Full speed towards a sustainable future

The story of the electric car in Germany: An institutional approach

Master Thesis

22.08.2013

Fabian Guse (2514454)

VU University Amsterdam

Business Administration – Strategy & Organization

First Supervisor: Dr. R.J.A. Klein Woolthuis

Second Supervisor: Dr. J.J. Berends

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Acknowledgements

This thesis represents the end of my study at the VU University Amsterdam and simultane-

ously my graduation as a M.Sc. in Business Administration: Specialization in Strategy & Or-

ganization. It was a very exciting and valuable year for me on both, educational and personal

levels. I’m grateful for all experiences I made and things I have learned during lectures, pro-

jects and in particular during the conducting of my master thesis.

In this regards, I would like to thank my research group for all the nice meetings, discussions

and the teamwork during the last months. In particular, I would like to express my gratitude to

my supervisors Dr. R.J.A. Klein Woolthuis and Dr. J.J. Berends for all their support during

the conduction of this thesis. Their insights on the topic of sustainable innovation really in-

spired me and even changed my way of thinking about business and my professional career

plans.

Fabian Guse

Amsterdam, August 22th

2013

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Table of Content

1. Introduction ......................................................................................................................... 5

1.1. Research Objectives & Research Question ................................................................. 7

1.2. Research Contribution ................................................................................................. 7

1.3. Structure of the thesis .................................................................................................. 8

2. Theoretical Framework ....................................................................................................... 9

2.1. Sustainable Innovation ................................................................................................ 9

2.2. Institutional Theory ................................................................................................... 13

2.2.1. Coercive Pressure ............................................................................................... 14

2.2.2. Mimetic Pressure ................................................................................................ 16

2.2.3. Normative Pressure ............................................................................................ 17

2.2.4. Institutional Change ......................................................................................... 19

2.3. Strategic Responses ................................................................................................... 21

3. Methodology ..................................................................................................................... 25

3.1. Sample - Introducing the electric car ......................................................................... 25

3.2. Research Approach & Design ................................................................................... 26

3.3. Data Collection: Sources & Search Terms ................................................................ 27

3.4. Setting the timeframe ................................................................................................. 29

3.5. Database composition ................................................................................................ 30

3.6. Analysis ..................................................................................................................... 33

4. Results ............................................................................................................................... 35

4.1. A Niche Market (Q1 2003 – Q3 2006) ...................................................................... 38

4.2. The Beginning (Q4 2006 – Q1 2008) ........................................................................ 40

4.3. First Hype (Q2 2008 – Q2 2009) ............................................................................... 42

4.4. Rising Skepticism (Q3 2009 – Q3 2010) ................................................................... 49

4.5. Second Hype (Q4 2010 – Q4 2011) .......................................................................... 52

4.6. Disenchantment (Q1 2012 – Q4 2012) ...................................................................... 58

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5. Conclusion ........................................................................................................................ 63

6. Discussion ......................................................................................................................... 69

6.1. Limitations of this study ............................................................................................ 70

6.2. Future Research ......................................................................................................... 71

7. References ......................................................................................................................... 73

8. Appendices ........................................................................................................................ 75

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Table of Figures

Figure 1: Conceptual Model ....................................................................................................... 7

Figure 2: The Triple Bottom Line of Sustainable Innovation .................................................. 11

Figure 3: Overview of strategic responses to institutional pressures ....................................... 22

Figure 4: Overview of identified events from institutional pressures ...................................... 31

Figure 5: Overview of identified company actions .................................................................. 32

Figure 6: Electric Car Market Diffusion 2012 ......................................................................... 36

Figure 7: Amount of Institutional Pressure 2003-2012 ............................................................ 36

Figure 8: Overview Actor per Institutional Pressure ............................................................... 37

Figure 9: Overview of Pressures during Phase 1 ..................................................................... 38

Figure 10: Overview of Pressures during Phase 2 ................................................................... 41

Figure 11: Sold Cars in the US 2008 ........................................................................................ 45

