Institutional perspective on emerging industry development

Abstract

PurposeThe purpose of this paper is to elucidate the dynamic interactions and co‐evolution of institutions with the technology and organization fields in emerging industry development. Insights and inspirations from comparison of the triangle relationship among government, market and local community in different institutional contexts could contribute to possible institutional innovation in the context of large‐scale institutional transition. In this way, this paper is expected to offer insights to the development of emerging industries in China.Design/methodology/approachThe paper reviews the focal literature focusing on institutional change and the co‐evolution of institution, industry and technology. A multi‐level conceptual framework is put forward to explain the mechanism for the co‐evolution of technology, organization and institution. A multi‐case comparison method was applied to compare and disclose the process of co‐evolution of institutions, and the technology and organizational fields, as well as varied paths of industry development in different institutional contexts.FindingsEmerging industry development in China is still presenting the character of path dependence to a great extent under traditional institutional arrangement, while the power and possible contribution from broader actors in the local community have been ignored. Driving force for a more innovative institutional transition towards emerging industry development should consider decentralized institutional arrangement and actions at local community instead of “command and control” from central planning.Practical implicationsFirst, the comparison of wind energy industry development in three countries creates possibilities for further analysis and reference for China's emerging industry. Second, the illustration of the triangle relationship among government, market and local community in different countries helps policy makers in China reconsider and redesign an effective institutional framework for balancing the powers among indigenous community, local government and market. Institutional alignment should be listed as an important consideration during the process of the policy design of such an effective institutional framework.Originality/valueThe paper presents a model to understand the dynamic co‐evolution of the institution, technology and organizational fields. It confirms the role of institution in promoting emerging industry development. Particularly, it offers inspirations for the development of emerging industries in nations facing large‐scale institutional transition.