an ecological perspective on supply networks

Organization Studies Workshop, Cyprus, June 5-7th 2008

An Ecological Perspective on Supply Networks

L. Varga1, P.M. Allen1, M. Strathern1, C. Rose-Anderssen2, J. Baldwin2 and K. Ridgway2

(1) School of Management, Cranfield University, Beds MK43 0AL, [email protected]

(2) AMRC, Department of Mechanical Engineering, University of Sheffield, Mappin Street, Sheffield S1 3JD

Abstract

The notion of supply network management has evolved considerably over the last 50

years to reach a point today where we need a post-normal science to describe the inter-

related nature of physical, informational and people networks that transform raw

materials into products. Bi-lateral, local arrangements for the creation of relatively

simple products are largely superseded by multi-tier, global sourcing regimes for highly

integrated, sophisticated products and services. And organizations are concerned not

only with intra- and inter-organizational supply chain efficiencies, but also with their

future roles within operational and developing supply chains of their customers and other

organizations. By examining supply networks from an ecological perspective we provide

a description which is grounded in environmental context, path-dependency and

coevolutionary processes. A case study of the supply networks within the commercial

aerospace sector describes how the structure, behaviour and knowledge of these complex

economic systems have coevolved with their environmental contexts and thus how

supply network ecology has matured.

Key words

Complex Economic System, Supply Network, Coevolution, Aerospace, Structure, Environment

An ecological perspective on supply networks 1 Varga et al

mailto:[email protected]

Introduction

Our theoretical knowledge of the nature of the supply network has matured considerably

in the last 10 years helping practitioners to understand how decisions, resources and

behaviours might be deployed to improve survival and performance. This new

knowledge makes the assumption that the supply network is a complex adaptive system

located in an ecology with which it coevolves. The emergent structures which persist

within the system, together with their associated behaviours, reveal the structural

attractors of the system. These structural attractors are the outcome of coevolutionary

processes between multi-layer complex economic systems and the environment.

An ecological perspective is primarily concerned with organisms or human systems

interacting with their environments. In the context of supply networks such organisms or

human systems are the structures, including associated behaviours, which are

hierarchical, nested within multiple other organisms or human systems, open to influence

from the environment and adaptive to change. In complex systems terms, the

environment is merely another layer in a nested system “every system takes all other

systems as its environment; systems co-evolve as they complexly adapt to their

environment” and which coevolves with the systems that constitute the environment “the

environment or landscape that each system faces is changed as a result of changes in the

systems that constitute the landscape” (Kauffman, 1993)

An ecological perspective further seeks to explain the spatial distribution of systems in

their environment, their patterns of abundance in time and the functional interactions

between co-existent systems. Factors that determine the range of environments that are

occupied and that determine how abundant systems are within those ranges are a key

component of investigations within ecology. Ecological studies explore how the system

interacts with the environment to influence evolutionary mechanisms of survival, growth,

development, and reproduction.


These evolutionary processes must necessarily produce qualitative change in the system.

Qualitative change may be triggered within the system, the environment or the interaction

between them. We find that the environment of commercial supply networks is changing

rapidly. Through continued globalisation and the availability of transport infrastructure

and electronic communications, the reach of even modest sized firms is extended into

markets and resources not previously available, thus opening up greater possibilities of

change from the environment.

Given that organizations and the networks to which they belong are dynamic, and need to

adapt, it is relevant to consider the processes of evolution. Aldrich’s evolutionary theory

(Aldrich, 1999) recognises and incorporates relevant organizational theories such as

institutionalism, resource dependence and transaction cost economics amongst others.

Processes of evolution, namely variation, selection, retention, and struggle are developed

from Donald Campbell’s work, based originally on Darwin (1859).

The importance of organizations as innately dynamic and responsive to the environment

and networks is examined in his evolutionary biology approach in which change is

stochastic not teleological. Coevolutionary theory extends evolutionary theory further

and focuses on competitive leadership positions, and how they are lost and gained over

time (Murmann, 2003). An observed supply network form may be a variation which is

favoured (selected) in some environments thus retained and diffused within the

population. The processes of evolution continue their search for new variations thus

species co-evolve with the environment. Small differences in market share can be

amplified and develop into much larger differences (Arthur, 1994) so long as self-

reinforcing processes, that is positive feedback, dominates self limiting processes or

negative feedback which act as a self-regulatory mechanism and the key to equilibrium

(Capra, 1996).

One action may have varying effects on different parts of the complex system and may

result in varying degrees of feedback, driving virtuous or vicious cycles (Holland, 1998).


And the firm does not exist in isolation. It is nested within other bodies, including

partnerships, regional economies, nationalities; and a firm itself has multiple nested sub-

systems, including functions, divisions, teams, projects, individuals; and individuals

belong to multiple systems, professional bodies, academic associations, social and leisure

groups, etc. No single complex system acts in isolation: “Nothing happens in isolation”

(Barabási, 2002).

The Resource Based View (RBV) of the firm provides an explanation of sustainable

competitive advantage, which is defined as a “value creating strategy not simultaneously

being implemented by any current or potential competitors and when these other firms

are unable to duplicate the benefits of this strategy” (Barney, 1991). This implies the

identification of a market niche that an organization can either create or exploit in a way

which gives it advantage over its competition. In evolutionary terms this equilibrium is

an ideal state. Competitors find ways to imitate the firm or re-shape the niche to their

own advantage. In a changing environment, sustainable competitive advantage needs to

reflect the rate at which the firm can identify new niches, exploit them and then adapt to

the next niche, and so on as the environment continues to change. This means that

experimentation is important (Allen, 1988) and that innovations and evolutions fit within

the wider milieu of the social, cultural, environmental and technological of their own

history: the “eco-historical regime” (Garnsey and McGlade, 2006).

The importance of an ecological perspective is that it recognises systems (surviving

abundant structures) and the environment as an evolving dynamic. Other lenses with

which to observe supply networks tend to take a partial view giving prominence to

organizations (using neo-classical environmental economics to extrapolate the past using

assumptions that do not apply to modern evolving economic systems (Ramos-Martin,

2003)); the environment (e.g. population ecology (Hannan and Freeman, 1977)), or to

equilibrium and so a lack of novelty (e.g. RBV). Such lenses treat environmental change

as an exogenous variable (Baum and Singh, 1994). Exogenous variables are economic

variables independent of the relationships that determine the levels of equilibrium.


