A co-evolutionary analysis of longevity: Pakhoed and its predecessors

Abstract

In this study of the warehousing company Pakhoed and its predecessors over a period of 200 years, we analyse the configuration of environmental forces, exploitation and exploration, and three firm-level longevity factors: a tolerant management style and decentralised structure; a strong sense of identity; and a conservative financial policy. The idiosyncratic set-up of Pakhoed's forerunners enabled their long-term survival through co-evolution with an environment that both compelled them to be responsive and provided them with scarce resources. In the most recent period, failed explorations helped Pakhoed to strengthen its sense of identity and to focus on a well-chosen field of exploitation.

Keywords::

• longevity
• co-evolution
• exploration
• exploitation
• configurations
• warehousing
• tank storage
• ports

Acknowledgements

We thank Marten Boon, Evert de Haan (archivist of Royal Vopak) and the interviewees for their help and we gratefully acknowledge comments by two anonymous reviewers. The authors claim full responsibility for the contents of the article.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Collins and Porras, Built to Last; de Geus, The Living Company. According to Google Scholar, these books have been cited 5065 and 2049 times respectively (www.scholar.google.com; accessed February 24, 2015).

2. For studies focusing on long-term superior firm performance, see overviews in Foster, “Exposing”; Raynor and Ahmed, The Three Rules, Appendix B.

3. This is in line with understanding the longevity of an enterprise as independent of its ownership structure, which thus distinguishes longevity from survival as a family firm (see Colli, “Contextualizing Performances”), and also with the definition of firm exit used in the population ecology literature (see Freeman, Carroll, and Hannan, “The Liability”).

4. Stadler, Enduring Success, 5.

5. Innosight. Creative Destruction.

6. De Geus, Living Company; Kwee, Investigating.

7. Volberda and Lewin, “Co-evolutionary Dynamics,” 2114; see also Lewin and Volberda, “Prolegomena”.

8. This concerns Handelsveem, founded in 1895, which since 1973 has controlled Hollands Veem, itself dating from 1898. All the other warehousing companies in Rotterdam today made their entry into the port after 1975. See Kuilman and Van Driel, “‘You too, Brutus?’,” Tables A1 and A2, for an overview of entries since 1818, which include a few non-third party warehousing companies, name changes and double-counts of companies merged on an equal basis into Vopak and forerunners (all not included in the estimated 80 entries). The list excludes some non-accredited companies.

9. Volberda, Baden-Fuller, and Van den Bosch, “Mastering.”

10. Hannan and Freeman. “Structural Inertia.”

11. Chakravarthy, “Adaptation,” 35.

12. Chakravarthy, “Adaptation.”

13. Teece, Dynamic Capabilities, ix.

14. Chandler, Scale and Scope and “Organizational Capabilities.”

15. Foster, “Exposing.” It should be repeated that, unlike the perspective taken in our article, many of these studies search for sources of sustained superior (financial) performance and not of mere survival.

16. Kwee, Van den Bosch, and Volberda, “The Influence.”

17. Lewin, Long, and Carroll, “The Coevolution”.

18. Collins and Porras, Built to Last; de Geus, Living Company; Hall, “Long Term Survivors”; Stadler, Enduring Success. For Collins and Porras ‘visionary’ means more than long-lived (the latter also applies to their comparison firms, whose stocks in the long-term performed worse than those of the visionary companies), but they emphasise that to visionary companies the organisation itself is more important than the products made or the profits generated. Stadler's study centres on differentiating superior performing companies from other long-lives ones, but as four of his nine comparison companies lost their independence, and given his stress on the merits of a generally cautious approach in business, his findings seem to concern the sources of longevity in general, too.

19. March, “Exploration and Exploitation.”

20. Burgelman and Grove, “Let Chaos Reign.”

21. March, “Exploration and Exploitation”; Kwee et al., “The Influence”' Agarwal and Helfat, “Strategic Renewal”; Uotila, Maula, Keill, and Zahra, “Exploration.”

