Grand societal challenges and the reorientation of incumbent industries:

hardtofindcurtainUrban and Civil

Nov 16, 2013 (3 years and 6 months ago)

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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)

Structure

1.
Introduction/motivation

2.
Theoretical framework

3.
Case study 1

4.
Case study 2

5.
Conclusions



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.




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)


Organizational field

Supply chain:

* material supliers
* component suppliers
* machine suppliers
Users
Production,
industry:
* firms
* engineers,
designers
Research:
* universities
* technical institutes
* R&D laboratories
Policy, public authorities:
* European Commission, WTO, GATT
* Government, Ministries, Parliament
* Local authorities and executive branches
Societal groups:
(e.g. Greenpeace,
media, branch
organisations)
Research questions

Lock
-
in, inertia, path dependence



1.
How do societal problems emerge and develop?


2.
How do industries respond to societal problems?
When do they implement substantial responses
(i.e. overcome lock
-
in)?


Research strategy


Develop an enriched issue life cycle model




Confront the model with in
-
depth case studies:


US car industry and:

a)
Local air pollution (1945
-
1985)

b)
Car safety (1910
-
2000)

c)
Climate change (1990
-
2010)

2. Theoretical framework

Issue life cycle theory (Business & Society)

Public
attention
Dramatic
event or
trigger
Voluntary
or government
mandated
resolution
Secondary
trigger
C
B
A
Expectational
gap(s) has
opened
Debate; coalitions
develop possible
redefinitions of
the gap/issue
Implementation;
monitoring by
most interested
parties
A = The issue re-emerges because the resolution is not satisfactory or new issues emerge from the r
esolution
B = The issue is satisfactorily resolved as long as the resolution mechanism remains in place.
C = The issue dies because of further social, economic, political, or technological change.
Mahon and
Waddock

(1992)

Tombari

(1984)

Rivoli

and
Waddock

(2010)

Strengths


Issues/problems have temporality


Issue dynamics are socially enacted


Social construction + power/politics


Multi
-
dimensional:

a)
Activists/social movements

b)
Public opinion

c)
Political debates

d)
Political decisions (+ implementation)

Weaknesses

1.
Too little conflict/struggle (teleological
unfolding)


2.
Too little corporate strategies


3.
Linear sequence
(problem in many phase
-
models)



Improvements

1)
Link to broader industry framework


2)
Add more strategy and struggle/conflict


3)
Flexible with phases: backwards, forwards

Triple
embeddedness

framework 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


Industry
Suppliers
Politics
Customers
Civil society,
social movements,
public opinion
Industry regime
Institutional
environment
Task environment
Knowledge, capabilities
(technical regime)
Mission,
behavioural norms
Regulations
Beliefs, interpretations
Firms
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

Corporate political strategies
(Hillman and
Hitt
, 1999)

1. Information and framing strategy

-

industry research institutes to build expertise

-

contest the science

-

commission research reports

-

testify as expert witness in hearings

2. Financial incentives strategy

-

make contributions to political parties

-

pay fees to politicians for speeches

-

offer politicians lucrative jobs at the end of
their career

3. Organized pressure strategy

-

create fake grassroots organizations
(‘astroturf’)

-

create industry associations that speak for the
industry

-

mobilize employees, suppliers, customers to
pressure their representatives

4. Direct lobbying strategy

-

hire lobbyists to work politicians

-

mobilize CEOs to speak with politicians

5. Confrontational strategies

-

oppose laws through litigation

-

threaten policy makers with plant closures

-

refuse to implement or obey policies

Economic positioning strategies


Porter: low cost, high performance, niche market



Supply chain management, marketing strategies



Corporate strategy/mission

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


Rothwell

(1992)

Tactical factors

Strategic factors

Effective linkages with external sources
of know
-
how

Top management commitment to, and
visible support for, innovation

Effective functional integration;
involving all departments in the project
from its earliest stages

Long
-
term corporate strategy in which
innovation plays a key role

Careful planning and project control
procedures

Long
-
term commitment to major
projects.

