Transcript PPTX 2.79MB - Centre on Innovation and Energy Demand

Technological reorientation for sustainability:
A dialectic industry-in-context perspective
Prof. Frank Geels
MBS/SCI
May 7, 2014
Structure
1. Introduction
2. DILC-model
3. Empirical examples: climate change
and US car industry
4. Conclusions
1. Introduction
Problem articulation
• New environmental problems are major societal challenge
(‘planetary boundaries’)
• Require technological reorientation in some big industries (cars,
coal, agro-food, electricity) with powerful positions.
• Radical innovation/strategic reorientation is always risky, but
does happen (exploitation-exploration, ambidextrous etc.)
• More difficult for ‘green’ innovation, because of uncertainties
(about policy, consumers/markets, technology)
 How does substantial green reorientation happen?
Basic ideas/assumptions [open for discussion; may vary per industry]
• Incumbent firms don’t (intrinsically) care about social problems (despite CSR),
but about financial-economic performance
• They actively deny, hinder and frustrate progress with multiple strategies
(especially initially)
• Industries will not change unless pushed by public opinion, policymakers and
consumers [importance of industry context]
• Important to understand build-up of problem-related pressures (social
mobilization + spillovers to markets) [so, ‘problems’ have their own dynamics]
• Industries will gradually develop technical capabilities and can become part of
the solution [when they perceive economic opportunities]
 We need to better understand temporal co-evolution of problems and solutions
Aims
• Present Dialectic Issue LifeCycle (DILC) model:
struggles/conflict between industry and social
groups in wider contexts
• Illustrate some core mechanisms with
empirical case study: climate change and US
car industry (1979-2012)
2. DILC-model (Dialectic Issue LifeCycle )
- Struggles between problem stream and solution stream
- Types of struggles/interactions evolve through phases
Underlying view of industry: triple embeddedness framework (TEF)
- evolutionary: selection pressures + adjustment + lock-in/path dependence
- strategic: aim to shape environments + adjust core characteristic
- institutional theory: cognitive, normative, formal institutions (‘industry regime’)
- economic sociology: embeddedness
Industry regime
Regulations,
laws, standards
Technical knowledge,
capabilities
Mission,
identity, norms
Mindset, belief system
Policymakers
Customers
Industry
Suppliers
(finance, machines,
labour, knowledge)
Economic (task) environment
Civil society,
public discourse
Firms
Activists,
social
movements
Socio-political
environment
Phase 1: Problem definition and industry denial
Phase 2: Rising public concerns and defensive industry responses
Phase 3: Political debates and industry hedging
Phase 4: Political regulations and industry
diversification
Phase 5: Spillovers to economic environment (emergence of
markets) and industry reorientation
3. Examples from US car industry
and climate change
- First some longitudinal time-series
- Then some qualitative examples of core
mechanisms/struggles
a) Public attention
* Public attention (and concern) go up and down:
* Steep increase after 2005: Hurricane Katrina, Al Gore’s
movie, 2007 IPCC report, Nobel Peace Prize for IPCC and Al
Gore [importance of events to keep issues on agenda]
* Decline since the financial-economic crisis
b) Policy pressure also goes up and down
• Policymakers follow public attention. Rising public concerns create pressure
on Congress to act and on industry to be seen to address the problem
• First Bush administration (2001-2005): federal stalemate because of
ideological reasons
• Second Bush administration (2005-2009) more active, because of energy
security concerns (rising oil prices), rather than climate change
• 2007 Supreme Court decision (CO2 is pollutant) breaks congressional
deadlock, leading to high regulatory attention
c) Industry attention to climate change
* Follows public and political attention
* Steep decrease after 2009, because of crisis, bankruptcies of
GM and Chrysler, bailouts, and restructuring
d) Cumulative AFV (alternative fuel vehicle) patenting
Increases gradually (hedging), but accelerates after 2005 (HEV-market)
Industry keeps patenting after 2009, despite decreasing attention to climate
Change. [so, they keep preparing for the future]
However, there is much uncertainty about ‘best’ technology
Hype-disappointment cycles
Reluctance to fully commit (‘betting on wrong horse’)
Hype-cycles less pronounced in patenting: firms keep options alive after
attention bubbles burst
Much patenting in biofuels and improved ICE (accelerates after 2005), which
shows on-going commitment to petrol cars
2010: patenting in all options  on-going uncertainty and hedging rather than
full commitment
Electric drive market remains small: a) limited consumer demand, b) no tough
legislation
 Not enough incentive to reorient towards electric cars
Salient aspects/mechanisms
I) Socio-political fight back from car
industry
• Create ‘closed industry front’ (Global Climate
Coalition), which attacks science + lobbies
policy + debate (1989-1999)
• Attack ZEV-mandate (since 1990) in bi-annual
reviews (‘technically unfeasible’, ‘costly’)
• Shape congressional debates through Detroit
representatives (continuous)
• Conservative think tanks aim to open up the
science base (late 2000s)
II. Innovation strategy
• Technical hedging of US automakers:
a) Improved-ICE + biofuels/FFV
b) Explore long-term options: shift from BEV to
FCV (only prototypes, no real marketing)
First-mover advantages and innovation race
• Toyota introduces HEV in US (2001): initially derided,
but gradual success:
• First-mover advantage triggers innovation race after
2004
Currently much attention for BEV, but no clear first-mover advantage yet
III. Symbolic/rhetorical innovation
• In 1990 GM develops BEV (Impact) for reputation reasons, but
involuntarily triggers ZEV-mandate
• PNGV (1993-1998) promises to develop radically new
technology (but no commitment to bring to market); PPP allows
industry to control debate and speed of progress
• In 1997, Daimler promises to mass-market FCV by 2004
• Toyota improved its green (and innovative) credentials with the
Prius (HEV), but still mainly sells ICE-cars.
• GM unveiled Volt (BEV) concept-car before bailout (to create
positive reputation), but limited sales
4. Conclusions
• Industry reorientation has progressed, but remains slow
• Shift from phase 3 to 4 is most difficult: from sociopolitical dynamics to markets
• Diversity of technical options delays full commitment
(continued ‘hedging’)
• Still attached to core ICE-competence
• Climate change (still) seen as externally-imposed issue
rather than market opportunity
• Industry reorientation requires internal strategy and
capabilities, but also external pressures (+ struggles)