Introduction
Classification societies play a major role in the functioning of the international maritime market. Created during the eighteenth century, they established and published rules (technical and administrative) for ships in the project phase, under construction or operation. Thus, they have a dual mission of classifying and certifying ships. In this context, they are asked by shipowners to verify that a vessel, throughout its life, meets its regulations. While overtly their activities are responsible for private contracts with shipowners, their role is much more complex to grasp since it is of interest to many other players directly or indirectly linked to the maritime transport market. These players include insurers, charterers, shippers, bankers, potential buyers of ships, states (flag, port, coastal) for which they can carry out checks, the European Union, the European Maritime Safety Agency (EMSA), the International Maritime Organisation (IMO), amongst others.
Bindel (
2019), general engineer of armaments, expert-approved by the French Court of Cassation and a member of the Marine Academy, offers a synthetic presentation of classification societies. He states that “
it was in London, in the mid-18th century, that marine insurers first felt the need to rely on an independent company to assess the strength of the vessels they guaranteed. The first register of listed ships, Lloyd’s Register Book, was published for the years 1764-1765 and 1766”
. Since then, this profession has continued to develop and, according to Bindel (
2019),
in “almost two and a half centuries, classification societies have evolved [...] but the founding principles remained the same. A classification company is first and foremost an organisation that establishes rules, both technical (regarding, for a ship, its hull, its machinery and its equipment) and administrative (frequency and scope of inspections for example), and publishes them.” The classification societies provide their services to shipowners for the vessels in service and the vessels under construction. The classification society will then verify that a particular vessel conforms with its standards and issue a published certificate. The classification society proceeds to periodical verification to ensure that the vessel continues to meet its standards. Classification is, therefore, a private matter, a contract between a service provider and a shipowner. However, the class certificate “
may also be of interest to third parties, insurers, charterers, bankers or potential buyers” Bindel (
2019).
To date, there are approximately 50 classification societies in the world. Since 1968, the largest of them (representing 94% of the international merchant fleet tonnage) have been grouped within the International Association of Classification Societies (IACS). As an international non-governmental organisation, IACS plays an important role in self-regulating the maritime market by harmonising rules and practices to increase maritime safety (Molenaar,
2014; Kopela,
2017; Ceyhun,
2020; Lissillour et al.,
2021a,
b). In addition to their private classification activity, classification societies carry out a public service mission on behalf of the flag states known as ‘certification’. They act on behalf of states that generally do not have the means to carry out inspections or audits (of the ship and the company that manages it) on terms depending on each flag state. Furthermore, classification societies must ensure compliance of vessels, not with the rules they have issued, but with the technical standards of various international conventions relating to personal safety (the Safety of Life at Sea (SOLAS) Convention) or pollution (the Marine Pollution (MARPOL) Convention) (Raynaut,
2019). Their role here is all the more justified since these inspections are identical to those carried out in the context of classification.
However, in a world where economic interests and safety imperatives are entwined, their credibility can be questionable. According to Latrech (
2004), several factors justify this questioning: the ambiguity of their role between public and private, their commercial nature, sometimes their complacency, their financial dependence on shipowners, the legal problem posed by the disclaimer inserted in their contracts, or the IACS policy excluding smaller companies. Furthermore, from a legal viewpoint, their responsibility in strengthening maritime safety is regularly asked (Ferrer,
2004; Langlais,
2018; Raynaut,
2019). However, beyond the legal issues, is it not the broader governance of maritime safety in which classification societies play a particular role that needs to be questioned? As Latrech (
2004) pointed out, “
moving from a simple information role to a more technical role, they are now wandering between private functions for the granting of a rating and public functions carried out under delegation of flag states to equip ships with their international safety titles”.
