The Jack Sparrow Revolution. A case study of how emerged piracy off the Somali coast has affected the shipping industry and its identified key actors

TABLE OF CONTENT

1 INTRODUCTION
1.1 Background
1.1.1 The Suez Canal
1.1.2 Piracy
1.1.3 Piracy In Somalia
1.2 Problem Discussion
1.3 Research Questions
1.3.1 Subquestions
1.4 Purpose
1.5 Delimitations

2 METHODOLOGY
2.1 Abductlve Approach
2.2 Qualitative Approach
2.3 Research strategy
2.3.1 Designing Case Studies
2.3.2 Strengths and limitations of a case study
2.4 Data collection
2.4.1 Semi structured Interview
2.4.2 The process of Information selection
2.4.3 Theoretical framework selection
2.4.4 Access
2.5 Reliability
2.6 Validity

3 THEORETICAL FRAMEWORK
3.1 stakeholder theory
3.1.1 Stakeholder analysis
3.1.2 Stakeholder mapping
3.1.3 Categorizing the approach
3.1.4 A network theory of stakeholder influences
3.1.5 Critics towards the stakeholder approach
3.2 Value Constellations
3.2.2 The strategy of Value Constellations
3.2.3 Integration and CO- produced value
3.2.4 Relationships
3.2.5 Different performance of business activities
3.2.6 Critics towards the Value Chain and Value Constellations
3.3 Institutional Theory
3.3.1 Critics towards the Institutional theory
3.4 Theoretical synthesis

4 EMPIRICAL FINDINGS
4.1 Related stakeholders towards The Shipping Industry
4.2 Governments, Nations and Militaries
4.2.1 International Trade
4.2.2 Interactive behaviour and Piracy Impact
4.2.3 Challenges and Opportunities
4.2.3 Related Costs
4.3 International Organizations
4.3.3 International Trade
4.3.4 Interactive behaviour and Piracy Impact
4.3.5 Challenges and Opportunities
4.3.6 Related Costs
4.4 The Insurance Industry
4.4.1 International Trade
4.4.2 Interactive behaviour and Piracy Impact
4.4.3 Challenges and Opportunities
4.4.4 Related Costs
4.5 The Logistic Industry
4.5.3 International Trade
4.5.4 Piracy Impact on the Actors
4.5.5 Related Costs
4.5.6 Challenges and Opportunities
4.5.7 Interactive behaviour
4.6 The Shipping Industry
4.6.3 International Trade
4.6.4 Piracy Impact on the Actors
4.6.5 Challenges and Opportunities
4.6.6 Related Costs
4.6.7 Interactive behaviour

5 ANALYSIS
5.1 Identified Stakeholders
5.2 Interactive behaviour
5.2.1 Behaviour response to the external changes
5.2.2 Social Network and Relationships
5.2.3 Different performance of business activities
5.3 The effects of piracy on the shipping Industry
5.3.1 Direct effects
5.3.2 Indirect effects
5.4 International Trade
5.5 Related cost- effects on the studied actors
5.6 Challenges and opportunities that has occurred
5.6.1 Challenges that are having a direct effect
5.6.2 Encountered opportunities for the studied actors

6 CONCLUSIONS
6.1 The piracy effect on the shipping Industry
6.1.1 The most affected actors
6.1.2 Significant challenges and opportunities for the shipping Industry
6.1.3 Costs related to direct and Indirect effects
6.1.4 Resolutions In terms of changes In behaviour and Interactions
6.2 Limitations of the research
6.3 Recommendations to future research

REFERENCE

APPENDIX

FOREWORD

We would like to thank our respondents who have taken their time and contributed with valuable information and made this thesis possible.

We also want to thank our tutor, Petter Boye, for his time and discerning knowledge and above all his guidelines through this thesis. We will also dedicate gratefulness to our objectors who have given US good advices and insightfulness comments in our thesis.

Kalmar 27 May, 2011

ABSTRACT

The objective with this thesis is to study and create a good understanding of the current piratical activities off the Somali coast and its influence on the shipping industry. By illuminating the increasing piracy problem, we have formulated a primary research question: 'How has the piracy in Somalia affected the behaviour of doing business for the shipping industry and its identified key actors?' In order to answer the primary research question we use a qualitative approach and conformed our research strategy through a case study design.

Our theoretical frame of reference includes the stakeholder theory, which is important in order to identify the actors involved with this matter. Moreover, we use the value constellation theory and the institutional theory to be able to identify a structure of the the problem and its impacts. The empirical findings are a process of the data we have gathered from our interviewed respondents. It conducts on how they have been affected by the increasing piratical activities and how they believe the international shipping industry and trade has been affected.

In our analysis we have linked the theoretical frame of reference with our empirical findings. We have enlightened how the different studied actors have been affected in accordance to: international trade, the direct effect of piracy, direct costs, challenges and opportunities that has occurred from this issue, and lastly changes of interactive behaviour among the studied actors.

