On the Shift in Dominant Group Logics in Liberalizing Industries

Abstract

This paper explores the transition from logics of cooperation to logics of competition in strategic groups in liberalizing industries. I suggest that the notions of logics of action and dominant logic, usually associated with studies of institutional fields and organizational top management teams, respectively, can usefully be applied to the study of cognition in the formation of strategic groups in liberalizing industries. Over time, a group dominant logic emerges through cognitive processes of simplification, elaboration, and the avoidance of cognitive dissonance, as a result of observations and interactions between executives across organizations in the group. These processes also serve to maintain the dominant logic of competition in strategic groups over longer periods, until external environmental changes lead to a sufficiently large rise in dissonance, prompting the emergence of a new logic. The Nordic postal industry presents many of the hallmarks of a strategic group, including pursuing similar strategies, regularly benchmarking against each other, and pursuing both competitive and cooperative strategies against and with each other. Until the end of the 1990s cooperation was maintained and competition avoided. However, the transformation from government agency to government-owned corporations, as well as the liberalization of the European postal market, initiated a transition from logics of cooperation to logics of competition within the strategic group. Then, in 2007, the logic of cooperation within the group was permanently disrupted by the un-expected merger of the Swedish and Danish posts, leading to the creation of a new company, Post Nord. A new logic focussing on competition in the group emerged during the 2000s and entirely replaced the logics of cooperation in the aftermath of the merger. The empirical base for this paper is a series of interviews conducted with the top management of the Danish, Norwegian and Finnish Posts, complemented by the analysis of a variety of historical documents.