Grand societal challenges and the reorientation of incumbent industries: A dialectic issue life cycle model and exampl

1. Grand societal challenges and the reorientation of incumbent industries: A dialectic issue life cycle model and examples Prof. Frank Geels SPRU, Univ. of Sussex (sustainable practices workshop, 26-27 Jan. 2012)

2. Structure • Introduction/motivation • Theoretical framework • Case study 1 • Case study 2 • Conclusions

3. 1. Introduction Why at this workshop? • NOT about consumption practices • But it is about: • “problems such as climate change”  Issue life cycles (the dynamics of problems) • Political economy  much talk in transitions literature about power and politics, but remains vague (often rather discursive) • “Questions of the interaction between political and regulatory frameworks”. And industry/technical innovation, markets and civil society/discourse.

4. Background (innovation studies) • New topic: Grand societal challenges (climate change, energy security, transport and resource efficiency, food safety, obesity, health and aging) • Linked to: Systemic transitions + directionality of innovation (rather than speed and output) • Focal actor: Industry (population of firms) • Embedded in organizational field (link to my previous work)

5. Organizational field

6. Research questions Lock-in, inertia, path dependence How do societal problems emerge and develop? How do industries respond to societal problems? When do they implement substantial responses (i.e. overcome lock-in)?

7. Research strategy • Develop an enriched issue life cycle model • Confront the model with in-depth case studies: US car industry and: • Local air pollution (1945-1985) • Car safety (1910-2000) • Climate change (1990-2010)

8. 2. Theoretical framework Issue life cycle theory (Business & Society) Mahon and Waddock (1992)

9. Tombari (1984)

10. Rivoli and Waddock (2010)

11. Strengths • Issues/problems have temporality • Issue dynamics are socially enacted • Social construction + power/politics • Multi-dimensional: • Activists/social movements • Public opinion • Political debates • Political decisions (+ implementation)

12. Weaknesses • Too little conflict/struggle (teleological unfolding) • Too little corporate strategies • Linear sequence (problem in many phase-models)

13. Improvements • Link to broader industry framework • Add more strategy and struggle/conflict • Flexible with phases: backwards, forwards

14. Triple embeddednessframework of industry Inspired by: • institit. theory: org. fields • Structuration theory (‘rules and resources’) • Regulation theory (mode of production, regime of accumulation, mode of regulation) • Scott’s (1993) institutional pillars • Evolutionary theory: adapting to selection pressures

15. Framing, PR and issue management strategies • Ignore, deny, downplay problems • Emphasize uncertainties and contest the science • Emphasize costs and difficulties of solutions Adjust storylines to increase (Benford and Snow, 2000): • Actor credibility • Empirical fit • Centrality • Experiential commensurability • Macro-cultural resonance

16. Corporate political strategies (Hillman and Hitt, 1999)

17. Economic positioning strategies • Porter: low cost, high performance, niche market • Supply chain management, marketing strategies • Corporate strategy/mission

18. Innovation strategies Tension: Radical and incremental innovation • Exploitation-exploration (March, 1991) • Ambidextrous organizations (Tushman) Radical innovation not just about knowledge flows (innovation systems), But also about beliefs and strategic commitment

19. Rothwell (1992)

20. Temporal unfolding of pressures and responses (ideal-type)

21. Phase 1: Problem definition and framing struggles

22. Phase 2: Rising public concerns and defensive industry responses

23. Phase 3: Political debates/struggles and defensive hedging

24. Phase 4: Political regulations and diversification

25. Phase 5: Spillovers to task environment and reorientation

26. Different issue cycles

27. 3. Longitudinal case study: Air pollution, technical innovation, and the American car industry (1943-1985) Source: University of Southern California Digital Library and Los Angeles Times photographic archive, UCLA Library

28. Phase 1: Issue emergence and sensemaking attempts (1943-1953) Pressures: • Severe smog events in California (1943, 1948)

29. Public concerns and protests Smog protestants at Board of Supervisors, 1947 Source: University of Southern California Digital Library

30. Symbolic policy statements (concern) Smog committee at District Attorney's Office, 1947 Source: University of Southern California Digital Library

31. Research into causes (sensemaking struggles) • Initial blame to stationary sources (oil and waste burning) • Haagen-Smit research: car exhausts + smog chemistry Smoking stack from Mercer Hotel, LA, 1949 Source: University of Southern California Digital Library