Nevertheless, while their role is increasingly crucial for the regulation and safety of the maritime market, the academic literature on the strategic behaviours of the stakeholders, the forefront of which are classification societies, remains very limited. Most prior research on maritime safety focused on the technical aspects and identifying risk indicators to predict accidents; the subject raises issues related to strategic management and supply chain management (SCM) (Kretschmann,
2020). Nevertheless, it remains very understudied in Management Sciences (Lissillour et al.,
2019), and recent studies urge future research to focus on the inter-organisational aspects of maritime safety (Dominguez-Péry et al.,
2021). Furthermore, whereas prior research focused on decision models based on a rational decision-making approach (Hoffmann et al.,
2020; Rahman et al.,
2016), this research use behaviourism to understand better stakeholders’ complexity, their power relationships, leadership, conflict and cooperation maintained with their market, in a duality oscillating between regulatory actions and competitive behaviour.
In order to do so, this paper adopts the analysis prism of the behaviourist approach commonly applied to the inter-organisational dynamics of supply chains. Specifically, the paper aims to investigate the role of classification societies in maritime safety governance and the inter-organisational dynamics of international shipping. To do so, we mobilise the dimensions of power, leadership, conflict and cooperation characterising the behaviourist approach. The second section is dedicated to the literature review. Referencing works analysing the inter-organisational dynamics of supply chains, the third section develops the theoretical framework and analysis grid used in this study. The fourth section details the empirical study’s main methodological features between 2014 and 2019 in the port areas of Shanghai, Singapore, and Europe. The fifth section is devoted to the presentation and discussion of the main research findings. Finally, while acknowledging this work’s limitations, we conclude by elaborating on the practical and theoretical contributions and venue for further research.
Literature review
The classification societies have been studied from various perspectives, first in terms of methodology and focus. The classification societies play an important role in the functioning of the Port State Control (PSC) because “
the flag of registry and classification society are an integral part of the target factors used by PSC authorities when deciding on vessels to select for inspection” (Cariou and Wolff,
2011). The impact of the flag of registry on the casualty rates has been measured to assess the performance of Flags of Convenience compared to the others (Li and Wonham,
1999; Alderton and Winchester,
2002). Other research studies included other variables, such as the ship’s age (Robert and Marlow,
2002) and size and type (Talley,
1999). Cariou et al. (
2007,
2008) considered all these variables together and confirmed that they are potent predictors of eventual deficiencies during the inspection. Knapp and Franses (
2007b) investigated the phenomena of flag and class-hopping and measured the extent to which both contribute to increasing vessels’ blacklisting. Indeed, vessels in bad shape are more likely to repeatedly engage in flag- and class-hopping (Cariou and Wolff,
2011).
Prior studies investigated the regional impact of the maritime safety regime on the shipping industry. Port State Control inspections have been found to have a positive effect on cost-saving for the industry as it reduces the risk of detention and loss of ships (Knapp et al.,
2011). But then, how to avoid unnecessary inspections (Bijwaard and Knapp,
2009) and target the right ships is the rationale behind the work of Knapp and Franses (
2007a,
b). Via econometric analysis, the authors found out that the basic ship profiles did not vary much across regimes regarding detention probability (Knapp and Franses,
2007b). In another study, these authors found out that a high detention rate did not lead to a low casualty rate, thus pointing at the lack of coordination and trust amongst PSC regimes and industry inspections (Knapp and Franses,
2008). This lack of trust between stakeholders such as states, classification societies, insurance companies and shipowners has created a fertile environment for many inspections providers for the sake of safety (Knapp and Franses,
2010). Meanwhile, other factors outside the reach of the PSC, such as the economic conditions of the shipping market, may negatively impact safety quality (Knapp and Franses,
2010).
