Key Internalization Determinants of Value Chain Activities in the Salmon Farming Industry: A Bakkafrost Case Study
Translated title
Key Internalization Determinants of Value Chain Activities in the Salmon Farming Industry
Authors
Olsen, Mikkjal ; Rahman, H M Mushfiqur
Term
4. Semester
Publication year
2023
Submitted on
2023-06-01
Pages
100
Abstract
Dette speciale undersøger, hvorfor virksomheder i lakseopdrætsindustrien vælger at internalisere deres globale værdikædeaktiviteter – det vil sige at udføre flere led internt i virksomheden i stedet for at outsource dem. Eksisterende forskning peger ofte på transaktionsomkostninger, stordriftsfordele og ressourcer som forklaringer, men overser ofte branchekontekst, institutioner, geografisk placering og globale begivenheder som COVID-19. Specialet anvender en kritisk realistisk tilgang (med fokus på underliggende årsagssammenhænge) og et casestudie med datatriangulering, hvor flere kilder kombineres. Datagrundlaget omfatter kvalitative ekspertinterviews med marketingchefen hos caseselskabet Bakkafrost og et indflydelsesrigt medlem af det færøske parlament, suppleret af sekundære kilder og deltagerobservation. Analysen viser, at internalisering påvirkes af brancheforhold, relevante institutioner og regulering, virksomhedens geografiske placering, transaktionsomkostninger og ressourceafhængighed. COVID-19 har ifølge casens indsigter fremskyndet internaliseringsindsatsen, især hos organisationer i geografisk isolerede områder. Derudover kan større kontrol over værdikæden styrke kvalitetssikringen. Samlet belyser specialet de centrale drivkræfter bag internalisering og den væsentlige rolle, som institutionelle aktører spiller på markedet.
This thesis examines why companies in the salmon farming industry choose to internalize their global value chain activities—that is, to carry out more steps in-house rather than outsourcing. Prior research often explains internalization with transaction costs, economies of scale, and resources, but tends to overlook industry context, institutions, geographic location, and global shocks such as the COVID-19 pandemic. The study uses a critical realist approach (seeking underlying causal mechanisms) and a case study with data triangulation that combines multiple sources. The data include qualitative expert interviews with the head of marketing at the case company Bakkafrost and an influential member of the Faroese parliament, supplemented by secondary sources and participant observation. The analysis finds that internalization is shaped by industry conditions, relevant institutions and regulation, the firm’s geographic location, transaction costs, and resource dependency. In line with the case evidence, COVID-19 accelerated internalization efforts, particularly for organizations in geographically isolated locations. Greater control over the value chain can also strengthen quality assurance. Overall, the thesis clarifies key drivers of internalization and highlights the important role of institutional actors in the market.
[This summary has been rewritten with the help of AI based on the project's original abstract]
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