Slides from presentation at the International Congress on Postal History: Multidisciplinary and Diachronic Perspectives - Prato, Italy, June 15th 2019. To cite the underlying paper: SUND, K.J. (2019), FROM COOPERATION TO COMPETITION: CHANGING DOMINANT LOGICS AND LEGITIMIZATION IN LIBERALIZING INDUSTRIES, IN Rendtorff, J. D. Handbook on Business Legitimacy, Berlin: Springer

1. Dr. Kristian J. Sund
Associate Professor of Strategy and Organization
Department of Social Sciences and Business
Roskilde University, Denmark
The coral in RUC's seal
Liberalization and Emergent Competitive Strategy
in the Nordic Postal Market
at the Start of the New Century

2. My postal journey…

3. Early days of Nordic Posts
King Christian IV created a
first postal system in
Denmark/Norway, soon
copied by Sweden/Finland.
There were 9 postal routed
between Copenhagen and
other major cities, such as
Hamburg, in Germany.

4. Delivery and network
innovations
Postal riders – express mail
(1640s)
Expansion of number of post
offices / routes
Local delivery (Copenhagen 1806)
Post trains (1856)
House numbers (1859)
Post codes (1967)
Service innovations
Passenger traffic on postal
coaches (ca. 1660s)
Goods transport (ca. 1670s)
News (and later newspaper)
deliveries
Stamp (1851)
Mail box (1850s)

5. Political Economic
Technological
Environmental Legal
Social
Digital
substitution
Internet
e-Mail,
SMS
Economic
recession
("crisis")
Liberalization

6. Global
downturn
in mail
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.75
3.00
3.25
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Index(1970=1.00)
FiscalYear
Figure2
Gross Domestic Product(GDP)and Total Mail VolumeGrowth Fiscal Years1970- 2009
GDP (Chained to 2005 Dollars)
Total All Mail

7. Nordic Area
Source: PostNord annual report 2018

8. How did postal operators perceive
these changes, and how did the
institutional environment change?

9. Institutionalization
Organizations compete and adapt to the demands and
values of their environment, society, and of internal
groups.
Institutionalization occurs as actions are repeated.
Institutional environments reward organizations for
adopting acceptable practices and structures. Without
this acceptance, organizations can be driven out of
business. (Social legitimacy)

10. Institutional Theory (DiMaggio & Powell)
An organization is institutionalized by the following contexts:
1. Technical, Economic, or Physical
e.g. production and exchange of
goods in a market
2. Social, Cultural, Legal, or Political
e.g. conforming to norms, values, rules,
and beliefs upheld by society.

11. Institutional Pressures
Coercive: Pressure to conform that comes from the
government in the form of rules or laws.
Normative: Pressure from cultural expectations.
Mimetic: The desire of one organization to
look like another. Usually used as a response to uncertainty.

12. Institutional Logics
Mindsets, cognitive frames and mental models configuring thought and systems.
behavioral symbolic
Organization invested with meaning

13. Logics of Action (DiMaggio)
• Logics of action exist as a cognitive frame at the level of the individual
actor, but logics become shared through socialization processes and daily
action within the organization, or across organizations. Logics of action
mostly operate in a taken-for-granted fashion, but critically manifest
themselves when individuals have to explain and justify their actions.
• Bettis and Prahalad (1995) suggest that what focuses attention at the
strategic level in the organization, is a dominant logic. Logics of action at
various levels of the organization must fit within the dominant logic.
• Only large environmental disturbances have the potential to create a
mismatch between the dominant logic and the external reality.

14. Dominant Logic
Logics of
action
Logics of
action
Logics of
action
Logics of
action
Coercive Dominant Logic
Logics of
action
Logics of
action
Logics of
action
Logics of
action
External
shocks

15. Figure 1: Changing Landscape Exerting Pressure on the Postal Industry
(a) Technology (b) Market (c) Regulatory
(Bogers, Sund & Villarroel, 2015)

16. Cooperation before 2000
• Market-oriented reforms were gradually
introduced by all four Nordic
governments.
• The telecommunications arms of all
Nordic posts were divested, liberalized
and privatized.
• Before, and in a period of some years
after, the first postal directive (European
Commission 1997) all the postal
companies would cooperate in the letter
distribution.
“I think before the year 2000 and before the
second postal directive, everyone was business
friends. So if you were sending a letter from
Norway to Stockholm it was very natural that
Swedish Post and Norway Post cooperated
and had a supply chain that smoothly linked
together.”
CSO, Norway Post

17. Logic of Cooperation
• Legitimized a number of strategic
actions during the 1990s.
– posts focused internally on increasing the
efficiency of their own operations, through
investments in automation equipment and
the reduction of the workforce.
– posts all invested resources in
experimenting with new digital
technologies as a way of diversifying their
businesses.
– continued to seek cooperation
opportunities with each other, for example
through the creation of joint ventures.

