How do sectors change?: The role of incumbents as institutional entrepreneurs

Abstract

In a societal transition towards sustainability incumbents are often viewed as unwilling or unable to change, or even as actors that intentionally block change processes. This dissertation focuses on the potential role of incumbents in successfully impacting a societal transition towards sustainability by studying the motivations and actions of incumbents acting as institutional entrepreneurs in specific sectors. Which actors take up the role as institutional entrepreneur in the process of sectoral change? Generally the innovation literature points at new innovative firms that try to enter an existing sector with new technologies that radically deviate from the existing knowledge base in the sector: so called discontinuous innovations. It is commonly not expected that insiders or incumbents are a source of discontinuous innovation, as incumbents have strong, vested interests in the existing sectoral innovation system and are therefore not looking for changes that can potentially overthrow this. However, the assumptions regarding the inertia of incumbents might be exaggerated. Several resources related to institutional entrepreneurship are authority, power, legitimacy, and economic capital. Contrary to new innovative firms, incumbents are more likely to possess these resources. Therefore, the focus in this dissertation is on the work incumbents undertake to attempt to enact institutional change. Four case studies have been performed in three different sectors: the greenhouse horticulture sector, the built environment sector (as mature sectors with strongly institutionalized settings) and the bio-plastics sector (as an emerging sector with an emerging institutional setting). Motivations and strategies of incumbents acting as institutional entrepreneurs will likely differ between mature and emerging institutional settings. In mature settings there are clear institutions guiding behavior and limiting change, while emerging settings have more room for actors to create institutions. While there are some methodological differences between the chapters, the overall research design follows a qualitative case study approach. The main finding is that incumbents act as institutional entrepreneurs partly because their view on what constitutes legitimate behavior changes and partly because there are no clear or dominant pressures determining what constitutes legitimate behavior in certain settings. Their view on legitimate behavior can change following their multiple embeddedness in different institutional fields. For instance, several managers placed more importance on sustainability after becoming parents. The lack of clear institutional pressures in emerging fields provides room for institutional entrepreneurs to shape institutions. Incumbents act as institutional entrepreneurs by (un)intentionally pressuring the existing system through collective actions. In projects, collaborations, and strategic alliances the incumbents further develop and diffuse their vision. The success of these collective actions puts pressure on existing sectors. Firms developing discontinuous innovations should be on “making the pie bigger, instead of fighting for the same piece”. As collective actions are important for establishing and diffusing new institutions, there should be legal room for such actions. When deciding to allow or support collective actions, it is crucial to view these actions in light of their contribution to specific sustainability dimensions and to determine whether these actions are discontinuous in nature rather than incremental changes in line with the current system.