Innovation and institutional change: the transition to a sustainable ...
Innovation and institutional change: the transition to a sustainable ... Innovation and institutional change: the transition to a sustainable ...
Theoretical perspectives 43 defining problems – all of them embedded in institutions and infrastructures”. As a regime emerges and evolves, the different elements become strongly interwoven such as that the mental frames of actors will view the existing technological system as the natural way things work. As they fall outside their frame of reference alternatives will be intuitively rejected because the focus tends to be on problems and limitations associated with them as they are assessed on their fit with the existing technological regime. And clearly in the early stages of the development of a new technology a lot of imperfections can be pointed out. Therefore, there is a need for the inclusion of alternative frames of references into evaluation mechanisms to appreciate technological options that deviate from the incremental path, such as for example a focus on achievements and potential of new technologies. For this, however, cognitive barriers need to be broken down, such as those established by the fact that members of technological communities have undergone “a long process of learning and socialization that produces deeply held assumptions about technology” (Lampel, 2001: 307). They are often strongly rooted into existing regimes, cognitively, professionally, or even economically, and tend to develop evaluation routines that filter out information not consistent with their beliefs about technology. “Data inconsistent with an individual’s evaluation routines are either ignored or appear as noise. Data consistent with evaluation routines are perceived as information and cognitively rearranged in a manner that reinforces an individual’s beliefs. Given bounds to rationality, this bracketing of perception occurs because individuals may be more interested in confirming their beliefs than in actively trying to disprove them” (Garud and Rappa, 1994: 347). This is but one example on the cognitive dimension of a regime that illustrates the difficulty of deviating from the technological path rooted in the regime. If we look at entrepreneurs, these continuously influence paths by setting processes in motion by putting new products on the market and by employing new technologies. This, however, predominantly involves innovative activities that incrementally built upon the regime in terms of artefacts, knowledge, infrastructure and technologies. Incumbent firms tend to develop incremental innovations based on their established organisational and technical capabilities, and on present ways of evaluation, within their existing networks and markets. The main point of these examples is that innovation is “not a negation of the past, but an elaboration and extension in specific directions depending on the particular sequence of unfolding events” (Garud and Karnoe, 2001: 1). This concept of path dependence is useful to explain how at different levels lock-in to certain trajectories of change, organisational structures, or modes of governance occurs.
44 Chapter 2 2.4.1 Innovation as a path-dependent phenomenon In order to be able to understand how path dependence can be escaped or in other words how processes of path creation occur, first the concept of path dependence is tentatively unpacked at different levels and for the key elements of regimes, as is illustrated in Table 2.2. Table 2.2 Path dependent processes and outcomes at different levels Path dependent processes Outcomes Firm Routinised behaviour, Incremental innovation based on organisational routines, investment accumulated competences and procedures, training, search established perceptions of return and heuristics based on cumulative risk and user preferences (markets), e.g. knowledge, accumulated experience through cost-benefit analysis and and competencies calculated returns on investments; organisational forms shaped by technological factors (e.g. established design) Network Co-evolution of technology and Shared beliefs and expectations; guiding networks along routines and principles for improvement within heuristics based on core capabilities established design; optimisation of and established designs; network components and technologies within the composition based on mainstream competences within existing technological fields existing system; single loop learning Sector Industrial organisation coevolves Continuous system optimisation; with the established design; tuning industrial standards based on established of production, distribution, design; standards based on what is state consumption, infrastructure; of the art ‘within’ the sector, ‘capture’ formation of industrial standards (network externalities, technological interrelatedness); formation of environmental standards of regulatory system Society System configuration becomes Societal demands are absorbed without embedded in society (mode of fundamentally changing the governance matches the system), system becomes intertwined with daily life (‘electrification’) sociotechnical configuration At the level of the firm decision making processes are largely determined by the routines that have developed based on cumulative knowledge, accumulated experience and competencies. Based on this also search heuristics have developed to determine which direction of innovative activity may be worthwhile and which one not. What is worthwhile is defined from a
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44 Chapter 2<br />
2.4.1 <strong>Innovation</strong> as a path-dependent phenomenon<br />
In order <strong>to</strong> be able <strong>to</strong> underst<strong>and</strong> how path dependence can be escaped or in<br />
o<strong>the</strong>r words how processes of path creation occur, first <strong>the</strong> concept of path<br />
dependence is tentatively unpacked at different levels <strong>and</strong> for <strong>the</strong> key<br />
elements of regimes, as is illustrated in Table 2.2.<br />
Table 2.2 Path dependent processes <strong>and</strong> outcomes at different levels<br />
Path dependent processes Outcomes<br />
Firm Routinised behaviour,<br />
Incremental innovation based on<br />
organisational routines, investment accumulated competences <strong>and</strong><br />
procedures, training, search established perceptions of return <strong>and</strong><br />
heuristics based on cumulative risk <strong>and</strong> user preferences (markets), e.g.<br />
knowledge, accumulated experience through cost-benefit analysis <strong>and</strong><br />
<strong>and</strong> competencies<br />
calculated returns on investments;<br />
organisational forms shaped by<br />
technological fac<strong>to</strong>rs (e.g. established<br />
design)<br />
Network Co-evolution of technology <strong>and</strong> Shared beliefs <strong>and</strong> expectations; guiding<br />
networks along routines <strong>and</strong> principles for improvement within<br />
heuristics based on core capabilities established design; optimisation of<br />
<strong>and</strong> established designs; network components <strong>and</strong> technologies within <strong>the</strong><br />
composition based on mainstream<br />
competences within existing<br />
technological fields<br />
existing system; single loop learning<br />
Sec<strong>to</strong>r Industrial organisation coevolves Continuous system optimisation;<br />
with <strong>the</strong> established design; tuning industrial st<strong>and</strong>ards based on established<br />
of production, distribution, design; st<strong>and</strong>ards based on what is state<br />
consumption, infrastructure; of <strong>the</strong> art ‘within’ <strong>the</strong> sec<strong>to</strong>r, ‘capture’<br />
formation of industrial st<strong>and</strong>ards<br />
(network externalities,<br />
technological interrelatedness);<br />
formation of environmental<br />
st<strong>and</strong>ards<br />
of regula<strong>to</strong>ry system<br />
Society System configuration becomes Societal dem<strong>and</strong>s are absorbed without<br />
embedded in society (mode of fundamentally changing <strong>the</strong><br />
governance matches <strong>the</strong> system),<br />
system becomes intertwined with<br />
daily life (‘electrification’)<br />
sociotechnical configuration<br />
At <strong>the</strong> level of <strong>the</strong> firm decision making processes are largely determined by<br />
<strong>the</strong> routines that have developed based on cumulative knowledge,<br />
accumulated experience <strong>and</strong> competencies. Based on this also search<br />
heuristics have developed <strong>to</strong> determine which direction of innovative activity<br />
may be worthwhile <strong>and</strong> which one not. What is worthwhile is defined from a