However, the environment has significant effects on organizations; arguably

organizations are determined largely by their environments. And each organization may

interpret its environment differently. The assumption that all organizations within one

industry interpret the environment in a single way is false (Aldrich and Pfeffer, 1976;

Daft and Weick, 1984) as managers can manipulate environmental features, for example,

by political action (Child, 1972) and can change organizational designs (Goold and

Campbell, 2002). Industry events can also reinforce or loosen network structures

(Madhavan, Koka and Prescott, 1998). Without the explicit inclusion of how the

environment of an organization influences the organization and vice-versa, a single-lens

view by definition can provide only a partial view of the evolution of the organization.

Having established the case for an ecological perspective, the rest of this paper charts the

history of supply network perspectives and supply network structures to arrive at current

day thinking in the supply network literature. The environmental context of the civil

aerospace industry is then considered and propositions are suggested for the key

ecological variables influencing supply network structures, behaviours and knowledge.

A case study of the UK aerospace industry over the period 2005 to 2008 then takes a

critical look at these propositions. The paper concludes proposals for further research.

Supply Network Perspectives

The concept of the supply network has matured through a number of observable stages

(see Figure 1): from connecting intra-organizational components of inbound materials

and outbound products; to dyadic (two-sided) supplier relationships in which each

organization attempts to manage immediate suppliers; to dyadic chains which extend the

relationships of the organization to both to customers’ customers and suppliers’ suppliers;

to supply chain management in which all organizational supply chains are managed

holistically; to integrated business networks which manage multiple businesses that

create products and service packages; to demand chain communities, which manage

multiple enterprises practicing agility to customer demand.


Stage of development

Type of trading relationship References

Intra-business chain Internal supply chain integrates business functions involved in the flow of materials and information from inbound to outbound ends of the business

(Harland, 1996)

Dyadic relationship The management of dyadic or two party relationships with immediate suppliers; Extended to downstream distribution channels and upstream production chains;Structure and scope of supply chain consists of material and information processing units: demand, value-adding transformation and supply

(Harland, 1996)

(Womack. James P. and Jones, 1990; Womack, 2002)(Davis, 1993)

Dyadic chain The management of a chain of businesses including a supplier, a supplier’s suppliers, a customer and a customer’s customer, and so on

(Harland, 1996)

Supply chain Management of multiple company relationships (SCM); Managing and coordinating multiple business activities across functions and firms, and viewing the supply chain as a single entity, rather than as a set of separate functions.

(Lambert, Cooper and Pagh, 1998)(Mentzer, DeWitt, Keebler, Min, Nix and Zach, 2001)(Larson and Rogers, 1998)(Christopher , 2005; Christopher, 1992)

Integrated business network

The management of a network of inter-connected businesses involved in the ultimate provision of product and service packages required by end customers

(Harland, 1996)

Demand chain communities

Demand driven, agile, multi-enterprise organizations, increasingly complex with various inter-relationships between companies, growing number of participants which does not remain constant throughout product life cycles; unlike old models where customer orders were delivered from on-hand inventories.

(Hewitt, 2000)(Lummus and Vokurka, 1999)(Bowersox, Closs, Stank, 2000)

Figure 1.0 Supply Network Maturity

The evolution of the supply chain discipline has however been fragmented (Harland 1994

& others), with differing and even disparate themes emerging in the field, crossing many

traditional research boundaries (OM, logistics, strategic management, etc). Multiple

definitions of the Supply Chain and Supply Chain Management are to be found in the

literature. Mentzer et al (2001) provide a helpful classification of the literature into three

categories: 1) a management philosophy, 2) the implementation of a management

philosophy and 3) a set of management processes. The most advanced management

philosophy of the supply chain is that of system or single entity, optimizing the entire

chain (Bechtel and Jayaram, 1997) and managing the flow of a distribution channel


through multi-firm effort, from the supplier to the end user (Ellram and Cooper, 1990).

This philosophy is consistent with Harland’s (1996) network, the most mature form of

supply chain conceptualisation, shown in Figure 2.0.

Figure 2.0 Supply Chain Evolution (Harland, 1996)

The initial focus of supply chain management was on the internal chain as the method of

internal management was known to impact local firm performance (Mintzberg, 1979) as

the firm was perceived as having control over these inputs and outputs. Indeed, a supply

chain philosophy today includes intra firm capability: “achieve synchronization and

convergence of intrafirm and interfirm operational and strategic capabilities into a

unified, compelling marketplace force where supply chains rather than firms compete”

(Christopher, 1992). This definition raises the importance of the systemic, strategic

orientation to the whole chain which is necessarily required of every partner in the supply

chain. This systems perspective requires the analysis and management of the entire

network to achieve the best outcome for the whole system (Cooper and Ellram, 1993).

The philosophy is also consistent with the logistics paradigm that integrated performance

produces superior results to that of loosely managed functions (Bowersox, 1996). Thus

each firm in the supply chain directly and indirectly affects the performance of all other

supply chain members as well as ultimate supply chain performance (Cooper, Lambert

and Pagh, 1997). But each organization’s networks are idiosyncratic and have followed a

path dependent process (Gulati and Gargiulo, 1999) conferring competitive advantage as


they are not easily imitated or substituted. As a result of these relationships, dynamic

network constraints and benefits occur (Gulati, Nohria and Zaheer, 2000), e.g. benefits of

lock-in to a profitable network or lock-out of a failing network. Conversely, the

constraints can act disadvantageously, e.g. lock-out of profits and lock-in to a failing

network.

Conceptual models such as dyadic relationships and supply chains simplify the

organization in three major respects. Firstly, organizations are treated as having static

relationships but in practice individuals within each organization have relationships with

individuals in other organizations, dispersed across the organization and working at

different points in the product life cycle, e.g. at design, manufacture, operation, etc. This

occurs because of the functional specialisms of staff. As a consequence there is a

probability of loss of information, which also occurs due to the turnover of staff. The

body of individuals that constitutes the organization does not remain static; people retire,

move to other firms or locations and also pass away. Each person has a potentially

unique perspective, or a ‘virtual’ view of the supply chain (Mouritsen, Skjott-Larsen and

Kotzab, 2003). Furthermore, we can say that each view is partial, with no one person

having a complete and full view of the supply chain. Inter-organizational relationships

are thus dynamic as well as path-dependent.

Secondly, an organization is likely to operate multiple supply chains concurrently, whilst

others will be in a state of development or demise. Even in a simple case, where an

organization produces only one product, it will still require multiple suppliers for

electrical parts, mechanical parts, raw materials, etc. The organization that produces

many similar products may be able to source common parts from a single supplier but

this may cause prioritization conflicts for the firm at times of short supply. The

organization that produces many different products will need to operate concurrent

relationships with many sets of suppliers. This process of supply chain management, i.e.

the management of a variety of supply chains within one organization, creates

opportunities for and constraints upon organizational performance.


