Elsevier

Marine Policy

Volume 54, April 2015, Pages 108-117
Marine Policy

The business management of the Chilean salmon farming industry

https://doi.org/10.1016/j.marpol.2014.12.020Get rights and content

Highlights

  • Chilean salmon farming sanitary crisis was caused by industry moral disengagement.

  • Moral reengagement in firms was instrumental to receive government and private aid.

  • The industry firms association was forced to propose a new regulatory standard.

  • A new order was established as a way of restorative justice.

  • This new order is not sufficient; the industry will continue to be close to a crisis.

Abstract

This study reviews and explores the salmon farming industry management in an emerging economy context, in the light of environmental responsibility, restorative justice and moral reengagement. Strategic information were gathered, performing in-depth interviews with CEOs and other key senior executives, to analyze the managerial behavior regarding environmental care and moral engagement to industry production standards. The results reveal issues related to firms and government roles on setting industry standards and enforcing them. Firms required to be perceived as renewed in order to receive help from the government and convince the market on their IPOs. Government lack of technical strength and capacity to reestablish order forced the industry firms association to propose a new regulatory standard. But this new order seems not to be satisfactory and this industry will continue to be on the verge of a crisis.

Introduction

The Chilean salmon farming industry experienced a dramatic downturn in 2007 while firms were seeking profit maximization through overexploitation of natural resources; the increase of fish density in the cultivation ponds deteriorated water quality and farmed fish welfare [35]. Significant associations were found between management factors and salmon mortality [57]. Also, areas were identified in which good management practices were associated with a reduced disease risk. Lizuka and Katz [35] inferred that the long-term decay in industry performance had been the outcome of a complex process of gradual productivity deterioration that started in the middle of a sustained rise in world prices for salmon. The expansion of global demand for salmon products triggered a production boom but the absence of adequate environmental responsibility was disastrous far outweighing short-term economic gains. Misguided management has resulted in higher costs and diminishing market reliability, weakening the international competitive advantages that firms operating in Chile used to have.

Other countries have experienced similar problems in the past concerning mistaken management behaviors in the salmon industry. After suffering from many pests that resulted in production losses, Norway raised its sanitary operational standards accomplishing environmentally responsible milestones such as low antibiotic usage, high food conversion rate and a smaller egg-to-salmon survival rate. Later, Canada followed in that same direction [10]. Therefore, following these examples, environmental responsible management (ERM) for salmon farming firms in Chile can be seen as the way to solve these problems and achieve higher standards in international competitiveness.

The environmental crisis experienced by this industry was triggered by low sanitary production standards catalyzed by managers who experienced moral disengagement due to a Tragedy of the Commons situation [52], where self-regulation and detrimental conduct was the result of a dynamic interplay of personal and environmental influences [3]. In the aftermath, the entire industry suffered a financial debacle that was followed by moral reengagement and the search of restorative justice. This change and the establishment of a new order are considered a key opportunity for achieving better industry standards and competitiveness [43].

The aim of this paper is to explore and discuss the processes of moral disengagement observed in the managers of this industry, and the following moral reengagement and the search for restorative justice in the Chilean salmon industry.

Section snippets

Theoretical perspectives

Learning and knowledge accumulation is the base for the proper development of an international strategy, a process aimed to develop skills in foreign markets and the internationalization processes of a firm in several ways [8], [46]. An international firm shares knowledge flows with other firms, enabling early and rapid internationalization; the processes of absorptive capacity and open innovation are crucial for international firms to succeed in the international markets. Hence, internal

Methodology

To analyze the theoretical model, field research using a multiple case study approach was conducted and then expanded using inductive reasoning [60]. The selected country is Chile, the world’s second largest producer and exporter of farmed salmon. Although the use of a case study approach can raise concerns about the validity of the results beyond the borders of Chile, this approach has many advantages, particularly for exploratory research, and is seen as the best fit for this research.

The

Farming in the salmon industry

Over the past thirty years, aquaculture has become the fastest growing sector of the global food market. About 60% of the world׳s salmon production is farmed; the main type of farmed salmonids is the Atlantic salmon with total world supply of 1.46 million tons in 2011. Growth in global supply of Atlantic salmon is estimated to be 119% in the period 2000–2012, varying between −2% and 13% annually with a compound annual growth rate of 7% [38].

Salmon farming started on an experimental level in the

Firm structure

The Chilean salmon industry cluster consists of large farming companies and a greater number of Small and Medium Enterprises (SMEs) that support the entire industry cluster needs. Regarding the number of large companies, Chile is following the current global trends in mergers and acquisitions (see Table 1) but in the crisis period of 2006 to 2009 the number of companies increased, this may be explained by all of the crisis turmoil and instability. In 2012, the merging trend started again.

Discussion

Regarding proposition 1, the Chilean salmon-farming cluster behaved as a Tragedy of Commons environment due to many reasons exposed in the previous section (shared resources, diffusion of pollutants, etc.). And after the cluster production had collapsed, resulting on a financial debacle, the only feasible way out for most of the firms in this industry was to ask for help to the government and investors. These are not going to help again if the same Commons situation reappears. Naturally, given

Conclusion

The Chilean salmon farming sanitary crisis revealed that the previous high industry growth rate was based on an aggressive and careless production operation, conceived and performed by industry firm managers due their moral disengagement on proper practices and sustainability.

The following deep financial crisis and an extended stop in production let moral reengagement appeared naturally, it was instrumental for firms to be perceived as renewed in order to receive help from the government and

Acknowledgements

Research Center for International Competitiveness UAI, Conicyt grant SOC1105.

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