Figure 12: Overview of Industry Cooperation ......................................................................... 46

Figure 13: Overview of Pressures during Phase 3 ................................................................... 48

Figure 14: Overview of Pressures during Phase 4 ................................................................... 52

Figure 15: Overview of Pressure during Phase 5 ..................................................................... 57

Figure 16: Overview of Pressure during Phase 6 ..................................................................... 61

Figure 17: Overview of important Events during Phase 1-6 .................................................... 63

Figure 18: Overview Institutional Pressure & Focal Company Action ................................... 64

Figure 19: Summary of Results ................................................................................................ 68

Figure 20: Overview of current National Policy Initiatives ..................................................... 70

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1. Introduction

“I believe in horses, automobiles are a passing phenomenon”1

(Kaiser Wilhelm II, 1905)

More than 100 years ago when the first motorized vehicles appeared on the streets, Kaiser

Wilhelm II was not able to see the potential of this invention and how it would change the

world he lived in. Today we are facing the next revolution of transportation technology, elec-

tric mobility (e-mobility). In consideration of continuous scarcity of fossil resources and pro-

gressive environmental issues caused by increasing amounts of CO2 emissions in our atmos-

phere, a rethinking of universally accepted habits is needed. Public and private transportation

account for 19% of the overall CO2 emissions in Germany and is therefore one of the largest

contributors to climate change and local air pollution (Umweltbundesamt, 2011). This cir-

cumstance also shows the great political relevance of this topic as well as the need to make

the whole industry more sustainable. A sustainable innovation like the electric car can help to

decrease the negative externalities of economic growth and reduce the ecological footprint of

a modern-day life. Against this background, the German government proclaims that Germany

should be the leading market for e-mobility; aiming to have a diffusion rate of one million

electric cars until 2020 (Delhaes, 2008). In order to achieve this, they are dependent on the

innovation activities of the German automotive industry. But consumers as well as car manu-

factures seem to be skeptical about this novelty, which results in a comparable small diffusion

rate of only 7114 electric cars in the end of 2012 (Kraftfahrt-Bundesamt, 2013). For instance,

in Denmark the diffusion rate of new electronic cars is 30 times higher than in Germany and

even The Netherlands have a rate that is 8 times higher (Masson, 2013). The mentioned diffu-

sion rate shows the total number of newly registered electric cars in comparison to the total

number of traditional fuel cars within a year. This is curious on a first view as Germany has

the largest automotive industry in the world, consisting of firms like BMW, Daimler, Opel

and Volkswagen. One would hence expect great interest and a proactive stance from both the

firms as well as the government in supporting this innovation.

Institutional theory describes the processes that lead to stability of organizations, industries or

even societies and explains the phenomenon that firms or whole industries often seem to be so

similar in their structure and behavior (Scott, 2001). Organizations tend to conform to existing

1 „Ich glaube an das Pferd. Das Automobil ist eine vorübergehende Erscheinung“ ("Das Automobil - In

Deutschland beginnt das Auto seine weltweite Erfolgsgeschichte.," 2013)

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institutions, consisting of regulations, norms, standards, values and common beliefs, which

determine appropriate and legitimate behavior for an organization rather than changing them

(Dimaggio & Powell, 1983; Scott, 2001). Referring back to the case of Kaiser Wilhelm II and

his persistent preference for horses as common means of transportation, his statements can be

described as legitimate behavior based on the existing institutions, even though if it seems to

be not rational from today’s point of view. However, according to Oliver (1991) organizations

have a range of strategic options when responding to institutional pressures.

