The Modern Role of Trading Companies

Abstract: The evolving nature of trade in intermediate goods and services, developing into fragmented and internationally dispersed value chains has changed the need for high end-services, putting more pressure on service providers to develop dynamic capabilities so to answer to the changing demand. Although there are many types of companies able to offer various kinds of services, trading companies, acting as an intermediary actor in international trade, are perhaps one of the oldest organizational forms. A risk for these companies is that of disintermediation, due to the transformation of the landscape in which they act. Experts are therefore expressing doubts of the continuous existence of an intermediary actor on global markets. However, despite this, trading companies are managing to prosper through strategic adaptation. The aim of this paper is therefore to map the trading companies’ strategic adaptation due to the ongoing transformation process and investigate how they have managed to stay competitive in the 21st century. Through nine interviews with four trading companies from Japan and Sweden, in addition with interviews conducted with external actors specialized in international trade, we have been able to draw some important conclusions on how this trend has developed. The findings are presented in two case studies, going in-depth into the particular contexts in which these four trading companies operate. The conclusion is that all of them have been affected by the external transformation and thereby strategically adapted their business model. However, based on internal strengths and weaknesses, along with previous experiences this process has taken different approaches. Therefore a new model has been developed which can better describe the strategic adaptation of modern trading companies in Japan and Sweden, showing a growth of dynamic and flexible abilities to find a strategic fit in the service supply chain, a Strategic Sweet Spot.