of
R
ESEARCH INTO THE SURVIVAL AND
SUSTAINABILITY OF TRADITIONAL
SMALL-SCALED PRODUCTION CRAFTS IN A SOCIETY
RULED BY KNOWLEDGE, SCALE, AND
EFFICIENCY
M.J.H. Wouters
SUSTAINABLE
CRAFTS
“The Christian shoemaker does his duty not by putting little crosses on the shoes, but by making good shoes,
because God is interested in good craftsmanship.”
― Martin Luther
S
tatement of originalit
y
This document is written by Student Mark Wouters who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
P
REFAC
E
Before you lies the thesis “Sustainable Crafts”. It has been written to fulfil the graduation requirements of the Strategy track, which is part of the Executive Program in Management Studies at the Amsterdam Business School of the University of Amsterdam. I was engaged in researching and writing this thesis from October 2015 to January 2016 in addition to my work as an officer of the Royal Netherlands Air Force (RNLAF).
Craftsmanship has always fascinated me, but it became a passion after I got to know my girlfriend Dawn, who lives in Amsterdam. Amsterdam is the stronghold of Dutch craftsmanship, and wandering about the capital increased the love and passion for craftsmanship immensely. If I had chosen the RNLAF as my research topic, the provision of information would have been a lot easier. But I figured that writing a master’s thesis would be even easier if it was fun to do, and if it was on a topic I was passionate about. The inspiration the Amsterdam craft businesses gave me was the decisive factor for me to start writing a proposal on this topic.
The research was difficult, and it took more time than I imagined at first. But examining this topic wasn’t annoying, thus I was able to take big steps every time I worked on it. Fortunately and thankfully, my supervisor, prof. dr. Strikwerda, was always inclined to help and to offer extensive information. Therefore, I would like to thank him for his excellent guidance and support during this process. I wish to thank all of the respondents as well, without whose cooperation I would not have been able to conduct this analysis.
My girlfriend Dawn has been a great support. It was always helpful to be able to spar about my research with you, or about the process or exams during the whole master’s for that matter.
Finally, but definitely not least, my parents deserve a particular note of thanks. It has been a hectic one and a half years, and I could always count on you for support, kind words, or just my basic needs.
T
ABLE OF
C
ONTENT
S
STATEMENT OF ORIGINALITY ... I PREFACE ... II TABLE OF CONTENTS ... III TABLE OF FIGURES ... V TABLE OF TABLES ... V
1. INTRODUCTION ... 6
1.1 PURPOSE AND TOPIC ... 6
1.2 RESEARCH QUESTION ... 8 1.3 THESIS STRUCTURE ... 8 2. LITERATURE REVIEW ... 10 2.1 CRAFTSMANSHIP ... 10 2.2 CUSTOMER VALUE ... 12 2.3 BUSINESS SUSTAINABILITY ... 17
2.4 HAZARDS AND COMPETITION ... 18
2.4.1 Economies of scale and scope ... 19
2.4.2 Knowledge ... 23
2.4.3 Financial incentives ... 26
2.5 CHANCES AND OPPORTUNITIES ... 26
2.5.1 Quality ... 26 2.5.2 Firm size ... 28 2.5.3 Cooperation ... 31 2.5.4 Learning economies ... 32 2.6 TRADITIONALISM ... 33 2.6.1 Innovativeness ... 34 2.6.2 Inertia ... 35
2.7 POSSIBLE SOLUTIONS AND NEW DEVELOPMENTS ... 36
2.7.1 Authenticity ... 36
2.7.2 Open Innovation ... 38
2.7.3 Dynamic capabilities ... 40
2.7.4 Digital capabilities and transformation ... 41
2.7.5 Creating support ... 45 2.8 PERSPECTIVES ... 46 2.8.1 Overview ... 46 2.8.2 Conceptual framework ... 49 3. RESEARCH METHOD ... 52 3.1 DESIGN ... 52 3.2 METHOD ... 54 3.3 SAMPLING ... 55 3.4 QUALITY ... 56 3.4.1 Reliability ... 56
3.4.2 Interviewer / Interviewee bias ... 56
3.4.3 Validity ... 57 3.5 ANALYSIS ... 57 3.5.1 General Strategies ... 57 3.5.2 Analytical Techniques ... 58 3.5.3 Analysing steps ... 58 4. FINDINGS ... 61
4.1 CONTEMPORARY CRAFTSMANSHIP ... 61 4.2 QUALITY AS A PRECONDITION ... 63 4.3 STRENGTHS OF CRAFTSMANSHIP ... 64 4.3.1 Small scale ... 64 4.3.2 Serving customers ... 66 4.3.3 Inventiveness ... 67 4.3.4 Market share ... 67 4.3.5 Authenticity ... 68 4.4 CUSTOMER VALUE ... 69 4.5 WEAKNESSES OF CRAFTSMANSHIP ... 71 4.5.1 Small scale ... 72
4.5.2 Scarce time and attention ... 73
4.5.3 Cooperation ... 75
4.5.4 Other threats ... 76
4.6 EVOLVEMENT ... 76
4.6.1 Learning ... 77
4.6.2 Positive market positioning ... 78
4.6.3 Digital developments ... 79 4.6.4 Alliances ... 80 4.6.5 Open innovation ... 81 4.6.6 Intentions ... 82 4.7 PROPOSITIONS ... 83 5. DISCUSSION ... 84 5.1 OUTCOMES ... 84 5.2 THEORETICAL IMPLICATIONS ... 87 5.2.1 Trap immunity ... 87
5.2.2 Business and administration ... 87
5.2.3 Scale and efficiency ... 88
5.3 PRACTICAL IMPLICATIONS ... 88
5.3.1 Advocate of interests ... 89
5.3.2 Consultation ... 90
5.3.3 Promoting ... 90
5.4 LIMITATIONS &FUTURE DIRECTIONS ... 91
5.4.1 Limitations ... 91
5.4.2 Future directions ... 91
6. CONCLUSIONS ... 93
REFLECTION ... 94
REFERENCES ... 95
APPENDIX 1 INTERVIEW QUESTIONS ... 101
APPENDIX 2 INTERVIEWS ... 104
HAETTS ... 104
BGLKEDELSMEDEN ... 118
TYPIQUE ... 127
NEW TAILOR AMSTERDAM ... 134
ANNA STRINGER –BEELD- EN ORNAMENTSNIJDER ... 145
RUTH VISSER –KLASSIEKE MEUBELSTOFFERING ... 153
PETSALON ... 164
VAN GERWEN METAALTECHNIEK ... 171
KETELBINK BIER ROTTERDAM ... 187
SACHA VINK AMSTERDAM ... 201
T
ABLE OF
F
IGURE
S
FIGURE 2.1COST CURVES FOR GENERAL AND SPECIALIZED QUALITY FIRMS (ADAPTED FROM
BESANKO ET AL.,2009) ... 27
FIGURE 2.2COST AND DEMAND FOR CRAFTS (ADAPTED FROM BESANKO ET AL.,2009) ... 28
FIGURE 2.3THE LEARNING CURVE (RETRIEVED FROM BESANKO ET AL.,2009) ... 33
FIGURE 2.4LINEAR VS.EXPONENTIAL (RETRIEVED FROM ISMAIL ET AL.,2014) ... 43
FIGURE 2.5SCP-PARADIGM (RETRIEVED FROM CARLTON &PERLOFF,2000) ... 48
FIGURE 2.6VISUALIZATION OF THE RESEARCH PROCESS ... 51
FIGURE 3.1BASIC TYPES OF DESIGN FOR CASE STUDIES (RETRIEVED FROM YIN,2009B) ... 53
T
able of table
s
TABLE 2.1TYPOLOGY OF CUSTOMER VALUE (ADAPTED FROM HOLBROOK,1996) ... 14TABLE 2.2SWOT ANALYSIS ... 47
TABLE 4.1ADOPTED AND REJECTED PROPOSITIONS ... 83
1.