Thirdly, an organization is likely to have many customers. Some of these customers will

be transactional, whilst others will be long-term relationships perhaps with increasing

demand. In a simple scenario, the organization has one customer. However, this

customer may require multiple products with different delivery times and priorities. In

the 21st century, mass customization has been the trend so significant variety in terms of

product look and feel must be created in addition to delivery to various locations, with

fluctuating demand over time.

Thus there are three types of potential organizational arrangement:

simple – 1 supplier to 1 customer

one-sided – n suppliers to 1 customer; 1 supplier to n customers

complex – n suppliers to n customers

Regardless of the number and type of supply chains in operation, an organization’s

infrastructure services, such as Human Resources Management, ICT services, facilities

management, commercial services, strategic marketing and procurement, etc are finite

resources, providing services to staff engaged in multiple supply chains. The effect on

the organization is that concurrent supply chains vie for organizational resources. And

these organizational arrangements may be different in each organization within the

network. Ultimately, the network structures and behaviours needed to effect inter-

organizational cooperation and coordination are paramount to achieving successful

performance.

The structure or phenotype of a supply network reflects the underlying genetic code or

internal diversity of the system. This genetic code is located within the resources of the

organizations – people, buildings, machinery and so on. Emergent structures are limited

by the genetic code which changes with more or less frequency. Existing structures are

the consequence of the irreversibility and path-dependency of the supply network and of

the organizations, past and present, within the supply network.

The genetic code of the system creates emergent properties at many layers, for example,

quality emerges from a particular set of practices, which are directed to optimise


desirable features. But the same emergent property may be produced from a different set

of practices, that is, the outcome may be produced in more than one way. The property

however will not emerge if all requisite practices are not present. The process requires

the effort of a combination of many resources: physical, human, informational,

technological. Emergence occurs at different layers in the supply network, enabling and

constraining the potential for new emergent properties at the next layer (Fuller and

Warren, 2006), for example: quality and cost combine to create increased sales in the

market place, dyadic relationships contribute to overall supply network relationships.

The organizational perspective in traditional supply chain philosophy creates two limiting

factors to the evolution of the organization: the boundary to evolution is limited to the

organization, which has to demonstrate qualitative change for it to have evolved; and the

methods for evolution are inwardly focussed, denying the ecology in which the

organization persists by treating it exogenously. These limiting factors create paucity in

our understanding of complex economic systems in all but a handful of relatively

isolated, static organizations. Organizations exist within a wider ecology encompassing

land and air space, professional institutions, infrastructure (physical and informational),

assets (physical, human and knowledge) and so on. The networks which join together

such various components within and across the ecology exist at multiple, cross-cutting

layers.

Giannakis, Croom et al (2004) mapped the theoretical developments that influenced

supply chain management over 4 eras: the post-war, computerization, globalization and

the current internet era. They chart the political, economical and technological

developments and so contextualise the evolution of supply chain theories. The major

institutions which contributed to the development of supply chain theory are also

introduced, including the International Motor Vehicle Programme (IMVP) which

spawned key contributions on lean supply chains, such as The Machine that Changed the

World (Womack. James P. and Jones, 1990) and value streams (Hines, Lamming, Jones,

Cousins, and Rich, 2000). Each era appears to span 15-20 years and so we may be on the

threshold of a new era. Ma (2006) mapped supply chain activities over the decades from


the 1950s, demonstrating the increasing integration of firms and logistics capabilities as

shown in Figure 4.0. Since the late 1990s, the evolution of supply chain management has

shifted to IT (Ho, Au and Newton, 2003), management (Chapman, Soosay and

Kandampully, 2002), and lean, JIT and agile (Womack, 2002; Gunasekaran, 1998).

Date Key activities (Ma, 2006) Era (Giannakis, Croom et al, 2004)

1950s and early 1960s

Separate activities in SC;No real liaison between distribution related functions

Post-war

1960s and early 1970s

Fragmentation of distribution;Inter-related activities could be linked together and managed more effectively;Relationships between functions recognised, enabled a systems approach and total cost perspective

Computerization

1970s Centralisation of logistics; Change in structure and control of distribution chain; Total cost management

1980s Clear definition of true costs contributed to professionalism within distribution;Longer term planning, including centralized distribution , severe reductions in stock-holding, use of computers for information and control;Growth of third party distribution services

Globalization

1980s early 1990

IT and emphasis on information aspects;Integration of Logistics and cost control

1990s Process integration beyond organization boundaries – SCM; Partnerships and alliances, plus intermediaries;Gulf War gave rise to aspects of modern logistics channeling

Internet

2000 onwards

Fierce competition, redefinition of business goals and re-engineering of entire systems; Business importance and added value of logistics recognised

Figure 4.0: Supply Chain Evolution

The next section discusses supply network structures and their related behaviour, which

itself is embedded with the governance arrangements of the supply network structure.


Supply Network Structures and Behaviours

In this section consideration is given to the network structures and behaviours which

supply components and services to meet customer demand. Components including,

materials, labour, intellectual wherewithal, information and so on, are supplied in order to

design, manufacture, maintain, service and decommission a specific product model, such

as the Boeing 737 or the Airbus A320. Demand is global and dispersed across many

airlines and other types of customer including the government and private sectors.

Network terminology is used as a more accurate way to describe the varying concurrent

roles undertaken by organizations including leadership, coordination, sub-system design,

commodity manufacture, and so on. Nassimbeni (2004) describes an inter-organizational

network as “two or more agents, at least in part autonomous, which gives rise to an

exchange relationship, according to certain modalities and forms”. The structure of such

a network depends on the overall architecture of these systemic relationships. The

content describes what is exchanged and the modalities and forms define the governance

of the relationship and how it may adapt, coordinate and safeguard exchanges.

The first part of this section takes a look at inter-organizational networks and the methods

of governance relating to different types of network. We identify 5 different types of

supply network each with a distinct structure and related behaviours relating to

governance. The 5 ideal types are: market, hierarchy, heterarchy, 4PLTM and Keiretsu.

The rationale for managing, co-ordinating and focussing the value creation network

(Supply Chain Orchestration) is that there needs to be a “common agreed agenda driving

the achievement of the supply chain goals and a supply chain strategy that is subscribed

to by the entities in the chain”. Usually the Orchestrator is the most powerful member of

the network which is the prime, however the logistics firm has a key role in

synchronizing partner activity, such as the use of information technologies, throughout

the supply chain (Chapman, Soosay et al, 2002). Croom et al (2000) also demonstrate the

dependence on the element being exchanged: assets, information, knowledge or

relationships. The role of the logistics firm in facilitating the exchange is to synchronize


activities among the partners in the supply chain with the aim of gaining and integrating

knowledge.

