The Missing link : Business Models Lock-in in Sociotechnical Transitions

Abstract: Societal and environmental challenges present challenges for our current industrial systems. In order to respond to these difficulties, various alternative systems have been suggested, as they promise sustainability and increased societal quality of life enabled by innovative technologies. These future solutions hold the capacity to solve problems by unlocking considerable business potential. However, the journey to the forthcoming era will bring dramatic changes, not only to the success of incumbent industrial stakeholders but also to their very existence. The upcoming changes are impregnated with hazards to current business models of successful organizations. So, one may ask what impact future technologies may have on the realms that industrial actors live in? To disentangle the complexity of the unknowns, multitudes of collaborative efforts in protected spaces have emerged globally to experiment with potential systems on the road to sociotechnical transitions.The transport sector is undergoing efforts towards transitions to future sustainable systems. This sector has a special focus when it comes to sustainability challenges due to its substantial economic and environmental impact.  Bus systems are at the heart of this challenge due to the central role they play in urban mobility. Hence, different fuels and charging technologies for buses have been tested in pilot projects to facilitate the march towards sustainability; electric charging is one of the promising technologies, which achieve this aim. However, current business models of incumbent transport stakeholders seem to be problematic, and changes to facilitate the transitions seem to be complex.Extant literature indicates a critical role of business models under sociotechnical transitions. Theoretically, there is an underlying need for incumbents to change their business models to reap the benefits of innovative technologies. However, this change is difficult and potential business models are far from clear. With that, the dynamics of business models under transition remains as an underexplored area, and the challenge to incumbent business models poses itself as an interesting area to gauge. Under this umbrella, a question arises regarding how the pressure on incumbent business models interacts with systemic innovations.This thesis is a case study of an incumbent bus operator participating in a pilot project on a future bus system. The case study is in-depth in nature and investigates the potential business model of a bus operator in a multiple stakeholder pilot project, which tests an inductive electric hybrid bus. With a strong empirical exploratory nature, this thesis is built on an “insider” single case study that occurred in the year 2016-2017. The focus of the study is on the pressure on bus operator business model in the face of systemic innovation. The findings reveal positive future value proposition, disrupted value creation, and unclear value capture in the potential business model of the operator. Moreover, the findings show lock-in and resource dependence situation of the operator’s current business model. The lock-in of the business model hinder the transition to future sociotechnical bus system and makes it difficult to commercialize the new technology.The outcome of this thesis speaks to a significant influence of history and the regulator, manifested by rules on the future of business models of commercial incumbent stakeholders. This demonstrates lock-in may prove to be a major impediment, and that unchained and flexible business model of incumbents is critical for further continuation of successful shifts. Given these findings, this thesis suggests applying the business model lens to pilot projects for sustainability. This would aid in better comprehending how current business models may facilitate or hinder favorable transitions. This knowledge informs both managerial decisions and policy making, especially when it comes to resource optimization and investment decisions.