Abstract
This paper investigates how business and innovation strategies explain companies' responses to transformational pressures in a mature industry. The analytical framework combines two perspectives on business and innovation strategies: competitive position and resource position. Based on an embedded case study of eight companies in the Swedish pulp and paper industry, the paper contributes to previous innovation literature by connecting companies' innovation responses to their business and innovation strategies. Most notably, it reveals a new type of ambidextrous innovation strategy, i.e. “market-driven exploitation”, and shows that the responses by incumbent companies in the pulp and paper industry are the result of deliberate and justifiable strategic choices rather than path dependency and inertia. The study also confirms the value of integrating the two perspectives on strategy. On the one hand, the explanations provided by each perspective overlap with the other, so that they together provide a more nuanced understanding of the companies’ choices and activities. On the other hand, the perspectives complement each other, so that one perspective explains observations that cannot be explained by the other. The results of the paper inform both managers and policy makers about the trade-offs involved in changing a strategic direction while retaining core capabilities.
Highlights
Technological change is an ongoing process in technology-based industries
Based on a qualitative study of eight companies in the Swedish pulp and paper industry, we show that the companies’ responses are a result of conscious strategies rather than a sign of failure to adapt to the ongoing transformation
With regard to the competitive position perspective, the empirical findings show that the overall focus on market penetration and product development is in line with the dominating differentiation strategy and that the competitive scope of companies largely explains their range of innovation activities for both product and process innovation
Summary
Technological change is an ongoing process in technology-based industries. Both industry-internal factors and changes in the external environment can cause significant pressures on an industry, which require companies to either change their technology base to be able to enter new product markets (Taylor and Helfat, 2009) or be confined to small and specialized market niches (Adner and Snow, 2010). Several of its established business segments have been declining (e.g. newspaper and printing paper), and at the same time increasing sus tainability pressures encourage the use of forest raw materials in the development of substitutes for a number of fossil-based products, such as plastic packaging, textiles, fuels and chemicals, which can be developed from forest-based raw materials in so-called biorefineries (Novotny and Nuur, 2013; Onufrey and Bergek, 2020; Scordato et al, 2018) While this industry has a rather good track record for responding successfully to various sustainability pressures – for example by developing and adopting chlorine-free bleaching technology in the 1960s–1980s, con verting from fossil fuels to biomass fuels for energy in the 1970s, and reducing sulphur dioxide emissions in the 1970s–1980s (Bergquist and Soderholm, 2016; Bergquist et al, 2013; Soderholm et al, 2017) – several studies have noted that the transformation pace of the pulp and paper companies is rather slow and that the industry as a whole does not meet the high political and academic expectations on their role in the realization of a bioeconomy (cf Hansen and Coenen, 2017; Hellsmark and Soderholm, 2017; Karltorp and Sanden, 2012)
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