In the case where suppliers are wholly owned, vertically integrated or where the

organization owns a significant part of the supplier, governance and control act as a

hierarchy. Hierarchical control indicates the ability of the organization to control and

mandate the action of each member to be directed to the needs of the organization.

The structure of an inter-organizational supply network with complicated interactions

among the players fits neither "market" nor "hierarchy" categories (Powell, 1990). When

relationships are missing ex-ante, the supply network acts more as a market in which

prices determine the selection of the supplier. Markets can be more efficient than

hierarchies. In a study of the corporate cultures of Japanese companies, those which

stressed competitiveness (markets) and entrepreneurship (adhocracies), outperformed

companies dominated by internal cohesiveness (clans) and by rules (hierarchies)

(Deshpandé, Farley and Webster Jr, 1993).

When prior relationships exist, the supply network acts as a heterarchy. Various forms of

heterarchies have been described in the literature, such as strategic networks (Jarillo,

1993), however, all networks are similar in that governance is heterarchical and there is a

requirement for coordination. A supply network can be defined as "a group of semi-

independent organizations, each with their capabilities, which collaborate in ever-

changing constellations to serve one or more markets in order to achieve some business

goal specific to that collaboration" (Akkermans, 2001). Markets and networks are

similar in that they have unconnected ownership structures but, for networks, governance

is implemented with informal coordination methods in which relationship continuity

incentivizes collaboration (Nassimbeni, 2004).

Contemporary thinking believes that in an heterarchical environment, relationships are

key to influencing decision-making. Where relationships exist between organizations,

that is, where an individual or group in one organization can influence the decision


making of an individual or group in another organization, the supply network acts

synergetically. These organizational relationships tie firms to each other and to the

success of the entire supply chain, which may then function as a firm in its own right with

its own identity (Cooper, Lambert et al, 1997).

The introduction of hierarchical structures attempt to improve coordination and reduce

costs by minimising relationships between the parts of the substructure. The

consequence of creating a hierarchy means a reduction of information accuracy and

timeliness because of the need to pass on information. A hierarchy also creates issues of

resilience as the parts become minimally connected (Lewis and Talalayevsky, 2004) and

the strength of the supply chain depends on the integrity of the links (Davis, 1993).

Influencing independently owned firms within a heterarchy requires coordination

mechanisms. Mulford and Rogers (1982) define coordination as “the process whereby

two organisations create and/or use existing decision rules that have been established to

deal collectively with their shared task environment”. The need to coordinate assumes

that cooperation is needed between firms. Cooperation heightens the need for

communication, and for information technologies and associated software to support that

communication (Castells, 1996). The need to cooperate and leverage complementary

competencies within the network becomes essential (Yusuf, Gunasekaran, Adeleye and

Sivayoganathan, 2004). Coordination ultimately becomes a formalised way of

cooperating (Beerkens, 2004), where cooperation is defined as a voluntary cooperative

agreement. Beerkens suggests that after coordination, comes amalgamation, that is,

merger or acquisition, and thus the creation of a hierarchy with a loss of autonomy. It

follows that formal coordination potentially leads to ownership.

Other than the heterarchy, and vertical integration (ownership) and the market, two other

forms of supply network exist: the 4PL™ and the Keiretsu. The 4PL™ (fourth-party

logistics service provider) business model to manage the modern supply network was

originally copyrighted by Accenture. The 4PL, or sometimes referred to as the lead

logistics provider, provides systems architecture and integration skills, houses a control


room for decision-makers, acts as supply chain infomediary using its own information

systems and manages access to the best of breed asset providers. The 4PL is thus a

hybrid organization typically formed from parts of other organizations as a joint venture

or long-term contract. The Orchestrator, previously the airframe prime, passes control to

the 4PL who then exerts control over the supply chain. Orchestration is usually driven by

the prime (Chapman et al, 2002) who carries out the management and coordination of

multiple business activities across functions and firms (Lambert et al, 1998, Mentzer et

al, 2001) guided from a hub where key functions are managed (Webster Jr, 1992).

Keiretsu, originally from Japan, is a form of network governance in which a central bank

acts to bind the network. Partner firms belong to only one Keiretsu and in that way

control is maintained over member firms. Ellram and Cooper (1993) identify similarities

and differences between the Keiretsu and the Supply Chain Management approach.

Similarities include a long-term approach, sharing risks and rewards, speed of operations

and a reduced supplier base. Differences in control, dependence and strategic

coordination amongst others (see Figure 3.0) make this a fundamentally different

structure for supply network management.

Figure 3.0: Differences between Supply Chain Management and Keiretsu (Ellram and Cooper, 1993)

The legacy of western management attitudes and anti-trust laws which focus on

competition and independence have largely prevented the implementation of a supply


chain philosophy unlike the Keiretsu approach (Ellram and Cooper, 1993) which has

created some very competitive channels.

Inter-organizational network relationships although often established by firms as formal

contractual relationships with bureaucratic structures, will develop on a dynamic, organic

basis of continuity, reciprocity, co-operation, informality and social embeddedness

(Sydow and Windeler, 1998). As the inter-organizational relationship develops, a

structure is exposed but governance of the structure becomes more problematic to

implement as the structure is ‘owned’ by multiple organizations with only partial control.

Compared with organizational hierarchical relations, the network is more loosely

coupled, relies more on self-organizing processes and has greater competitive pressures

(Ring and Van de Van, 1994). However, strong ties may improve the probability of

oligopolistic coordination more than weak ties (Galaskiewicz and Zaheer, 1999). This

emphasis on longer term relationships reduces market focus and which would otherwise

exist in a supply networks (Cohen and Agrawal, 1999) but this is mitigated somewhat by

unequal distribution of costs and benefits between the supply chain partners making inter-

company cooperation difficult (Kärkkäinen, Holmström, Främling and Artto, 2003).

