Research Questions - Nicolas Hatzfeld

From Trajectories of Firms to Industrial Models

The diversity of trajectories prior to 1974 complicates the legitimate attempt to develop a typology of trajectories. For instance, the idea of concretizing a "modernist social-democratic" model in several European firms (Renault, Volkswagen, then Volvo) in the early post-war period remains to be explored. It appears to fit the case of Volkswagen. However, in Sweden, national organizations (union and owner) appear to have prevented a company-level accord for several years. In France, the development of such a model at Renault certainly did not coincide with nationalization. Despite the ideas of the new Managing Director, nominated at the time of Liberation, the organization of the firm and of work changed little in the early years. It was in 1953 that a new social policy was developed and confirmed, not without difficulties. However, this policy was not very different at the time from that of a private firm like Peugeot, each of them obliged, sometimes with a similar reticence, to submit themselves to State demands and to the same market and labour force pressures. The weight of State intervention on the organization of the firm, moreover, may have been reduced in a similar way for both firms as the shortage of the reconstruction period were left behind. In the case of France, various arrangements were reached according to the measures examined: negotiation relationships with trade unions, familial or managerial structure, role given by the State at Liberation . . .

Regarding changes in the nature of markets, which is one of the major uncertainties determining the strategic choices of firms, it was hypothesized that there are five successive phases in the three world automobile poles (Europe, Japan, North America), and a chronology for each pole indicating the transition from one phase to the next. Examination of developments over time clearly reveals differences in the periodization and pace of change among the three poles. Several points can made and questions raised. In the first place, the markets function according to different criteria. Thus Japan and North America must include both vehicles sold to private consumers and goods vehicles, which account for about 40 percent of the market. Also, the North American market swings widely, in the order of 30 percent, which obviously affects firms' production organization. Finally, the markets have to be analyzed carefully, especially the replacement market. Some markets have two cars per household, others do not. Moreover, markets which become stabilized at a level interpreted as replacement alone experience sudden growth and re-stabilize at a higher level (United States around 1965, Europe after 1976, Japan after the "bubble economy"). Thus, understanding the markets requires recognition of various, and not only quantitative, factors: for instance they are sensitive to the variety and quality of supply.

The variety of products is a vital aspect of the development of firms. Most of them have practised a strong diversification strategy, often followed by a relative reduction of diversity. But it is useful to distinguish internal diversification from diversification as a result of absorbing another firm or merger, even if from the perspective of the market they are not very different. From the perspective of the vehicle manufacturer, in fact, purchasing a firm may eliminate a competitor, prevent the formation of a dangerous competitor group, give access to technologies, overcome internal blockages to diversification: this seems to have been the case with Volkswagen, which was unable to separate itself from the "Beetle" model when it took over NSU (for instance due to a sclerosis of its design department). The consequences of mergers remain poorly understood. While it appears that, usually, the new group experiences a reduction in the breadth of models due to efforts at rationalization (especially the use of shared platforms) as well as a reduction of its market share, we still know little in fact. As far as these tendencies to integrate the acquired firm in the strategy of the new group are concerned, more needs to be known about what is really happening versus what is discourse.

Our thinking about strategies of firms, which has been started with the typology suggested in the paper of nine possible strategies, certainly needs to be developed further. If what is understood here is a basic orientation of a firm, understood as something lasting, and if on the other hand this is distinguished from an industrial model properly speaking, the range of strategies which are actually practised will doubtless turn out to be more limited. This approach is nonetheless fruitful, as suggested by an example which was presented, because it helps make sense of the development of trajectories. It helps to characterize the major periods, as well as to reveal future strategic combinations and periods of uncertainty with frequent strategic fluctuations. Finally, it should help us to classify the vehicle manufacturers.