I
NTRODUCTIO
N
1.1
Purpose and topic
This thesis is on craftsmanship and the sustainability of small-scaled artisan businesses. The purpose of this thesis is to make a contribution to the understanding of and the theory on the development and sustainability of small-scaled crafts and artisan businesses in a world of scale, knowledge, and efficiency. Therefore the relationship between the characteristics of crafts, new business models, and sustainability has to be examined.
After the Second World War, the appreciation of working with your hands decreased. Working with your mind became more important and people had to study. After years of focusing on the interests and careers in the knowledge economy in the Netherlands, it seems that craftsmanship is appreciated once again (CvAE, 2015). In this period, the emphasis in the economy and in economic and managerial theory was on large-scale industrial production for reasons of efficiency and labour productivity (economies of scale) (Chandler & Hiniko, 1997; Grossman & Hart, 1986). In theoretical publications the role of craftsmanship tended to be ignored. Nowadays, a revival in economic theory can be observed with respect to small and medium enterprises (SME) (Audretsch, 2000). Although most craft activities are organized as small firms, not every small firm is a craft, and due to their nature, require a specific theory.
In 2013, the Social and Economic Council of the Netherlands (SER) also recognized this trend and they advised the government to pay more attention to craftsmanship in the Netherlands. “Crafts form a vital link in the Dutch economy and society”, SER states, and “they cover many areas of the economy”, like construction, repair, nutrition, health, footwear, grooming, and IT. According to the SER crafts employ 774,000 people, there are 285,000 craft businesses and there is an annual turnover of 110 billion euros. SER’s advice focuses on the importance of crafts for the Dutch economy and
The Dutch government takes over this advice and wants to work on a strong and vital crafts economy (SER, 2014).
Dutch newspapers Trouw and Telegraaf see a similar trend and last year they wrote several articles on the revival of Dutch craftsmanship. Artisanship is no longer considered frumpy or old-fashioned (Visscher, 2014) and is fully rehabilitated (Brand, 2013). People experience craftsmanship as a new opportunity in harsh times. After the recession resulting from the financial crisis in 2008 “craft-making has not only been defined as a viable business choice but has also emerged as a thriving multibillion-dollar industry” (Jakob, 2012). Walker and Brown (2004) and Paige and Littrell (2002) both consider two criteria for craftsmanship’s success. On the one hand financial incentives such as profit and growth are considered, but on the other hand non-financial or lifestyle criteria become important for small business owners. These intrinsic factors, such as personal satisfaction, motivate the artisans to start a business on the basis of a flexible lifestyle, pride in the job, and achievement. It is this combination that is attractive to young entrepreneurs in harsh times. Young artisans don’t just want to keep the tradition alive, they know and they feel they can make a living out of working with one’s hands and creating something tangible. While doing this, they are flexible and experience great pride, personal satisfaction and achievement.
Improving the crafts economy and getting artisanship back in Dutch society is the first step. Preventing crafts from disappearing again is the next. Craftsmanship is difficult in a society ruled by knowledge, scale, and efficiency. Industries tend to be dominated by large-scale firms for reasons of efficiency (lowest average unit costs), purchasing power, bargaining power and other forms of market power. Technology, at least before the digital era, emphasized large-scale operations, with low average units costs (but standardized products) and required high investments, creating entry barriers. Elrie Bakker, president of the Central Industry of Crafts (in Dutch: Hoofdbedrijfschap Ambachten) states that in such a society, craft businesses lack the strength, the capacity, the knowledge, the resources, and the infrastructure to safeguard their industry and the quality of craftsmanship and entrepreneurship (Beroepseer, 2013). To make the transition and for the crafts economy to become sustainable, these aspects have to be taken into account.
1.2
Research question
This leads to the following research question:
‘How can small-scaled traditional crafts stay sustainable and survive in a society ruled by knowledge, scale, and efficiency?’
In order to keep this research manageable and feasible, choices have to be made. Therefore this research only focuses on traditional production oriented craft businesses, since these businesses experience competition from larger (international) companies the most. Large companies have knowledge, scale, and efficiency advantages when it comes to production activities. Therefore, the comparison with production crafts is better expressed then the comparison with service crafts, since production oriented crafts are expected to encounter a lot of competition from these large companies. Hence, this thesis disregards service oriented artisan businesses.
Furthermore, this thesis is on the ways small-scaled production oriented craft businesses manage to do something about their sustainability themselves. There are endless possibilities for craft businesses to stay sustainable. Governments, branch organizations, education institutes and society can help with this as well. This thesis tries to sort out which possibilities these small-scaled craft businesses exploit themselves in order to stay sustainable.
1.3
Thesis structure
Following this introduction a theoretical framework based on relevant scientific literature will be formed in chapter 2. On the basis of this theoretical framework various propositions are made. In chapter 3 the methodology will be explained, whereupon the findings on craft’s sustainability will be delineated. These findings are based upon interviews held with various craftsmen and –women, which can be found in Appendix 2. The propositions made in chapter 2 will be tested after the findings are displayed. Chapter 5 discusses these findings with the theoretical framework, giving theoretical and
practical implications, and limitations and suggestions for future research. The research question will be answered and an overall conclusion will be given in chapter 6.
2.
