Transition policies and incumbents' business models: From resistance and system failure to learning and adaptation

Abstract

The notion of transition policies has rapidly gained prominence because of its potential to accelerate transitions. Transition policies mostly aim to accelerate transitions by fostering the development and diffusion of sustainable technologies. However, for a complex and multifaceted issue such as climate change, an individual product or service cannot bring about the required transformational changes. While many sustainable technologies are off-the-shelf, many firms – especially incumbent firms – resist adopting those technologies due to the difficulties in inevitable changes that might happen in their business models. Incumbents’ business models could act as a source of inertia or transformational changes towards sustainability transitions due to their systemic nature, which includes incumbents’ main activities and interactions with their upstream and downstream value chains. The urgency of climate change and the severity of its consequences ask for transition policies to enable and urge incumbent firms to change their business models to be able to adopt sustainable technologies. A question of significance but relatively unexplored is how interactions between governments and incumbents affect socio-technical transitions towards sustainability. This question is answered in this doctoral thesis through three journal-format papers. By addressing the research problem this thesis makes three main contributions. First, it systematically delineates the impact of transition policy mixes on incumbents’ business model adaptation strategies into a conceptual framework. Second, it provides a zoomed-in perspective on a failed transition policy mix to identify the underlying reasons behind its failure by considering the opinion of both policymakers and incumbent housebuilders. This helps to find the required features for a successful transition policy mix in an antithetic way. Third, this thesis moves beyond the historical examples of sustainability transitions and provides forward-looking insights into the current and future transition policies. By investigating the nature of policy failures in the ZCH failed transition, this thesis identifies the lessons that are relevant for the current and future ZCR transition policies in the UK. These contributions allow deriving policy implications regarding the design and implementation of transition policy mixes. Policymakers can accelerate transitions by bringing incumbents into the equation not only as resisting forces, but also as change agents with powerful resources that can provide transformational changes. However, to trigger this transformational change, policymakers should consider all the important elements of incumbent business models, i.e., their supply chain partners, key activities, capabilities, customers and their preferences, and their financial models.

Date of Award	1 Aug 2023
Original language	English
Awarding Institution	The University of Manchester
Supervisor	John Rigby (Supervisor) & Jonatan Pinkse (Supervisor)