Browsing by Author "Isaksen, John R."

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Browsing by Author "Isaksen, John R."

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Upstream vertical integration and financial performance : the case of the Norwegian fish processing industry

Isaksen, John R. (Doctoral thesis; Doktorgradsavhandling, 08-Jun-2007)

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Abstract:

In this thesis, four different articles address the correlation between vertical integration and profitability in the Norwegian fish processing industry. By vertical integration we mean the ownership and control of one firm over different stages in the value chain. Firms within this industry consider the uncertain supply of fish as a main challenge. Literature prescribes vertical integration as an organisational form that can enable industries to overcome uncertainties in raw material supply, and, hence, increase profitability. Therefore, upstream vertical integration, i.e. ownership in – and supply from own – fishing vessels or fish farms, is expected to influence profitability positively in this industry.
Detailed firm and industry data, from the period 1977–2002, reveals a great diversity of firms, with varying profitability. Also, their organisation towards the fishing fleet varies. A central conclusion from this work is that no clear correlation can be revealed between the profitability of firms and their degree of upstream vertical integration toward their raw material source.
The study also demonstrate that the key to success in this industry seem to be connected to the resources firms possess, which enables them to make the most of the advantages – and minimise the disadvantages – of their choice of strategy. While successful integrated firms utilise a continuous production and reduced transaction costs, firms without ownership in – and supply from – fishing vessels have to develop alternative relations towards the fishing fleet, and exploit the advantages from a flexible production to succeed.
A central part of the thesis has concentrated on developing adequate measures for evaluating the degree of vertical integration in firms in this industry – related to prior research and methodologies. Analyses show that in this particular industry, there exist effective and profitable alternatives which firms can utilise in order to handle the inherent uncertainty in the raw material markets.

URI:

http://hdl.handle.net/10037/2546