The emergence of neoconservative market structures in the energy transmission industry: Rejecting innovation, in the ruins of mutual domestic development collaborations
2015 (English)Conference paper, Abstract (Refereed)
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 – often state utilities in domestic markets – 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 and discuss how structural changes within the energy industry have altered the conditions for diffusing new technological applications, made intimate collaborations in the ‘home’ market impossible, and mobilized a set of forces that appear to be stalling innovation adoption in important market segments. The analysis presented in the paper adds to a discussion of how free market ideology paired with managerial initiatives assumed to increase competition/competitiveness and innovation/ innovativeness within these industrial domains have lead to more complex modes of interaction, which appear to be threatening the perceived innovation gain in the adopting environment/client network. Whereas prior research into client–supplier relationships in the energy sector (see e.g., Berggren et al. 2001) has highlighted how increased complexity and organizational fragmentation (on part of both suppliers and clients) impacts the management of large scale projects and the incentives for implementing new innovative solutions during the execution of turn-key deliveries, the present analysis provides a more detailed account of how technology is perceived to be evaluated and procured within this industry, mainly from a supplier’s perspective. The article suggests that the increasingly market-based relations, paired with managerial strategies to increase competition and innovativeness within the utilities sector, have opened up the value chain to more disparate value creating logics, and entertained an industry/market dynamics that has diluted the incentives to adopt new technology; this by distributing the innovation utility over a broader range of actors, and institutional, organizational and business-related logics.
Place, publisher, year, edition, pages
Economics and Business Engineering and Technology
Research subject Business Studies; Engineering Science with specialization in industrial engineering and management
IdentifiersURN: urn:nbn:se:uu:diva-268320OAI: oai:DiVA.org:uu-268320DiVA: diva2:876516
Standing Conference on Organizational Symbolism