The thesis conclusions demonstrate that it has affected some of the identified actors, but especially the shipping industry. This through increase costs and re-routing, which have lead to delay in cargo. Furthermore, we can also conclude that the interactivities among the actors have increased and positively created constellations since many have realized that measurements needs to be done in order to decrease piracy off the Somali coast and secure today’s international business.

Keywords; Piracy, Somalia, international business, the shipping industry, stakeholder theory, value constellation and institutional theory.

TABLE OF FIGURES

Figure 1: Map of Somalia

Figure 2: Illustration of the structure of an interview and its different levels of openness and focus

Figure 3: Illustrates the map of a firms stakeholder

Figure 4: Illustration of the activities being made within the firm

Figure 5: Theoretical synthesis

Figure 6: A map of the shipping industry and those groups who affect or are affected

Figure 7: Illustration of the extended risk-area

Figure 8: A stakeholder map showing the different integration levels

LIST OF ABBREVIATIONS

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1 INTRODUCTION

This chapter conducts background, problem discussion, research questions, objective of the thesis and delimitation are presented and discussed. Further on, it will also state the interest and why we have chosen the subject.

1.1 Background

The last couple of years there has been a severe increase in piracy, especially off the Somali coast, around the Gulf of Aden, the Suez Canal and the Indian Ocean. In this thesis we want to investigate the on- going problem through an international business perspective. Moreover, we will present a history of the Suez Canal, piracy, Somalia. In order for the reader to receive greater comprehension of the problem. Thereafter further discuss the problem through a international business perspective.

1.1.1 The Suez Canal

One of the world’s most vital and trafficable gateway for the world economy, international trade and most importantly the international business between countries and companies is the Suez Canal. It has improved the international business between the east and the west by avoiding a detour around the Cape of Good Hope. This would have added approximately 6,000 miles to the transportation route. However, the Suez Canal, is still highly important for the world because around 8 percent of the sea trade transit through the canal (guardian.co.uk, 2011).

The establishment of the Suez Canal has not been simple, but after much diplomatic manoeuvring between France and Britain the canal was finally opened in November 17, 1869. Despite this, opening and closing of the Suez Canal have lead to some difficulties for the world trade in the history, mainly because of Britain and Egypt. Britain wanted to establish military protection in the area because they were the nation with the most transiting trade through the canal. In 1880, Britain occupied Alexandria as a reason to invade Egypt, but then France and the Ottoman empire became very impatient of Britain’s actions and intervened. This lead to a negotiation in 1888 - the Constantinople Conventions, which stated that the Suez Canal shall always be free and open despite turmoil’s in the area.

Unfortunately, this was not the end of commotions in the Suez Canal. In 1952, nationalism was heavily influential in Egypt and president Nasser nationalized the Suez Canal in 1956. Shortly after, the canal started to be operated by the Suez Canal Authority. Since then there have been less problems regarding the canal. The Suez Canal has been temporarily closed during some periods. Firstly, after the British- French- Israeli invasion when Nasser nationalized the waterway and re- opened it in 1957. Secondly, in 1967, a war broke out between Egypt and Israel leading to closing the waterway once again. However, in 1975 the two nations signed a second disengagement agreement and since then the gateway has been primarily in peace (suezcanal.gov.eg, 2011b). The opening and closing of the canal have heavily affected the international business. For instance, the closing between 1967 and 1975 caused a steady decline of the world trade during that period. Also re- routing around the Cape of Good Hope instead of transiting through the Suez Canal adds two extra weeks in transportation time (guardian.co.uk, 2011).

1.1.2 Piracy

Historical records show that piracy goes back as far as 2000 years, early civilizations as the Greeks and Romans dealt with piracy. Its primary motive is to acquire wealth and it has become a symbol of menace and lawlessness (Barry & Staver, 2009, Bradford, 2009). Between 1620 till 1720, piracy was an open business, which was authorized by governments (Barry & Staver, 2009). They could either be pirates who explored and traded with strong nations, or they could plunder the weak and incautious (Bradford, 2009). Those years was also referred to as 'The Golden Age of Piracy׳, a time in history when pirates were roaming the international oceans and plundering other shipments (Barry & Staver, 2009).

In the history the ocean was seen as a dangerous and unexplored area. Throughout the history the ocean was not occupied, owned or governed by anybody. The nations sovereignty ended at the shoreline meaning that the ocean was an open and common- pool of resources for all nations (Elleman et al., 2010).

Piracy is often seen through a romantic and historical aspect, and it has not entirely vanished. During the last quarter in the twentieth century, piracy has increased to an extent, which researchers never could predict. The prime target has been in West Africa, which has gradually spread to Southeast Asia. Especially in 1990s, after the Soviet Union’s collapse the piracy increased tremendously, and the attacks tripled during 1991 - 2001. Today it is not the piratical activities in Southeast Asia that worries the world instead it is the increased piracy outside the coast off Somali (ibid).

