Ports as Actors in Industrial Networks by Carl J. Hatteland A dissertation submitted to BI Norwegian School of Management for the degree of Dr.Oecon Series of Dissertations 6/2010 BI Norwegian School of Management Department of Strategy and Logistics Carl J. Hatteland Ports as Actors in Industrial Networks © Carl J. Hatteland, 2010 Series of Dissertations 6/2010 ISBN: 978-82-8247-020-0 ISSN: 1502-2099 BI Norwegian School of Management N-0442 Oslo Phone: +47 4641 0000 www.bi.no Printing: Nordberg Trykk The dissertation may be ordered from our website www.bi.no (Research – Research Publications) 2 Abstract The purpose of this thesis is to consider how port authorities can be characterized as actors in industrial contexts. The thesis uses the Industrial Network Approach to avoid bringing in typical views of what a port is and hence to allow for alternative views and ideas about the port as an actor. Four case studies are used to assess and discuss how port authorities can be considered actors in industrial networks through the use of the Actor- Resource-Activity model. The Industrial Network Approach is empirical in nature, which facilitates the consideration of port authorities as actors in industrial contexts via assessing actual interactions. The first three cases are from the Norwegian ports of Karmsund, Aalesund and Grenland. The three examples combined suggest there are three overlapping dimensions through which port authorities can be characterized in industrial settings: the administrative, political and commercial dimensions respectively. Each of the three Norwegian cases emphasizes one of these dimensions. The fourth case, the Swedish Port of Gothenburg, complements the others by providing an example of the three dimensions operating simultaneously. The thesis argues that there is no automatic link between these dimensions and stating that a port authority is an actor in relation to companies in the industrial context of a port, however. This requires actual interaction between organisations to take place. Interaction is described in terms of the efforts of a port authority to engage with particular industrial counterparts in order to pool activities, combine resources and mobilise actors around utilisation of resources for the purpose of loading and unloading vessels in each particular port. This is referred to as bundling and wedging in the thesis. Overall, the main findings of the thesis are that (i) the industrial network Actor- Resource-Activity model can be used to investigate non-business actors in industrial settings and (ii) it is problematic for a port authority to as a non- business actor to actively intervene in an industrial context without creating wedges to interaction that leads to discrimination across users. 3 Acknowledgements Whereas the responsibility for the contents of this dissertation is mine, it would not have reached a final without the direct and indirect support of many to whom I can only offer my humblest and deepest felt gratitude. The NETLOG project awarded me the opportunity to pursue my research interest as well as offering an inspiring and also critical setting for this pursuit. To everyone associated with NETLOG and the logistics group at BI Norwegian School of Management; in particular Marianne Jahre, Håkan Håkansson, Debbie Harrison, Lars-Erik Gadde, Lars Huemer, Göran Persson and my fellow students in NETLOG; Per Engelseth, Lena E. Bygballe, Fahad Awaleh, Andreas Brekke, Ingunn Elvekrok and Bente Flygansvær- Thanks! Thanks also to Ivan Snehota and Dag Bjørnland for useful comments at the predoc. To Håkan and Marianne, my supervisor and co-supervisor/project leader respectively, in addition to your guidance, your outstanding generosity both at a professional, social and personal level represents some of the finest virtues of academia. I would also like to thank the wider IMP community for support and encouragement, in particular colleagues at NTNU, Chalmers and Uppsala. Thanks also to Arild Tjeldvoll and Anne Welle-Strand for your support and inspiration through discussions and allowing me in on BOSHMAN and SAMM, which furthermore introduced me to a great network of people in the Balkans, in particular Dijana Tiplic (Stanford University) and Damir Hodzic (University of Sarajevo). I also wish to thank BI and in particular the Department for Strategy and Logistics for its financial and social support over a long time. All the respondents across the 4 empirical cases in the thesis – thank you for your time and energy. Family and friends in Karmøy and elsewhere, which I had to leave for the purpose of this undertaking also deserves my sincerest gratitude. Lastly, thanks to Debbie, for practical and theoretical guidance, discussion and insurmountable amounts of patience and support. I managed to create a wedge of my own! 4 Table of contents ABSTRACT ................................................................................................... 3 ACKNOWLEDGEMENTS ............................................................................... 4 TABLE OF CONTENTS................................................................................... 5 LIST OF FIGURES AND TABLES ..................................................................... 8 1. PORTS .................................................................................................. 9 1.1 Prologue: Ports and port development in the Isle of K ............ 10 1.2 What ports exemplify or what is a port? ................................... 13 1.2.1 Quay, harbour and port ......................................................... 14 1.2.2 Seaways and shipping ........................................................... 15 1.2.3 Landside and industry ........................................................... 16 1.2.4 Notions of user ...................................................................... 17 1.2.5 Trade and exchange .............................................................. 18 1.2.6 Handling and services ........................................................... 20 1.2.7 Port Authority ....................................................................... 20 1.2.8 Government .......................................................................... 21 1.3 The port as an actor .................................................................. 22 1.4 The purpose of the thesis .......................................................... 24 1.5 Structure of the thesis ............................................................... 26 2. APPROACHING PORTS ....................................................................... 29 2.1 Motivation or axiology .............................................................. 29 2.1.1 Netlog, ports and actors ........................................................ 30 2.2 The choice of analytical approach ............................................ 31 2.2.1 The Industrial Network Approach and the ARA model ....... 32 2.2.2 Industrial networks, infrastructures and ports ....................... 34 2.3 A Case Study Research Design ................................................. 35 2.3.1 Case selection ....................................................................... 36 2.3.2 Data collection ...................................................................... 38 2.3.3 Data analysis ......................................................................... 39 2.3.4 Bias and Validity in Case Study Research ............................ 39 3. PORT LITERATURE AND THE ACTOR DIMENSION ............................. 41 3.1 Port literature: an introduction ................................................ 41 3.2 Port classification ..................................................................... 42 3.2.1 Functional port classifications .............................................. 42 3.2.2 Administrative port classifications ....................................... 43 3.2.3 Operative port classifications ................................................ 44 3.3 Ports in logistics systems .......................................................... 45 3.3.1 Port operations ...................................................................... 45 5 3.3.2 Port flows .............................................................................. 47 3.4 Actor ambivalence and agency ................................................. 49 4. PORTS AS INFRASTRUCTURE ............................................................. 51 4.1 The optimal allocation of given resources ................................ 51 4.1.1 Imperfect competition ........................................................... 52 4.1.2 Externalities .......................................................................... 52 4.1.3 Public goods .......................................................................... 52 4.1.4 Ports are actually public ........................................................ 53 4.2 Infrastructure and ports ............................................................ 53 4.2.1 Market failure and monopoly in ports .................................. 54 4.2.2 From provision to regulation and deregulation ..................... 55 4.3 Governing the leftovers and crossovers .................................... 56 4.4 The Actor Dimension ................................................................ 58 5. INDUSTRIAL NETWORKS: A TOOL FOR PORT ANALYSIS ................... 61 5.1 The industrial network approach: some background ............... 61 5.2 Actors, resources and activities - the