22. Kwee et al., “The Influence,” 987.

23. Burns and Stalker, The Management; Lawrence and Lorsch, Organization.

24. It should be noted, however, that in Hall's research population only slightly more firms adopted an ‘evolutionary’ management style (45%) than adhered to a ‘command and control’ style (41%).

25. Berghoff, “Blending.”

26. Burgelman and Grove, “Let Chaos Reign,” 978.

27. Albert, Ashfort, and Dutton, “Organizational Identity,” 13.

28. Zahra, Hayton, Neubaum, Dibrell, and Craig, “Culture.”

29. Bigelli, Martín-Ugedo, and Sánchez-Vidal, “Financial Conservatism.”

30. Meyer and Zucker, Permanently Failing Organizations.

31. Collins and Porras, Built to Last, 304.

32. Fernández-Roca, “The Strategies.”

33. See Welsh and Zellweger, “Can We Afford it,” for references and a nuanced view on this.

34. Carr and Lorenz, “Robust Strategies,”

35. Burgelman and Grove, “Let Chaos Reign,” 978.

36. Cyert and March, A Behavioral Theory, 36–38.

37. Piao, “Thriving.”

38. Lewin et al., “The Coevolution,” 537–538.

39. Miller, “Organizational Configurations.” For an application of configurations to explain the failures of initially very successful companies, see Miller, The Icarus Paradox.

40. This is inspired by Höpner's insights on institutional complementarity (Höpner, “What Connects?”). On the importance of a dynamic approach of configurations, see Miller, “Configurations Revisited.”

41. This solvency measure is used here in the absence of reliable balance sheet data for Pakhuismeesteren until well into the twentieth century.

42. Van Driel, “De Ontwikkeling,” for the period until the merger of 1967, and Eikelboom, Bedrijven for the period thereafter.

43. For the trading activities of the De Monchy-partners during the nineteenth century, see Bruggeman, “Familie De Monchy” and Verhoog, Je suis Monchy. The data on the goods traded are derived from online research looking at Dutch newspapers via www.delpher.nl, using the search term ‘E.P. de Monchy’ (the name then used by the trading firm) for the years 1820–1849. The coverage of cargo lists thus obtained is far from complete.

44. Kuilman and van Driel, “‘You too Brutus?’.”

45. Loohuis, Rotterdam, 86–89.

46. De Goey, “Henri Deterding”; Schenk and Boon, “Trading Places.”

47. Nieuws van de Dag, December 30, 1892.

48. Vopak Archives (VOA). Minutes of the meeting of the board of managing directors of Blaauwhoedenveem-Vriesseveem on September 9, 1929 (all documents from this archive referred to are in Dutch, including annual reports).

49. VOA, file Al, specification of vegetable, animal and mineral oils stored in bulk at the tank installation in Pernis in 1937 and 1938. We thank Marten Boon for assessing the identity of the customers; the remaining 39% could not be identified, so the 61% represents a minimum.

50. For the data on cargo flows through Rotterdam referred here and elsewhere in the article, see http://persistent-identifier.nl/urn:nbn:nl:ui:13-n6w-g4s (data files/origi/period 1880–1914/sheet3 and /1914–1995/sheet 10). The volume of sea-borne incoming cargo is used as a crude yardstick for the total possible market for tank storage in this article; it should be noted that the flow of outgoing cargo originating from the European continent could also be relevant and that the general level of market uncertainty, expectations regarding the supply of and demand for oil and the (expected) price differentials may be much more important in terms of local demand for storage than the mere volume of cargo flows involved.

51. The volume of raw tropical goods consists of gums, wool, cotton, raw sugar, oilseeds, and other luxury foods and food preparations.

52. Kuilman and van Driel, “‘You too, Brutus?’.”

53. Van Zanden, Een klein land, 67.

54. VOA, file 28.01.73, reports by S.D. Eikelboom of interviews with M. Cook and J. de Beus, former directors of the tank business of Pakhuismeesteren and Pakhoed, around 2000; interview by first author with J. Brouwer (April 9, 2013) who served in several management functions at Paktank (International) between 1970 and 1999 (interview Brouwer [1]).

