Abstract
In fisheries, formal institutions are intentionally implemented to protect the stock of fish and to better adjust the fleet’s catch capacity to the resource base. The present study, however, explores how the same institutions also influence competitive forces that shape industry attractiveness and the profitability of fishing boats. The empirical context is a sample of Norwegian seagoing purse seiners during a period that saw the introduction of two different individual transferable quota (ITQ) variants, the so-called unit quota system (UQ) system and the structural quota (SQ) system. The study analyses and compares the profitability of the vessels before ITQs were implemented in Norway (1985–1995), then under the original UQ regime (1996–2004), and finally under the present SQ regime (2005–2018). The findings disclose that the average profit margin was 8.8% in the pre-quota period, 20.6% in the UQ period and 24.3% in the SQ period. The differences between the pre-quota period and the two quota periods were significant (p < 0.000), whereas the difference between the two different quota periods were not (p = 0.068). Thus, the findings of this study draw a picture of an economically thriving industry after the introduction of ITQs. The paper argues that the significant profitability improvements achieved is rooted in the institutions that are established, which provide the players with essentially free and protected access to a common and valuable fish resource. Finally, implications of the findings are discussed.
Highlights
In open unregulated fisheries, fish is a common property that everyone has the right to exploit [1,2]
The system does not emphasise the importance of securing fish resources to geographical areas that are most dependent upon fisheries restrictions can be built into an individual transferable quota (ITQ) regime to prevent the market from becoming the sole quota allocation mechanism
The measures were anchored to support a regional distribution profile since transfers from north to south resulted in a 40% quota cut while internal transfer within a region gave a reduction of 5% or 15%
Summary
Fish is a common property that everyone has the right to exploit [1,2]. To explore the issues of profitability in this institutional context, the paper integrates two leading theoretical perspectives within strategic management: Porter’s [12,13] industry-based view of strategy; and Peng et al.’s [11] institution-based view of strategy (IBV). The paper contributes to the literature of strategic management in several ways It enhances the understanding of how institutions matter in explaining the attractiveness of fishery industries and fishing boats’ long-term profit ability. The result is the emergence of the institution-based view (IBV) of strategy [11] It is not solely firm resources or industry characteristics that can explain performance variations. The profound differences in institutional frame works between fisheries on one hand and free market industries on the other force scholars to pay more attention to institutional differences in addition to considering industry- and resource-based antecedents to performance variations [11,22]
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