Institutional Arrangements and Competitive Posture

176 Pages·2008·1.41 MB·English

by  Thomas Mejtoft

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: businessstrategy, cooperation; customervalue, 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, institutionellstruktur, 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 printing research program TryckTeknisk Forskning (T2F). They are all
gratefully acknowledged.
There are so many others who have supported me over the years, but in particular I
would like to mention Sofia Demnert and Vinit Malhotra for doing a great job when
writing their master’s theses and making my job as a supervisor a really easy task.

* Quote from the TV show The Simpsons, Thank God It’s Doomsday (Payne & Marcantel, 2005).
Institutional Arrangements and Competitive Posture ix
I am also very pleased to thank my friend, former colleague and language expert
André Odeblom, for every time he has saved me with last minute proofreading.
Since this research is interdisciplinary and touches both media technology and
business strategy, I have had a great dependence of the participation of external
persons, companies and organizations. I am most grateful for the positive atmosphere
that met me each and every time I wanted to make interviews, surveys or just
wanted to talk and get input to my research. Without all them this dissertation
would have been just an empty shell of ideas.
Thank you everyone, you all know who you are and I will always be grateful.
Bye for now!

Örnsköldsvik, Sweden, October 2008.

Thomas Mejtoft.

x Thomas Mejtoft (cid:121) Royal Institute of Technology (cid:121) 2008