An Ecological Perspective on Supply NetworksDocument Transcript
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,
(2) AMRC, Department of Mechanical Engineering, University of Sheffield, Mappin
Street, Sheffield S1 3JD
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simple products are largely superseded by multi-tier, global sourcing regimes for highly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.
Complex Economic System, Supply Network, Coevolution, Aerospace, Structure,
An ecological perspective on supply networks 1 Varga et al
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.
An ecological perspective on supply networks 2 Varga et al
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
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).
An ecological perspective on supply networks 3 Varga et al
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”
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.
An ecological perspective on supply networks 4 Varga et al
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.
An ecological perspective on supply networks 5 Varga et al
Stage of Type of trading relationship References
Intra-business chain Internal supply chain integrates business (Harland, 1996)
functions involved in the flow of
materials and information from inbound
to outbound ends of the business
Dyadic relationship The management of dyadic or two party (Harland, 1996)
relationships with immediate suppliers;
Extended to downstream distribution
channels and upstream production chains; (Davis, 1993)
Structure and scope of supply chain
consists of material and information
processing units: demand, value-adding
transformation and supply
Dyadic chain The management of a chain of businesses (Harland, 1996)
including a supplier, a supplier’s
suppliers, a customer and a customer’s
customer, and so on
Supply chain Management of multiple company (Lambert, Cooper and Pagh,
relationships (SCM); Managing and 1998)
coordinating multiple business activities (Mentzer, DeWitt, Keebler,
across functions and firms, and viewing Min, Nix and Zach, 2001)
the supply chain as a single entity, rather (Larson and Rogers, 1998)
than as a set of separate functions. (Christopher , 2005;
Integrated business The management of a network of inter- (Harland, 1996)
network connected businesses involved in the
ultimate provision of product and service
packages required by end customers
Demand chain Demand driven, agile, multi-enterprise (Hewitt, 2000)
communities organizations, increasingly complex with (Lummus and Vokurka, 1999)
various inter-relationships between (Bowersox, Closs, Stank,
companies, growing number of 2000)
participants which does not remain
constant throughout product life cycles;
unlike old models where customer orders
were delivered from on-hand inventories.
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
An ecological perspective on supply networks 6 Varga et al
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
An ecological perspective on supply networks 7 Varga et al
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
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.
An ecological perspective on supply networks 8 Varga et al
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
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.
An ecological perspective on supply networks 9 Varga et al
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
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 and value streams (Hines, Lamming, Jones, Cousins, and Rich, 2000). Each era
An ecological perspective on supply networks 10 Varga et al
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,
1950s and Separate activities in SC; Post-war
early 1960s No real liaison between distribution related functions
1960s and Fragmentation of distribution; Computerization
early 1970s Inter-related activities could be linked together and
managed more effectively;
Relationships between functions recognised, enabled a
systems approach and total cost perspective
1970s Centralisation of logistics; Change in structure and
control of distribution chain; Total cost management
1980s Clear definition of true costs contributed to Globalization
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
1980s early IT and emphasis on information aspects;
1990 Integration of Logistics and cost control
1990s Process integration beyond organization boundaries – Internet
SCM; Partnerships and alliances, plus intermediaries;
Gulf War gave rise to aspects of modern logistics
2000 Fierce competition, redefinition of business goals and re-
onwards 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.
An ecological perspective on supply networks 11 Varga et al
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
An ecological perspective on supply networks 12 Varga et al
activities among the partners in the supply chain with the aim of gaining and integrating
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
An ecological perspective on supply networks 13 Varga et al
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
An ecological perspective on supply networks 14 Varga et al
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
An ecological perspective on supply networks 15 Varga et al
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
An ecological perspective on supply networks 16 Varga et al
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,
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).
An ecological perspective on supply networks 17 Varga et al
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
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)
An ecological perspective on supply networks 18 Varga et al
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
An ecological perspective on supply networks 19 Varga et al
(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
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,
An ecological perspective on supply networks 20 Varga et al
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)
An ecological perspective on supply networks 21 Varga et al
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)
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
An ecological perspective on supply networks 22 Varga et al
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
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
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
An ecological perspective on supply networks 23 Varga et al
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
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.
An ecological perspective on supply networks 24 Varga et al
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
An ecological perspective on supply networks 25 Varga et al
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
An ecological perspective on supply networks 26 Varga et al
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
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
An ecological perspective on supply networks 27 Varga et al
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).
An ecological perspective on supply networks 28 Varga et al
A growth in indigenous skills and knowledge has reduced demand from current primes
and accelerated the requirement for innovation and product efficiency, confirming
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
R1: Increased business risk increases the numbers of customers sought by an organization
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
An ecological perspective on supply networks 29 Varga et al
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
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.”
An ecological perspective on supply networks 30 Varga et al
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
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
An ecological perspective on supply networks 31 Varga et al
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.
An ecological perspective on supply networks 32 Varga et al
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.
This 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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