Key Factors Influencing Economic Relationships and Communication in Finnish Food Chains

The aim of this report is to discuss the role of the relationship type and communication in two Finnish food chains, namely the pig meat-to-sausage (pig meat chain) and the cereal-to-rye bread (rye chain) chains. Furthermore, the objective is to examine those factors influencing the choice of a relationship type and the sustainability of a business relationship. Altogether 1808 questionnaires were sent to producers, processors and retailers operating in these two chains of which 224 usable questionnaires were returned (the response rate being 12.4%). The great majority of the respondents (98.7%) were small businesses employing less than 50 people. Almost 70 per cent of the respondents were farmers. In both chains, formal contracts were stated to be the most important relationship type used with business partners. Although for many businesses written contracts are a common business practice, the essential role of the contracts was the security they provide regarding the demand/supply and quality issues. Relative to the choice of the relationship types, the main difference between the two chains emerged especially with the prevalence of spot markets and financial participation arrangements. The usage of spot markets was significantly more common in the rye chain when compared to the pig meat chain, while, on the other hand, financial participation arrangements were much more common among the businesses in the pig meat chain than in the rye chain. Furthermore, the analysis showed that most of the businesses in the pig meat chain claimed not to be free to choose the relationship type they use. Especially membership in a co-operative and practices of a business partner were mentioned as the reasons limiting this freedom of choice. The main business relations in both chains were described as having a long-term orientation and being based on formal written contracts. Typical for the main business relationships was also that they are not based on the existence of the key persons only; the relationship would remain even if the key people left the business. The quality of these relationships was satisfactory in both chains and across all the stakeholder groups, though the downstream processors and the retailers had a slightly more positive view on their main business partners than the farmers and the upstream processors. The businesses operating in the pig meat chain seemed also to be more dependent on their main business relations when compared to the businesses in the rye chain. Although the communication means were rather similar in both chains (the phone being the most important), there was some variation between the chains concerning the communication frequency necessary to maintain the relationship with the main business partner. In short, the businesses in the pig meat chain seemed to appreciate more frequent communication with their main business partners when compared to the businesses in the rye chain. Personal meetings with the main business partners were quite rare in both chains. All the respondent groups were, however, fairly satisfied with the communication frequency and information quality between them and the main business partner. The business cultures could be argued to be rather hegemonic among the businesses both in the pig meat and rye chains. Avoidance of uncertainty, appreciation of long-term orientation and independence were considered important factors in the business cultures. Furthermore, trust, commitment and satisfaction in business partners were thought to be essential elements of business operations in all the respondent groups. In order to investigate which factors have an effect on the choice of a relationship type, several hypotheses were tested by using binary and multinomial logit analyses. According to these analyses it could be argued that avoidance of uncertainty and risk has a certain effect on the relationship type chosen, i.e. the willingness to avoid uncertainty increases the probability to choose stable relationships, like repeated market transactions and formal written contracts, but not necessary those, which require high financial commitment (like financial participation arrangements). The probability of engaging in financial participation arrangements seemed to increase with long-term orientation. The hypotheses concerning the sustainability of the economic relations were tested by using structural equation model (SEM). In the model, five variables were found to have a positive and statistically significant impact on the sustainable economic relationship construct. Ordered relative to their importance, those factors are: (i) communication quality, (ii) personal bonds, (iii) equal power distribution, (iv) local embeddedness and (v) competition.