Beyond these essentially quantitative studies, investigations from the field of engineering have led scholars to create a systematic management tool to prevent marine accidents by good design, training, and operation (Wang,
2001). While having a strong potential for useful translation into the industrial setting, these studies do not lead to an acute understanding of the inter-organisational dynamics to which this paper is devoted. A few studies from the field of supply chain management tackled the case of classification societies. Goh and Yip (
2014) documented their essential role for maritime safety, despite being sometimes suspected of partiality because of their commercial relationship with the shipowners and the competition amongst societies. Early publications already stressed the danger of privatisation of maritime safety and the need for governmental audit and monitoring on classification societies (Brooks,
1996). Recent interdisciplinary studies at the crossroad between sociology and management drew on the theory of practice to better understand the growing domination of classification societies (Lissillour and Bonet-Fernandez,
2020) as they impose their vision of the world in the governance of maritime safety (Lissillour et al.,
2021a,
b) while other actors are gradually excluded (Lissillour and Bonet, 2018). While these research papers shed much light on the conflict of interest and the source of influence within this ecosystem, their theoretical perspective did not integrate the complexity of both competitive and cooperative relations. This matter of fact motivated the behaviourist approach’s choice (Simon,
1947) for this investigation.
Conceptual framework
The behaviourist approach supports our theoretical framework (Simon,
1947; March and Simon,
1958; Cyert and March
1963), which was applied to distribution channel analysis (Stern and El-Ansary,
1977) and, more broadly, to the study of the inter-organisational dynamics of supply chains (Mentzer et al.
, 2001). Although distinct disciplines approach the distribution channel and supply chain, they are inter-organisational exchange systems with strong conceptual proximity (Roveillo,
2015; Fulconis and Roveillo,
2017). The traditional theories used to study supply chains, more often than not, assume a rational decision-making approach (Gino and Pisano,
2008), which is characterised by 1) the possession of comprehensive data, 2) optimal data analysis taking into consideration alternative actions, and 3) the selection of the most efficient decision to optimise profit (Mantel et al.,
2006).
Indeed, decisions are gradually understood not necessarily as the result of a rational process but as bounded by decision-makers capacity to gather and analyse complex data (Mantel et al.,
2006). Such complex analysis requires multiple dimensions (Davis-Sramek et al.,
2018), which result from organisational constraints, prior experiences, associative learning (Kaufmann et al.,
2014,
2017) and intuition (Salas et al.,
2010). According to the Behaviourist School of distribution channel analysis, inter-organisational dynamics are traditionally based on four dimensions: power
, leadership
, conflict and cooperation (Stern and El-Ansary,
1977). These are regularly used to study the management of multi-actor supply chains (Paché and Spalanzani,
2007; Bonet-Fernandez and Boissinot,
2012; Roveillo,
2015). These will be presented and drawn on to propose an exploratory analysis grid hereafter.
Power
The dimension of power has been the subject of much work which broadly defines the capacity for influence (Filser,
1989; (Filser et al.,
2012). Schopler (
1965) defines the power of an individual A over another individual B “as the
probability of B engaging in a certain behaviour after an A intervention, compared to B’s likelihood of adopting that behaviour in the absence of A’s approach”. According to the founding work of French and Raven (
1959), power is characterised by five sources: reward, sanction, expertise, reference value and legitimacy. For Emerson (
1962), power
“implicitly resides in dependence on others”, which is proportional to resource needs and inversely proportional to the availability of these resources. Porter (
1986) determines a company’s bargaining power through the level of concentration of its customers and suppliers, its size, and its offer’s scarcity or specificity. As for Cox (
2001), the author stipulates that, within the framework of supply chains, the power that a company has, originates in 1) the appropriation of value that allows the company to sustain its activity, 2) the contribution of value to the end customer when marketing a product or service, and 3) in the capacity to improve processes between members of the supply chain (Lavastre et al.,
2016).
Leadership
Leadership is defined as the exercise of power “
recognised and accepted by members of a group. The legitimacy of the leader allows members to benefit more from the coordination established by the leader. Recognition of leadership is based on members’ representation of the leader’s vision, legitimacy, and skill/expertise” (Fabbe-Costes,
2010). According to Bowersox and Closs (
1996), supply chains need a leader to establish performance-generating cooperation between the various players. One member’s leadership is due to its power and dominant position (size, the scope of activities, client portfolio, among other issues) and status as a promoter of relations between members.
