Do Trading Companies Need to Change their Business Models in Response to a General Trend of Increasing Transparency in International Business? A case study on five Swedish trading companies

Abstract

As globalization is increasing in pace whilst technological improvements are connecting individuals from all across the world; trading companies, who previously were found to thrive on idiosyncratic knowledge and non-transparency, find themselves in a difficult spot. As intermediaries, trading companies constantly need to ensure their ability to add value in the value chain as they otherwise soon would be bypassed. Despite their antecedents date back centuries, there is a lack of research covering trading companies’ strategic behaviors. The study is set out to bring light to the question if trading companies need to reconfigure their business model in order to respond to a changing environment. The study shows that trading companies can increase their rent seeking without necessarily reconfiguring the business model. The study has identified four alternatives for increasing the rent seeking: market diversification, increased service offering, product diversification or vertical integration. The study has also identified the extensive use of networks for the provision of services, which together with superior network capabilities could create a competitive advantage. The study has further found that business model reconfiguration for trading companies is highly dependent upon the ability to in fact realize such configurations, and the more resource intense a transformation is, the higher the willingness by upper management needs to be. The relationship between high resource endowments and high willingness can to a large extent be explained by the highly valued flexibility that trading companies possess.