18. • The four Nordic postal companies
in 1999 decided to join forces
(one last time), in the
international parcels distribution
segment. They created a joint
venture company, PNL (Pan
Nordic Logistics), to jointly
capture the European and global
inbound volumes to the Nordics.
• They defined the large global
logistics companies (such as UPS,
TNT, DHL and DB Schenker) as
their main and common
competitors

19. Early 2000s: Liberalization and the Emerging
Logics of Competition
• The internal focus did not yet clash with
the dominant logic of cooperation in the
strategic group. The spectre of
competition was already there and the
intention of becoming competitive was
there as well, but interestingly there was a
reluctance to publicly name the other
Nordic posts as potential competitors. In
official documents, such as the annual
report, future competitors were by
Norway Post defined as being “major
international logistics and
communications companies”
“We saw that competition at some point
in time was coming in Europe following
the liberalisation. However we know
today that this development took much
longer than most participants in the
market anticipated.”
CEO, Norway Post

20. • Similarly, Finland Post
recognized that competition
would come, but not from
the Nordic neighbours, their
historical cooperation
partners…
“National posts are forming alliances and
expanding well outside their domestic
markets. Acquisitions by Deutsche Post
AG in Germany, for example, targeted the
global operators Danza and DHL as well
as the Nordic company ASG. The Dutch
Post operates as a global logistics
company through TNT, a company it
owns. The Posts in Britain and France are
also actively seeking new international
partners.”
Finland Post Annual Report, 2000, p.9

21. • In June of 2007, the former Finland
Post (Posti in Finnish) rebranded the
corporation to the new name Itella.
• This was to create a brand name
around what was perceived as the
new core business, namely intelligent
logistics, combining the traditional
capabilities in the movement, sorting
and storage of mail, parcels and
goods, with the more recently
developed know-how in IT.
• A renewed Posti logo was maintained
for the postal consumer market in
Finland.

22. PNL: Cooperation vs Competition
• Globalization meant
that more customers
might seek a pan-Nordic
logistics partner.
• Itella decided to
withdraw from the joint
venture and instead
cooperate with DHL.
“I think it fell apart because the
companies started to think about the
future and their own strategies.
Especially Swedish Post was starting
to think they were the biggest in the
Nordics and felt accordingly that they
should be in the driver seat.”
-CEO, Itella

23. • In 2001 Swedish Post also
left the PNL joint venture to
undertake a Nordic
franchise for the DPD
parcels system (owned by
the French Post)
• By 2008, Norway Post
bought out the remaining
Danish Post shares.
“(. . .) I would say that the
relationship was becoming cooler
and cooler.”
CSO, Norway Post

24. Competition in the Letter Market
• Norway Post in 2002 expanded its
letter business into Sweden by
acquiring an entrepreneurial
venture named Citymail.
• This was the beginning of building
a new business model as
challenger to the incumbent
player in the traditional core
letter mail market in Sweden.
• Norway Post’s strategic intent
was to establish a market leader
position in the Nordic letter mail
market with distribution
networks in all the Scandinavian
countries.
• Based on this strategy Norway
Post also created a new company,
Bring Citymail Denmark. The
assumption was that there could
only be one surviving challenger
in each market.

25. April 1, 2008: the Surprise Merger
• The immediate reaction of
top management in those
companies was one of
disbelief.
• This did not seem a
legitimate action, so
Norway Post and Itella both
appealed to the European
Commission.
“The merger happened on the 1st of
April, so we actually thought it was an
April fool’s joke. But then we understood
that they really would merge, so that was
a bit of a shock!”
CSO, Norway Post
“For us it came as a big surprise. We
were not expecting this, because the
process went quite rapidly.”
CEO, Itella

26. Logics of Competition
• After the merger there were now
three Nordic postal companies all
competing in the logistics
segment, and growing their
market presence through
strategic acquisitions, but not, as
expected for almost ten years,
competing very much in the mail
segment.
• By the early 2010s, all three
operators (PostNord, Norway Post
and Itella) explicitly identified
each other as direct competitors.
• For example, PostNord in their
2013 annual report indicate
“national postal operators in
Norway and Finland” as direct
competitors in the area of
logistics.

28.  There is a story of emerging shared logics of competitive
action in TMTs and across organizations, as these
organizations learn how to compete.
 Strong mimetic pressures
 Dominant logics:
Cooperation (pre-2000s)
Transition (early 2000s)
Competition (late 2000s)
Changing Logics

29. Today’s
competitive
landscape

30. Thank you!