Industry Incumbents Research Articles

Imagining a net-zero Teesside: actors, networks, and expectations in industrial decarbonisation megaprojects

Abstract Decarbonising industrial clusters is critical to achieving the UK’s net-zero industrial strategy. This study focuses on Teesside, an industrial cluster in Northeast England, analysing its transition through the framework of the Sociology of Expectations (SoE). The research investigates the role of public and private stakeholders in driving decarbonisation efforts, concentrating on a limited set of technologies and large-scale megaprojects, especially carbon capture, hydrogen production, CO2 and hydrogen transport. The study highlights the challenges of deploying these first-of-a-kind technologies, which are not yet commercially viable in the UK. Our analysis identifies both opportunities and significant risks in Teesside’s approach, particularly the potential over-reliance on a narrow range of technologies. The findings raise concerns about the assumed reductions in costs and carbon emissions, questioning the feasibility of scaling these technologies for long-term industrial sustainability. The main implication is that, should the technologies currently favoured by incumbent industry fail to perform, the expectations could play a double and contradictory role in net-zero transitions—by both motivating actors to legitimise decarbonisation technologies, yet blinding others to the significant challenges that lie ahead.

We're in it for the long haul: How corporate venture capital helps alleviate financial market frictions in social entrepreneurship

The financing of social entrepreneurship is a noted challenge. The scale of problems and potential solutions are daunting, and the time required for solutions to come to fruition often involve investment horizons that are too long for traditional investors. Using an exploratory case study of the energy industry we provide evidence that industry incumbents are one potential solution to help alleviate the market coordination problem inherent to financing social ventures. As a going concern, we find that corporate investors exhibit temporal benevolence and can provide investment horizons necessary for solutions to be developed and diffused. At the same time, commitment from an incumbent brings resource predictability that encourages others in the value chain to engage with social ventures that show promise. In this regard incumbents are able to participate in their industry's evolution while providing an underappreciated role in supporting the social entrepreneurship ecosystem.

Beyond Petroleum? The Diffusion of Alternative Fuels in the United States, 1994–2015

ABSTRACT What determines whether technological innovations are adopted or abandoned? We leverage comparative data from three competing alternative fuel technologies to explore the conditions under which social movement organizations and industries support or challenge the adoption of emerging technologies. Empirically, we examine the diffusion of three technologies – electric, ethanol, and compressed natural gas – in the United States between 1994 and 2015. The comparison of results from quantitative analyzes of each case shows that environmental organizations can have different effects on the adoption of technologies that challenge fossil fuel dominance and that the effects change over time. The results also indicate that an incumbent industry that has an opportunity for diversification can positively influence the adoption of the technology, and that partial abandonment results when a technology is not supported by either environmental organizations or an incumbent industry.

Transition policy mixes and business model adaptation: Incumbent firms' response to zero‐carbon policy in the housing sector

AbstractThis paper provides a firm‐level perspective on sustainability transitions by analysing how government can use transition policy mixes to entice industry incumbents to adapt their business model to integrate sustainable technologies. It examines firm‐level barriers to policy implementation, why these exist, and how government can use transition policy mixes to overcome them. The empirical analysis provides an in‐depth case study of the UK Zero Carbon Homes (ZCH) as a transition policy mix and considers the point of view of policymakers and incumbent housebuilders. The paper sheds light on the question of how transition policy mix designs can support incumbents' business model adaptation to bring about transformational change for sustainability. The results show that the interaction between various policy shortcomings and business model adaptation barriers led to a failure of government to move the housebuilding sector towards a stronger integration of sustainable technologies. The paper concludes by arguing that decarbonising housing in the UK was a system failure, rather than a market or policy failure, as the government failed to address the underlying reasons of incumbents' resistance to changing their business model. The findings suggest that taking incumbents' business models into consideration while designing policies for sustainability transitions is necessary to entice established firms to actively take part in the process of transitions and adapt to new sustainable norms.