L
ITERATURE
R
EVIE
W
The theoretical framework deepens the problem that is outlined in the introduction by evaluating and integrating existing literature. By explaining what craftsmanship and business sustainability is, how consumers value products, and what the hazards and chances are for small-scaled businesses, the basis of this thesis is herewith submitted. Then, by looking at new developments the theoretical framework is completed. Lastly, all these aspects will be put in perspective and the conceptual framework will provide a comprehensive and clear definition of the key constructs, and the propositions will be specified.
2.1
Craftsmanship
It’s difficult to define craftsmanship. There is no single accepted definition of ‘craft’ in the English language. The Oxford dictionary defines the word ‘craftsmanship’ as the “skill in a particular craft” or as “the quality of design and work shown in something made by hand” (Oxford dictionary, 2015). The Cambridge dictionary defines the term as the “skill at making things” (Cambridge dictionary, 2015). Originally, crafts are organized into guilds. Maarten Prak shows that being part of a guild, and thus performing a craft, had an economic function, as well as a public and even a political one. Guilds provided a safety net for its members, a sense of community, and assistance in everyday life (2006). Prak states that, in the Low Countries, “in the earliest guild statutes, which date from the late eleventh and early twelfth centuries, three elements are particularly prominent. First of all, mutual protection and assistance. This was especially relevant for merchants, who were often the first to initiate professional organisations. Secondly, admissions and the behaviour expected from members, and thirdly the civic duties, which included the provision of poor relief to non-members of the urban community, and community services like the maintenance of streets and city walls” (2006). The main
conception was to take care of each other, which was an important reason for poor and underprivileged citizens in the Middle Ages to be a part of a guild and to start performing craftwork. However, this thesis tries to explain how small-scaled traditional crafts can be sustainable in today’s society. Therefore, one has to take a more present-day perception of craftsmanship into account. Sennett gives this present-day perception and puts it differently in his book ‘the Craftsman’ (2009). The slogan of his book is “travail, opium unique”, which is a quote of the French writer François Mauriac in his book Le Desert de l’Amour (1925), and states that in Sennett’s mind work is more than just a means to an end. Craftsmanship is more than just security for one’s being and a way to provide oneself a safety net. According to Sennett, in terms of quality of life, craftsmanship enriches one’s being. Self-awareness, engagement, self-discovery and professional identity can be achieved by using one’s hands. These factors all stem from pride for the physical product the worker is making with his hands. The worker does not form out of self-centeredness, but out of a sense of belonging, both to the workforce and to society. In craftsmanship, Sennett states, the worker is engrossed in his work, focussing his energy away from himself and towards the task itself, becoming absorbed in one’s work. “The craftsman represents the special human condition of being engaged” (Sennett, 2009). The focus is doing “something well for its own sake” (Sennett, 2007), not for particular means to a particular end.
In order to do research on this topic, a clear definition of what craftsmanship exactly is has to be made. Combining Sennett’s sense of self-awareness, self-discovery, belonging, respect, and pride with the definitions in the Oxford and Cambridge dictionaries concludes that craftwork is more than just making things with one’s hands. The feeling of utility and the elimination of complacency are two very important issues in craftsmanship.
As stated in the introduction of this thesis, this is what Paige and Littrell recognize as well (2002). They discovered that craft retailers who reported greater success did not engage in competitive pricing. Furthermore they found that success was defined with intrinsic factors such as the opportunity to elevate the craft tradition and personal satisfaction. Of course, these entrepreneurs also have to take financial factors into account and thus also define success with traditional criteria such as profit and growth, but the main focus is on pride, satisfaction, and belonging.
This statement is supported by Walker and Brown who state, “that both financial and non-financial lifestyle criteria are used to judge business success, with the latter being more important” (2004). They found that personal satisfaction and achievement, a flexible lifestyle, and pride in the job are valued higher than wealth creation. Focussing on the feeling of utility and the elimination of complacency, and doing something well for it’s own sake is craftsmanship in its purest form. This purest form of craftsmanship is maintained by working in the traditional spirit of François Mauriac. Therefore, the following proposition can be made:
P1: Holding on to the traditional way of working maintains the purest form of craftsmanship,
increasing its sustainability.
2.2
Customer value
Besides the fact that crafts are more than just a means to an end for the craft worker, this industry also provides substantial added value for society and consumers. Marchand (2008) states that “thirty thousand new consumer products are launched each year”, but over 90% of them fail. That is after marketing professionals have spent massive amounts of money trying to understand what their customers want. Sennett (2009) explains that skills and consumer demands are not easily taught or explained, but are rather gained through trial and error. To know what consumers want, the craftsman depends on years of ‘trial-and-error-experience’, instead of just producing products and hoping they won’t fail. Through this process, quality is guaranteed and consumer demand is met. This also serves society, since only products proved to be useful come to market and thus this industry refrains from pollution of the market and of the environment.
Craftsmanship and the products made by craftsmen contain a special value for consumers. Helms explains that fine artisanship, which is more available to powerful elites than to ordinary people, is a mean “of creating or acquiring tangible objects that embody intangible powers and energies from the cosmological realms of gods, ancestors, or heroes” (Helms, 2013). Although this is an anthropological and archaeological perspective, she shows the reason why craftsmanship is of value for consumers.
“Through the objects, these qualities become available to human society and confer honour and power on their possessors” (Helms, 2013). Being able to purchase something that is made with pride and by hand, by a skilled artisan, brings about great prestige. Objects with these characteristics are rare, since they are not made with great numbers, and – as stated above – came about after a long process of trial and error. With this process, artisans have years of experience and know what consumers want. Besides that, Helms states that traditional craft products have special value for consumers. Therefore, the following is proposed:
P2: Holding on to the traditional way of working increases the customers value and hence the
sustainability for craftsmanship.
