Breaking The Chains A Sector Matrix For

Topics: Automotive industry, Ford Motor Company, Volkswagen Group Pages: 42 (14937 words) Published: January 4, 2015
Competition & Change, 1998 Vol. 3, pp. 293-334
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© 1998 OPA(Overseas Publishers Association) N.Y.
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Breaking the Chains? A Sector Matrix
for Motoring
Julie Froud, Colin Haslam, Suk.hdev Johal and
Karel Williams
This paper challenges the productionist chain concept of economic activity. It also provides a constructive alternative in the form of sector matrix analysis which considers the two non-corresponding webs of demand and supply side relations around the production, distribution and use of goods and services. Sector matrix analysis constructs the demand side in terms of the complementary and competing demands made by end users, and the supply side in terms of the corporate consolidation of surplus from different activities inside and outside a specific demand matrix. The scope and potential for this new kind of analysis is illustrated with material on motoring and the article uses a range of evidence, including car assembler accounts and United Kingdom (UK) data on household demand, to show how a motoring sector matrix can be used to pose new questions and provide different answers to old ones about the car industry.

In every age the capacity to engage new realities is limited by the persistence of old ways of thinking. Thus, our capacity to understand the spatia-temporal organisation of economic activity, and its intersection with expanding services through the broad processes of tertiarisation, is limited by the available, long-established concept of economic activity as an industrial chain leading to a finished product. As we will argue, this concept is not so much wrong as limiting, despite attempts at development and critical correction. While Gereffi's work on global commodity chains develops the chain concept ( 1996), it still constructs supply in over-simple linear terms and constructs demand as a series of reverse relations within the production/distribution chain. Sociological and institutionalist critics of chain analysis have emphasised the social embeddedness of economic activity. While these critics have made many valuable points, they have

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J. Froud et al.

generally accepted chain suppositions and have not provided an alternative concept of an industry.
This article proposes an alternative form of analysis which has been immediately developed for the analysis of activities, such as motoring or healthcare, where products, such as cars or ethical drugs, can only be consumed along with a bundle of services which involve end user choice and constraint within a complex supporting infrastructure. We have developed a sector matrix approach which de-emphasises the organisation of production and instead separately analyses the two webs of demand and supply relations which meet at the points of product and service consumption but do not represent mirror images of each other. These general arguments are supported by a case study which demonstrates the advantage of a sector matrix analysis of motoring over the orthodox chain analysis of the cars industry. Specifically, sector matrix analysis extends the field of the visible by including motoring services and second hand cars at the same time as it expands the area of the intelligible by providing new explanations of the structural problems of motoring services, as well as manufacture, and new explanations of the linkage between demand limits and income distribution. The first section of the paper shows how the chain concept of industry has been carried over from economics into other discourses, such as business policy and political economy, and, more specifically, has dominated recent work on cars. The...

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