The impact of regional supply network structure and governance on the resilience of resource extractive regions: the case of South Australia

Abstract

This thesis examines the adaptation processes among mining equipment and technology services (METS) firms’ in the South Australian resource sector from 2014 till 2016 during a global downturn in resource commodity prices. Of special interest was the effect on the METS firms of the structure and governance of the resource industry regional supply network in terms of their ability to adapt to the downturn and the implications for regional resilience. The research was driven by the common problem faced by METS suppliers operating in resource extractive economies of how to prosper in spite of fluctuating mineral commodity prices. Downturns in commodity prices usually result in significant job losses, reduction in GDP growth and economic decline. It requires resilience at the firm and regional level to not only cope and recover from external shocks, but also to create new technological paths.

Previous research into the regional development of resource-extractive regions has proved that the development of technology and knowledge intensive, value-adding industries around resource extractive activity enhances the resilience of resource economies. A diverse and technology intensive METS sector emerging naturally in proximity to resource extraction sites is potentially able to use its accumulated knowledge and capabilities to overcome the consequences of a decline. In the right environment, METS firms can develop high value-added products and services that can have other industrial applications and find new niches in domestic and overseas markets. The ability of local METS companies to diversify and innovate results in the lateral transfer of technologies developed initially to serve the resource sector, encouraging regional economic diversification and the development of alternative growth paths during a decline in the resource sector.

Supply chain relationships are critical to the strategic diversification and innovation of regional METS experiencing resource constraints. Their ability to innovate and diversify depends not only on their own internal research and development efforts, but mostly on their collaboration with customers and supply chain partners around customer problems and solutions. Since there are multiple shared suppliers and clients, a regional supply network serves as a conduit for information and knowledge transfer. Our knowledge of the impact of the structure and governance in a regional supply network and firm diversification and innovativeness is still limited, however. There is a lack of conceptual explanation specific to how network governance in a regional supply network influences METS firms’ ability to respond during those periods when the whole network is experiencing constrained resources.

To address this problem in the current research, a multilevel conceptual framework was developed, and a mixed-method research design adopted. The findings demonstrated that formal and informal instruments of regional supply network governance impact firms’ strategies and facilitates both short- term adaptation and the long-term adaptability of regional METS. The research contributes to the economic resilience literature by providing empirical evidence of the role of regional supply network structure and governance as factors influencing regional firms’ strategies at the micro-level. In turn, the strategies and behaviour of regional METS firms at the micro level impact adaptability and regional resilience at the meso-level. Therefore, a coordinated effort by governing bodies through policies and resource allocation is required to ensure the formation of well-connected, integrated regional supply networks that can foster long term adaptability and resilience in resource extractive regions.