This great prestige and special value, which comes along with purchasing craftwork, is further explained by Holbrook (2006). Holbrook describes consumption experience and customer value in a framework; explaining that consumers are not only looking for utility or exchange value of a product, but pursue other values as well. The values Holbrook explains are dependent on the context. He defines customer value as an interactive relativistic preference experience. By this, he means:
That it involves an interaction between an object (e.g., a product) and a subject (e.g., a consumer). This object-subject interaction is relativistic in at least three senses (comparative, personal, situational) – first, involving a comparison among objects; second, varying from one person to another; and, third, depending on the situation in which the evaluation occurs. (Holbrook, 2006)
By explaining the relativistic part of customer value, Holbrook explains the importance of context. He further states:
Customer value entails subjective hierarchical preferences based on an individual’s situation-specific comparisons of one object with another. Such interactive relativistic preferences shape
the essence of the consumption experiences that underlie the creation of all customer value in the sense that products perform services that provide the relevant value creating experiences. (Holbrook, 2006)
Within a certain context consumers will compare the value of one object to another and decide which object will satisfy the consumer’s needs the most and thus which object will be of the most customer value. Holbrook shows different types of customer value:
Table 2.1 Typology of Customer Value (Adapted from Holbrook, 1996)
Extrinsic
Intrinsic
Self-oriented
Active Efficiency (Convenience) ECONOMIC VALUE Play (Fun) HEDONIC VALUE Reactive Excellence (Quality) Aesthetics (Beauty)Other-oriented
Active Status (Success) SOCIAL VALUE Ethics (Justice, Virtue, Morality) ALTRUISTIC VALUE Reactive Esteem (Reputation) Spirituality (Faith, Ecstasy, Sacredness)In this model Holbrook puts extrinsic and intrinsic value against self-oriented and other-oriented value:
Extrinsic value pertains to a means-ends relationship wherein consumption is prized for its functional, utilitarian, or banausic instrumentality in accomplishing some further purpose. By
contrast, intrinsic value occurs when some consumption experience is appreciated as an end in itself, for its own sake as self-justifying, ludic, or autotelic. (Holbrook, 1996)
Considering Sennett as stated above, one might think consumers of craftwork only pursue intrinsic value, since intrinsic value occurs when some consumption experience is appreciated as an end in itself. Sennett doesn’t consider craftsmanship as a means to an end; it enriches one’s being. This corresponds to the way Holbrook discloses intrinsic customer value. In the spirit of Sennett consumers would only have to rely on the intrinsic value of the craftwork. This isn’t always the case, since Holbrook shows one’s appreciation of an object relies on a certain context. In different contexts, consumers may choose to let Sennett’s principles and thoughts go.
Holbrook also explains self- and other-oriented value:
Value is self-oriented when I prize a product or experience selfishly or prudently for my own sake, for how I react to it, or for the effect it has on me. Conversely, other-oriented value looks beyond the self to some other(s) (family, friends, neighbours, colleagues) or some Other (Country, Planet, Universe, Mother Nature, Cosmos, Deity) where something is valued for their sake, for how they react to it, or for the effect it has on them. (Holbrook, 1996)
Craftsmanship can either be of self-oriented value or other-oriented value. In the spirit of Helms craftwork brings about a lot of other-oriented customer value, since she states that consumers who are able to purchase something that is made with pride and by hand, by a skilled artisan, experience great prestige (Helms, 2013). Craftwork consumers are able to enhance their status and establish a great reputation when purchasing these artisan objects, she states. In the spirit of Sennett customer value is also other-oriented, since he states the worker does not form out of self-centeredness, but out of a sense of belonging, both to the workforce and to society. In this sense consumers can identify themselves with the worker and purchase these objects that bring about altruistic value for the customer. Sennett also states that craftwork is not a means to an end, but an end in itself. Consumers
might experience this as well. In this sense craftwork is of hedonic value to customers and thus the value is self-oriented. This self-oriented value also comes along when consumers are looking for quality and convenience. Sennett explains artisans can fall back on years of trial-and-error-experience, which guarantees quality. Customers looking for quality and thus economic value might find this value in craftwork.
Both self-oriented value as well as other-oriented value can be active or reactive. Holbrook explains:
Value is active when it entails some physical or mental manipulation of some tangible or intangible object – that is, when it involves things done by an individual. Conversely, reactive value results from apprehending, appreciating, or otherwise responding to some object – that is, from things done to an individual. In the first, I act upon it; in the second, it acts upon me. (Holbrook, 1996)
Purchasing an object can be experienced as fun by the customer (active), and once the object is in the possession of the customer it brings beauty. The purchase of an object can confirm the customer’s current status (being able to buy a handmade and expensive object confirms a wealthy status of the customer) and owning the object establishes a new reputation for the customer. Active and reactive values show the specific reason to purchase an object.
As mentioned above, the consumer can experience craftwork in different ways. Sennett emphasizes the intrinsic (hedonic and altruistic) value as well as the economic value of craftwork. On the other hand, Helms states craftwork to have more of a social value. This all depends on the context, but combining the above theories of Holbrook, Helms, and Sennett it looks like ‘normal’ products only seem to speak to the extrinsic value of customers, craftsmanship seems to appeal to the intrinsic value as well. It seems consumers can get economic and social value from mass produced products, but the hedonic and altruistic value seem reserved to craftwork. Therefore, the following is proposed:
P3: In order for crafts to be sustainable, craftsmen have to focus on the intrinsic value of the product
therewith differentiating themselves and thus gain a competitive advantage.
2.3
Business sustainability
As was the case for craftsmanship, there are many definitions for the words ‘business’ and ‘sustainability’ as well. The Oxford dictionary describes business in a number of different ways. For example, it is described as “commercial activity”, but also as “trade considered in terms of its volume or profitability’ and ‘a commercial operation or company” (Oxford dictionary, 2015). The Cambridge dictionary comes up with slightly different explanations of the word business: Business is “the activity of buying and selling goods and services” and “a company or organization that buys and sells goods or services” (Cambridge dictionary, 2015).
For the word ‘sustainability’ or ‘sustainable’ the following definitions are given: The Oxford dictionary defines ‘sustainable’ as “able to be maintained at a certain rate or level” or “conserving an ecological balance by avoiding depletion of natural resources” (2015). The Cambridge dictionary defines ‘sustainability’ as “the idea that goods and services should be produced in ways that do not use resources that cannot be replaced and that do not damage the environment” and as “the ability to continue at a particular level for a period of time”.
Recognizable in the definition of sustainability in both dictionaries is that the aspect of environment comes up. Carroll and Buchholtz explain this in their book ‘Business and Society: Ethics,
Sustainability, and Stakeholder Management’ (2014). They state “discussions of sustainability began
with respect to the natural environment. As time has passed, however, it has become evident that it is a broader concept that applies not only to the natural environment but to the entirety of business’s operations and processes as well, especially business’s global role and development” (2014). This means that the environment played an important role in the development of the definition of ‘sustainability’ and still plays an important role for businesses today. A shift of perception regarding the natural aspect has taken place, since not only this aspect is taken into account, but particularly the business aspect of sustainability is gaining ground. “At a basic level, sustainability is about business’s
ability to survive and thrive over the long term. The concept of sustainability is derived from the notion of sustainable development, which is a pattern of resource use that aims to meet current human needs while preserving the environment so that these needs can be met not only in the present but also for future generations” (Carroll & Buchholtz, 2014). The Brundtland Commission also explains this in their report ‘Our Common Future’ from the United Nations World Commission on Environment and Development (WCED) in 1987, defining ‘sustainable development’ as follows:
“Development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (1987).
