Institutional perspective on emerging industry development

Abstract

Purpose -The purpose of this paper is to elucidate the dynamic interactions and co-evolution of institutions with the technology and organization fields in emerging industry development. Insights and inspirations from comparison of the triangle relationship among government, market and local community in different institutional contexts could contribute to possible institutional innovation in the context of large-scale institutional transition. In this way, this paper is expected to offer insights to the development of emerging industries in China. Design/methodology/approach -The paper reviews the focal literature focusing on institutional change and the co-evolution of institution, industry and technology. A multi-level conceptual framework is put forward to explain the mechanism for the co-evolution of technology, organization and institution. A multi-case comparison method was applied to compare and disclose the process of co-evolution of institutions, and the technology and organizational fields, as well as varied paths of industry development in different institutional contexts. Findings -Emerging industry development in China is still presenting the character of path dependence to a great extent under traditional institutional arrangement, while the power and possible contribution from broader actors in the local community have been ignored. Driving force for a more innovative institutional transition towards emerging industry development should consider decentralized institutional arrangement and actions at local community instead of "command and control" from central planning. Practical implications -First, the comparison of wind energy industry development in three countries creates possibilities for further analysis and reference for China's emerging industry. Second, the illustration of the triangle relationship among government, market and local community in different countries helps policy makers in China reconsider and redesign an effective institutional framework for balancing the powers among indigenous community, local government and market. Institutional alignment should be listed as an important consideration during the process of the policy design of such an effective institutional framework. Originality/value -The paper presents a model to understand the dynamic co-evolution of the institution, technology and organizational fields. It confirms the role of institution in promoting emerging industry development. Particularly, it offers inspirations for the development of emerging industries in nations facing large-scale institutional transition.

State, institutional entrepreneurship and the creation of the biopharmaceutical industry in a developing country

“…When industries are nascent, newcomers do not have enough cognitive and socio-political legitimacy (Aldrich and Fiol, 1994; Rao et al , 2000) because the incumbents’ political dominance, normative pressures for isomorphism (DiMaggio and Powell, 1983) and dominant socio-technical regimes (Geels, 2004) do not allow a new industry, a new technology or a new form simply to develop. In other words, industry emergence and development could be considered an institutional change or institutional transition – sometimes a large scale one (Cao and Zabe-Brechtel, 2011; Gu, 2013).…”

“…In fact, the state itself is a learner, and the state and private sectors should learn simultaneously during the industrial development process, in which their ties and embeddedness guarantee co-learning progress (Evans, 1995; Rodrik, 2008). Based on Cao and Zabe-Brechtel (2011), the co-evolutionary interactions between state and firms is the key to opening the black box of industry emergence and development, and the dynamics of these interactions is a research gap to be further discovered.…”

“…To elaborate more on the first aspect, based on institutional studies, industry emergence and development is an institutional change or institutional transition process including human agency (Cao and Zabe-Brechtel, 2011; Gu, 2013), in which a few key actors from either the state or private sector may play the role of change agent – or IE (Battilana et al , 2009; DiMaggio, 1988; Eisenhardt, 1988), while others could hinder industry development by following the status quo (Fligstein, 2002). Hence, this research argues that in studying the relationship mechanisms between state and firms, it is essential to focus on key change agents, IEs, on both sides, and to analyse their collaboration and ties in overcoming institutional inertia.…”