Disintermediation of consumer services through blockchain? The role of intermediary brands, value-added services, and privacy concerns

This paper explores the dynamics between value-added services, intermediary brands, and consumer privacy concerns in shaping attitudes toward blockchain-enabled consumer services. Grounded in the Antecedents-Privacy Concerns-Outcomes (APCO) framework, we develop a theoretical model that we test in three experimental studies with a total of 1613 participants, utilizing verbal scenarios featuring blockchain applications for international money transfer and hotel booking. Our research reveals that complete disintermediation via pure peer-to-peer blockchain transactions is unlikely. Consumers prefer blockchain applications offering supplementary services like call centers, password assistance, and cancellation options. As consumers become familiar with blockchain technology, privacy concerns intensify due to its distributed and immutable storage. The fears of data breaches are more pronounced when blockchain applications are offered by unknown startups as opposed to well-known Big Tech companies. However, privacy-conscious consumers also value the prospect of distancing themselves from big-data ecosystems by embracing blockchain solutions from startups. Our research extends the APCO framework by clarifying how privacy concerns, brand-based heuristics, and technological attributes interact. For managerial implications, blockchain applications necessitate re-intermediation to meet consumer preferences. Potential intermediaries, including Big Tech firms, startups, and industry incumbents, face unique challenges in developing and marketing blockchain-enabled consumer services.

Strategies for digital entrepreneurship success: the role of digital implementation and dynamic capabilities

PurposeTo augment sales revenue, B2B digital start-ups aim to create and sustain commercial relationships with industry incumbents. However, since these incumbents have traditionally struggled with implementing disruptive digital artifacts, most studies have almost exclusively concentrated on their challenges, leaving the digital start-ups' side underexplored. Therefore, this study seeks to understand how digital start-ups navigate digital implementation (DI) hardships to ultimately achieve digital entrepreneurship success.Design/methodology/approachAn abductive explanatory multi-case study of four industries that pose a variety of implementation challenges for B2B digital start-ups (agriculture, insurance, real estate and construction, and healthcare) was conducted using data collected from 40 interviews with Israeli experts and relevant digital data observations.FindingsThis study articulates two main observations. (1) Throughout their journeys, digital start-ups have utilized newly created and/or refined dynamic capabilities (DC) to successfully implement their digital artifacts. Simultaneously, successful DI has enabled digital start-ups to create new DC or sustain and evolve current DC. (2) We provide empirical evidence outlining how digital start-ups using continuous learning have combined causation and effectuation logic throughout their DI journeys.Originality/valueThis study answers a call to explore more explicit digital-related drivers (i.e. DI) for digital entrepreneurship success by studying a highly-ranked country on the Global Entrepreneurship Index (GEI) to achieve this. Moreover, it illustrates how digital start-ups evolve throughout their commercial relationships with industry incumbents, thereby enabling an effective approach for successful DI. Such an approach can be considered very valuable for both practitioners and policymakers. Consequently, it advances digital entrepreneurship as an independent research topic.

Too close for comfort: the pitfall of incumbents' knowledge search during industry evolution

Innovation shocks combine technology and market disruptions. They can lead to a complete overhaul of an industry. Building on prior work on firm‐level responses to technological uncertainty, we propose and explore a model to explain R&D behavior under uncertainty. We theorize that industry incumbents adjust their knowledge search as the innovation shock unfolds, reacting to the perceived sources of uncertainty. We use a unique combination of two decades (2000–2020) of patent data and archival news to (1) identify the industry evolution stages as the shock unfolds and (2) map the firm's knowledge search response. Our analysis of three leading car manufacturers exposed to the emergence of the electric vehicle shows the path‐dependency effects that delay the incumbents’ adjustment of their innovation direction, even after the shock becomes visible. We extract insights for R&D managers by making evident the long‐lasting effects of prior R&D decisions, impeding their reaction to a shock and reducing their capability to integrate newly available knowledge.