Drivers of ERP Systems´ Business Value

ERP system implementations have evolved so rapidly that now they represent a must-have within industries. ERP systems are viewed as the cost of doing business. Yet, the research that adopted the resource-based view on the business value of ERP systems concludes that companies may gain competitive advantage when they successfully manage their ERP projects, when they carefully reengineer the organization and when they use the system in line with the organizational strategies. This thesis contributes to the literature on ERP business value by examining key drivers of ERP business value in organizations. The first research paper investigates how ERP systems with different degrees of system functionality are correlated with the development of the business performance after the completion of the ERP projects. The companies with a better perceived system functionality obtained efficiency benefits in the first two years of post-implementation. However, in the third year there is no significant difference in efficiency benefits between successfully and less successfully managed ERP projects. The second research paper examines what business process changes occur in companies implementing ERP for different motivations and how these changes impact the business performance. The findings show that companies reported process changes mainly in terms of workflow changes. In addition, the companies having a business-led motivation focused more on observing average costs of each increase in the input unit. Companies having a technological-led motivation focused more on the benefits coming from the fit of the system with the organizational processes. The third research paper considers the role of alignment between ERP and business strategies for the realization of business value from ERP use. These findings show that strategic alignment and business process changes are significantly correlated with the perceived benefits of ERP at three levels: internal efficiency, customers and financial. Overall, by combining quantitative and qualitative research methods, this thesis puts forward a model that illustrates how successfully managed ERP projects, aligned with the business strategy, have automate and informate effects on processes that ultimately improve the customer service and reduce the companies’ costs.

Managing Project Business Development: an Inter-Organizational and Intra-Organizational Perspective (summary section only)

The driving force behind this study is the gap between the reality of the firms engaged in project business and the available studies covering project management and business process development. Previous studies show that project-based organizations were ‘immature’ in terms of the project-management ‘maturity model’, as few firms were found to be optimizing processes. Even within those, very little attention was paid to combine inter-organizational and intra-organizational perspectives. In this study an effort is made to elaborate some thoughts and views on project management, which interrelate firms’ external and internal activities. In line with the integration, the dissertation uses an approach to the management of project-business interdependencies in the networks of actors, activities and resources. Firstly, the study develops an understanding for inter-organizational perspectives by exploring the complementarities of process activities in the basic development of project business. It presents a framework that is elaborated on the basis of the reciprocal interactions of activities within and outside the organization—thus providing a coherent basis for continuous business-process improvement. In addition, the study presents new tools that can be used to develop project-business processes in each of its functional areas. The research demonstrates how project-business activities can be optimized using the right resources at the right time with the right actors and the right actions. The selected five articles included in this dissertation explain the basic framework for the development of project business. Each paper covers various aspects of inter-organizational and intra-organizational perspectives for project management. The study develops a valuable and procedural model for business-process improvement using the Delphi method that can be used not only in academia but also as a guide for practitioners that takes them through a series of well-defined steps when making informed, consistent and efficient changes to their business processes.

The Nature and Change of Bonds in Industrial Business Relationships

A focus on cooperative industrial business relationships has become increasingly important in studies of industrial relationships. If the relationships between companies are strong it is usually a sign that companies will cooperate for a longer time and that may affect companies’ competitive and financial strength positively. As a result the bonds between companies become more important. This is due to the fact that bonds are building blocks of relationships and thus affect the stability in the cooperation between companies. Bond strength affect relationship strength. A framework regarding how bonds develop and change in an industrial business relationship has been developed in the study. Episodes affect the bonds in the relationship strengthening or weakening the bonds in the relationship or preserving status quo. Routine or critical episodes may lead to the strengthening or weakening of bonds as well as the preservation of status quo. The method used for analyzing bond strength trying to grasp the nature and change of bonds was invented by systematically following the elements of the definitions of bonds. A system with tables was drawn up in order to find out if the bond was weak, of medium strength or strong. Bonds are important regulators of industrial business relationships. By influencing the bonds one may have possibilities to strengthen or weaken the business relationship. Strengthen the business relationship in order to increase business and revenue and weaken the relationship in order to terminate business where the revenue is low or where there may be other problems in the relationship. By measuring the strength of different bonds it can be possible to strengthen weak bonds in order to strengthen the relationship. By using bond management it is possible to strategically strengthen or weaken the bonds between the cooperating companies in order to strengthen the cooperation and tie the customer or supplier to the company or weaken the cooperation in order to terminate the relationship. The instrument for the management of bonds is to use the created bond audit in order to know which bonds resources should be focused on in order to increase or decrease their strength.