The case of the electric car in Germany seems to support institutional theory in the sense that

companies do not change and old beliefs and standards prevail despite the fact that change

seems to be logical. The electric car is introduced into an established and hostile environment

based on regulations, which consist of old paradigms, existing technological standards and

infrastructures as well as normative determinants that influence social behavior, expectations

and beliefs. In order to succeed, big changes are necessary. Manufacturing processes need to

be adapted, regulations and infrastructures have to be altered and the consumer behavior

needs to change. But simultaneously this innovation represents a huge opportunity for firms to

generate additional income and enter new markets. The results is a negotiation process of two

different institutional streams competing for dominance on the market; one aims to preserve

the existing institutional logic and the other offers new solution from the outside of the institu-

tional field. By looking on the mentioned German firms and the availability of electric cars in

the end of 2012, it can be seen that they are lacking of concrete actions on innovations. On the

German market, 38 different electric cars were available but Opel and Daimler were the only

ones of the key players that already had one electric car in production. While international

competitors, particularly from France and Japan like Toyota, Peugeot, Renault but also Amer-

ican manufacturers like Ford offer a broad range of models (Appendix B).

Is this the proof that institutional theory is right? Are the pressures for stability and preserva-

tion of the status quo too high because of large dominant industry actors in Germany, which

are not existent in other countries? Or can a new dominant institutional paradigm be estab-

lished when new technologies occur (Kraatz & Zajac, 1996) or as described by Zucker (1987)

through generation processes of new institutions?

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1.1. Research Objectives & Research Question

In consideration of these circumstances and questions, this research will provide insights on

the development and diffusion of an occurring sustainable innovation over a certain time

within an institutional field. It will unveil the dynamics between institutional pressures and

the actions of firms in that particular environment as well as provide explanations for different

diffusion rates across several countries.

The research aim is explicated into the following main research question:

In the context of institutional theory, can sustainable innovation lead to the generation of in-

stitutional change and how can it explain the relatively small diffusion of the electric car in

Germany and the lack of firm’s innovation activities?

The following conceptual model summarizes and illustrates the theoretical assumptions into a

consistent framework.

1.2. Research Contribution

Institutional theory delivers powerful explanations for stability and dominant paradigms with-

in an organizational field but when it comes to change, in particular to a technological change;

Figure 1: Conceptual Model

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it has less explanatory potential (Greenwood & Hinings, 1996). The literature lacks compre-

hensiveness, especially when the question is about the reasons for potential institutional

change. So far, no attempt has been made to operationalize such theoretical concepts in order

to establish a solid measurement scheme for a general applicability. This research approaches

two conceptual frameworks, institutional pressure as well as strategic responses of organiza-

tions. Both are integrated into a model based on an extensive literature review on the topic of

institutional theory. It further operationalizes both to measure and explore how and why insti-

tutional change happens. A third approached theoretical framework introduces the concept of

sustainable innovation into this coherence. This will improve the theoretical understanding of

the dynamics between generated institutional pressure for change around sustainable innova-

tions and strategic organizational responses embedded in existing dominant paradigms.

Regarding social or practical relevance, policy makers as well as organizational leaders will

get a better understanding of how the institutional environment affects the introduction of new

products and in particular sustainable innovation on a market. They will get insights on mar-

ket adaption processes and on opportunities for the reduction of potential entry barriers.

1.3. Structure of the thesis

This research is segmented into the following structure. In order to establish a solid basis,

chapter 2 will introduce the approached theoretical frameworks. The concepts of sustainable

innovation will be examined and set in the context of institutional theory. A focus lays on the

different kinds of pressure, which can be exerted on an institutional field as well as the rea-

sons and causes for the change of existing paradigms. Combined with the associated potential

strategic company responses, these theoretical analyses will result in a comprehensive coding

scheme as basis for the empirical research. This coding scheme will be presented in chapter 3,

which deals with the methodology of this research. Hence, additional information will be pro-

vided on the chosen sample, the research approach and design as well as on data collection

methods and the approached analysis of the collected data. Chapter 4 will present and de-

scribe the results of the data analysis. Qualitative methods as well as quantitative methods are

used to analyze the coded events and interpret them according to the theory. In Chapter 5, the

research question will be answered and the results are consolidated, before they are discussed

in regards to theory in chapter 6. Similarities and distinctions between the findings of this

research and the theory are analyzed and interpreted. At last, the research will finish with an

elaboration on the limitations of this study and give further advice and recommendations for

future research.

