New uses of an agricultural product? : A case study of development in an industrial network

• Main Author: Forbord, Magnar
• Format: Doctoral Thesis
• Language: English
• Published: Norges teknisk-naturvitenskapelige universitet, Fakultet for samfunnsvitenskap og teknologiledelse 2003
• Subjects: Nationalekonomi; Økonomi; Landbruksprodukter; Economics
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:no:ntnu:diva-37; http://nbn-resolving.de/urn:isbn:82-471-5586-9

Use influences the value of a resource. An element that is not used has no value and is no resource. However, the use can change. In the study the point of departure (chapter 1) is an observation of three actors’ view of the use of a certain resource – goat milk produced in Norway. We refer to this resource as the focal resource. The three actors are a farmer (provider of the resource), a dairy company (user) and a food (technical) researcher. Common to them all is the fact that they are dissatisfied with how the resource is being used at a certain time. Only one, ‘easy’ component of the resource is ‘really’ used and then for making one, rather ‘simple’ product. In chapter 2 we put this ‘resource-use’ problem into theoretical perspective. We take it that the use is related both to the resource ‘itself’ and the ‘structure’ in which it is embedded. On these grounds we find a network perspective interesting. More precisely, we employ a model of business networks developed within the ‘industrial networks approach.’ The view is that interaction among actors builds and sustains three dimensions in business network structures; linkage of activities results in certain activity patterns, tying of resources gives particular resource constellations and bonding of actors leads to specific webs of actors. Applying this perspective to our problem we conclude that the focal resource is used ‘poorly’ mainly because it is part of a network structure built around another very similar, but – in terms of volume – much ‘larger’ resource (cow milk). We call this structure ‘the Norwegian milk network.’ As with any business network, a certain activity pattern, a particular resource constellation and a specific web of actors characterize the Norwegian milk network at the actual point in time (1980s). This network was quite efficient and effective for cow milk, while it was less so for goat milk because this resource was somehow subordinated in the network. Thisinterpretation of the problem leads us to two sets of questions. The first is theoretical; what can actors do to improve the use of a resource that is subordinate in a business network? Here a conceptualizing of the dynamic element in business networks is crucial. The other set of questions is empirical; how can concrete actors facing the actual resource use it ‘better’? E.g. should the resource still be part of the actual network or would it be better to detach it from the prevailing network? In chapter 3 we address the latter (empirical) set of questions. We start with a description of some structural characteristics of the ‘big’ actor in the network (Tine – a consortium of regional dairy companies). We also give a short account of features of the focal resource. The rest of the chapter is divided in two parts. In part A we tell (in case 1) the story of the provider (the farmer mentioned above) and how he and his spouse through conflicts and co-operation with other actors (e.g. Tine, public agencies, other farmers and an education centre) are successively able to detach their ‘portion’ of the focal resource from the prevailing network. Then the resource can be tied to other resources. In particular, the couple becomes able to exploit the component of the resource that in many ways is the most valuable but also ‘demanding’ (casein) through making and selling various white (real) cheeses. A traditional regional goat cheese, which the mother of the farmer knew how to make, provides the start of the product development. In many ways this existing product also served as inspiration for establishing the farm dairy in the first place. Later the wife on the farm joins a course in small-scale production of cheese and learns about recipes and how to make some other types of white goat cheeses. In a smaller case (2) we describe among other things how the earlier user of this ‘portion’ of the focal resource ‘reduces’ the use of it still more. Hence, part A concerns mainly development of the focal resource from the use side. Part B of chapter 3 consists of five case stories; one main case (5) and four smaller ones (3, 4, 6 and 7). Each of them is organized around a product made from the focal resource. Compared to part A the emphasis is on the focal resource ‘itself;’ how its specific features (especially those of the casein component) are used and not used by the ‘big’ actor by applying resources that by and large are made for the ‘big’ resource. In the main case we learn about how one of these features (taste) is altered. The background is that the ‘big’ actor (Tine)becomes provider of an existing, but for Tine new product for a specialized goat cheese maker localized abroad. To its ‘surprise’ Tine finds that the customer does not like the product; it tastes too strong. After some rounds of ‘trial and error’ in co-operation in order to identify the source of the problem the two actors conclude that the problem has to be sought in the focal resource. Then Tine orchestrates a project to which some ‘technical’ researchers are attached – some from departments within Tine, others working at departments at the national university of agriculture. Tine also uses its relationship to the national organization responsible for goat breeding in order to influence the resource. To make a long story short, the persons from different organizations involved in the project find out that the problematic feature of the resource is due mainly to three ‘factors;’ feed, breeding and storing/transportation. On these grounds another actor (a feed provider) develops a new concentrated fodder especially designed for milking goats. The breeding organization changes its breeding goals. Technicians in Tine experiment with prototypes for adjusted storing and transportation equipment. In this way a request for an existing product from a demanding, foreign customer leads to questioning of the resource ‘Norwegian goat milk.’ Features of the resource become a topic. Moreover, a feature that the ‘big’ actor previously regarded as less good (‘weak’ taste) turns into something good (‘mild’ taste). The stories told in chapter 3 evoke the theoretical question posed in chapter 2. Hence, in chapter 4 we discuss on a more abstract level development in a business network. The cases make it clear that we must distinguish between a resource and the actual use of it. Moreover, actual use requires combination of the resource with other resources. Combined with other resources or in other ways the resource can ‘obtain’ other uses. Thus, resources are heterogeneous. Hence, the value of a resource is a question of combination. This can in principle be done in two ways, 1) search for new ways in which existing features of the resource can be combined with those of other resources and 2) search for new or different features of the resource. The cases show that interaction between actors plays a crucial role when it comes to identifying and implementing new uses of a resource. One reason for this is the ‘double faced’ (relational) nature of resources; they have both a provision side and a use side. Hence, looking at the resource from one side only can restrict actors’ imagination of potential uses. In other words, interaction can facilitate knowledge creation, which is necessary for discovering new economic uses. When the provision of a resource is confronted with the way it is used unexpected things can ‘start to happen.’ A former provider may start to use a resource and find new ways to combine it (cf. case 1). A user may complain to the provider, who starts to search for possibilities for changing the features of the resource (cf. case 5). Hence, it is actors that set resources in motion. That this motion takes place within the context of a network will mean that actors face hindrances as well as opportunities for finding new uses. Moreover, what are regarded as hindrances and opportunities is a question of ‘the eye that sees,’ that is the actor. One actor may view a certain resource combination as uninteresting, while another may look upon it as interesting. Hence, it is important not to forget that there are actors ‘behind’ any activity pattern and resource constellation and, moreover, that actors relating to the same resource may have bonds to different (other) actors. In order to be able to analyse the ties and development in relation to the focal resource we apply a more detailed scheme developed by Håkansson & Waluszewski (1999, 2000, 2001). Here development is seen as a question of interactive, systematic relating of resources of different kinds; resources that are mainly technical (products and facilities) and resources that are by and large social (business units and business relationships). Hence, a certain use of a resource presupposes that a complex of interfaces between different resources – products, facilities, business units and business relationships – are ‘correct’ across firm boundaries. As a consequence, to arrive at a new use may require change in several interfaces involving many actors. To draw a ‘definite’ map of relevant interfaces before acting is thus impossible. Hence, when there has been at least some acting some relevant interfaces may come to the surface. In chapter 5 we map, based on the empirical material (chapter 1 and 3), resource constellations at ‘the beginning’ (1980s) and at ‘the end’ (2001). We are ‘stunned’ by the richness and complexity within the constellations. But the mapping also reveals the extent to which the resources (especially at ‘the beginning’) are directed towards the ‘big’ resource (cow milk). Almost all other products, facilities, business units and business relationships are adjusted to this resource. In other words, there is ‘heaviness’ in the resource constellations that we are studying and in which our focal resource is embedded. However, at the end it seems that the focal resource has got some resources ‘of its own;’ not only outside the sphere of the ‘big’ actor (Tine) but also within, in the form of some new products, a new facility and some new business relationships. We then analyse more thoroughly certain interfaces that we find especially relevant for the focal resource and how these differ at ‘the beginning’ compared to at ‘the end.’ However, in a business network new resource combinations and features are not ‘sufficient’ in themselves. There have to be economic effects (economics) tied to them. In chapter 6 we discuss economic effects and how they can be assessed in a business network context. We identify the importance of calculations. Actors in a business network calculate. These calculations will always be relative in the sense that they will include some resources in a constellation and not others. Moreover, some resources may be regarded as important and hence receive a central position in the calculation, while others may be located at ‘the fringe.’ E.g. case 1 demonstrates that one of the actors (Namdalsmeieriet) views the focal resource as marginal and hence lets it enter their calculation as a cost, while another actor (Skånaliseter)gives prominence to the resource and lets it enter into their calculation as a value. On these grounds we assert that economics is not only an effect of resources being developed; development of resources is in very direct ways also affected by economic calculations. Based on these findings we conclude the thesis with some remarks (chapter 7). Here we also briefly present a theme for further research – interaction between business actors and public institutions regarding improved use of agricultural resources. In chapter 8 we describe and reflect upon the research process; how we interacted with researchers belonging to different research networks and how cases were successively developed in reciprocal influence with theory. We also give an account of sources and types of data, which mainly have been interviews and documents. In other words, the thesis is a qualitative study. On these grounds we assess the trustworthiness of the study by applying a scheme especially designed for judging qualitative research. Credibility, transferability, dependability and confirmability are key concepts in this scheme. We conclude that the study is trustworthy but that the trustworthiness could have been improved in certain ways.