When speaking of ‘how to get small-scaled traditional craft businesses sustainable’, according to this definition it means ‘how can these crafts persevere to ensure future generations are able to enjoy the products and traditions of those crafts as well’. Or better; ‘how can traditional crafts meet the needs of the present without compromising the ability of traditions and products of future generations to meet their own needs’.
Sustainability thus embraces more than just environmental aspects, but also social and economic criteria, which is the general use in this master thesis. In order to catch the economic aspect of this definition, the term ‘business sustainability’ will be used in this research.
2.4 Hazards and competition
Medieval craftsmanship, as stated above, was performed in guilds that had a public, economic, and political function. Maarten Prak elaborates further on this stating “firstly, and most obviously, craft guilds could not do whatever they set out to do, without the official license from either local or national authorities” (2006). So, in order for a craftsman to produce products, he had to get permission to do so from the authorities. In a way, this is still the case today, since government regulations apply for all businesses in today’s society. But, as Prak continues, “guilds were often directly involved in local administration, as an integral part of local government” (2006). This means that the guilds and
politics were somewhat intertwined, compromising on flexibility. The guilds and local governments determined the number of apprentices, the prices of goods, the size of the shops, and many other aspects of importance for artisans. This is the third aspect Prak mentions when stating “guilds were involved in the execution of policies of the local government” (2006). This explanation concludes in the perception that – exceptions aside – craftsmen couldn’t freely and without involvement of others decide how they should practice their profession. This is an important hazard to acknowledge, since this can be a pitfall on the road to sustainability in today’s society as well.
2.4.1 Economies of scale and scope
Another hazard for craftsmanship came up as a reaction to the slow and inflexible way of working. In Adam Smith’s book ‘An Inquiry into the Nature and Causes of the Wealth of Nations’ (1776) the author explains the cause of the increase of welfare in industrialized countries. This automatically implies, that the welfare in industrialized countries is considered higher than the welfare in non-industrialized countries. Smith explains that the division of labour leads to productivity increases, which are the main sources of the increasing ‘wealth of nations’. The division of labour leads to great increases in the quantity of work per worker, because of specialization. Adam Smith states:
This great increase in the quantity of work, which, in consequence of the division of labour, the same number of people are capable of performing, is owing to three different circumstances; first, to the increase of dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and, lastly, to the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many. (1776)
After Adam Smith’s magnum opus at the beginning of the Industrial Revolution, the general idea on economics changed. Specialization became the norm, which is the exact opposite of craftwork. According to Broadberry and O’Rourke (2010), “the Industrial Revolution led to the introduction of new steam-based technologies such as the steamship and railroad, which dramatically lowered
transport costs, while the telegraph speeded the transmission of information”. Furthermore, they explain, “more and more technology was embedded in machines rather than in individual know-how, even if training was still necessary” (2010). This change in basic conditions became a great hazard for artisans for exercising their profession. “The new forms of transportation and communication, in turn, permitted the rise of modern mass marketing and modern mass production” (Chandler, 1990). Chandler proceeds by stating that:
As a result of the regularity, increased volume, and greater speed of the flows of goods and materials made possible by the new transportation and communication systems, new and improved processes of production developed that for the first time in history enjoyed substantial economies of scale and scope. Large manufacturing works applying the new technologies could produce at lower costs than could the smaller works. (Chandler, 1990)
The economies of scale and scope resulting from the specialization as mentioned by Adam Smith led to an increase in labour productivity and firms were able to benefit from this. Besanko, Dranove, Shanley and Schaefer explain “the production process for a specific good or service exhibits economies of scale over a range of output when average cost (i.e., cost per unit of output) declines over that range” (2009). “As output increases, these costs are averaged over greater volumes, tending to drive down average costs” (Besanko et al., 2009). This is why larger firms have an advantage over smaller firms, and this is why smaller firms face competition from larger firms. This is also why smaller firms are threatened in their existence by larger firms, and why it is harder for smaller firms to stay sustainable.
In order to understand what the exact advantages are for scale economies, it is necessary to examine where these scale economies come from. According to Besanko et al. there are several sources of scale economies. Economies of scale come from indivisibilities and the spreading of fixed costs, increased productivity of variable inputs (mainly having to do with specialization), and inventories. To be complete, economies of scope are also an advantage, and are thus addressed briefly as well.
Indivisibilities and the spreading of fixed costs
According to Besanko et al. “the most common source of economies of scale is the spreading of fixed costs over an ever-greater volume of output” (2009). Costs for special equipment, R&D, training, and the costs to set up a production process are fixed costs in a production process. Small as well as large firms have these costs, but large firms are able to spread these costs better than small firms. The output in large firms is larger than in small firms, which makes the average costs smaller in large firms.
Specialization
Economies of scale are closely related to the concept of specialization. Larger firms are able to specialize, because they can make substantial investments. “They will not do so unless demand justifies it; if demand is inadequate, they will not recover their costs and will be reluctant to specialize” (Besanko et al., 2009). This is why larger companies specialize and profit from it. Small-scaled production-oriented craft businesses operate on a smaller market, since these craft products are more exclusive than ‘normal’ products, as is explained in the previous paragraph. Smith’s theorem states that individuals or firms will not make specialized investments unless the market is big enough to support them, so according to this theorem it depends on the size of the market whether or not small-scaled production oriented craft businesses can specialize and compete with larger firms. In larger firms, there is a different machine or worker for every step of the production process, whereas in small-scaled craft businesses every step is done by the same craftsman. Above all, this saves precious time.
Inventories
Scale economies can arise when firms carry inventories. Besanko et al. state “firms carry inventory to minimize the chances of running out of stock” and “the need to carry inventories creates economies of scale because firms doing a high volume of business can usually maintain a lower ratio of inventory to sales while achieving a similar level of stock-outs. This reduces their average cost of goods sold” (2009). These inventories have to be managed well, since inventories carry costs, like value depreciation and the expenses borne in producing the inventory. Larger firms are better able to spread
these costs and benefit from inventories than smaller firms. This is another factor for small-scaled production oriented craft businesses to compete against.
Economies of scope
According to Besanko et al. “economies of scope exist if the firm achieves savings as it increases the variety of goods and services it produces”. Economies of scope are about the synergies enjoyed by a firm that produces an array of complementary products and services (2009). Many resources are needed to produce product A as well as to produce product B. When a firm decides to expand their assortment with product B, there’s no need to acquire additional resources, since these resources are already present for the production process of product A. This results in savings.
