The Saskatchewan Wheat Pool went from being the largest grain handler in western Canada in the mid 1990s to undertaking a $405 million debt restructuring in January 2003. Provincial grain handling market share had been over 60 percent for two decades prior to the Pool becoming publicly traded in 1996. With the share conversion, the Pool began a capital expenditure program in an effort to adapt to industry deregulation and to compete with the multinationals that were entering western Canada. This program was not successful. SWPs long-term debt increased five fold over the period 19961999 and consecutive multi-million dollar net losses were incurred followed by the debt restructuring.<p>This thesis uses dominant logic theory and the principal-agent problem to analyze what went wrong at SWP. Theory suggests organizations faced with major industry change may have difficulty revising their dominant logic, which leads to organizational failure. Not only is there a tendency to hold on to established beliefs, but the creation of new beliefs is prone to error because of bounded rationality. The existence of a principal-agent problem can worsen an organizations ability to revise its dominant logic. Information asymmetry and the principals trust of the agent can lead to inaccurate beliefs and ineffective strategies being approved. <p>The results of personal interviews with twenty-one past management and elected Saskatchewan Wheat Pool personnel and grain industry affiliates are presented and analyzed in a case study format. The results suggest that deregulation of the grain handling industry and the anticipated arrival of multinational competitors pressured the Pool to respond quickly to major industry change. The Pool had difficulty revising its dominant logic; it retained outdated beliefs and accepted inaccurate new beliefs. Interviewees described how some investments were built on erroneous beliefs and lacked complete due diligence. Evidence suggests the principal-agent problem was also at play. The need for confidentiality after the share conversion increased information asymmetry, and management took advantage of the boards lack of experience as investments extended beyond the farm gate. The principal-agent problem in conjunction with an inaccurate revised dominant logic is a reasonable explanation for the Pools failure.

The Saskatchewan Wheat Pool went from being the largest grain handler in western Canada in the mid 1990s to undertaking a $405 million debt restructuring in January 2003. Provincial grain handling market share had been over 60 percent for two decades prior to the Pool becoming publicly traded in 1996. With the share conversion, the Pool began a capital expenditure program in an effort to adapt to industry deregulation and to compete with the multinationals that were entering western Canada. This program was not successful. SWPs long-term debt increased five fold over the period 19961999 and consecutive multi-million dollar net losses were incurred followed by the debt restructuring.<p>This thesis uses dominant logic theory and the principal-agent problem to analyze what went wrong at SWP. Theory suggests organizations faced with major industry change may have difficulty revising their dominant logic, which leads to organizational failure. Not only is there a tendency to hold on to established beliefs, but the creation of new beliefs is prone to error because of bounded rationality. The existence of a principal-agent problem can worsen an organizations ability to revise its dominant logic. Information asymmetry and the principals trust of the agent can lead to inaccurate beliefs and ineffective strategies being approved. <p>The results of personal interviews with twenty-one past management and elected Saskatchewan Wheat Pool personnel and grain industry affiliates are presented and analyzed in a case study format. The results suggest that deregulation of the grain handling industry and the anticipated arrival of multinational competitors pressured the Pool to respond quickly to major industry change. The Pool had difficulty revising its dominant logic; it retained outdated beliefs and accepted inaccurate new beliefs. Interviewees described how some investments were built on erroneous beliefs and lacked complete due diligence. Evidence suggests the principal-agent problem was also at play. The need for confidentiality after the share conversion increased information asymmetry, and management took advantage of the boards lack of experience as investments extended beyond the farm gate. The principal-agent problem in conjunction with an inaccurate revised dominant logic is a reasonable explanation for the Pools failure.

Background: The advancement of digital technologies and hence the emergence of new opportunities but also changing customer needs force incumbent firms to increase their innovation capacities. Therefore, they must find ways to explore the opportunities of digital innovation, while simultaneously exploiting their core business and ensuring a secured revenue stream. This phenomenon, called organizational ambidexterity, can amongst others be achieved by implementing a digital innovation unit (DIU). DIUs, structurally separated units, especially within Germany, Switzerland and Austria are declared to be successful instruments to increase incumbent’s innovativeness but also to foster an innovation culture and advance the corporate digital transformation while the core organization can focus on core business activities. Research Problem: Despite the prevalent perception of DIUs being successful initiatives to find remedy for incumbents’ conflict of being innovative while simultaneously advancing the core business, in recent years more and more DIUs were closed. This development is particularly interesting as the amount of DIUs is still increasing while on the other hand especially business press claims the end of these units. However, regarding this paradox, academic literature is still rare and has until now primarily focused on the challenges of DIUs but not on their closure. Correspondingly, DIU closure poses a significant research gap. Research Purpose: The study primarily aims to clarify why DIUs are being closed and derive a general theory explaining this phenomenon. Above that, a secondary purpose is to advance knowledge regarding DIUs as a digital innovation instrument and what characterizes a DIU. Finally, we aim to examine whether a closure can be equated with a failure. Research Question: Why are Digital Innovation Units being closed? Research Method: Qualitative, inductive research; Ontology – Relativism; Epistemology – Social Constructionism; Methodology – Grounded Theory; Data Collection – 14 semi- structured in-depth Interviews; Sampling – Purposive, Snowball, Theoretical; Data Analysis – Grounded Analysis Conclusion: Resulting from the findings, a model was developed, that explains five major statements related to DIU closure. On the one hand, we ascertained distinct symptoms that anticipate a closure such as personnel measures and budget cuts. On the other hand, we identified factors that significantly influence the fate of a DIU such as corporate politics or cultural dissonances and identified remnants of closed DIUs. Finally, the immediate reasons why DIUs close can be related to strategic changes within the parent company and to how the DIU is evaluated.