Chapter 13: The automotive industry: an ecosystem perspective
It is quite clear that the automotive system is about to undergo a period of rapid and potentially quite fundamental change; a process that is already underway. The ability for a firm to adapt to changing circumstances is in certain respects a measure of its flexibility. The notion of firm flexibility has long been studied (e.g. Stigler, 1939) and was explored to some extent in Chapters 10 and 11. Schumpeter (1942) highlighted the need for firms to innovate in order to ensure their survival. Innovation would provide the much needed adaptability and flexibility to deal with changing conditions, but much of it has focused on flexibility in manufacturing. This became a particularly fruitful area of research in the 1980s and 1990s when flexible manufacturing systems were being introduced in the manufacturing industry. Out of this, however, came a renewed analysis of the broader nature of firm flexibility and its variants. A major contribution to the flexibility debate at this time was provided by von Ungern-Sternberg (1990), who provided a model for firms to assess their optimal degree of flexibility. He does note that within a given sector there would normally be a mixture of flexible and non-flexible firms. In this way demand fluctuations can be absorbed by those firms that have invested in higher degrees of flexibility, to the benefit of the sector as a whole (von Ungern-Sternberg, 1990: 356). He calls this situation a polymorphous equilibrium, but it already shows indications of an ecosystem-like structure.
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