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2. Theoretical Framework

As mentioned in the introduction chapter, the research objective of this thesis is based on

three theoretical frameworks that need to be further analyzed and consolidated in order to

specify interrelations and find correlations. Firstly, the construct of ‘sustainable innovations’

will be examined before a deeper understanding will be built around it in the context of insti-

tutional theory. The last concept to be reviewed is strategic responses of firms towards institu-

tional pressures in order to investigate how they are interlinked with each other.

2.1. Sustainable Innovation

“An innovation is an idea, practice or object that is perceived as new by an individual or oth-

er unit of adoption.”

(Rogers, 1995, p. 11)

The term ‘sustainable innovation’ consists of two theoretical concepts, ‘sustainability’ and

‘innovation’ that both need to be further elaborated to in order to locate the electric car within

these concepts. As Rogers stated it in the quote above, product or service innovations distin-

guish on the extent or level of innovativeness. Novelties like totally new products or services

as well as minor adjustments can be considered as innovation (Booz, 1982). Ideally, an inno-

vation meets a number of certain criteria, which directly influence its market success, it needs

to be; profitable, applicable and conducive and problem solving (van de Ven, 1986). Accord-

ing to Clark and Wheelwright (1992), not only the technological dimension but also the de-

gree of market renewal influences the success of an innovation.

Innovation research typically tries to get a deeper understanding of how innovations emerge,

develop, grow and are replaced by other innovations (Hockerts, 2003). The succeeding of an

innovation is also pending on the significance of the change or improvement, which comes

along with the product, service or process compared with previous achievements (Amabile,

1997; Harper & Becker, 2004). The innovativeness of a country can be considered as one of

the main drivers for economic growth. Innovation strengthens the competitiveness for coun-

tries as well as for sectors and individual companies (Porter, 1985). On a firm level, it con-

duces to the profitability and long-term stability. Further it can also contribute to quality im-

provement, increasing variety and diversification in the product portfolio, increased produc-

tiveness and a positive influence on turnover and employment (Guinet & Pilat, 1999). More

strategic advantages are the securing or extension of market shares, improved operational ef-

10

ficiency and overall cost reduction (Abernathy & Clark, 1985; Cooke & Mayes, 1996). Be-

sides these direct economic influences, there are also non-economic developments, which can

come along with an innovation. The latter focuses more on a better social and environmental

corporate performance resulting in an improved market position and a higher reputation

(Elkington, 1997; Larson, 2000).

It can be distinguished between three different types of innovation differing in the extent of

newness; radical, incremental innovations and really new innovations (Garcia & Calantone,

2002; Henderson & Clark, 1990). However, the newness of an innovation in general can be

considered less relevant compared to the fact that the ideas, practices or objects are new to

units and actors that are adopting them (Bhaskaran, 2006).

The framework of ‘sustainable innovation’ builds up on the discussed innovation concepts

and additionally focuses on the sustainable development. The WCED (1987) determines sus-

tainable development as “seeking to meet the needs and aspirations of the present, without

compromising the ability to meet those of the future” (p. 4). This definition is widely used and

adapted and can also be described as the ability to continue common behavior into the long

term future (Bonevac, 2010). However, besides this theoretical classification, it has often been

criticized that it lacks on operational goals and guidelines (Devereaux Jennings &

Zandbergen, 1995). Therefore, research focused on the development of a more extensive and

specified definition for sustainability, which resulted in the ‘triple bottom line’ consisting of

multiple areas: social, economic and environmental (Elkington, 1997). Norman & MacDonald

(2003) described these dimensions as ‘people, planet, profit’, by renouncing from the tradi-

tional shareholder perspective of measuring a firm’s performance solely by financial success,

towards a new paradigm of integrating the environmental as well as the social performance

into measurement of the overall firm success. This addresses the simultaneous improvement

of the general welfare of the people, the environment of the earth and the growth of the econ-

omy. This concept goes beyond the mere consideration of environmental and social aspects as

it suggests to measure as well as to report the performance within those two dimensions.

