Reconfiguration of Routines by Incumbents Facing Emerging Technologies: The Case of Solvay

Abstract

Breakthrough technologies and emerging industries are drivers of structural change and economic welfare. Early successes within this context are often attributed to de novo entrepreneurial firms while incumbents are considered to be at a disadvantage. The paper builds on an in-depth case study of Solvay, an upstream material firm in the emerging space of Organic and Printed Electronics. It proposes that incumbents have strong incentive to experiment during the early emergent phase, despite the challenges and uncertainty characterizing the period prior to the emergence of dominant design. Proactive investments in emerging domains are necessary for knowledge accumulation, enhancing absorptive capacity and preventing technological lock-out. It identifies a novel “in-between” dimension of mechanisms and routines adopted in the transition phase. The study provides evidence on the mechanisms Solvay adopted for the reconfiguration of capabilities aimed at transformation rather than evolution or substitution. Solvay created new routines, modified some existing ones, and discarded others. Their strategic approach was more holistic striving for structural ambidexterity and developing a separate business unit to facilitate innovation. The exemplary, complementary elements of their strategy were (1) modifying their intra-organizational and inter-organizational routines for university-industry collaboration which does not follow a conventional linear model, but an interactive and iterative approach with feedback loops; (2) creating loose coupling between basic and applied research; (3) systematic use of direct and indirect corporate venture capital mechanisms to ascertain future technological paths and promising start-ups; and (4) development of intellectual human capital for assimilation and integration of new acquired knowledge.