In a supply network there are many dyadic relationships, some of which are

commensalistic and others symbiotic. This is one of the complicating factors of supply

networks which leads to complex governance and structural forms. In coevolutionary

terms, three types of relationship are identified: predator-prey, symbiotic and parasitic

(NECSI, 2007). The prey is part of the predator's environment. Each evolves

characteristics (speed, stealth, camouflage etc) in order to consume or avoid the other as

applicable. Organisms in a symbiotic relationship evolve together; each is part of the

other's environment, adapting to their environment and benefiting from each other. In a

parasitic relationship the parasite lives off the host, harming it and possibly causing its

death. There is close proximity between host and parasite. Symbiotic relationships can

help remove parasites, however, they may become predator-prey or parasitic relationships

over time. But these relationships are not linear. The use of linear constructs in the

supply chain depict a simple topology of aligned goals, when the arrangement is more


similar to “a supply web in which predators and prey have many and various

relationships in a complex non-linear structure” (Brown, Lamming, Bessant, and Jones,

2005),

The dynamic network view considers the firm’s position in the network, how the network

evolves and how new networks are created (Mills, Schmitz and Frizelle, 2004). The

evolution of networks occurs in a number of ways: by consolidation into fewer suppliers;

new entrants; increased outsourcing (buy as opposed to make) of non-core competences

(Prahalad and Hamel, 1990), particularly to specialists (Snow and Miles, 1992), during

times of rapid market growth. Where the organization is loosely connected (Webster Jr,

1992) it can leave supply network or can be replaced easily. Once a product/model is

established, the organization is locked in, or vertically integrated, to a supply network

(Gulati et al, 2000).

Whilst the initial conditions at the time of creation of an alliance have an influence on the

development of the alliance (e.g. Hamel 1991), some alliances evolve in a punctuated

equilibrium manner due to changes in the environment (Gulati, 1998) and other

exogenous factors such as industry competition. Organizations and the networks to

which they belong are dynamic and need to adapt and combat non-linearities such as the

bull-whip effect which spirals between tiers in the supply network. The self-reinforcing

processes of organizations will allow small differences in market share to be amplified

(Arthur, 1994) so long as they dominate negative feedback which acts as a self-regulatory

mechanism and the key to equilibrium (Capra, 1996). An action may have varying

effects on different parts of the complex system resulting in varying degrees of feedback,

driving virtuous or vicious cycles (Holland, 1998). Thus each firm in the supply chain

directly and indirectly affects the performance of all other supply chain members as well

as ultimate supply chain performance (Cooper, Lambert et al, 1997) in a non-equilibrium

manner. Learning races can occur where one partner benefits from information contained

within the network (Gulati, Nohria et al, 2000).


In summary, supply network structures include: the hierarchy, the heterarchy, the market,

the 4PL™, the Keiretsu (in the Far East). Each of these network forms has appeared as a

consequence of adapting to boundary conditions, consciously changing them to enable

the teleological nature of the supply network. This section has taken a broad look at

dynamic, evolving supply networks considering the many factors relating to the types of

structure and governance which might evolve. The next section investigates the context

of the civil aerospace industry and formulates propositions relating environmental trends

to supply network structures and behaviours, and to effects upon demand and the

environment.

Civil Aerospace Context

The context of the environment, locating the supply network within a particular space-

time, is a fundamental ecological perspective. Global techno-economic paradigms,

latterly in the 3rd globalisation, have created new opportunities for organizations, such as

broadband for volume information flow and the global division of labour. And just as the

environment enables the evolution of the supply network, so to does the growth of

aircraft manufacturing and air-traffic affect the environment negatively with its attendant

infrastructure and CO2 emissions, but also positively by enabling international

cooperation and social mobility.

At the start of the 21st century, the severe knocks to the global civil aerospace industry

following 9/11, SARS and the Iraq war caused industry lay-offs and consolidation. The

industry was expected to recover in 2005 back to historic rates of demand, and indeed to

grow at a rate of 4.7% per annum to 2022 (Aerospace Innovation and Growth Team,

2003), valuing the global industry at $1,860 billion over 20 years relating to some 32,500

new aircraft. This anticipated growth was expected to contribute to a set of key

characteristics what would define the global civil market by 2022. These key

characteristics (Aerospace Innovation and Growth Team, 2003) are expected to be: a)

airline industry restructuring; b) improved environmental performance and highly

efficient aircraft structures and fuel consumption; c) sophisticated security measures; d)


improved business models for manufacturers and service providers; e) serviced-based,

total life cycles packages to civil customers. In addition, aerospace primes and systems

integrators are expected to achieve better rewards attracting more private capital.

Overall trends for the aerospace industry (Aerospace Innovation and Growth Team,

2003) are i) the fusion of manufacturing, service provision and MRO (maintenance,

repair and overall); ii) a change to the concept of ‘prime contractor’ being the aircraft

manufacturer to it being an aerospace service provider, whose capability may be solely

the “conception and management of large scale systems”; iii) greater technology sharing

with military products and other sectors; iv) growth in the systems concept of civil

aerospace as a global, integrated air transport system; globalisation and less nationalism.

Future shocks of the magnitude of those seen at in the early millennium may recur.

Industry consolidation and tiering (reduction in direct suppliers) is likely to take place in

the UK and increased sourcing from low cost economies is predicted (DTI Aerospace and

Defence Directorate, 2003). Industry analysts Forrester suggest that no top-down

planning, however collaborative, can deliver results in this environment (Forrester,

2003); brittle supply chains risk collapsing like a house of cards under the disruptive

influence of business drivers like accelerated global outsourcing, punishing competitors

and supply/demand mismatches (Forrester, 2002).

The effects of aerospace use continue to influence in the industry. The need to reduce

CO2 emissions and its effects on global warning have become political issues but

remedies to reduce emissions appear to have a negative effect as world-wide demand for

air service including freight transport which is expected to double by 2010

(http://www.atag.org/files/AirTransportEnvironmentFlyer.pdf). Political interventions

include carbon-offsetting; proposed restrictions on airport growth and routes, and rising

air passenger duty. Other environmental concerns range from aircraft noise, to fuel

consumption and the need for energy efficiency, improved infrastructure and land use.

The increasing use of information communication technologies (ICT) is uniting global

networks across different time periods, enabling the sharing of information and the use of

previously untapped resources in the development, production and servicing of aircraft


http://www.atag.org/files/AirTransportEnvironmentFlyer.pdf

(Ho, Au et al, 2003). ICT is also providing a substitute to some forms of travel, e.g. by

enabling multi-media conferencing over IP (internet protocol).

Social and economic benefits of air transport, including improved international

cooperation and increased consumer choice are persistent drivers increasing demand. Yet

other social changes, such as the growth in obesity due to energy dense food, motorised

transport and sedentary lifestyles (http://s3.amazonaws.com/foresight/20.pdf) will impact

the design of future aircraft, as will the use of modern materials such as composites and

technologies such as fly-by-wire, for example, Boeing’s 787 and Airbus’s A320

respectively. Also, the location of developing skills and knowledge, particularly in great

numbers in China and Russia will be a source of competition for the west. Terrorism acts

such as 9/11 create incredible shocks to aircraft orders and if supply chains are unable to

adapt, e.g. from commercial to defence production, then supply chains will not be able to

compete or survive.