Combining the insights about sustainable development with the concept of innovation, sus-

tainable innovation can be defined as innovations in which the renewal or improvement of

products, services, technological or organizational processes not only result in an improved

economic performance, but also in an enhanced environmental and social performance, both

on short and long term (Alakeson & Sherwin, 2004; Biondi, Iraldo, & Meredith, 2002; von

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Weizäcker, Lovins, & Lovins, 1997). It distinguishes itself from ‘conventional innovation’ by

its contribution to decrease negative externalities, involving stakeholder opinions and expecta-

tions as well as creating value on economic, social and environmental. In general, sustainable

innovations need to be considered as radical or transformational by nature (Rycroft & Kash,

2000). This means that they are concerned with the exploration of new and uncertain technol-

ogies, which cause marketing and technological discontinuities on both macro and micro level

(Garcia & Calantone, 2002). Figure 2 summarizes the identified key indicators of sustainable

innovation.

When it comes to the introduction of a developed innovation to an intended audience or mar-

ket, they will not always unconsciously adopt it. Rogers as one of the leading researchers in

the field of the diffusion of innovation has published a lot of research referring to the topic of

how and when an innovation will be adopted. He describes diffusion as: “the process by

which an innovation is communicated through certain channels over time among the members

of a social system” (Rogers, 1995, p. 605). There are certain criteria that influence the speed

and the success and therefore the diffusion of an innovation. Rogers (1995) described in his

research five characteristics, which are mainly determinative for the diffusion: relative ad-

vantage, applicability, complexity, reliability and observability. The existence of these charac-

teristics is supported by various studies (Dieperink, Brand, & Vermeulen, 2004; Smith, 2002).

Figure 2: The Triple Bottom Line of Sustainable Innovation

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However, looking from a more comprehensive perspective by not only focusing on the inno-

vation itself, there are aspects such as institutional drivers, which are crucial for the succeed-

ing of a novelty such as a sustainable innovation. Geels (2004), who describes diffusion more

as a kind of a social change, stressed the significance of social interaction between people to

change the way things are done. Further, the adoption of innovation is not always based on

rational choices of the adopters, but can also associate with institutional pressures connected

to certain fashions (Nutley & Davies, 2000). It is obvious that in the research field of sustain-

able innovation external factors like institutional pressures have a big influence on the diffu-

sion and the adoption behavior of customers. This is also supported from the perspective of

firms and their motivation to integrate sustainability aspects into their strategic roadmaps. It

can be stated that they look similar to the mentioned ‘conventional innovation’ advantages:

competitiveness and legitimation, profitability, social responsibility, increasing stakeholder

pressure, legal requirements, reputation concerns, internal organization improvements, media

pressure (Bansal, 2005; Bansal & Roth, 2000; Daily & Walker, 2000; Dunphy, Griffiths, &

Benn, 2003; van Marrewijk & Werre, 2002). However a stronger focus on institutional pres-

sures and extrinsic motivation can be identified compared to the motivators of ‘conventional

innovation’. As an example, legitimation refers to the motivation of a firm to improve the

adequacy of its actions within an established set of regulations, norms, values, or beliefs, for

long-term sustainability as well as for avoiding fines and penalties and reducing risks (Bansal

& Roth, 2000). The reason for that can be found in the nature of sustainable innovation itself.

In times of raising sustainability issues as mentioned in the introduction chapter, govern-

ments, professionals and the public have a significant interest in tackling these social and en-

vironmental issues and supporting sustainable development in order to preserve and improve

the common welfare.

Coming to the case of the electric car in Germany, it is clear why the electric car can be con-

sidered a sustainable innovation rather than a conventional innovation. Especially on the envi-

ronmental dimension it has the chance to create significant improvements compared to the

traditional fuel-based car. Studies showed the raising negative externalities associated with

the current mobility systems, highlighting problems for the environment and health, compris-

ing climate change, local air pollution, noise and accidents (Bickel & Friedrich, 2001; EEA,

2006). Further environmental impacts that come along with the current mobility system in-

clude soil sealing as well as fragmentation of natural, semi-natural and agricultural areas.