32. Car industry responses: • Unconcerned • Rejected automobile as cause

33. Phase 2: Policy learning and defensive industry responses (1953-1960) Pressures: • 1953 ‘five-day siege of smog’ increased public concern • Activist movement: Stamp out Smog (1958) Stamp Out Smog meets with public officials Source: Jacobs and Kelly (2008:192)

34. Policy debates and early Federal involvement • Federal Air Pollution Control Act (1955) stimulated further studies on the causes and (health) effects of air pollution • First National Conference on Air Pollution in 1958

35. Car industry responses • Industry acknowledges the issue (denial impossible) • Framing strategies: • Science base uncertain • California is special case (no federal involvement needed) • Incremental R&D programme by Vehicle Combustion Products Committee (1953) • But also collusion: agree not to compete

36. Phase 3: Increasing public concern, early legislation and industry delay (1960-1970) Pressures • Growing scientific understanding of health effects • New framing in public discourse • Increasing anxiety Health risk framing of air pollution in the early 1960s Source: Washington Star, reprinted in U.S. Department of HEW (1966:3)

37. Smog problems spread to other states (New York, Philadelphia) • New activist groups: Clean Air Council (1967) and the Group Against Smog and Pollution (GASP) (1969) • Coalition with medical establishment • Californian legislation: Motor Vehicle Pollution Control Act (1960) • 1963 Clean Air Act (CAA): weak, no standards, but do more research

38. Ralph Nader’s Unsafe at any speed Decreasing legitimacy of car industry: • ‘anti-trust case of the century’ (1969): conspiracy re. pollution control devices • Secret recall campaigns: 20% of cars recalled for safety defects between 1960 and 1966 • Safety issue: Nader (1965) and regulations (1967) Public perception: car industry no regard for public interest.  Needs to be forced by law Source: Scanned cover of the book

39. Car industry responses Framing strategies: • ‘regulation is not needed’ (Voluntary’ installation of devices in 1960) • Solutions are expensive (mocked in newspapers) Cartoon mocking the reluctance of the car industry to install control devices Source: Washington Post, reprinted in U.S. Department of HEW (1966:53)

40. Incremental innovation strategies • PCV valves • evaporation-control systems (ECS) • transmission controlled spark (TCS) • thermovacuum switches (TVS) • air injected reactor (AIR) Radical innovation strategies • Suppliers (chemical industry) offer catalytic converters • Industry rejects, but starts R&D

41. Phase 4: Tough legislation and resisted implementation (1970-1977) Pressures • Peak in public attention

42. Air pollution resonates with broader cultural trend of environmentalism (Earth Day, 1970) Earth Day One (April 22nd, 1970) Source: Getty images

43. Increasing frustration with car industry • Political jockeying Muskie and Nixon  Result in tough Clean Air Act (1970) Figure 7: Number of air pollution control bills introduced

44. Car industry responses Framing strategies • CAA is threat to US economy (imposes costs) • Emphasise trade-offs with fuel efficiency (1973) Political strategies • Lobby senators to kill the bill • Complain directly to President • Litigation tactics to fight CAA implementation

45. Innovation strategies • Continue incremental innovation • But also improve catalysts  Innovation race (patents)

46. GM breaks industry front and installs catalytic converters (1975) • Advertising • GM’s 1975 add of catalytic converters Source: Google News Archives

47. Phase 5: Industry fightback, implementation delays, and institutionalization (1977-1985) Pressures • Decline in public attention • Postponement of 1977 standards • Other issues: oil crises, economic problems (late 1970s), unemployment • Policy makers more interested in saving car industry than air pollution • New anti-regulation discourse (causing economic problems) • Reagan (1981) attempts regulatory rollback

48. Car industry responses Economic problems (weak demand + Japanese competition)

49. Economic problems embolden industry: refusal to comply with 1978 standards • Industry supports anti-regulation discourse • Ask policymakers for support Innovation strategies • Slowing down patent race • But install three-way catalyst (1981), which reconfigured the engine

50. Pattern matching Relatively good match with first three phases Deviations in fourth and fifth phase, due to: • Decreasing pressure from public opinion • Limited spillovers from the issue to consumer demand • Rise of competing issues • Strong resistance from the powerful car industry