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Stalling Innovation Adoption through the Emergence of Neoconservative Market Structures: Observations from the Energy Sector
Uppsala University, Disciplinary Domain of Science and Technology, Technology, Department of Engineering Sciences, Industrial Engineering & Management.
Uppsala University, Disciplinary Domain of Science and Technology, Technology, Department of Engineering Sciences, Industrial Engineering & Management.
Uppsala University, Disciplinary Domain of Science and Technology, Technology, Department of Engineering Sciences, Industrial Engineering & Management.
2015 (English)Conference paper, Abstract (Refereed)
Abstract [en]

Objectives and theoretical and practical relevance: The expectations on industrial actors in the energy transmission sector to lead and facilitate the transition to renewable energy solutions are building up. When significant financial institutions (such as coalitions of pension funds) are taking serious action to drop investments in coal, oil and gas, to instead invest in sustainable technologies, energy transmission is identified as one of the most central areas, insofar as it sets the limits for how renewable energy sources may interact, and it stakes out the direction for what kind of renewable energy technologies are worth investing in. What remains a question, however, is where the innovative spirit needed to facilitate a transition to renewable energy solutions find its power. Components and subsystems for energy transmission are characterized by extremely high demands on reliability and long product life cycles. Consequently, investing in new technology within this realm is seen as a risky endeavor. And energy transmission has therefore been known to be a market marked by a conservative reflex – a reflex that has worked against radical technological developments within this realm.

Historically, this conservative reflex has been dealt with through strategic national development programs, through which daring and demanding customers have been integrated in the value-creating processes, for instance. As Fridlund (1999) has shown, this has driven development as well as diffusion/adoption of new products and technologies within this realm. However, the past decades have seen significant shifts in how energy markets are organized – how utility-customers interact with suppliers, and procure and otherwise relate to new technology. The aim of this paper is to explore structural changes within the energy transmission market that appear to be stalling innovation. More specifically, it looks into how changing business models amongst utilities and reorganized value chains in the procurement, construction, deployment, and maintenance of energy transmission infrastructure seem to have fed the conservative reflex integral to this market, and increased the reluctance to adopt new technology. With the analysis centering on how management ideologies and legal-political frameworks have spurred such changes, the paper highlights a set of conservative forces that are seldom mentioned in the debate around the transition to renewables, and that have been overseen in research on non-adoption of innovation – but which call for a re-consideration of dominating innovation and marketing strategies.

Brief literature mapping and key references: To discuss adoption of energy transmission components and subsystems, the paper draws on research indebted to Rogers’s (1995) work on how diffusion processes are impacted by the ways in which markets are constituted and customers relate to novel offerings (eg, Frambach & Schillewaert 2002, MacVaugh and Schiavone 2010). MacVaugh’s and Schiavone’s (2010) attempt to synthesize existent research on non-adoption of innovation is of particular concern here, with the present analysis dealing with aspects that largely fall outside the ‘integrative model of factors limiting innovation adoption’ they seek to establish, thus extending the understanding of non- adoption encountered there.

Method: The study builds on approximately 20 semi-structured interviews circling around the development, diffusion and adoption of new technology, around customer behavior and organization, and how these different aspects have changed over past decades. Directed towards product/system suppliers, intermediaries, customers/users and allied partners in the energy sector, the conservative theme and its associated dynamics emerged through the interpretative work following the interviews.

Research question and theoretical development: In contrast to MacVaugh and Schiavone’s (2010) integrative model – which outlines, in a rather static way, how factors pertaining to the technology, the social structures and the conditions for learning in the market (may) stand in relation to (non-)adoption on an individual, organizational level and industry/market level – the present study seeks an understanding of a dynamics governed by managerial- ideological and legal-political forces that is restructuring and reconstituting this market: giving rise to new actors, increasing the complexity of intra- and inter-organizational relationships, and fragmenting the interests of the actors involved in the market networks, ultimately making them more reluctant to adopt new technologies.

Findings: With the value chain of this industry spanning across public/private divides, and customers being characterized by increasing degrees of corporatization and privatization, energy markets have been subject to managerial-ideological and legal-political forces that have fragmented and extended the value chains in similar ways, by 1) preventing customers from being an integrative part of development processes, by 2) pushing customers to specialize and seek out business models that increase the dependence on various sub- contractors with limited innovation gain, and by 3) instituting new intermediaries in the procurement process (eg, centralized innovation purchasing units or Engineering Procurement Construction Companies).

Conclusion and contribution to the field: Consequently, the potential benefits of an innovation becomes diluted upon several actors with no joint responsibility. Limiting the innovators’ capacity to convince the market to adopt new technology, and stealing lead customers of progressive purchasing power, this severely inhibits development as well as diffusion of innovation. With respect to theoretical contributions, the study introduces fragmented/ dispersed value chains or value networks into the (non-)adoption discourse, and puts the focus on the dynamics driving such fragmentation and dispersion.

Managerial implications: These findings indicate that suppliers need refined innovation inception strategies that take new purchasing entities with narrow agendas into account, and customers may well have reason to re-assess or formulate specific innovation appropriation strategies. Organizations that have outsourced purchasing, construction and or operating services need to carefully secure systemic innovation need that sub-partners lack knowledge or incitements to attain. 

Place, publisher, year, edition, pages
National Category
Economics and Business Engineering and Technology
Research subject
Business Studies; Engineering Science with specialization in industrial engineering and management
URN: urn:nbn:se:uu:diva-268319OAI: oai:DiVA.org:uu-268319DiVA: diva2:876515
22ND Innovation & Product Development Management Conference
Available from: 2015-12-03 Created: 2015-12-03 Last updated: 2015-12-15

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