55. Interview by first author with H. J. E. van Beuningen, partner/managing director of Pakhuismeesteren/Pakhoed between 1949 and 1970, on March 6, 2013.

56. Interview by first author with J. Brouwer, on April 16, 2013 (interview Brouwer [2]).

57. VOA, Pakhuismeesteren, Annual report 1961, p. 7.

58. Unlike the data on traditional warehousing commodities presented for the period 1880–1913, these figures exclude edible oils, but include non-ferrous metals which gained in importance as dry warehousing commodities after World War II.

59. Van Ommen, NOM, 56, 59, 61.

60. Kuilman and Van Driel, “‘You too, Brutus?’.”

61. Interview van Beuningen.

62. Van Driel, Samenwerking, 203.

63. Financial and market data relevant to acquisitions and divestments discussed in this section are obtained from Pakhoed, Annual Reports 1967–1970; Reports and accounts 1971–1998.

64. Interview van Beuningen and De Telegraaf, 5 March 1977.

65. VOA, Memorieboek Pakhuismeesteren IV, speech by H.J.E. van Beuningen, remembering the deceased J.A. de Monchy, December 12, 1957; Van Ommen, NOM, 57.

66. VOA, file 28.01.73, Report of interviews by Eline Kamerbeek, July 2000; Kamerbeek, Dynamic Analysis, 58–59.

67. Interview Brouwer (1).

68. This and the following is based upon interviews with Brouwer (1) and (2). See also Pakhoed, Reports and accounts 1980–1998.

69. Pakhoed, Report and accounts 1995, 11.

70. VOA, file 28.01.73, Report of interviews by Eline Kamerbeek, July 2000.

71. This and the following are based on interview Brouwer (2).

72. Van Ommen, NOM; VOA, file 28.01.73, Report of interviews by Eline Kamerbeek, July 2000.

73. Pakhoed, Report and accounts 1986, 7.

74. Vopak, Annual Report 2001, 14. Vopak, Annual Report 2002, 10.

75. Algemeen Dagblad, June 22, 2002; De Telegraaf, August 13, 2002. The English translation of the Dutch phrase used is derived from Vopak, Annual Report 2002, 10.

Additional information

Notes on contributors

Hugo van Driel

Hugo van Driel is an Assistant Professor of Business History at the Rotterdam School of Management, Erasmus University. He wrote several books and articles on the history of port business and recently co-authored (with Abe de Jong and David Michael Higgins) a methodological article entitled “Towards a new business history?” published in Business History.

Henk W. Volberda

Henk W. Volberda is Professor of Strategic Management and Business Policy and Director Knowledge Transfer at the Rotterdam School of Management, Erasmus University. He is also a Scientific Director of the top institute INSCOPE: Research for Innovation. He has been a visiting scholar at the Wharton School at the University of Pennsylvania and Cass Business School, London. His research on strategic flexibility and renewal received many awards, including the Igor Ansoff Strategic Management Award and the SAP Strategy Award. His work on strategic renewal, coevolution of firms and industries, knowledge flows, new organizational forms and innovation has been published in many high-impact journals such as Academy of Management Journal, Management Science, Organization Science, and Strategic Management Journal. In 2014 he was listed in the “The World's Most Influential Scientific Minds” and selected as Thompson Reuters Highly Cited Researcher. His book Building the Flexible Firm: How to Remain Competitive (1998) published by Oxford University Press received wide acclaim and has been translated in many languages. His international textbook Strategic Management: Competitiveness and Globalization (Cengage, 2011) is used at many European Business Schools.

Sjoerd Eikelboom

Sjoerd Eikelboom holds a PhD in Economics from the Erasmus University Rotterdam and is a former senior vice president of Royal Pakhoed. In 2002 he published a book (in Dutch) on the longevity of organisations in general and of Pakhoed in particular.

Eline Kamerbeek

Eline Kamerbeek is a master graduate from the Rotterdam School of Management, Erasmus University. She wrote her master thesis (2000) on corporate longevity, applied to the case of Pakhoed. Currently she is Manager Parcels Consumer & SOHO at PostNL.