The aerospace industry does not exist in isolation; the wider techno-economic

environment also prevails. Three generations of globalization describe the economic

progress towards our current environment. Described variously as ‘dominant logics of

production/techno-economic paradigms (Tuomi, 2007) or Schumpeter’s waves

(Schumpeter, 1942), based on Kondratiev’s macroeconomic cycles, we are now in the 3rd

globalization or Schumpeter’s Vth wave, defined by broadband communications

networks, global division of labour, internet-based business models and real-time virtual

service. Continued miniaturization is enabling the end-customer to perceive an

increasing value during flights with the accessibility of increased multi-media

technologies. These eras or waves of new all-purpose technologies drive investment in

the development of new infrastructure leading to new economic models through waves of

creative destruction.

Within the last 10 years as a consequence of globalization and proliferation of multi-

national companies, strategic alliances, joint ventures and other forms of partnerships,

have been found to contribute to the success of supply chains, just as Just-in-Time, Lean,


http://s3.amazonaws.com/foresight/20.pdf

Agile and similar manufacturing practices (e.g. (Womack, 2002; Gunasekaran, 1998)

have contributed positively to performance. The rise of the information age and greatly

reduced information communication costs is changing coordination mechanisms among

partners in the supply network (Coase, 1998), increasing collaborative work within teams

on high capacity networks (Tapscott, 1996), enabling continuous information flow in an

integrated supply network (Lambert and Cooper, 2000) and providing new opportunities

for customers to connect to supplier and to reduce transaction costs and risks (Lewis and

Talalayevsky, 2004). Supply chain integration of legally and spationally separated firms

is shown as a vital tool for competitive advantage (Yusuf, Gunasekaran et al, 2004).

However, the relationship between supply chain performance and integrated supply

chains is not linear. In a study of dyadic relationships it was found that performance is

not symmetrical upon the partners and indeed can be opposing, with one realising its

objectives and the other not (Gulati, 1998).

In summary, we have considered a number of environmental trends which appear to have

an impact on supply network structure and behaviour, performance and on the

environment and future demand.

Propositions from an ecological perspective

From a review of the literature above, a number of propositions are put forward. Each

proposition is based on change to the current ecological position, thus it is defined as a

trend and so underlies the path dependent nature of the ecological perspective.

P1: Greater access to Low Cost Economies (LCEs) increases the geographical

distribution of supply networks (S); increases coordination requirements (B)

P2: Increasing broadband communications technology deployment increases the

geographical distribution of supply networks (S); improves design and development

collaboration and so increases the potential for innovation (B)


P3: Growth in customer volume demand increases the number of suppliers needed

and/or resources within existing suppliers (S); increases competition within the industry

and so drives the need to innovate and improve production efficiency (B)

P4: Increasing demand for agility from customers increases the need for easily formed

(and disbanded) supply network structures (S); drives small-scale production plants (to

avoid lock-in); increases requirements for coordination (B)

P5: Growth in demand for whole-of-life aerospace service solutions increases

consolidation/integration within the industry (S); increases cooperation and so the

potential to innovate (K)

P6: Increasing global warming and CO2 levels drives clustering of local/national

organizations (S); drives product and process efficiency requirements and so the demand

for technological innovation (B)

P7: Increased terrorism activity increases industry consolidation and reduces numbers

of suppliers (S)

P8: Growth in technological product innovation drives the use of specialist/visionary

suppliers in the supply network (S); reduces the scope of knowledge within the top tiers

of the industry (K)

P9: Growth in indigenous skills and knowledge drives the use of national aerospace

services (S); decreases global collaboration (B)

Research Approach

A case study approach was taken. Eighteen open ended interviews were held with key

individuals in commercial aerospace primes and first tier suppliers. Individual transcripts

extending to 8,000 words were recorded. The approach allowed interviewees to express

important aspects of the nature and management of supply chains without interviewer


prompting. Coding was carried out in Mind Manager, a mind-mapping software tool, and

captured examples of the key words used in the propositions. Care was taken to record

the supply network tier at which the interviewee worked to look for similarities and

differences across tiers. The authors also used two further sources of primary data. First,

were questionnaire results which evaluated the importance of supply network principles

to 5 criteria for performance success. This novel approach, extended from organizational

systematics (McKelvey, 1978) to consider the second order effects resulting from the

adoption of multiple network principles, demonstrated how the anticipated performance

outcomes of supply networks can be significantly different from reality. The full analysis

of the questionnaire results are available (Allen, Varga, Strathern, Rose-Anderssen,

Baldwin and Ridgway, 2008). Second, structured interviews were held in aerospace

organizations in which significant changes were occurring. Details of these studies are

also available (Varga, Allen, Strathern, Rose-Anderssen, Baldwin and Ridgway, 2008).

The next section presents the results of this case study undertaken between 2005 and

2008.

CASE STUDY AND DISCUSSION

This section considers the environmental trends and propositions, developed from the

literature above and matches them to the results of our empirical investigations. There

are two categories of results: first, the results which affirm the propositions presented;

second, novel results which appear to have significance for the ecology of the civil

aerospace industry. Discussion takes place throughout using quotations from interviews.

Where results appear to be different depending on the tier of the respondent this is

identified.

Results affirming the Propositions

Across the civil aerospace supply network, there is evidence of reduced numbers of

suppliers to organizations on a major scale down to around 20%, for example, Boeing

had over 30,000 suppliers in 1999 reduced to over 6,000 in 2007; Rolls Royce had over

900 in 2002 targeting to less than 200. There is evidence of both industry consolidation


and more supply network tiers as a result. Organizations who want to move up the value

chain appear to have reduced or eliminated their manufacturing plants, by either

outsourcing to local organizations specializing in manufacturing or to low-cost

economies. Where the outsourcing has been local, existing suppliers to the

manufacturing operations have moved to the new manufacturer; these suppliers are

usually held under review and growth in the manufacturing operations are being curtailed

or outsourced over time as local manufacturers themselves seek to reduce costs.

“In the 90s watching the Japanese companies, we recognised how important it was to

understand the production system or the strength of your supply chain, and looking for

ways to make it more efficient. And so we really started to talk about lean manufacturing

and increasing all our awareness to the point now I think most people are pretty well

grounded in.”

Both Boeing and Airbus recognise the need to sub-contract whole systems and sections to

improve quality and cost. 1st tier suppliers to the primes put the need for high levels of

integration in the supply chain as a priority for cost efficiency. There is less evidence

that the primes are as highly integrated with 1st tier. The outsourcing of competitive

advantage in the creation of new products and systems is an important factor for primes.

As product and service offerings have become more complex, networks have broadened.