1.1.3 Piracy in Somalia

Somalia, also called as the Horn of Africa, has a long coastline. Salopek (2008) describes after the fall of the Somalia government 1991, the country became a lawless and impunity coastline with unpatrolled waters. This have given MNCs and nations permission to behave as they please. Leeson (2007) argues that Somalia is ranked as a LDC, because it does not have a functioned and stable government.

End of 1990, large parts of the country were in civil war, and in January 1991, the Somali state collapsed. Simultaneously, the current leader Mohamed Siad Barre of Somalia was forced to leave the country (Abdallah, 2008). This left Somalia in a state that created anarchy. Since then Somalia did not have a functioning economy instead there has been clan-based welfare (Emmanuel, 2011).

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Figure 1: Map of Somalia (cia.gov].

Somalia and Gulf of Aden are one of the most heavily trafficked areas in the world (Sorenson, 2008). Approximately 95 percent in volume of the EU member states trade are transferred through the sea-lane and 20 percent of the world trade passes through the Gulf of Aden each year (forsvarsmakten.se, 2011b). In 2003, the first severe attack of modern piracy occurred (Sorenson, 2008).

Today, piracy outside the lawless Somali coastline is one of the biggest issues in the world economy. It has posed immense challenges for the international vessels and maritime services. Gulf of Aden is the gateway to the Suez Canal, which allows direct water transportation from Asia to Europe. Instead of re- routing around the Cape of Good Hope, the canal has provided a fast gateway for transportation and made international business a lot simpler. Nowadays, around 30 000 vessels pass each year, and 90 percent of World Food Programs’, WFP, humanitarian relief consignment are transferred through Somalia seaway (forsvarsmakten.se, 2011a).

The main argument why modern piracy has expanded vastly in Somalia is due to the fishermen’s attempt on protecting their coast and one of their most important resources. Salopek (2008) also argues that reports have shown that many European industries have had Somalia as a cost- free dumping ground for industrial waste as late as in 2005. Further on, Salopek (2008) apprizes that for many foreign nationalities such as Thai, European, Yemeni and Korean boats, the Somali coastline has been a rich gold water filled with fish, especially tuna. Resulting in that the Somali fishermen did not have anything to fish, which lead to sporadic attacks on foreign vessels and taxing them. The Somali fishermen thought this was some sort of compensation after several years of foreign poaching in the Somali waters. Furthermore, this escalated to captures and attacks on vessels, and very outlined activity schemes on the international vessels. Johan Henningsson (2011) apprizes that the pirates today have very organized piratical organizations with economical back up of higher statesmen. Also according to Emmanuel (2011), the piracy has a strong historical influence on the fall of the government due to many factors, such as the state failure and the poor living condition of the population. Furthermore, Strandberg (2011) describes the evolved piratical activities in Somalia.

"Why are there pirates? Because Somalia is a lawless country, with states within the state; different clans, autonomous regions and in addition ofthat a militant Islamic groups. It's a mess, some sort of dead point"

- Hansa Strandberg (2011)

The increased piracy in the East Coast of Africa has extremely damaged the littoral economies, which has lead to a vast risen of insurance premiums in one of the most trafficked routes for international shipping (Emmanuel, 2011).

"Now they are everywhere, now it is not only an African problem. The simply reason is: it is profitable"

- Paddy O’Kennedy(2011)

Above O’Kennedy (2011) states that the problem started as a small issue in Africa. However, today it has increased to an amount that afflicts the whole world, especially the international trade. In order to protect the international trade from this vast increased piracy, many nations have responded with military resolve. Today there are more than 20 naval escorts assisting many of the vessels. Sadly, the enlarged military resolve has not effectively eliminated piracy (Emmanuel, 2010). Several problems have arisen and made the military less effective; the area is too large for some few naval ships, which Emmanuel (2011) believes have diverse interest in the area and the solutions. Furthermore, it is hard to distinguish between the pirate boats and the ordinary fishermen. The increased piracy in the Gulf of Aden is not only a threat to international trade; it also threatens the United Nation, UN, WFP. Today around 2, 4 million Somali depend on this shipment (Barry & Staver, 2009).

When North Atlantic Treaty Organization, NATO, was unsuccessful to prevent piracy, international forces as the European Union, EU, developed a specialized division, Operation Atalanta. It consists of six warships and a few specialized aircrafts for reconnaissance. Thus, the EU still face the problem that they cannot search the suspected captured vessels in international waters (Barry & Staver, 2009).

1.2 Problem Discussion

The Somali pirates have assertively increased their attacks and expanded the area. In February 2011, the Somali pirates had expanded from the coast of Somali and captured 10 vessels in the Indian Ocean and the Arabian Sea. In 2010, only three vessels had been captured and two of them were in the Gulf of Aden. Henceforth, at the end of the year 600 vessels from more than 18 different nations were held as hostages (Bowden et al., 2010). Reports by International Maritime Bureau, IMB, indicates that this year of captured of vessels will exceed last year’s record of 49 (Wright, 2011).

