Strategies of Incumbent Car Manufacturers in Sustainability Transitions

To protect their vested interests, incumbent firms have a history of opposing change, even when change is societally beneficial. Empirical research on this topic is limited. In this dissertation we study the role of incumbent firms in the socio-technical transition to a more sustainable society. The development and commercialization of new, cleaner technologies are important for such a transition. But these technologies render obsolete many existing assets and competences that are specific to the established technology, which decreases the competitive advantage of incumbents. Incumbents that thrive on the established technology therefore have incentive to prevent the introduction of such new, cleaner technologies. The role of incumbent firms in sustainability transitions is studied by looking at how they facilitate transition through innovation, and how they influence transition through political influence strategies. The focus is on the automotive industry. Firstly, we studied the relation between competitive forces, that stimulate incumbents to innovate, and the continuation of waves of Clean Vehicle Technology (CVT) development. The findings suggest that competitive forces positively relate to continued CVT development. Because of competitive pressures, we expect the current wave of electric vehicle (EV) development not to collapse like previous waves of CVT development, but to be prolonged on the longer term. Secondly, we quantitatively studied what types of incumbents pioneer radical innovation, by linking their incentive and opportunity to innovate to EV sales over the period 1990-2011. It turns out that during the period that EVs were commercialized (i.e. 2007-2011), large car manufacturers with both a strong incentive and a strong opportunity to innovate sold significantly more EVs. Hence, car manufacturers that profited relatively little from the established technology and that had developed an EV asset position, were the ones to abandon the established technology first by engaging in radical innovation. Thirdly, we studied the innovation and political influence strategies incumbents used in response to public CVT policy. The case study focused on incumbent car manufacturers’ response to the Californian zero emission vehicle mandate over the period 2000–2013. We developed a new theoretical framework on corporate response strategies to public policy with which we integrate the innovation and political activities literature. Combining patent, sales and content analysis, the research shows that car manufacturers initially showed few innovation activities, but over time strongly increased their efforts. Their political influence strategies changed from opposing the mandate to trying to shape and/or support it. However, coalitions continued to oppose the mandate, as they were assigned to do the manufacturers’ “dirty work”. We showed that car manufacturers combine their innovation and political influence strategies in synergistic ways. The case study thus illustrates that the role of incumbent car manufacturers over time changed from hampering socio-technical transition to a more sustainable society, to facilitating it. To deal with industry opposition to policy interventions, our research suggests that policy makers focus their interaction with industry on individual firms instead of coalitions, craft policies that stimulate competition between firms to break apart their closed industry front, and complement technology-forcing policies with demand-pull initiatives.