The Case of Saab Automobile AB from Core Capabilities Into Core Rigidities - a Trajectory Towards Demise
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Master Degree Project in Knowledge-based Entrepreneurship The case of Saab Automobile AB From core capabilities into core rigidities - A trajectory towards demise Giacomo Buzzoni and Magnus Eklund Supervisor: Evangelos Bourelos Master Degree Project No. 2016:148 Graduate School The Case of Saab Automobile AB From Core Capabilities into Core Rigidities - A Trajectory Towards Demise © Giacomo Buzzoni & Magnus Eklund School of Business, Economics and Law, University of Gothenburg, Vasagatan 1, P.O. Box 600 SE 40530 Gothenburg, Sweden All rights reserved No part of this master thesis may be reproduced without prior written permission from the authors Acknowledgements First of all, we would like to thank our supervisor Evangelos Bourelos for his patience and effort in providing us with meaningful advice throughout these months of intense research. We would also like to express our appreciation and gratitude towards all our respondents who have allocated their valuable time to help us interpret this interesting case. Your passion, knowledge and commitment guided us through this journey, and we have enjoyed every single day of it. Finally, we would like to thank our peer students and all the people close to us for your support during our years of university studies. Without you, this would not have been possible. ABSTRACT This master thesis is addressing the case of Saab Automobile AB, creating a full historical reconstruction using primarily extensive quotes derived from semi-structured interviews with former Saab employees and other relevant actors. The aim is to depict and discuss the roots behind the company’s historically unique capabilities and its trajectory towards failure, together with the influence of General Motors’ ownership in this detrimental process. The empirics suggest that Saab’s sustained competitive advantages were mainly based on core capabilities derived from historically determined knowledge accumulations. However, the huge success of the company based on engineering core capabilities paradoxically evolved into core rigidities which enhanced a technocratic culture, decreasing the strategic and organizational fit with General Motors. This cultural clash was nevertheless not the only reason for Saab’s demise; low production volumes and General Motors’ mismanagement created a situation where the development of dynamic capabilities were inhibited. Due to the lack of reconfiguration of knowledge assets, the core capabilities of the firm faded over time, leading the company into becoming a shadow of its past, unable to cope with future challenges. This path towards demise ended in December 2011 when Saab Automobile AB, an icon of the automotive industry, went into bankruptcy. Keywords: Automotive, M&A, Cultural clash, Sustained competitive advantages, Core capabilities, Core rigidities, Dynamic capabilities, Reconfiguration Notes for the Reader In the following thesis, when the authors are using the company name “Saab”, they are referring to the car manufacturer “Saab Automobile AB”. This notice is to clarify that the authors are not referring to Saab AB, the military and defense company when writing “Saab”. “General Motors” is named as “GM” when referring to the main company based in the US, and “GM Europe” when referring to the Europe based subsidiary, which includes the car manufacturer “Opel”. When mentioning “Spyker”, the authors are recalling Spyker and related companies’ ownership of Saab Automobile AB. TABLE OF CONTENTS 1. INTRODUCTION ----------------------------------------------------------------------------------- 1 1.1 BACKGROUND -------------------------------------------------------------------------------------- 1 1.2 PURPOSE --------------------------------------------------------------------------------------------- 2 1.3 RESEARCH QUESTIONS ---------------------------------------------------------------------------- 3 1.4 THESIS DESIGN ------------------------------------------------------------------------------------- 3 2. LITERATURE REVIEW -------------------------------------------------------------------------- 5 2.1 THEORETICAL INTRODUCTION -------------------------------------------------------------------- 5 2.2 COMPETITIVE ADVANTAGES THROUGH CORE CAPABILITIES ---------------------------------- 6 2.3 CORE CAPABILITIES AND CORE RIGIDITIES ----------------------------------------------------- 7 2.4 COMPANY CULTURE AND M&A ----------------------------------------------------------------- 13 2.5 SUMMARY OF THE LITERATURE ------------------------------------------------------------------ 16 3. METHODOLOGY --------------------------------------------------------------------------------- 18 3.1 RESEARCH STRATEGY ---------------------------------------------------------------------------- 18 3.1.1 Iterations -------------------------------------------------------------------------------------- 18 3.2 RESEARCH DESIGN -------------------------------------------------------------------------------- 19 3.3 RESEARCH METHOD ------------------------------------------------------------------------------ 20 3.3.1 Primary sources – Selection of respondents --------------------------------------------- 20 3.3.2 Secondary sources --------------------------------------------------------------------------- 23 3.4 DATA ANALYSIS ----------------------------------------------------------------------------------- 24 3.5 RESEARCH QUALITY ------------------------------------------------------------------------------ 25 3.5.1 Credibility ------------------------------------------------------------------------------------- 26 3.5.2 Transferability -------------------------------------------------------------------------------- 26 3.5.3 Dependability --------------------------------------------------------------------------------- 27 3.5.4 Confirmability -------------------------------------------------------------------------------- 27 3.5.5 Authenticity ----------------------------------------------------------------------------------- 27 4. HISTORICAL RECONSTRUCTION ---------------------------------------------------------- 28 4.1 THE HERITAGE OF SAAB -------------------------------------------------------------------------- 28 4.1.1 When Saab’s aircrafts started to conquer the ground ---------------------------------- 28 4.1.2 The introduction of the V4 - A new starting point --------------------------------------- 31 4.1.3 Merger with Scania - A joint R&D effort ------------------------------------------------- 32 4.1.4 The turbo generation ------------------------------------------------------------------------ 34 4.1.5 The new executive car – “Tipo Quattro” ------------------------------------------------- 38 4.2 GENERAL MOTORS - A NEW PARTNER FOR THE FUTURE ------------------------------------- 40 4.2.1 GM’s initial acquisition --------------------------------------------------------------------- 41 4.2.2 Part sharing with Opel – The first attempt ----------------------------------------------- 43 4.2.3 Saab - A brand to preserve ----------------------------------------------------------------- 46 4.2.4 General Motors’ full acquisition ----------------------------------------------------------- 47 4.2.5 Cost savings - The “Bean Counter” era -------------------------------------------------- 49 4.3 SAAB ON SALE ------------------------------------------------------------------------------------- 52 4.3.1 Crisis at General Motors - Koenigsegg Group as a new potential owner ----------- 52 4.4 THE SPYKER ERA - A NEW STARTING LANE --------------------------------------------------- 55 4.4.1 Spyker acquires Saab ------------------------------------------------------------------------ 55 4.4.2 An intrapreneurial atmosphere ------------------------------------------------------------ 56 4.4.3 The last chance ------------------------------------------------------------------------------- 59 4.4.4 The bankruptcy - Saab’s demise ----------------------------------------------------------- 59 4.5 NEVS - AN ATTEMPT OF ELECTRIFYING A DEAD COMPANY --------------------------------- 60 4.5.1 Nevs acquires Saab’s assets ---------------------------------------------------------------- 60 4.5.2 How much “Saabness” is left? ------------------------------------------------------------- 61 4.6 REASONS FOR THE BANKRUPTCY - WHY DID SAAB DIE? -------------------------------------- 62 4.7 WHAT WAS LEFT? --------------------------------------------------------------------------------- 63 4.8 QUANTITATIVE OVERVIEW (1997-2010) -------------------------------------------------------- 64 5. DISCUSSION ---------------------------------------------------------------------------------------- 69 5.1.1 What were the origins of Saab’s unique competitive advantages? -------------------- 71 5.1.2 Did GM’s ownership influence the sustainability and uniqueness of the firm? ----- 73 5.1.3 What happened to the competitive advantages of Saab until the demise of the company? -------------------------------------------------------------------------------------------- 75 5.2 DELIMITATIONS AND LIMITATIONS -------------------------------------------------------------- 78 5.3 FUTURE RESEARCH ------------------------------------------------------------------------------- 79 5.3.1 Further research on Saab ------------------------------------------------------------------- 79 5.3.2 Further theoretical research --------------------------------------------------------------- 80 6. APPENDICES ---------------------------------------------------------------------------------------