Another way to achieve savings through scope economies is bulk purchasing, since the price per unit of many items falls as the purchased amount increases. “Big businesses that make large purchases from their suppliers may also obtain discounts, enabling them to enjoy a cost advantage over smaller rivals” (Besanko et al., 2009).
Finally, R&D may also entail economies of scope. This is the case if ideas developed in one research project create positive spillovers to another project. The evidence for this statement is ambiguous, however. Small-scaled businesses may have a greater incentive to innovate, and therefore try various different approaches to tackle a research problem. This contradicts to the traditional ideas of craftsmanship, however. These businesses prefer working in the traditional way of craft making.
Although the idea on economics has further evolved since the Industrial Revolution, the division of labour is still thought of as an important aspect of today’s economic structure. Sennett (2009) tries to counter this and tries to recover the dignity of labour in our times. He disagrees with the idea that craftsmanship abilities and orientations have disappeared with the emergence of industrial society. The fast pace of the modern culture of capitalism and industrialisation undermines the spirit of craftsmanship in the sense of doing something well for its own sake (Sennett, 2007). Society is so deeply rooted in this fast pace, it has gotten used to it and made it the standard of economic thinking.
This is considered a hazard for craftsmanship. The hazard Sennett sees in our age is in many ways the same as what John Ruskin described in his book ‘The Nature of Gothic’ (1854) just after the Industrial Revolution: namely, the insidious dehumanizing of craftsmen and other labourers amid the crush of mass production and unrestrained capitalism (Sennett, 2009). Sennett states that means-ends approaches towards work are potential interfering factors for good work. He says: “Philosophically, pragmatism has argued that to work well people need freedom from means-ends relationships” (2009). The current economic thinking, which started with the division of labour by Adam Smith and is further explained by Besanko et al. – amongst others – is a means to an end and a threat to craftsmanship.
Elrie Bakker, the president of the Dutch Central Industry of Crafts, also supports this. She states that small-scaled crafts businesses lack the clout, the capacity, the knowledge, the resources, and the infrastructure to safeguard their industry and the quality of craftsmanship and entrepreneurship (Beroepseer, 2013). SMEs are vulnerable in today’s society in which the general idea of scale, efficiency, and knowledge are leading in industry. Considering these theories on the division of labour, the following can be proposed:
P4: Traditional craft businesses are severely impacted by economies of scale and scope, resulting in a
bad competitive position, and decreasing their sustainability.
2.4.2 Knowledge
Not only scale and efficiency, resulting from the division of labour, are a major threat to craft businesses. Knowledge is another factor that has to be reckoned with. As Drahos and Braithwaite state: “Knowledge is not only power. It is also the source of profits in modern global markets” (2002). This information society came up in the 1970’s and 1980’s, and the rise of the knowledge worker after the Second World War meant a shift to discursive knowledge. Lash states, “such training in discursive knowledge, in highly codified knowledge stands in contrast to craft training in the manufacturing society” (2002). Discursive training teaches a worker to subsume cases under rules, whereas craft training looks for what worked in the most similar case (Lash, 2002). This shift to discursive
knowledge meant that labour-power had to innovate and underwent discursive education. Lash explains:
Labourers-to-be produce papers justified through discursive argument, much like pure research laboratories do. These papers are structured through predicative utterances, evidence, formal cohesion and economy of formulations. Training in the information society results in the production of papers. These may be exam papers with multiple choices and correct answers. Often they are argued proofs, or theses backed up by experiential evidence. These immaterial and abstract products are proof that you have gained the knowledge to acquire the qualifications necessary to succeed in the information society. In the crafts, the apprentice became the journeyman and the journeyman a master with the production of a maître oeuvre. This was a work in the material sense of the French ouvrier. The artisan produced an artefact: a finished artifact. (Lash, 2002)
So, acquiring knowledge shifted from learning from each other, towards learning in a more abstract way, through learning from papers, exams, and evidence. This means the world of business hasn’t just scaled up, but everything has become more abstract as well. In addition to that, the demands of the knowledge economy even go a step further. As Doz, Santos, and Williamson put it:
The global game has changed. Yesterday, becoming a global company meant building an efficient network of production, sales, and service subsidiaries capable of penetrating markets around the world. But the demands of the new knowledge economy are turning this strategy on its head. Today the challenge is to innovate by learning from the world. Tomorrow’s winners will be companies that create value by searching out and mobilizing untapped pockets of technology and market intelligence that are scattered across the globe. (Doz, Santos & Williamson, 2001)
(2013) big data is “the ability of society to harness information in novel ways to produce useful insights or goods and services of significant value”. Nowadays, almost everyone has a cell phone or a computer, spreading information across the globe. This information is growing fast. Mayer-Schönberger and Cukier state that “big data refers to things one can do at a large scale that cannot be done at a smaller one, to extract new insights or create new forms of value, in ways that change markets, organizations, the relationship between citizens and governments, and more” (2013). Using big data enables firms to know exactly what customers value in a product, making it easier to enter new markets in a safe way. The use of big data is part of the knowledge game as discussed by Doz, Santos, and Williamson (2001).
This so-called ‘knowledge game’ doesn’t come back in the traditional guilds as discussed above. These traditional guilds have many years of experience and lots of know-how, but they often choose to work in the traditional way they’ve always worked in. They look what worked in the most similar case. This traditional way of thinking is a hazard for craftsmanship, because it may hinder innovativeness as is needed in the knowledge game as stated above.
Not only innovativeness is a hazard, the dealing with knowledge can be a challenge as well. As stated above, everything was regulated by the guilds and the authorities in the Middle Ages. Craft businesses weren’t allowed to think for themselves a lot. This isn’t directly the case with today’s craftsmanship, as explained by Sennett, since he states the artisan is engrossed in his work, focussing his energy away from himself and towards the task itself, becoming absorbed in one’s work. By focussing surely on the task at hand, the artisan might forget the world around him and thus all the knowledge around him. On the other hand, this doesn’t directly mean the worker doesn’t look outside his own scope at all. This might even mean that the worker is so committed to his work he does just that. All the same, knowledge is a potential pitfall for all businesses, but in particular for small-scaled businesses with a traditional state of mind and perception, proposing:
impacted by the knowledge game, hindering innovativeness, and therefore decreasing their sustainability.