Through an international business perspective, we will identify the aspects that have affected the world business both indirectly and directly on the shipping industry and the identified actors. Piracy has become a major international problem; therefore, it is vital to identify affected actors and nevertheless the shipping industry (Vego, 2009).

The piracy outside the coast of Somali and Gulf of Aden is a severe and growing problem, and it clearly affects world’s largest business transport industry, the sea transportation (Bowden et al., 2010). Since the first pirate attack a few years ago, today’s pirates have shown an increasing flexibility and mobility in their tactics. The pirates adapt their techniques and equipment towards the measures that are held to combat them. The success in limitation of attacks has been in the Gulf of Aden by global naval forces such as European, US, Chinese and Indian warships but, that is just a minor of the area in the afflicted route. Furthermore, it is the money that attracts the pirates, instead of earning 200 dollar a year as a fisherman, they can gain 10 000 dollar for each vessel they capture (DI Weekend, 2011). Therefore it is important to investigate on how the shipping industry have been affected, because it is the shipping companies that are the main targets in this problem.

The presence of the world’s warships has more or less diverted rather than decreased the pirates into new areas that are difficult to control (Percy & Shortland, 2010). According to Henningsson (2011), their activities in the Indian Ocean have tremendously increased and patrolling the whole Indian Ocean is like patrolling the whole u.s. with only two police cars. The piracy off the coast of Somali, the Gulf of Aden and the Indian Ocean has not only affected one country or actor, it has involved and affected several nations and therefore emerged to an international business problem.

According to Bowden et al. (2010), the international communities have been affected, and especially the region trade will affect the international trade. Ban Ki-Moon (2010:21) states 'Piracy... has had an immense impact on the economies of East Africa and also wider world... International trade routes are threatened and goods in the region as well as Somalia are becoming more expensive. This is made worse by the bleak state of the global economy׳. Since the piracy affects the whole international trade it further on affects the fishing industries.

Piracy have been a popular topic among international actors who have their transportation routes outside the Somali coast; furthermore, among the neighbouring nations since they are all affected either directly or indirectly. The increased growth of piracy off the coast of Somali, in combination with the posing threat to the commercial shipping, and further potential association with Islamist terrorism has put Somalia as a forefront problem of maritime policymaking (Percy & Shortland, 2010). According to Percy and Shortland (2010), the shipping corridor off the coast of Somali is crucial and also economically important for international peace and security.

According to Lindahl (2011), the cost of pirates for the worlds shipping companies is estimated to be 12 billion dollar a year, due to the required security and insurance costs. Therefore, many shipping companies have to re- route to the Cape of Good Hope. All nations that have a trading transport route through the Suez Canal have somehow been affected; especially, Kenya and Tanzania since many shipping companies do not want to port on the eastern African coast. Bowden et al. (2010), concludes assumptions on how the shipping industry would be affected in costs by re-routing to the Cape of Good Hope. They compiled information concerning costs per day, excess costs for extra 10 days voyage, and costs if 10 percent of the vessels in the shipping industry would re- route. They estimated that the shipping industry’s encountered costs would result in between 2, 3 - 3 billion dollars per year in order to re- route and avoid piracy.

In nearly twenty years, Somalia has been in civil war due to the agreement on power sharing of the primary six major clan families: the Darod, Digii, Dir, Hawiye, Isaaq and Rahanwein, which represents around 75 percent of the Somali population. The root of Somali piracy underlies in the state failure, the civil war, poverty, and the toxic waste that MNCs dumped outside their coast among several other reasons. This is a failure from not only Somalia’s government but also from all governments, nations, UN, and the lack of ethics in MNCs. It is a complex issue that requires more than one actor to solve. There are a lot of insistences in the involved actors to handle the issue, but in the present situation the actors are acclimating towards the pirates.

The piracy problem have especially troubled the shipping business, as mention before the sea transportation is one of the most vital way of transportation today. The increase piracy in Somalia have lead to a big threat not only for the shipping companies, but all the actors that are somehow affected by the piracy off the Somali coast. We find it is interesting to investigate the increase trend of piracy of the Somali coast, especially because it has a great impact on the international business and affected not only companies, but nations, governments and organizations.

1.3 Research Questions

Constructed through our problem discussion we have formulated a primary question.

How has the piracy in Somalia affected the behaviour of doing business for the shipping industry and its identified key actors?

1.3.1 Subquestions

In order for US to answer our primary question we have formulated four subquestions:

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In order for US to be able to identify the maritime piracy’s effect on the international business and the shipping industry, we need to identify who the key actors are.

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To answer the main problem we need to identify the encountered challenges and possible business opportunities that may have emerged.

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By studying the challenges and opportunities we are able to further identify, examine and question the related cost that have emerged through the maritime piracy in Somali.

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Based on the identifying question of challenges, opportunities and costs affecting the shipping industry and stakeholders. We will study the behaviour of how and in what aspects the shipping industry has dealt with these problem.

1.4 Purpose

The purpose of this thesis is to:

Identify the actors that have been directly affected by the piracy in Somalia.