As proposed by Bonet-Fernandez and Boissinot (
2012), for Defee et al. (
2010), supply chain leadership is “
a relational concept involving a supply chain leader and one or more followers who interact in a dynamic process of mutual influence”. The leader is the actor best able to “
deploy the four elements of leadership in relation to other members (an organisation capable of greater influence, clearly identifiable by its behaviors, creating visions and establishing relationships with other supply chain organisations” (Defee et al.,
2010). The leader then played a central role in managing the supply chain (Ellram and Cooper,
1990).
Conflict
According to Filser (
1989), the dimension of conflict is described either as a state or as a process. Filser (
1989) cites Goldman (
1966), for whom the conflict is “a
social relationship between two or more agents in which at least one of the agents perceives another agent as an adversary whose behaviour is likely to prejudice him”. For Bowersox et al. (
1980), the causes likely to trigger conflict are both the divergence of objectives and the strategic choices for achieving those objectives. Bonet-Fernandez (
2008) states that “
logistics do not escape a dimension of vertical competition” and that the strategic level “
remains marked by obvious or latent conflicts regarding the sharing of costs and benefits related to the management of logistics operations, but also to the information needed to control flows”.
Angelmar and Waldman (
1975) identify five resolution methods, namely negligence, accommodation, domination, compromise and cooperation. According to these authors, even if tensions are reduced between companies, conflicts can remain latent. In analysing inter-organisational relations and supply chain management, Cox (
1999) followed this logic while focussing more on resolution via domination. Drawing on March and Simon (
1958) work, Dant and Schul (
1992) propose four conflict management strategies: joint problem-solving, persuasion, negotiation, and the use of third-party mediation. While the first two strategies are carried out within a relationship of trust between the actors, the remaining two occur within a situation of mistrust. Finally, any conflict leads either to a breakdown in relations between the actors or the maintenance of relations requiring a renegotiation of the relationship beforehand. Therefore, for Dant and Schul (
1992), conflicts should disappear when stakeholders share a mutual will. This conception is similar to Christopher’s (
1992) approach to inter-organisational relations and supply chain management. A ‘win-win’ logic is conceivable for the latter because competitive stakes are no longer positioned between companies but between supply chains.
Cooperation
The logic of cooperation is defined as a strategic approach to coordinating the actions of legally and financially independent companies (Koenig,
1996; Filser, and des Garets, V. and Paché, G.,
2012). It brings together three main types of cooperative approaches identified and analysed in strategic management by many authors since the early 1990s. These include ‘outsourcing partnerships’ which correspond to established cooperation between a client and their supplier; ‘symbiotic partnerships’ which correspond to cooperation developed between companies which “
previously had no competitive relationships or customer-to-supplier relationships”, and ‘strategic alliances’ which correspond to cooperation between direct competitors (Garrette and Dussauge,
1995; Koenig,
1996).
Regarding supply chains, Dornier and Fender (
2001) highlight the major characteristics of logistics cooperation: a relational dimension in the form of a continuous process of repetitive activities over a considerable period; the pursuit of common goals leading to profit-sharing and the creation of specific assets; partner equality (the give-and-take principle); a posture based on the wealth of shared information and the development of a relationship of trust; and above all, a search for overall performance, if need be, purely in terms of logistics. Therefore, cooperation can be limited to exchanging operational information or deployed using operational and strategic information shared by partners following the same strategy.
Conclusion
This research on maritime governance and classification societies arguably demonstrates that these major players play a decisive and paradoxical role in the global maritime supply chain. Moreover, it provides theoretical contributions and managerial implications.