This broadening has driven the recognition that “there are really smart people and great

resources in other parts of the world”. 1st tier supplier selection is motivated by

expectations of increased quality and timeliness performance, and “We are more likely to

do business with a supplier delivering an integrated set of values: design, integration of

manufacturing, delivery and post delivery follow up. Suppliers that want to be world

class are continuously reinventing themselves. And if you are going to have innovation

you’ve got to have skills and training. Global relationships with 787 suppliers are risk-

sharing partnerships in which they take on the design, certification and full integration

for key elements of the aeroplane. These global relationships require a high-level of

collaboration.” Boeing appear to invest more time with suppliers than Airbus. This

appears to be driven by politics and government regulations, in particular, anti-trust and

independence requirements which have constrained partnership development.


The desire for reduced cost is enabled by greater access to Low Cost Economies which

increases the geographical distribution of supply networks but increases coordination

requirements, confirming Proposition 1.

Innovation comes through globalisation. “The 787 is an extraordinarily high technology

aircraft. Boeing have stretched the boundaries of technology; offered a unique solution

that have never been offered to the industry before. Sharing knowledge is perceived as

an importance performance characteristic for product quality, technological innovation

and supplier vision”. Within operational supply chains, the need to avoid interruption is

driving the sharing of knowledge and learning together; “You want to reduce inventory

but not to the point tipping the apple cart”.

Primes have developed portals in their design and engineering system that enables them

to work with suppliers, researchers and partners on a integrated basis, enabling high-

speed data transfer of high-level digital information supporting virtual working on fairly

complex environment of 3D CAD. Computing tools are incredibly powerful and driving

significantly changing relationships with suppliers. “Suppliers need to be organized for

efficiency of manufacturing but also for information and collaboration”.

The availability and reach of broadband communications technology has enabled the

geographical spread of supply networks, enabling design and development collaboration

and so, the potential to innovate, confirming Proposition 2.

Restructuring in the civil aerospace industry has been a consequence of a number of

environmental factors. First, increased competition, for example, Airbus having 50% of

the commercial aerospace market of airplanes with more than 80 seats, has fuelled

innovation, for example, design of the Boeing 787, which has been possible because of

technological advances in composite materials. These technological advances are

contained by specialist suppliers who are spread globally, driving wide distribution of the


supply network. Second, terrorism activity in the early 21st century significantly reduced

demand for civil aerospace travel.

Increased competition within the industry and so drives the need to innovate and improve

production efficiency, confirming Proposition 3. Environmental impacts have driven

product and process efficiency requirements and so the demand for technological

innovation, confirming Proposition 6. Terrorism caused industry consolidation and

reduces numbers of suppliers, confirming Proposition 7.

Understanding customer and passenger needs continues to be important to match

products to demand. “Getting closer to customers, such as airlines, is important to

understand how to make them more efficient so that passengers are happier.” Airlines

want a high quality product and are not mindful of where parts are sourced. This means

that there are opportunities to remain competitive. “Getting closer to airline customers is

important in figuring out how to make the whole passenger experience more rewarding

and how to make our products operate within the aerospace around the world”. Agility

and responsiveness to customers is needed in order to meet global competition, choice

and customisation. Being agile is not just concerned with the product but how easily you

can adapt to change in your process. “The more flexible you are the more flexible you

have, the more efficient and beneficial it is”. “Agility in be able to something completely

different on the other hand can be very expensive because you don’t get the asset

specificity.” Infrastructure or machine costs can be expensive and a supplier will not

invest unless they have the confidence in the type and volumes of work.

Customisation and shorter delivery requirements are causing new methods of agility to be

devised requiring increases in coordination, confirming Proposition 4.

The issue of coordinating behaviour and integrating across the supply network is

perceived as the potential next wave of evolution in the supply network. “Coordination

and integration is maybe one of the key characteristics that makes successful companies.

Because as the aerospace supply chain gets broader, you get more people, more


companies involved. Our ability (or the) company’s ability to coordinate those activities

that are happening around the world, integrated seamlessly is huge. So that is something

that really makes it different. Yet 6 people in one room is pretty easy to coordinate…I

think that may be the next wave of evolution. I think to some extent it goes hand in hand.

To some extent it may follow the evolution of the supply chain. How do you do the

coordination- or information-management? And how do you do that better than your

competitor. How do you orchestrate, those actions, you know, get that weak point you are

talking about on the platform?”

The future of supply network organization as local clusters of firms is already being

conceived. The Orchestrator will need to modules of the airplane built in a local

environment. “All the supporting processes that are needed to do that are there. But you

can connect, you can take a machine house, and that machine house can have a

processing house, and you combine that with a bearing source, now you can take

advantage of that in a country at low cost. Most of our suppliers operate at lower tiers

won’t have the sophistication of operating and do that. The prime can have those

capabilities.”

A growth in demand for whole-of-life aerospace service solutions has increased the need

for consolidation and integration within the supply network, permitting more innovative

customer offerings, confirming Proposition 5.

The number of aircraft produced each year has grown in response to pressure to produce

more and as a consequence of manufacturing and production efficiencies. For the 777

there is one roll-out every 11 days. The goal for the 787 is 3 days. “The 737 has

changed from static line to full moving line lean production; supplier relationships are

increasingly important to maintain this type of production”.

The long cycle time between product introductions, around 10 – 15 years, is difficult to

shorten. It takes time to bring suppliers on board, both new ones and existing suppliers

on other programmes. The supply network literature also found that once an organization


is locked into a supply network, it will stay in the supply network through the life-time of

the product model. Supplier selection models are different at different levels of the supply

chain. At the lower part of the supply chain at the commodity level it is much more

competitive. Short relationships come under more evaluation. As a large partner, “When

you choose that supplier you pretty much marry to him on that programme. So the

supplier selection has evolved, and is almost all upfront. We essentially take into account

market access. We take into account access to capital market, access to technology…”

The creation of aircraft sub-systems appears to have been driven by the large and

increasing numbers of components within the final aerospace products. Airframe primes

have responded by reducing the numbers of 1st tier supplier; thus, landing sub-systems,

flight sub-systems and so on have been created and strategic suppliers have taken on the

management of previously first tier suppliers. Whilst not fully decomposable (Simon,

2002), coordination within the supply network has been reduced and we see this activity

reflecting the nature of the supply network as a complex adaptive system.

Technological product innovation has motivated the emergence of specialist/visionary

suppliers which has moved the loci of knowledge away from the top tiers of the industry,

confirming Proposition 8.

Technological innovation leadership is especially relevant to new products. The selection

of partners is based on specialist capability and skills; these also help to meet

environmental efficiency demands. There are costs to mitigate environmental effects

and/or search for new solutions with good environmental performance of products and

supply chain. Global capabilities and specialisms have become accessible and are

growing in BRIC (Brazil, Russia, India and China) countries. Functional

complementarity of network partners can be achieved in which specialist skills and

capabilities are provided by relevant network members (Parkhe 1991).


