Innovation and institutional change: the transition to a sustainable ...

Transition to a sustainable electricity system 5
capitalism (Hawken et al., 1999), and industrial ecology (Graedel and
Allenby, 1995). The approaches are convincing in providing an alternative to
the existing exploitive nature of industrial systems, and especially in
pointing out how this alternative will imply a fundamentally different design
of industrial production. A main weakness is the lack of explanation how
these alternative design principles can take root and establish themselves at
the expense of or in symbiosis with existing design practices. A second
weakness is that the social and institutional dimension of applying these
design principles is hardly addressed, whereas application of these principles
will require new sets of organisational and institutional arrangements, and
also different routines and habits at the level of households, consumers, and
citizens. The inherent sustainability logic of the concepts and the design
principles put forward have triggered more recent work, however, to develop
further ideas on how the concept of industrial ecology can be integrated in
policy and management (e.g. Korhonen et al., 2004).
The business approach assigns a central role to firms taking principles of
sustainability aboard and assumes diffusion to take place once the
competitiveness of such a strategy becomes established. Superior
performance of stocks on the Dow Jones Sustainability Index and the
competitive edge of companies that adopt a sustainability strategy to work
with and engage stakeholders such as employees, communities, citizens,
governments and (prospective) consumers are seen as central elements for
firms’ continuity (Hart, 1995; 1999). Global sustainability is pictured as the
unfolding source for creative destruction (Hart and Milstein, 1999), and
serving the world’s poor is seen as the future source of growth and profits
for multinational companies (Prahalad and Lieberthal, 1998; Prahalad and
Hammond, 2002). Others criticise the view of multinational companies
leading the transformation to sustainability. For example, Welford (1998)
asserts that the present structure of capitalism has contributed significantly to
environmental degradation and to the increases of inequity and inequality.
Thus, only new modes of social organisation and market structures using
appropriate technologies and values can enhance the overall quality of life.
Since traditional business systems are responsible for many of today’s social
and environmental problems, new ways to move forward must be found
(Welford, 1998).
The cultural or value-oriented approach puts less faith in business leading
towards sustainability but points at the importance of changing the
underlying values, conventions and practices in social systems. Placing
ecological values at par or above material values and emphasis on the
intergenerational aspects of sustainability are two elements. A basic
interpretation is that values within the era of mass consumption have become
detached from nature. On the one hand we may appreciate and value nature,