A Re-evaluation of Global Financial Outlooks and Prospects in the Telehealth Industry Amidst the Transition to a Post-Pandemic Era

The onset of the COVID-19 pandemic propelled the telehealth sector into a period of rapid expansion, with web-based care emerging as a crucial tool for ensuring the safety of patients and healthcare providers alike. However, with the introduction of vaccines, the perceived need for telehealth services appeared to diminish, leading to a decline in value for telehealth companies. This shift prompted both existing players and newcomers in the telehealth space to innovate and redefine their value propositions in order to regain investor and customer confidence and stand out amidst increasing competition. The struggle to reshape the perception of telehealth from a pandemic-era necessity to a valuable complement to traditional in-person care has been reflected in the volatility of stock prices and declining valuations. This dynamic has underscored the need for telehealth companies to differentiate themselves through technological advancements and the convenience they offer. Analyzing the market through qualitative secondary research, incorporating insights from contemporary sources, financial data from platforms like Yahoo! Finance, and peer-reviewed literature, it becomes evident that the telehealth market experienced a surge in 2020, reaching $17.9 billion in the US alone, and is projected to grow to $140.7 billion by 2030. This growth was accompanied by a nearly twofold increase in digital health venture funding, reaching $14.1 billion in total funding. However, this rapid expansion led to an oversaturation of the market, with supply outpacing demand, resulting in a significant drop in valuations as vaccination rates rose in 2021. In response to this rebalancing, telehealth companies must chart a course for the post-pandemic era. The current role of suppliers in the telehealth space, whether they are established healthcare industry incumbents or innovative "telehealth-first" challengers, will influence the growth strategies they pursue. Moreover, identifying medical specialties and patient demographics that are best suited for web-based care will be critical for long-term success in the evolving healthcare delivery system. Looking ahead, investors should anticipate a bullish market characterized by growing share prices. Success in the telehealth industry is likely to hinge on fundamentally transforming care delivery models rather than simply transitioning traditional care to a web-based format. As the market consolidates, established telehealth giants capable of adapting to the changing landscape are expected to thrive, albeit amidst continued growth at a slower pace.

NAVIGATING THE DIGITAL TRANSFORMATION JOURNEY: STRATEGIES FOR STARTUP GROWTH AND INNOVATION IN THE DIGITAL ERA

In today's fast-paced digital landscape, startups face unprecedented challenges and opportunities in navigating the complex journey of digital transformation. This review explores key strategies essential for startup growth and innovation amidst the evolving digital era. Firstly, understanding the dynamics of digital transformation is crucial. Startups must recognize the profound impact of technological advancements on consumer behavior, market trends, and industry landscapes. By embracing digitalization as a strategic imperative rather than a mere operational enhancement, startups can leverage emerging technologies to drive innovation and gain competitive advantage. Secondly, agility and adaptability are paramount. Startups must cultivate a culture of flexibility and resilience to swiftly respond to changing market demands and technological disruptions. Embracing iterative approaches such as Agile and Lean methodologies enables startups to iterate quickly, experiment with new ideas, and pivot when necessary. Moreover, fostering a customer-centric mindset is indispensable. Startups must prioritize understanding customer needs, preferences, and pain points to deliver personalized experiences and create value-added solutions. Leveraging data analytics and customer feedback loops empowers startups to make data-driven decisions and continuously enhance their products or services. Additionally, collaboration and ecosystem engagement are instrumental in driving startup success in the digital era. Partnering with other startups, industry incumbents, academia, and governmental organizations fosters knowledge exchange, resource sharing, and access to new markets or funding opportunities. In conclusion, startups embarking on the digital transformation journey must adopt a holistic approach that encompasses technological innovation, organizational agility, customer-centricity, and collaborative ecosystems. By doing so, startups can navigate the complexities of the digital era, achieve sustainable growth, and unlock new avenues for innovation and market disruption.
 Keywords: Digital Transformation, Startup, Growth, Innovation, Digital Era, Review.

