Why incumbents and entrants need each other: The road to autonomous vehicles

Abstract

The emergence of autonomous vehicle(AV) technology, as well as other technologies associated with the “Fourth Industrial Revolution”, opens up opportunities for entrant firms to challenge incumbent firms and implies a transition in the way societal functions are currently fulfilled. Such sociotechnical transitions require radical changes in dominant technologies but also in institutional elements, such as user practices, standards, rules, norms, cultural beliefs, and expectations. However, scholars that have studied incumbents and entrants in the face of radical change have predominantly focused on determinants of successful performance and not on how incumbent and entrant firms influence sociotechnical transitions by their actions. Also, there has been a propensity to explain the outcome, instead of focusing on the process within unfolding transitions. This thesis fills these gaps by focusing on firm agency together with the endogenous processes of a sociotechnical transition, leading to the research question of: ‘how do incumbent and entrant firms differ in their contribution to technological and institutional change within the sociotechnical transition towards autonomous vehicles?’. Four incumbent and four entrant firms are studied over the period 2009-2016, with a focus on the state of California in the USA. This thesis uses three types of qualitative data, i.e. a media analysis, secondary data, and stakeholder interviews, to distill an extensive overview of the shift towards autonomous vehicles. The main finding is that the transition towards autonomous vehicles has undergone an acceleration as a result of differing, but complementary and synergetic contributions of both incumbent and entrant firms to technological and institutional change. Specifically, incumbent firms have been paramount in progressing AV technology gradually for the past two decades. But by undermining current cultural-cognitive beliefs and norms regarding vehicles and by expressing bold technological expectations, a new powerful, influential entrant sparked essential institutional change. In turn though, incumbents started adopting these institutional strategies and technological expectations themselves. Moreover, incumbents and entrants started working together in developing AV technology. In conclusion, this thesis shows that incumbents and entrants need each other to instigate technological and institutional change required for a sociotechnical transition.