Explain how the studied actors, with a focus on the shipping industry have been affected in terms of challenges and opportunities - Analyze in what ways the shipping industry have been affected and how they have combated piracy off the Somali coast.

Give knowledge and implications on how shipping companies can prepare in order to take further action in the piratical activities outside the Somali coast.

Our objectives are to achieve a greater understanding and knowledge of the piracy problem in Somalia. Furthermore, by focusing on the shipping industry we believe the thesis will become more intensity and thereby become more interesting.

1.5 Delimitations

Theoretical delimitations have been made due to the lack of theories regarding the international business aspect on this subject. We will concentrate more on the macro, and the broader use of the stakeholder approach, the value constellation and the institutional theory.

Due to the time of writing we have made empirical delimitations on our research, and therefore we will focus on whom the affected actors are. Furthermore, we will investigate how the studied actors have been directly affected by the maritime piracy in Somalia, e.g. integration, cost affects, and what challenges and/or opportunities the studied actors have encountered. Despite that we identify the most affected actors, we will limit our research to the shipping industry.

We are aware that there are piracy activities in other parts of the world, but we have decided to limit ourselves towards piracy off the Somali coast. Lastly, this thesis will not focus in depth on the perspective of political, social, financial, and the piracies point of view. However it is vital to mention them in order to give the readers an overall insight in the problem.

2 METHODOLOGY

In this following chapter, we will present the methodological framework that we have worked with. We will describe, explain how we have worked and implemented the methods into our process of writing the thesis. We will also highlight why we have chosen to exclude certain techniques and methods.

2.1 Abductive Approach

A researchers work includes interrelating theory and reality with each other. Patel and Davidson (2003) introduce three concepts; deduction, induction and abduction. The authors stress that it is the researchers task to develop and examine theories that will enable the readers to understand the reality.

A researcher who is using an inductive approach, is studying the objects not by establishing a recognized theory but, instead to formulate a theory from the collected empirics. When using a deductive approach the research is characterized by drawing a conclusion of single phenomenon from general principles and current theories. Lastly there is a research approach called abductive, where the researcher uses a combination of inductive and deductive approach (ibid).

Our thesis will contain case studies with a qualitative method and therefore we have chosen an abductive approach. Alvesson and Sköldberg (2008) highlights that the abductive approach is the most used when building your research on case studies. Due to this fact we have from a single case found recognized theories to explain the issue of our subject. The theories will be an attempt to view a new approach of the researched problem, by combining the case study and recognized theories connected with a business perspective. Dubois and Gadde (2002) defines 'systematic combining׳ as grounded in an abductive logic. The main characteristic of this approach is a continuous process between an empirical fieldwork and a theoretical framework. Due to the economical perspective on this research, there is a lack of theories on our research subject.

As mention before abduction is a combination of induction and deduction, however it is very vital to be aware of that it is not an “easy mixture" of these two, instead it contributes with new or own moments (Patel & Davidson, 2003; Alvesson & Sköldberg, 2008). Olsson and Sörensson (2007) explain abduction as rooted in a dialogue with the theoretical perspective and the result of understanding the current situation described in the field. A risk with abduction is that all researchers are coloured by their previous research and experiences (Patel & Davidson, 2003). From our starting point of view, as authors we have similar knowledge concerning international business; a business perspective is therefore a given preference for US viewing the researched problem. Since the business perspective has limited research concerning this specific problem area, we cannot only rely on our previous knowledge, and therefore we will not be heavily influenced. However since each of US has individual preferences and knowledge on the researched subject it gives US a wider approach to not colour the thesis.

2.2 Qualitative Approach

According to Ellásson (2010) there are two methods to collect data, qualitative and quantitative research. Quantitative are often close connected with research of how to understand how many and to what range of a problem. Numbers and statistical figures are often used and to study one selected part out of a greater population (Bryman, 1997). The quantitative method is often based on statistical and mathematical studies, they are often based on surveys and different experiments. The research areas are often great populations such as organizations, communities, nations and companies etc.

The qualitative method on the other hand accounts for a deeper study, were interviews and observations are common methods. A method to collect data in order to understand one area of a problem or one group of people in a context (Ellásson, 2010). According to Merriam (2009) qualitative studies are researched through the practice and experimental field, in order to understand how a situation or problem interact. In this thesis we will gather information that contributes to this understanding in order to create a relevant theoretical framework.

We will conduct a qualitative method by interviewing involved actors that have a stake in the shipping industry, been directly affected or had an involvement in the studied problem. Qualitative interviews will broadened our perspective and understanding, from the tendencies of an increased change by the development of modern piracy (Barry & Staver, 2009). By using this method in our thesis we will gradually achieve a clearer understanding of the main problem, in agreement of Ellásson (2010) that emphasizes qualitative methods objective is to gradually give a deeper perspective of the studied area over time.

2.3 Research strategy

According to Yin (2009) there are several methods of doing social science research. One of them is case study including experiments, surveys, histories and economic and epidemiologic research. Many early social science books failed to consider the case study as a formal research method. This because case study was considered as an exploratory “beginner" stage of some other types of research methods and has therefore only been mentioned shortly. In this thesis we will use the method case study as a research strategy.