2.4.3 Financial incentives
Last, financial incentives and motives should not be forgotten. The artisan might not think in terms of work as a means to an end and might do his work out of passion, engagement, or self-discovery. Sennett likes to emphasize on the work itself and not on the rewards or recognition of the achievement (2009). This is also a danger, since financial resources are needed in order to make everything worthwhile. The image Sennett creates is very romanticized, but in today’s society nothing is for free, since everyone seems driven by individual monetary incentives. To live, money is needed. When money is earned through the exercise of one’s passion and one can enrich oneself that is a positive side effect.
Since Sennett states that craftwork should not be a means to an end, the following is proposed:
P6: Considering financial incentives as a reward for craftsmanship detracts craftsmanship in its
purest form, and therefore decreases it’s sustainability.
2.5
Chances and opportunities
There are limits to economies of scale, and beyond a certain size, bigger is not always better. Certain aspects will backfire for large companies and might be beneficial for smaller ones. Quality can be used as a competitive advantage, and size can be a pitfall for large companies. Furthermore, resources, and learning can by thriving for small businesses, as well as working together and forming alliances.
2.5.1 Quality
In the context of division of labour, small-scaled craft businesses have to compete in other ways to stay sustainable. This is where quality comes in. A tailor may be very expensive, because of the labour
intensity and the time it takes to produce a bespoke suit. A large suit production facility produces a similar suit in less time, with machines, and with efficiency. In order to compete with these large firms, small firms have to pursue higher quality in their products implying fewer complications and greater effectiveness.
On the basis of Besanko et al. (2009) this is explained with figure 2.1. This figure depicts average cost curves for the production of suits produced by a general large firm and a specialized quality driven craft business. These costs represent the full cost of production, including aftercare, which is lower if the suit is of higher quality. A good suit implies fewer complications and greater satisfaction. Besanko et al. explain “the average cost curves are downward sloping to reflect the spreading out of the initial investments in training” (2009). The cost curve for the craftsman starts off much higher than the cost curve for the worker in the large firm because of the greater investment in time. The craftsman has to master all aspects of the tailoring profession, whereas the plant worker only has to master one specialized skill. However, the craftsman’s cost curve eventually falls below the cost curve of a
general plant operator because the tailor will produce a suit more effectively and with higher quality
than most specialized plant operators together. This goes together with the various aspects that define craftsmanship, like pride, satisfaction, and belonging.
According to figure 2.2 general large production firms may be able to cover their average costs at low demands (D1), but craft businesses may not. At high demands, craft businesses are also able to cover their average costs (D2). Since both types of firms are able to cover their average costs, quality has to be the deciding factor. With higher quality, fewer complications may occur and less aftercare is needed, so the effective price to the consumer is lower with craftwork.
Figure 2.2 Cost and demand for crafts (Adapted from Besanko et al., 2009)
Since quality implies fewer complications and greater effectiveness, the following can be proposed:
P7: Focussing and improving on quality increases craftsmanship’s sustainability.
2.5.2 Firm size
As stated above, bigger is not always better. Beyond a certain size, firms can experience difficulties in their work processes. Small firms can respond and profit from these situations.
Agency problems
First, “firms may eventually see an upturn in average costs if they bump up against capacity constraints or if they encounter coordination or other agency problems” (Besanko et al., 2009). The more firms specialize, the more difficult it is for firms to expand their vertical and horizontal boundaries, and the more coordination and cooperation they need. Coordination is needed to allocate the produced goods and services, as well as the factors of production. Cooperation among specialized people is needed to produce goods and services. The larger firms get, the harder it is to integrate the processes by coordination and cooperation. Smaller firms experience these problems much less.
Labour costs
Another disadvantage of large size firms is the high labour costs. According to Besanko et al. larger firms generally pay higher wages. Several reasons underlie this.
Large firms are more likely to be unionized than small firms. Workers in smaller firms may enjoy their work more than workers in large firms, forcing large firms to pay a compensating differential to attract workers. Large firms may need to draw workers from greater distances, forcing them to pay a compensating differential to offset transportation costs. (2009)
This is in favour of small-scaled businesses and a chance for these businesses to compete with larger firms. Wages are costs to recon with, since it is a great incentive for personnel to choose a firm. Although smaller firms have lower labour costs, every firm has to pursue a good ratio. Fewer staff means lower overall labour costs, but low wages might infer people to leave the firm.
Flexibility
Third, small firms find themselves closer to the work force and are more in touch with society than large firms. Large firms often experience structural inertia.
Hannan and Freeman (1984) propose a different set of competencies instead of efficiency, since they recognize that organizations incur more costs than necessary. In order to be reliable and accountable,
organizations must be reproducible every day. Hannan and Freeman explain reliability as an organization’s ability to produce collective products of certain quality standard over and over again. Furthermore, organizations should be able to account rationally for their actions. Reliability and accountability are the outcome of a selection process. The environment filters out firms that are not reliable and accountable. The consequences of reproducibility are institutionalization and highly standardized routines. The positive site of these consequences is that these two processes lead to lower costs of collective action. The negative site is structural inertia and a resistance to change (1984). This is also what is expressed by Hargadon and Douglas (2001) by stating that institutions experience difficulties with innovations. Innovations and change don’t do well in robust organizations. They thrive better in small-scaled businesses. As Besanko et al. (2009) state, codifying work rules and reducing job turnover facilitates retention of knowledge, but it stifles creativity as well.
In order to connect with society and the work force, large firms need radicals to bring back the entrepreneurship in their organizations. Burgelman explains “corporate entrepreneurship refers to the process whereby firms engage in diversification through inertial development” (1983). Middle managers can be used to catalyse this process internally. Balogun states these middle managers “use their position within the organization and their contacts externally to gather and synthesize information for senior managers on threats and opportunities”. They “encounter fledging projects within their own department to help facilitate adaptability within the organization” and they “use resources at their disposal to champion innovative ideas and business opportunities to senior managers” (2003). Large firms do not only need middle managers, they also use change agents, like consultants, to effectuate a connection with the work force and society as a whole (Caldwell, 2003).
Audretsch, Heger, and Veith show that “a plethora of studies have found that employees are better able to identify entrepreneurial opportunities and possess the skills to act on those opportunities when they have employment experience in smaller firms rather than larger companies” (2015). Small firms are closer to society and therefore it is relatively easy for them to know what society wants. These
senior managers. This makes small-scaled businesses more flexible and less susceptible for structural inertia.
Spreading specialized resources
Success in one place doesn’t automatically mean success in another. Entrepreneurs can’t think they will be successful just by lending his name to a new venture. Personal attention is important for new businesses to thrive, but personal attention is considered a specialized resource, which can’t easily be divided. Sometimes entrepreneurs simply spread themselves too thin. Even if entrepreneurs successfully divide their attention to the new situation, it still might fail because they lack the skills necessary to translate their success to this new situation (Besanko et al., 2009). Since traditional production oriented craft businesses are small-scaled these problems occur much less.
