ägande av utrustning och anställning av personal. Resultaten visar på att samarbeten kan användas för att få snabb tillgång till värdefulla resurser, såsom produktionsutrustning och kompetens och därigenom öka ett tryckeris resursflexibilitet. Trots att kontrollera resurser internt anses som viktigt för att tillgodose kunders behov och producera order på utlovad tid, kan samarbeten med partners skapa liknande strategiska effekter. Vidare kan samarbeten ge kostnads- och flexibilitetsfördelar gentemot vertikal integration genom att ge möjlighet att begränsa den interna kapaciteten och ge tillgång till kompletterande resurser. Det är med andra ord vanligt att kombinera vertikal integration med samarbeten för att skapa konkurrensfördelar och göra företaget mer flexibelt att möta förändringar på marknaden. Nyckelord: affärsstrategi, digitaltryck, institutionell struktur, kundvärde, samarbete, vertikal integration Institutional Arrangements and Competitive Posture vii Preface “In a world gone mad, only a lunatic is truly insane.” – Homer J. Simpson* I would like to express my appreciation to everyone who has contributed to this work through friendship, knowledge, collaboration and experience. First of all, I would like to show my deepest gratitude to those who deserve it the most – all my friends, and especially my family for their friendship, support and encouragement while I was working with this research project. I would in particular like to mention my sister Sara for always making ideas into reality with her lovely paintings, my mother Lena for carrying loads of books back and forth to Umeå University Library and my father Thommy and my grandmother Ruth for their encouragement and never ending belief in me. I wish to dedicate a special thanks to my academic supervisor Prof. Nils Enlund, KTH, and my project manager Dr. Marianne Klaman, STFI-Packforsk, for their valuable input to my research and for giving me all the necessary resources to accomplish this research within the projects Digital Printing Community (2003-2006) and DigiPrint (2006-2008). My colleagues, co-writers and friends Magnus Viström, Åsa Nordin, Åsa Gidlund, and Sven Packmohr for their inspiration, comments, hard work and for making research a whole lot of more fun and interesting. My colleague and friend Anna Lundberg, for her help with the data collection to the survey investigation. This is also a great opportunity to show my respect and appreciation to all my wonderful friends and colleagues in Örnsköldsvik at STFI-Packforsk and Mid Sweden University’s Digital Printing Center both present and past; Åsa, Magnus, Mattias, Åsa, Anna, Ole, Hanna, Jenny, Veronica, Jakob, Jonas, Raul, Clas, Malin, Per, Bertil, and Johan for being there almost every day. This research has been carried out at the Swedish research institute STFI-Packforsk in Örnsköldsvik, Sweden, with funding and support from the Kempe Foundations, the EU Structural Fund, the industry participants in the Digital Printing Community and DigiPrint projects, Tryckeriföreningens Stiftelse för Utbildning och Forskning (TUF) and the Swedish