High-Tech Ventures and Industry Incumbents: Knowledge Partnerships, Technological Knowhow, and Acquisition Likelihood

High-Tech Ventures and Industry Incumbents: Knowledge Partnerships, Technological Knowhow, and Acquisition Likelihood

Employee spinouts along the value chain

Abstract While much of the academic literature on spinouts focuses on new ventures launched by the ex-employees of incumbent firms within the same industry, recent research shows that spinouts may also enter a focal industry from “knowledge contexts” outside of the incumbent industry. In particular, recent studies show that spinouts may enter from both upstream and downstream industries related to a focal industry along the value chain. Such spinouts have been called user-industry and supplier-industry spinouts. In this article, evidence from existing studies is collected to provide an indication of the relevance of such spinouts across various industries. This survey also includes an analysis of industry studies in which user- and supplier-industry spinouts may have been present but were not identified as such by scholars due to a difference in focus. The paper then considers the evidence accumulated to date in order to explore the industry contexts in which these two types of spinouts appear and to develop propositions concerning differences in the entry timing and product/market strategies of these startups.

Strategies for green industrial and innovation policy–an analysis of policy alignment, misalignment, and realignment around dominant designs in the EV sector *

Governments in industrialized as well as emerging economies are racing to implement policies to accelerate clean energy innovation and capture the economic benefits of decarbonization. This paper explores which combination of technology-push and demand-pull policies best situates a country to lead in clean energy innovation, as new or dominant designs emerge and replace older technologies. A new analytical framework for green industrial policy is introduced regarding the alignment, misalignment, and deliberate misalignment of policies. This framework is applied to battery electric vehicle drivetrain technology to examine the use of policy alignment and misalignment by countries with big automakers as they pursue strategic green industrial policy. We find that countries that achieved early and sustained (not inconsistent) policy alignment gained a first-mover advantage compared with countries that deliberately or accidentally misaligned their policies. We also find that first-mover advantage can be lost due to deliberate misalignment of policies caused by an inability of governments to effectively incentivize their firms to develop and deploy cleaner and more efficient technologies. In situations where governments adopt misaligned or conflicting policies, incumbent industries tend to pursue their prior comparative advantage and maximize return from investments in prior technologies. We also find that deliberate misalignment of policies can be an effective catching-up strategy.

How to succeed with an AI-first strategy?

PurposeThe purpose of this paper is to identify the potential and the challenges for different firms in adopting an AI-first strategy. The study attempts to discern if any company can prioritize AI at the forefront of their strategic plans.Design/methodology/approachDrawing from illustrative examples from well-known AI-leaders like Netflix and Spotify, as well as from upcoming AI startups and industry incumbents, the paper explores the strategic role of AI in core business processes and customer value creation. It also discusses the advent and implications of generative AI tools since late 2022 to firms’ business strategies.FindingsThe authors identify three types of AI-first strategies, depending on firms’ starting points: digital tycoon, niche carver and asset augmenter. The authors discuss how each strategy can aim to achieve data, algorithmic and execution advantages, and what the strategic bottlenecks and risks are within each strategy.Originality/valueTo the best of the authors’ knowledge, this paper is the first to systematically describe how companies can form “AI-first” strategies from different starting points. This study includes actionable examples from known industry players to more emerging startups and industrial incumbents.

The takeover Tango: Unraveling the impact of state-owned enterprise acquisitions on American competitors

When foreign state-owned enterprises (SOE) enter the United States (US) market by acquiring domestic targets, they increase competition in the targeted industry and pressure domestic competitors. Competitors should respond to such acquisitions by changing their behavior. Using acquisition data from 2010 to 2018, we examine the impact of acquisitions by foreign SOEs on the US competitors of acquisition targets. We analyze the initial response to acquisition announcements, the attempts of industry incumbents to increase their political connections, and the change in profitability and efficiency of such incumbents. Investors respond most negatively to SOE acquisitions when the domestic competitor is politically connected, implying such firms have the most to lose from such acquisitions. The US target firms can access resources from SOEs to offer better and cheaper products and thus increase their market share. Our analysis shows that competitors’ profitability and lobbying activity decrease while efficiency increases after SOE acquisitions. These results indicate that SOE acquisitions force domestic competitors to adapt to a changing competitive environment.

