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Cooperative strategies of producers in a stalemate industry and a hostile environment: A U.S.-Canada cross-cultural study of wheat marketing
Abstract
Strategic management literature has given little attention to purely competitive or "stalemate" industries, a large and important area of the economy. Stalemate industries, extremely competitive and only marginally profitable, have many strategy related problems. It is relatively difficult to develop effective strategies because there are few if any opportunities for differentiation or gaining a competitive advantage (Porter, 1980; Calori & Ardisson, 1988). Hostile environments, business environments which are exceptionally harsh and risky, aggravate the problem. Some argue that these conditions call for entrepreneurial strategic postures (SP) and organic organizational structures (OS) (Coven & Slevin, 1989). One source of the problems associated with stalemate and environmental hostility (EH) is the relatively high transaction costs which charterize many of these industries. Internalizing marketing functions often reduces transaction costs (Williamson, 1975, 1986; Harrigan, 1986), but vertical integration on an individual basis is rarely a viable option for commodity producers. A cooperative strategy of joint or collective vertical integration can internalize risky and confining aspects of the market. A typology of economic organizations is developed. This study focuses on the red spring wheat industry because producers in Canada and the U.S. share a similar growing and economic environment, but have adopted radically different marketing strategies. This study is exploratory, rather than confirmatory. It is oriented to producer strategic concerns, rather than to the perspective of the government, cooperative, or investor-owned firm. Four areas of investigation (tentative hypotheses) are articulated. In order to explore possible relationships, a sample of U.S. and Canadian producers is surveyed by telephone. Canadians have a pooling strategy. Conclusions for strategic management include: (1) pooling reduces adverse impacts of EH; (2) pooling strategy performance cannot be measured by price advantage; it is successful to the extent it reduces stress and other adverse effects of EH; (3) entrepreneurial SP & organic OS are not called for in this industry; (4) important U.S.-Canada cultural differences exist and must be considered before recommending a strategy.
Subject Area
Management|Agricultural economics
Recommended Citation
Fleming, Kent Donald, "Cooperative strategies of producers in a stalemate industry and a hostile environment: A U.S.-Canada cross-cultural study of wheat marketing" (1991). Doctoral Dissertations Available from Proquest. AAI9207397.
https://scholarworks.umass.edu/dissertations/AAI9207397