Therefore the following can be proposed:
P8a: Exploiting the small size of traditional craft businesses by itself increases the sustainability of
craftsmanship.
Taking the agency, labour cost, flexibility, and attention problems of large firms into account, the following can be proposed:
P8b: The small size of traditional craft businesses and the associated increase in coordination,
personal attention, flexibility, and labour cost savings, increases the sustainability of craftsmanship.
2.5.3 Cooperation
As stated above, larger firms have certain scope economies in purchasing. “Small firms can take steps to offset these conditions and nullify purchasing economies” (Besanko et al., 2009). Small firms may obtain quantity discounts by buying in bulk as well. They can effectuate this by working together with others and form purchasing alliances with one another.
Not only does cooperation form better conditions in purchasing for smaller firms. Sharing supplies and inventories is another form of cooperation, which benefits small-scaled businesses as well. As stated above, firms carry inventory to minimize the chances of running out of stock. This is easier for larger firms than for small-scaled businesses, since larger firms can spread the costs of stock carrying easier. In order to bypass these large firm advantages, small businesses can share inventories by making certain trade agreements. Small firms can make an agreement with each other, but might also let an umbrella organization manage the inventories and stocks to ensure sustainability of the entire industry, proposing:
P9: Working together and cooperating with each other forms purchasing alliances and enables the
sharing of supplies and inventories, increasing the sustainability of craftsmanship.
2.5.4 Learning economies
Even though traditional craft businesses hold on to ancient methods, and aren’t very known with innovativeness, they can use their know-how and experience to improve their businesses. One can say that crafts are no scale economies, but they can be seen as learning economies. Craftsmanship has a long history of learning and improving, born of pride and belonging. As stated in paragraph 2.2 and 2.4 skills and consumer demands are not easily taught or explained, but are rather gained through trial and error and through learning from each other. Herewith, craftsmen learn what consumers want and what is the best way to produce it. As Lash explained, “craft training looks for what worked in the most similar case” (2002). According to Besanko et al. “experience is an important determinant of ability in many professions, and it is just as important for firms. The importance of experience is conveyed by the idea of the learning curve”. They continue to say that “the learning curve (or experience curve) refers to advantages that flow from accumulating experience and know-how. The benefits of learning manifest themselves in lower costs, higher quality, and more effective pricing and marketing” (2009). Lots of crafts are very old and are able to use their experience as an advantage. It enables these businesses to reduce costs and improve on quality (see figure 2.3 (Besanko et al., 2009)).
Figure 2.3 The learning curve (Retrieved from Besanko et al., 2009)
As Besanko et al. state: “Learning economies may be substantial even when economies of scale are minimal. This is likely to be the case in complex labor-intensive activities” (2009). This doesn’t mean larger firms do not learn. Large firms learn as well, but it might be harder to facilitate the adoption and use of newly learned ideas. In order to learn, information has to be shared, work rules that include the new ideas have to be established, and turnover has to be reduced (Besanko et al., 2009). New ideas are easier collected in smaller firms than in larger firms. Adding to that, in large firms learning mostly depends on codifying work rules and reducing job turnover, which might stifle creativity. In this sense smaller firms have a learning advantage over large firms, resulting in the following proposition:
P10: Exploiting their know-how, experience, and small size enables small-scaled traditional
production oriented craft businesses to get a learning advantage and therewith increase the sustainability of craftsmanship.
2.6
Traditionalism
Opportunities abound for small businesses amongst the hazards posed by large firms. As is shown above, small firms are flexible, innovative, cheap, and connect with society relatively easy. These opportunities are hampered for craft businesses by the one thing that makes crafts so strong: traditions.
So, besides the hazards coming from the outside world, craft businesses harness one big threat in itself.
2.6.1 Innovativeness
In order to compete with large firms and their R&D programs, small firms have to keep innovating. As stated above, Drahos and Braithwaite explain today’s challenge of innovating by learning from the world. This ‘knowledge game’ is a hard one to play for traditional craft businesses, especially when it comes to innovativeness.
Holding on to old methods can cause small-scaled craft businesses to fall in certain traps. Ahuja and Lampert explain that the dynamics of established organizations make the provision of diversity difficult, leading organizations into learning traps that favour specialization and inhibit experimentation (2001). These “learning traps are manifested in three types of organizational pathologies” (Ahuja & Lampert, 2001); the familiarity trap, the maturity trap, and the propinquity trap. Firms fall into the familiarity trap if organizations become path dependent, and run a high risk of drawing only from a limited bandwidth of routines, making the discovery of novel, radically new routines unlikely. They exhibit “a tendency to favour the familiar over the unfamiliar” (Ahuja & Lampert, 2001). When organizations have “a tendency to prefer the mature over the nascent” (Ahuja & Lampert, 2001), they are convinced that established technologies also have high legitimacy. They tend to stick to proven methods. Furthermore, innovators typically search in the vicinity of existing technologies to solve problems than in more remote areas. They tend “to search for solutions that are near to existing solutions rather than search for completely de novo solutions” (Ahuja & Lampert, 2001).
There are other learning traps as well. According to Levinthal and March (1993) success tends to drive out exploration. This is called the success trap, explaining firms choose exploitation over exploration. However, the introduction of this thesis shows that traditional crafts have not always had success in
perception of how things should be done, and their idea that their method is the only right one for success, pureness, and quality.
Another learning trap is described by Levitt and March (1988). They describe the competency trap, in which firms linger in the old, and keep on improving and specializing in that obsolete method.
Although small firms have lots of innovative potential, these traps ensure that this competitive innovation advantage over larger firms disappear, stating:
P11: Traditional methods of craft businesses hamper innovativeness and therefore decrease the
sustainability of craftsmanship.
2.6.2 Inertia
Not only large firms encounter inertia and a resistance to chance as a negative consequence of institutionalization and highly standardized routines. Crafts cherish their traditions and methods, because business has always been done in that way. This makes that traditions can also lead to standardization and institutionalization. The competency trap as described above doesn’t only affect innovativeness, but flexibility as well. This competency trap can lead to learning myopia (Levinthal & March, 1993). Holding on to traditions can mean that no account is taken of distant times. Furthermore, it contributes to the tendency to overlook distant places. Overlooking distant times and distant places is disastrous for a proper long-term vision of what is of real value for customers. The danger is that crafts lapse into the old and loose the industry’s connection with society, compromising in creativity and flexibility, proposing the following:
P12: Traditional methods of craft businesses lead to standardization and institutionalization, and