Yin (2009) explains that the case study method is an empirical inquiry, which investigates an existing phenomenon in depth and also in a real- life context. Furthermore, Yin (2009) mentions that the case study is preferred when methods and questions are composed of:

"How” or "Why” posed questions

The investigator has no or little control over the current event The focus is mainly on contemporary phenomenon which are in real-life setting

Gummesson (2000) conducts three characteristics of the case study research: exploratory, descriptive and explanatory. The descriptive purpose is to describe for instance when a new product is developed. While the exploratory case study research is mostly used in business related subjects. This character uses a pilot study as a basis for articulating more detailed questions or testable hypotheses. In our case study we have chosen to use the explanatory research, it builds on exploratory and descriptive.

Our main research questions that we have chosen in this report agrees upon Yin’s (2009) argument that a case study are reasonably adaptable to research strategies when there are occurring up-to-date incidents. This connects profoundly with the on-going piracy attacks and the threat of the global commerce and international business that we have chosen to do research upon.

Further we have chosen to use an explanatory research in our case study, because it goes on to identify why something has happened and the reason to why it has occurred. This connects profoundly to our research questions and the aim for the thesis.

2.3.1 Designing Case Studies

Yin (2009) defines research design as a logical plan to get from here to there. Where here is set up of different questions that needs to be answered, and there is a set up of conclusion. The research design deals with at least four problems: what question to study, what data are relevant, what data to collect and how to analyze the results. Furthermore Yin (2009) explain that a case study design could be either single-case design or multiple-case design, it discusses if one or several cases are the reason for the research questions.

In our case study we have chosen to use a multiple- case design, this because single- case design specifies that the current situation only occur for a specific company. The situation of piracy has not only affected a certain company, but instead worldwide multinational companies, government and nations, militaries and most importantly the shipping industry. Therefore, we need to discuss several cases in order to define the problem. The study is based on trying to answer our research questions by studying the shipping industries and its affected actors through a multiple case study design. By the obtained results from the study it will get US from here to there.

2.3.2 Strengths and limitations of a case study

In selection of a research design, relative strengths and limitations can be discussed. The advantage is to select the most suitable plan to address the research problem (Merriam, 2009).

There are reasons why a case study focuses on a single unit. A single unit case study can conduct a generalized function, which can be emerged larger than other qualitative research. Furthermore, critics have been made towards lack of repetitiveness and of consistency in the collections, constructions and analysis of the empirical materials in the case study (ibid).

Additionally, Merriam (2009) argues that the case study’s strengths outweigh its limitations. A case study research proffers insights and illuminates meanings that increases ones experiences. Furthermore, it presents a deeper understanding, which you view through an up-to-date situation perspective. The aim with this thesis is to achieve an increase of experiences concerning the problem of piracy. Our case study does not only focus on a single instance, since we study several actors that can maximize the benefits from a case study and qualitative research. Our aim is to get a deeper understanding of the issue and to provide information from an international business perspective to the readers.

2.4 Data collection

Patel and Davidsson (2003) emphasize on the importance of the closeness to validity of the retrieved information, this divided into primary- and secondary data. The primary data consist of information such as witnessed actions, and personal meetings and interviews. Secondary data are documented information such as scientific articles, literature, and reports etcetera. In our thesis we will combine a collection of primary and secondary data in order to get a close validity and a realized view of our studied problem. The secondary data will help US understand the underlying effects of the industry’s existence. The primary data will help US to identify the current situation and demand. This will give US an insight in the reality of the researched problem, in order to identify and discuss the actors involved.

2.4.1 Semi structured interview

According to Kylén (1994), it is difficult to formulate the right questions in order to get an answer that is useful and interesting. An interview is a dialogue between two or several persons. The interviewers’ job is to stimulate the interviewed person in order for them to collect certain information and applicable answers to their questions. An interview can be short and structured, or longer and unstructured.

During the process of interviewing, a guide or question list can be used as a pillar. When using an interview guide, you present it to the respondent in the beginning of the process and then leave it on the table as a pillar during the conversation. For a more structured interview you use a question list, which contains several completed questions. In this thesis we will use both techniques, also called a semi structure. Since our interviews will be held via the telephone, we will e-mail our questions the day before in order to prepare the respondent and gain more information. During the interviews we will premise with a question that could lead to more spontaneous questions, and then structure in order to answer our research questions. We will use the funnel model that is presented below.

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Figure 2: An Illustration of the structure of an interview and its different levels of openness and focus (constructed by authors).

The interviews will be our source to achieve primary data. Firstly, we will use a pilot study and interview with the juridical expert witness Johan Henningsson. This interview's purpose is to give US an idea of howto structure the following interviews that our empirical data will base upon. The respondents were contacted via email and telephone, due to the variation of geographical locations of our respondents.