This paper provides theoretical contributions to prior research that have detailed the important role of classification societies for maritime safety but did not address issues related to inter-organisational dynamics (Goh and Yip,
2014). The first contribution of this paper is to provide a new conceptual framework better to grasp the inter-organisational dynamics in the supply chain. With the
power to reward or sanction, mobilise resources, create an appropriate added value, classification societies play a central role in the governance of international maritime safety. Their
leadership enables them to play a central, decisive and paradoxical role in the functioning of the shipping market. These companies are recognised with the legitimacy conferred by the public service delegation for their expertise; they create a common vision. Their size, client portfolio and scope of activities place them at the heart of the network, coordinating activities and acting as a central agent to all actors, with a dual capacity of market regulation and a competitive position. In
conflict situations between players in the shipping market, classification societies are the ideal actors to manage and resolve them. Classification societies adopt different forms of conflict resolution strategies depending on the relative power of the players involved. These strategies oscillate between domination and cooperation, depending on this power. Finally, in
cooperation between players in the maritime transport market, classification societies facilitate their management and coordination of activities. Cooperation occurs on strategic (partnerships and alliances) and operational (coordination) levels.
The second theoretical contribution of this paper is to tackle the subject with qualitative methods. Indeed, prior research studies have been studied classification societies mostly with quantitative methodologies to measure the impact of variables such as the flag of registry the age, ship size and type and class on maritime safety (Knapp and Franses,
2007b; Cariou et al.,
2007,
2008; Cariou and Wolff,
2011; Knapp et al.,
2011; Bijwaard and Knapp,
2009). These studies provided interesting measurement with substantial implications, but our qualitative analysis could reveal new aspects of the interplay between actors. The power, leadership, conflict, and cooperation behaviours that classification societies maintain with their markets are marked by a duality oscillating between regulatory actions and competitive behaviour, which is a paradoxical position of these central institutions in the maritime chain. The implications of this data in the initial field should ultimately provide a holistic view of the present research object.
Third theoretical contribution: this research underlines that prior research analysed the lack of trust amongst stakeholders, which has created an environment that fomented new safety inspections (Knapp and Franses,
2010). This research study contributes by providing a complete understanding of the inter-organisational dynamics around classification societies. More recent works based on Bourdieu’s thinking (Lissillour and Bonet-Fernandez,
2018,
2020) shed much light on the power struggle in the supply chain from a new perspective. However, unlike the present paper, they could not provide a fair account of the cooperation and mutual interest in problem-solving that this behaviourist analysis allowed.
Finally, from a praxeological point of view, these research outcomes generate managerial implications for shipping companies because they shed new light on the unique role of classifications societies. This role has serious consequences in the definition and implementation of maritime safety regulations and standards and, more broadly, in how shipping companies design logistics strategies according to changing international logistics chains. The multiple perspectives provided by the behaviourist approach allow maritime transport practitioners to understand better the decisive and paradoxical role of classification societies and public bodies to nourish reflections on maritime safety management. For example, port authorities may periodically (every five years, for instance) control the ships themselves, not via a Recognised Organisation, to verify compliance with statutory requirements to reduce eventual conflict of interest. Such solutions may allow for control of classification societies’ work while helping public authorities to maintain a skilled workforce with updated technical expertise and thus reduce their operational and regulatory dependence on classification societies.
This study has methodological limitations regarding the dataset, including mainly French and Chinese elements, and excludes other geographies such as the USA or Africa. Even though this paper describes the general dynamics of a global industry, future studies may compare practices between geographies and eventually identify different findings. Since they cover more than 90% of the market, this study focused on classification societies that are IACS members, but adding non-IACS societies in the analysis may provide additional insights into a market with specific practices. The conceptual framework developed in this paper follows a deductive and systemic approach that could be applied to other maritime safety agents. Future studies may follow this approach by reviewing the literature concerning the specific role of other agents before adjusting the indicators selected in this paper and eventually identify new ones, notably abstract invariants that could be added to the framework (Van Campenhoudt and Quivy,
2011). Further research could look at maritime safety from another perspective, such as the role of IACS as the meta-organisation of classification societies (Carmagnac and Carbone,
2019) and the notion of service in the supply chain industry (Prakash,
2011).
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