A growth in indigenous skills and knowledge has reduced demand from current primes

and accelerated the requirement for innovation and product efficiency, confirming

Proposition 9.

Novel results

A major change over the last 30 years is the reduction in vertical integration. “We used to

be our own supplier in a lot of ways. Primes owned many more manufacturing facilities

then and do much less manufacturing now. Nowadays, primes prefer their suppliers to

have other customers to help spread the long term involvement in business risk.

R1: Increased business risk increases the numbers of customers sought by an organization

(S)

Airplane ownership has changed from airline operators to finance/leasing companies.

“The supply network for MRO has changed similarly, for example, for the 747 the

airlines owned all maintenance and repair operations themselves. The majority of planes

are now owned by leasing companies, so subcontracting and the sub elements of support

and continual service arrangements have changed.”

R2: Organizations are becoming functional specialists and increasingly buy services

which are not their core competences (S)

Innovation in existing product models is very limited. “The manufacturing of a

particular airplane stays pretty static. This is a result of the certification and approval

problem. It is much easier to take new technology, get in on a new airplane model than

to retrofit new technologies back on to an existing model. So suppliers have to get new

technologies on a new airplane.” But new airplane products are not frequent and

technological innovations occur very frequently. The process of new product

development is different from building a different model of a product in a sustaining


mode. When new models are introduced at the same time as a new product it puts a dual

requirement on the supply base.

R3: The concurrent introduction of a new product model and the creation of a new model

of an existing product increases the supply network strain (S)

Relationships in BRIC countries were started many years ago knowing that they would

have substantial growth in the business in the future. Primes started working with closely

with the industry, for example, software engineers, developing skills because Boeing

knew that when commercial aircraft were introduced into a commercial market those

airlines would need engineers to help them maintain those airplanes. Global relationships

and strategic partnerships was the model for these countries, including Japan.

R4: Increasing local skills and capacity for operations and maintenance improves the

global distribution of product models.

The average age of the aerospace engineer is in the 50s. This is a big issue for the

industry. New recruits are not attracted in sufficient numbers and resources need to be

sourced globally.

R5: Decreasing numbers of aerospace engineers in US/UK will reduce engineering

knowledge in these nations and increase dependence on global specialists and resources.

Supporting the learning and development in ‘low cost economies’ takes resources and

commitment. “So for instance with the Chinese we had to teach them a lot about quality.

But with the Russians we are teaching about schedules. Depending on which part of the

world you have got into or what maturity of the supplier you are dealing with depends on

how much you have to teach them to be able to be an important supplier… Some of that is

a long time commitment. It takes a lot of resources and energy.”


R6: Investment in low-cost-economy supplier development is long term, country-

specific and demands resources and energy; decreases over time and improves

knowledge of both the supplier and the prime

Conclusions

By examining supply networks from an ecological perspective we provide a description

which is grounded in environmental context, path-dependency and coevolutionary

processes. An ecological perspective aims to not only establish the evolution of a system

within a specific context and historical background (space and time, respectively) but

aspires to foster an understanding of the interactions between the system and their

environment. The abundance of specific types of system reflects the structures and

behaviours which persist within an environmental context, i.e. those which are currently

sustained. The structures and behaviours of inter-organizational networks connect

physical, information and people components in the process of managing the life cycle of

the product. The performance of specific structures and behaviours is context dependent

and the context will favour specific structures and behaviours. Inter-organizational

networks can influence the context, that is, the environment, just as the context influences

the networks. We have demonstrated this in the propositions put forward in the civil

aerospace case study.

Evaluation of networks as complex adaptive systems which emerge, change and

innovate, not only reflects a real-world dynamical view of changing components,

structure and behaviour, but more importantly an evolutionary view. This evolutionary

view seeks to explain how novelty occurs within the complex adaptive system, drawing

upon the diversity within the system and upon the structures and behaviours which act as

building blocks for the whole network. The case study has demonstrated the evolutionary

path of civil aerospace structures and suggests that these structures may evolve such at

sub-systems are created locally, materials are sourced locally and only the final assembly

of the product brings these together. This potential new structure responds to feedback

from the environment for a reduced footprint in the manufacture of the airplane, and to

the specialisms, skills and resources available to local clusters of firms. The new


structure reflects an underlying structural attractor perhaps driven by the availability and

ecological goodness of local organizations. We can also say that the performance of such

a new structure will not be predictable. If it grows in abundance it will replace existing

structures in a process of creative destruction, replacing less well performing structures.

Whilst shedding some light on structure, performance and emergence in aerospace supply

networks, we modestly accept that we live in an “ecology of ignorance” (Luhmann,

1998) creating complexity in trying to deal with complexity and new ignorance in trying

to know (Medd, 2001).

We conclude with suggestions for further research. Environmental factors which have a

coevolutionary influence on the civil aerospace industry will not remain static and in any

case new environmental factors will inevitably arise in the future. There may be specific

gaps our research has not uncovered. In contrast, the planned methods of structuring and

behaviours devised by organizational network members, will also seek to change the

network performance. There may be as yet unknown forms of structuring and behaviour

which if permitted by national legislation and regulation may positively influence

network performance and the ecology. Further, we are interested in similarities and

differences between the civil aerospace supply network and the defence aerospace supply

network. Many of the organizations who belong to the civil aerospace supply network

also have customers from and products used in the defence industry. What

environmental influences are relevant for the defence industry and how is the defence

aerospace supply network structured? Following our previous research of organizational

forms in the automotive manufacturing industry (Rose-Anderssen et al, 2008), there is

potential to compare this with network forms in the civil aerospace industry. There may

be interesting parallels, lessons for large product manufacturing generally and also a

contribution to product service systems which have a manufacturing component. Our

own further research will extend our notions of complex economic systems by further

modelling of coevolutionary factors within a dynamic ecology which is continually being

shaped and is shaping our futures.


Miles and Snow (2007) identify a research gap for new models of inter-firm organization

and collaboration which can exploit knowledge. As a complex adaptive system, we need

to be aware of the limits of knowledge (Allen, 2001b) and predictability within the

supply network. Knowledge within the ecological perspective is co-evolutionary,

stochastic and becoming; it is difficult to measure, based in value judgments thus

subjective, and certainly not neo-classical, mechanical nor predictive.

AcknowledgementsThis work was supported by the ESRC grant RES-000-23-0845 “Modelling the Evolution of the Aerospace Supply Chain” 2005-2008 with Sheffield University.

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