2.4.2 The process ofinformation selection

To conduct vital information and as much insight as possible of our research problem we have made a section that motivate our samples of information. It explains and motivates our decisions of the researched areas, theories and chosen respondents, but also why we have decided to exclude some.

Merriam (2009) argues that purposeful sampling is of importance when conducting qualitative research. It can be divided into two types, probability and non- probability sampling, of how you as researcher can conduct what, when, and whom to gather information from. Probability sampling is when you make an assumed pre- study on one part of a bigger whole. It could be a sample of a group that can help you generalize a result or a goal. This gives you a more statistical approach, even though it is a qualitative study and it may not even be justifiable according to Merriam (2009). Non probability sampling is a more usual type as a sampling method for qualitative studies, also called purposive, were your assumptions of the study are based on what you want to discover, understand and to gain insights in terms of a problem. The method is then to select from a sample of were it could be discovered and learned from in the best way. To make an assortment we therefore need to study one sample to motivate and understand how and were to find the right data to collect. Our pilot study with the juridical expert witness Johan Henningsson was a first small study to conduct further insight and information on how to illustrate the problem. In order to answer our research questions we wanted to know how and who this problem is important for, and whose affected. The pilot study gave US information to help US identify and get in contact with the involved actors of the researched problem.

The actors and its respondents have been carefully chosen in order for US to cover the variation requested of understanding several stakeholders that are connected to the shipping industry. Our aim is to have an equal selection of respondents from each type of stakeholder and from both profitable and non-profitable organizations. Due to our limited time framework we have excluded actors that we were not able to get in contact with. We have decided to exclude interviews with governments and nations, and military. Instead we have received a lot of information through our pilot study and secondary data concerning these actors, which we believe was sufficient in order to answer our questions. Instead we could focus our time to search respondents of other actors.

These are the actors that we have selected for our interviews;

- Pilot study, Johan Henningsson, juridical expert witness of the Swedish marine.
- Company X- Insurance company
- Swedish Club- Insurance company
- DB Schenker- Logistic company
- Gulf Agency Company, GAC- Logistic company
- Sveriges Redareförening, SRF- Swedish trade association for shipping companies
- Stena Bulk AB- Shipping company
- Oceans Beyond Piracy, OBP- Organization

The pilot study was suitable for our thesis since Henningsson (2011) holds unique knowledge and experiences form his project as a juridical special adviser for the Swedish marine. We decided to do this interview since he has been attending work in the problem area. His role for this thesis has given US vital information to conduct further knowledge of several actors’ existence.

When conducting insurance companies, this selection was being made based upon the variety required of different perspectives. Therefore, we decided to interview one non­profitable insurance association and one “business oriented" that is a large profitable actor with a great impact on the insurance industry. The difference in type of insurance companies motivated US to believe that they would give US different information concerning the same questions, and to obtain two perspectives from this actor. To be able to settle these interviews we offered the option of anonymity, which was for Company X determined in order to participate and give US information. Company X was our second interview, they gave us further knowledge in how to conduct interviews and how important it is to find and assort good actors within this industry. Especially, since they were a bit hard to get intimate and achieve fluent discussions with.

The logistic companies were assorted on relevance of where they conduct their business. Our process of selecting companies was very time consuming and it was difficult to get in touch with suitable logistics companies that could meet the requirements. Since we demanded that they conduct their business in a suitable international area. Our criteria’s was that they could provide US with respondents that have enough knowledge and experiences concerning the subject of international business. Leading to exclusions and interviewing GAC and DB Schenker. They offered US time and suitable respondents. To understand the logistic companies role and perspective we required information from actors that have an important position on the market, which both GAC and DB Schenker hold.

The shipping companies assorted are SRF and Stena Bulk. SRF represent several Swedish international shipping companies. This assortment gives US information from wider perspectives of the problem since they are in contact with numerous shipping actors. We had trouble to get one specific shipping company's interpretation, among options such as the Danish Maersk and the Swedish Wallenius Marine. Finally, we chose Stena Bulk, who is a part of the Swedish Stena Sphere since we achieved a wholesome contact and discussion with our respondent.

Ocean Beyond Piracy's, OBP, is very up- to- date and their aims are closely related to our researched objective. One of the contacted respondents within the organization is also the author of “The Economics of Piracy" (Bowden, 2011). It is a report concerning the cost affects, which have been important for US in order to give a real picture of the involvements and increased problem of piracy.

Other organizations of interest are the International Chamber of Commerce, ICC, and the Baltic International Maritime Council, BIMCO, which we relied on secondary sources. The same concerns the military and governmental organizations and actors. Since we believed to find reliable secondary sources and due to the limited timeframe for data collection we decided to conduct only secondary data from these actors. Since their main aim as organizations is to provide their members and actors with information, we could access this as their webpages works as the link on this kind of information sharing of information and reports.