Temporal unfolding of pressures and responses
(ideal
-
type)

Phase 1
: Problem definition and framing struggles

Phase 2
: Rising public concerns and defensive industry responses

Phase 3
: Political debates/struggles and
defensive hedging

Phase 4
: Political regulations and diversification

Phase 5
:
Spillovers

to task environment and reorientation

Different issue cycles

3. Longitudinal case study
:

Air pollution, technical innovation, and the American car industry (1943
-
1985)

27

Source:
University of Southern California Digital Library and Los
Angeles Times photographic archive, UCLA Library

Phase 1: Issue emergence and
sensemaking

attempts (1943
-
1953)

Pressures:


Severe smog events in California (1943, 1948)




Public concerns and protests

Smog protestants at Board of Supervisors, 1947

Source:

University of Southern California Digital Library


Symbolic policy statements (concern)

Smog committee at District Attorney's Office, 1947

Source:

University of Southern California Digital Library


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

Car industry responses:


Unconcerned


Rejected automobile as cause



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)


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



Car industry responses


Industry acknowledges the issue
(denial impossible)


Framing strategies:

a)
Science base uncertain

b)
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





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)


Smog problems spread to other states
(New
York, Philadelphia)



New a
ctivist 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


Decreasing legitimacy of car industry
:

1)
‘anti
-
trust case of the century’ (1969):
conspiracy re. pollution control devices

2)
Secret recall campaigns: 20% of cars recalled for
safety defects between 1960 and 1966

3)
Safety issue: Nader (1965)


and regulations (1967)


Public perception: car industry no

regard for public interest.



Needs to be forced by law

Ralph Nader’s
Unsafe at any speed

Source:
Scanned cover of the book

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)

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


Phase 4: Tough legislation and resisted
implementation (1970
-
1977)

Pressures


Peak in public attention



Air pollution resonates with broader cultural
trend of environmentalism (Earth Day, 1970)

Earth Day One (April 22
nd
, 1970)

Source:

Getty images


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

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


Innovation strategies


Continue incremental innovation


But also improve catalysts



Innovation race (patents)



GM breaks industry front and installs catalytic
converters (1975)


Advertising



GM’s 1975 add of catalytic converters

Source:

Google News Archives

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



Car industry responses

Economic problems (weak demand + Japanese
competition)


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



Pattern matching

Relatively good match with first three phases

Deviations in fourth and fifth phase, due to:

a)
Decreasing pressure from public opinion

b)
Limited spillovers from the issue to consumer
demand

c)
Rise of competing issues

d)
Strong resistance from the powerful car industry

50

4. Case study 2: Safety (1900
-
2000)

Main dynamic


Until 1960s: 3E
-
framing dominant (Engineering,
Education, Enforcement)


Car design was kept off agenda


Alternative framing in 1950s: crash engineering
and medical establishment


Clash between professional communities (not
driven by ‘the public’)

Nader (1965) + public outrage + policy learning


National Highway Traffic Safety Act (1966)

Followed by resistance and implementation
struggles
(seatbelt vs. airbag controversy)





Difference with case 1

Public attention continuous rise



spillover

to consumer preferences in late 1980s


Relative importance of decision criteria for car purchase

‘Safety did not sell’ in 1950s and 1960s, but does in 1990s



Market demand stimulates major industry effort


Automobile safety patents
(based on USPTO)

Lesson
: Industry fights regulation to delay issue progression

But when issue spills over to markets, industry can accelerate and mobilize resources

5. Concluding comments


Industries tend to postpone substantial
solutions to ‘issues’


External pressures important: public opinion,
activists, politics, markets


Pressure around issues develops gradually and
dialectically (conflict)


Issues go up and down



What about climate change?


absolute # articles
0
1000
2000
3000
4000
5000
6000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011*
The Guardian
The Times
The Independent
Daily Express
Decreasing public attention

normalized: max=1
0,0
0,2
0,4
0,6
0,8
1,0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011*
The Guardian
The Times
The Independent
Daily Express
Volatile and low carbon price


Kyoto successor postponed (limited political
pressure)



contesting the science (UEA ‘climate gate’)


Debates (
Newsnight
) on costs of green energy



Maybe the climate change issue moves back
to earlier phase


Need to analyze pressures and responses


(third case next year?)