Do Montreal! A Review Article

Abstract International climate change diplomacy has tried a rigid top-down approach (the Kyoto Agreement) and a more flexible bottom-up approach (the Paris Agreement). Neither approach has gained sufficient traction on the climate change problem. The authors of Fixing the Climate: Strategies for an Uncertain World propose a new direction. Borrowing from the framework of the Montreal Protocol of 1987, which made great strides in eliminating use of ozone-depleting chemicals, they outline a framework for “experimentalist governance” that relies on public and private organizations to promote a problem-solving approach that is, at the same time, both bottom-up and top-down, market based and institution based, technocratic and democratic. Using case studies and examples across a wide array of contexts—from U.S. coal-fired power-plant sulfur dioxide emissions to dairy farm pollution in Ireland—they build the case for infusing climate change governance with innovation-driven institutions, processes, and instruments. The case studies and examples, however, share several common features that suggest experimentalist governance thrives under ideal conditions, including clearly defined technology challenges and ability to contain the impacts of innovation largely to the incumbent industry. Under the Montreal Protocol, for example, switching chemicals in products did not require consumers to change behavior or make substantial sacrifices. Many of the challenges of climate change policy fit these and the other ideal conditions, but many do not. The full extent of the necessary energy transition, as well as the demands of climate change adaptation, present complex socioeconomic policy issues fraught with political division. Experimentalist governance can go a long way toward fixing the climate, but ultimately, fixing the climate also will require fixing the climate politics.

Mission Impossible: The Influence of Incumbent Industries on Mission-Oriented Innovation Policy Targeting Carbon Lock-In

Mission Impossible: The Influence of Incumbent Industries on Mission-Oriented Innovation Policy Targeting Carbon Lock-In

Generative artificial intelligence and large language models for digital banking: First outlook and perspectives

After several years of steady progress, the Generative artificial intelligence (AI) and large language models (LLMs, their applications to text) fields have accelerated tremendously since the end of 2022 and the public launch of ChatGPT. This is due to record-breaking model sizes and performances in the last couple of months, triggering unprecedented adoption curves from end users across the world. Even though regulators reacted fast, sharing their first recommendations, auditing emerging players, amending their AI regulation drafts or launching dedicated working groups, these efforts will require several months or years to come to fruition. There are multiple reasons for this. LLMs are complex technological objects made of gigantic foundational models trained on enormous quantities of texts, coupled with dedicated interfaces and action agents. They present a huge potential to perform high varieties of tasks with very high quality but also important risks in terms of costs, content accuracy, transparency, data privacy, security and ethics. Finally, the current ecosystem of stakeholders is very dynamic but also immature. In this uncertain context, the digital banking industry has been reacting ambivalently, with major players banning employee access to ChatGPT and publicly communicating on new LLM initiatives at the same time. This can be explained by the huge potential offered by these technologies to transform their business, coupled with many open questions in terms of technological set-up, usage, compliance and profitability. As these technologies seem to be too transformative for the industry incumbents to just wait and see, they should start creating the right conditions to learn how to use them, by identifying relevant use cases, choosing adapted and simple solutions, designing relevant user experiences, building the right teams, environment, data sets and operating model, and actively engaging in regulatory conversations.

A Rebalancing of Financial Valuations and Expectations Moving Forward in the Telehealth Sector as the United States Moves Toward a Post-COVID-19 Reality.