2.4.3 Theoretical framework selection

Merriam (2009) imply that theory is present in all qualitative studies even though the purpose of one study often is built on to develop a theory based on your findings. Thus this Merriam (2009) argues that the questions asked create a statement of a theoretical orientation. The theoretical framework is a structure of your study. Based on your research questions; it forms the study by the contribution of assumptions, beliefs and theories that can support your study. The choice of framework is based on your perspective and previous researched frameworks, for instance: economic, social, political science theoretical frameworks that are known. To identify the study's framework you need to identify your research topic, questions and concepts that are needed to understand the problem. Furthermore the literature and previous studies of models create a framework of how to answer your questions, and create a toolbox that can ease the work of your analysis techniques (ibid).

The theoretical framework of this thesis is selected from the perspective of the purpose to identify the affect on the shipping industry and its stakeholders. The international business perspective made US choose from different theories that we are familiar within business. Additionally also on some theories that are unknown for US. Our mix of theoretical models and strategies are based on previous work of persons within this perspective of international business. It will help US to apply our researched questions and give US analysing tools. The stakeholder approach is a tool to identify the stakeholder that have an interest of the shipping industry, the importance of their role within the business related to modern piracy. To further understand this, we want to identify changes in values and seek the relationships and integration levels between the actors. In order to identify if constellations of value added activities exists.

Since our researched problem involves many actors, that are affected by different institutional structures. The institutional theory help US to manage the importance of a structure and to understand underlying effects of the piracy problem.

We required a theoretical framework that could identify the importance of how to organize, structure them together into one context, to acquire an overview of the problem. The integration and the value of solving a problem made US seek models and theories to find these tools, and identify the real underlying problems. Which enabled US to map opportunities and challenges. We have narrowed down the theoretical framework by choosing fewer theories and to implement them well into our study. This since we want to have a high comprehension and validity on our theoretical framework. The theories are well- established theories and are assorted from academically sources, and reliable articles. Given a critical eye we have in one part of the theory used an advisable article written towards companies and in a managerial sense, which is not academically classified.

However, despite this we find it relevant and do comprehend that this will not deteriorate our assortment of sources for the theories.

2.4.4 Access

When conducting a business research study it is important not to only rely on basic methods. The importance is to have access to real life empirical data in a business perspective. “Real world data" is of priority, thus technical advanced data collection exist it will be in vain in comparison to primary sources (Gummesson, 2000). To be able to get access, the researchers must contain a close insight in the problem, be able to study the objectives and to identify the real data and researched problem. In our thesis we have been especially concerned to search for suitable sources and respondents of different companies and organizations. To be able get access to data that is truly valid for the researched problem. Our problem is current and well-discussed topic that has over the past years increased a lot. To be able to get a close connection and true insight we have carefully chosen respondents of the different actors that have a definite position or hold a great amount of experiences in connection with the shipping industry. Our intentions are to conduct specialized and the up- dated information from people involved within the problem researched. Our access to these respondents have turned out well, however it needs to be stated that we have consumed a lot of time in the process for finding suitable respondents. In some cases we have decided to not conduct interviews, which would not give US preferable information. For example, we have excluded contacts that have not provided US preferable information such as Wallenius Marine, Airlog Group and Försäkrings Förbundet. The access to involved stakeholders has been crucial in order to make the data collection possible. Our findings of our actors have been possible through recommendations within the industry to other persons, which have given US information in terms of reports and articles.

2.5 Reliability

The reliability refers to what extend the study and the findings of the thesis can be repeated, if it would apply the same result (Merriam, 2009). The reliability points out that it will always to some extend be unreliable to do the study once more since it is a human being that is behind every study. The research can therefore be manipulated and could never be static. The reliability is trying to measure the process if the exact same study would be made all over again then the findings and conclusions will be the same. The aim is to be as correct as possible, a test on how to minimize eventual errors and partiality in the thesis. When writing this thesis we will keep this in mind, in order to be as correct as possible. To limit errors during the process of writing we will continuously let different person’s proof read some parts. In addition we have also attended two thesis seminars, where we exchanged feedback, critics and discussions concerning our writing process and had a successful collaboration with CO- workers.

Further, the reliability is a measure of the stability and consistency in a study, a measurement on the accuracy in a study (Sekaran, 2003). To prevent any errors we have carefully collected all our data and findings into a study database. We have coordinated this to be able to organize the data and to have a structured and coordinated view of the study and the writing process. All primary data have been saved both in recorded- and in written form. Eventual misunderstandings or complementary questions have been made towards our respondents to limit confusions and errors in the data collection. The secondary data have been collected from academically sources, and our selection has been carefully assorted in order to keep the reliability high.

A consideration could be made as a test for qualitative studies, whether or not the same result will appear if another researcher would make the same study, this can be identified with the level of dependability and consistency. Concerning if the collected data would be dependable and consistent, in correlation to the result if an outside researcher do the same study. Merriam (2009) do not question whether the data will be found but rather if the results will be consistent with the data collected.

Since the reliability in a qualitative study can be argued not to be static it is almost impossible to achieve the same result once again. This is rather problematic, however we will argue that the data collection and findings have been carefully collected and organized into the context of our research problem.

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