Long-Run Consequences of a Radical Change in the Business Environment: Dualistic Corporate Cooperation in the Finnish Wood-Processing Industry during the 20th Century

Corporate strategic adaptation to changes in the business environment has been a central theme in studies of strategic management and organisation theory. Generally, the set of strategic responses of a firm includes competition, cooperation and cooptation. However, the long-run consequences of the strategic responses to changes in the business environment have gained little attention from scholars. In this study, drawing on the theoretical foundations of new institutional theory and industrial organisation economics, we define the business environment as consisting of both competitive forces and institutional forces. Focusing on cooperative behaviour of firms, our attempt is to indicate how strategic responses to radical changes in the business environment can have long-run effects on business operations, and how these long-run effects shape constraints in the business environment, generating path-dependent processes. The development path of dualistic corporate cooperation in the Finnish wood-processing industry during the 20th century is examined in order to analyse these mechanisms.