The telehealth sector of health care delivery experienced significant growth at the start of the pandemic as web-based care quickly became essential for the ongoing safety of patients and health care providers, such as clinicians and other health care professionals. After vaccines were introduced, however, telehealth companies lost value as the need for web-based care appeared to lessen. Presently, both existing telehealth companies and new entrants to the space are seeking ways to innovate, gain investor and customer buy-in, and overcome competitors. New companies are hoping to be seen not as pandemic-era substitutes, but instead as reinforcements to in-person care, valuable in their own right thanks to the convenience and technological advancements they bring. This struggle to reframe the value proposition, or perceived benefit, of telehealth is reflected in fluctuating stock prices and dropping valuations. This viewpoint summarizes the market volatility seen in the telehealth sector since the start of the COVID-19 pandemic and suggests potential opportunities for growth in the space. This is accomplished through a qualitative secondary research approach, leveraging contemporary sources, financial references such as Yahoo! Finance, and peer-reviewed literature to support predictions for the future market. We found that, in 2020, the size of the US telehealth market rose to US $17.9 billion and is estimated to reach US $140.7 billion by 2030. Additionally, digital health venture funding nearly doubled in 2020 over the prior 2 years with total funding rising to US $14.1 billion. However, these factors produced an oversaturated market in which the volume of supply was higher than demand, resulting in a sharp drop in valuations for some as vaccination rates climbed in 2021. In the face of this rebalancing, or return to normal following excessively high or unsustainable valuations, we suggest a possible path forward for telehealth companies in the postpandemic era. Suppliers' current role in the telehealth space-whether health care industry incumbents, that is, traditional health care delivery systems and companies, or "telehealth-first" challengers-are especially relevant to the specific growth strategies they should pursue. Furthermore, consideration of the areas of medicine and characteristics that best lend themselves to web-based care may lead to a greater chance for long-term success in a postpandemic health care delivery system. In the future, we believe investors should expect a bullish market, that is, one characterized by growing share prices. Success is likely to occur in part through changing the actual models of care, as opposed to moving traditional care to a web-based format. The oversaturated market will likely condense into select established telehealth giants who were able to adapt to the changing landscape. While investors may be reasonably hesitant regarding individual telehealth companies, the industry can expect slowed but continued growth.

Leapfrogging and partial recapitulation as latecomer strategies

Latecomer firms entering established industries face a pivotal strategic conundrum: Should they prioritize learning from industry leaders or directly compete against them? This paper examines two primary strategies that latecomers can adopt in response to this challenge. Each strategy emphasizes either learning or competition. Partial recapitulation underscores knowledge acquisition by selectively replicating the developmental pathways that have led industry leaders to their current dominant positions. Conversely, leapfrogging fosters competition by harnessing the most advanced products and practices to challenge industry incumbents directly. The appropriateness of these strategies heavily depends on the latecomers' internal capabilities and their external innovation ecosystems. We propose that partial recapitulation is optimal for latecomers with nascent capabilities operating in closed ecosystems, whereas leapfrogging is ideal for latecomers with strong capabilities within open ecosystems. The strategic choice between these two approaches not only delineates firms’ competitive positioning but also defines their learning and innovation trajectory, with significant implications for their competitive performance and industry standing. Our framework enhances the understanding of key strategic choices in latecomer firms, providing valuable insights for decision-makers in this context.

Preface: Techno-Economic Directions for a Green Future

Human civilization not only faces frightening forces but also sees encouraging developments. The dark triad of climate change, pandemic, and war interact dangerously. Climate change, for example, leads to mass migration, which in turn accelerates the spread of pathogens. Nations may soon go to war to capture resources that were lost to their homelands due to Earth’s changing environment. The primary resources of which I speak are energy, water, and food – though others like materials and education cannot go unmentioned. Researchers are certain that we cannot achieve sustainability – much less meet the UN’s multi-faceted Sustainable Development Goals – with current technology. Corporations that are the biggest polluters are slow even to adopt existing green technologies. Now that I have painted a grim picture, I turn to a most hopeful one. By creating and disseminating knowledge, we can innovate and develop sustainable technologies. We can educate and encourage the entrepreneurs who will bring these green innovations to the populations who need it. In other words, knowledge, innovation, and entrepreneurship are among the very most important keys to a sustainable human civilization. They are already showing impact. New advances in water desalinization and battery technology, for example, will help back us away from the edge of climate disaster. I emphasize technology to show that the answer is not purely economic. Yet the answer will require radical change in economic systems. Radically changing times mean we need an economics focused not on efficiency (equilibrium) but on flexibility and perpetual disequilibria. We need an economics that penalizes – rather than rewards – the creation of negative environmental and social externalities. An economics in which incumbent industries will not attempt to quash newer and greener technologies. And an economics that encourages enterprises to think long-term, rather than obsess about quarterly earnings. This new journal, Green and Low-Carbon Economy, under its brilliant Editor-in-Chief and with the help of your thoughtful research articles, will move us in these needed directions.