Actor and collective interests in emergent business creation: two biofuel cases

Abstract

The role of self-interest in commercial enterprise is often assumed dominant. However, other sets of interests also play their part: social, mutual and specific business interests as well as individual self-interest. The topic of interests is often mentioned, in passing, in business network research (Canning & Hanmer-Lloyd 2002; Håkansson 1982; Håkansson & Snehota 1995). There have, however, been a number of papers that have more specifically addressed interests in a business network context (Medlin 2006; Medlin & Törnroos Forthcoming; Munksgaard & Medlin Forthcoming). The purpose of this paper is to elaborate interests and explore the intricacies of different interest combinations in the dynamics of emerging business networks.

 

Interests are by their nature relative (Medlin 2006). Interests arise from the connections between actors, and it is these connections that create the relative nature of interests. In business, interests usually derive from property rights. An interest is the “right”, or “share” or “claim” of an actor an advantage, solution or profit. One reason for actors supporting business developments is their own understanding of how interests can benefit themselves and others.

However, legal ownership and property rights are only a part of the story in a business network context, where resources and activities gain their value by connections to other actors. In a network context interests must be considered in a more complex manner than simple commercial self-interest. No actor alone is responsible for development inside a business network (Håkansson & Snehota 2006). In the network the resources and activities are collectively re-generated on a continual basis. Interests of many types are implicated in this re-generation, and how they network dynamics proceeds also re-generates and changes the interests of the actors.

In this paper we explore interests and network emergence through two Biofuel case studies in Australia (Medlin & Törnroos Forthcoming) and Sweden (Lundberg 2013; Lundberg & Andresen 2012). The first case is mainly concerning private self and collective interests, while in the second case the network of actors is more cooperative with stakeholders seeking social and regional outcomes.

The first case is an R&D venture, which begins as a personal research program by university professors. This develops into a fully government funded research program which pilots algae growth for conversion to biofuel. At the next stage the research program moves to a private operation to commercialize the intellectual property, but is heavily funded by a government grant. At play in the case are private self-interest, social collective interests, firm specific interests, mutual interest between firms and also the individual social interests of the two original researchers. These sets of interests move and change as the R&D network unfolds in time. Apparent is not only present interests but the call of future interests.

The second case also has a Biofuel R&D focus. It began as a private initiative in support of a specific Swedish region. A large Multi-National Corporation (MNC), who was a major employer in a small Swedish town, had re-configured some of its local business into several smaller units. Some business units were sold to other firms, both Swedish and foreign. A group of managers who now had leading positions in some of the new firms, and who had previously worked together in the MNC, worried about the future because their firms lacked the R&D capacity of the MNC. These managers also feared a future “brain drain” from the city, as fewer R&D jobs would be offered by these smaller firms. Together they looked for ways of funding additional R&D with a future-oriented clean-tech perspective. This proved to be consistent with the ambitions of local politicians and a local research foundation which, in turn, paved the way for including university researchers into what became a cooperation encompassing a growing number of firms, as well as regional public organizations and a number of universities. As the network grew, an increasing, and at times conflicting, variety of interests had to be accommodated: private self-interest, social collective interest, firm specific interest, and shared interests in keeping the network cooperation on-going.

Both the case studies are conducted through longitudinal and interpretive data gathering (Halinen, Medlin & Törnroos 2012). Personal interviews and good access to key informants were used and the cases both deal with emerging bio-energy ideas that became realized at two different locations, but these processes were taking place around same time. Constructivist case research pinpoints the specific setting and context in order to arrive at understanding a phenomenon (Lincoln & Guba 1985). This makes also the idea of interests as a basic stepping-stone a topical issue. Biofuel is a needed alternative to the dominating oil dependence. Biofuel production can use raw materials of different kinds. Australia has a lot of sunshine and large coastal areas where algae can be used for developing large-scale biofuel production. Sweden and the surrounding Nordic countries have huge potential reserves of forests that can be used as a base for biofuel production. Old and new industrial sites offer good production facilities with ready infrastructure for other resources and for distribution and transports.

The comparison of our two case studies highlights how combinations and changing interests move actors to participate in developing new businesses in a network context. The case analysis allows a critical analysis and strengthening of the relevance of the interest-approach and model.

Key words: dynamics, business network, cooperation, constructivist, R&D