The survival story of a newsprint mill. : A single case study of an industrial transformation at Hylte Mill.

Background: The pulp and paper industry (PPI) and its products is one of Sweden's largest export goods, with newsprint as one of its major sources of income. The historically stable context had led to innovation inertia something that became clear when a sudden decrease for newsprint occurred. Hence, Stora Enso Hylte Mill, which is one of the largest producers of newsprint in Sweden realized that they needed to do something in order to secure their future. Therefore, the company started to investigate the possibility of moving into a new market, biocomposite. Problem discussion: Ambidexterity is a requirement for a firm to be successful over time (Birkinshaw & Gibson, 2004). In uncertain environments organizational ambidexterity appears to be positively linked to increased firm innovation, better financial performance, andhigher survival rates (O’Reilly & Tushman 2013). Hylte Mill has historically had a stablemarket, thus exploitive activities have been their main concern. As the conditions change, explorative activities are needed which creates uncertainty for the firm. How does a firm in a historically stable context that has worked with exploitation for many years organize for exploration? What changes needs to be done in the organization? Purpose: This master thesis will systematically go through and analyze how firms within previously stable market organize for ambidexterity and exploration. This is going to be done through three phases of an industrial transformation within the PPI. The purpose for this thesis is to increase the understanding of how organizations, operating in historically stable context, deals with radical innovation when the external environment demands it. Methodology: This study has been an inductive single case study. The data has been collected through five semi-structured interviews with key individuals from period of industrial turbulence. Findings: The barriers to innovation varies over time, when one barrier is solved another one occurs. By using ambidexterity, the firm can be better suited to handle these changes. The inertia in large established firms do not only depend on events occurring within the firm but can also be affected by external events. Conclusion: Ambidexterity has a positive impact on innovation in uncertain environments that creates a sense of urgency. By initially applying structural ambidexterity to provide slack, and later expand the desired culture by contextual ambidexterity, large established firms can overcome innovation inertia. Slack showed positive impact on radical innovation on both mill- level and group-level. Also, external help proved to be crucial for the radical innovation capability.