Linked to the social dimension, the car industry is the largest manufacturing sector in the

13

world (Nieuwenhuis, Vergragt, & Wells, 2004); therefore contributes as one of the major

generators of wealth and employment in the European Union. The interest for society and

policy lays in the retention of the social and economic benefits associated with mobility while

simultaneously reducing the negative environmental and social externalities from the tradi-

tional fuel-based cars.

To get a deeper understanding of how these interests can drive the diffusion of a sustainable

innovation, the next chapter will elaborate on the institutional theory and the process of

change associated with it.

2.2. Institutional Theory

Institutional theory originally can be used to explain the stability of organizations, industries

or societies (Scott, 2001). This research field translates sociological theories to an organiza-

tional level, in order to explain the phenomenon that firms or whole industries often seem to

be so similar in their structure and behavior. DiMaggio and Powell (1983) define this process

as isomorphism. The reason for the existence of stability and isomorphism behavior is based

on institutions, which are defined: “Institutions are social structures that have attained a high

degree of resilience. Social structures include norms, values, expectations, procedures, stand-

ards and routines.”(Scott, 2001, p. 48). Organizations tend to conform to existing institutions,

consisting of regulations, norms, standards, values and common beliefs, which determine ap-

propriate and legitimate behavior for an organization (Dimaggio & Powell, 1983; Scott,

2001). In general, institutional theory states that three processes, also known as pressures,

influence the behavior of a firm or organization: Coercive, Normative and Mimetic processes

(Dimaggio & Powell, 1983; Zucker, 1987). Coercive pressure originates from institutional

actors, which have the power to enforce certain standards or regulation. Firms normally need

to align to this kind of pressure in order to survive as they have a direct financial or legal im-

pact (Devereaux Jennings & Zandbergen, 1995; Zucker, 1987). Mimetic pressure originates

from uncertainty and the desire of conformity with other organizations within an industry that

are perceived to be more legitimate or successful (Dimaggio & Powell, 1983). Normative

pressures are characterized by beliefs, expectations, values and norms expressed by large

parts of the society about certain forms of (economic) behavior. It pressures firms to adopt in

search of social justification (Devereaux Jennings & Zandbergen, 1995).

Several actors, also called institutional agents, are embedded in an institutional field. Those

can play a significant role either in preserving existing institutions or in changing institutions.

14

In this context, Scott (2001) emphasized the role of the state, as a collective actor, which op-

erates primarily via regulative processes, and the professionals which control formal

knowledge. In addition to that, the public, consisting of social movements, non-governmental

organizations (NGOs) and other collectives also needs to be considered as powerful institu-

tional actor (Etling, Kelly, Faris, & Palfrey, 2010; Greening & Gray, 1994; Ramanath, 2008;

Stolle, Hooghe, & Micheletti, 2005). As part of the public, large consumer groups or custom-

ers also need to be considered as a significant source for creating institutional pressure

(Dimaggio & Powell, 1983). Even firms which are in general more likely to be the receiver of

institutional pressure, can put institutional pressure on other organizations, e.g. during their

own innovation processes (Rogers, 1995) as well as normative pressure through lobbying

(Henriques & Sadorsky, 1996).

In order to measure the amount and extent of institutional pressures, certain indicators or

measurement scales are needed which can be considered as a difficult challenge (McCool,

2004; Zucker, 1987). This is based on the circumstance that indicators need to measure a large

number of firms within a certain time frame, which are at least partial based on unique param-

eters. Another challenge is the separation between the resource dependence of a firm and gov-

ernmental intervention granting resources (Zucker, 1987). However the aim of the following

literature review is to develop a comprehensive coding and event scheme for all three types of

pressures in order to operationalize them. Based up on the identified institutional agents, the

scheme will provide an overview of the links and possible action of these agents within each

type of pressure.

2.2.1 Coercive Pressure

As mentioned in the chapter before, coercive pressure can result from formal and in-formal

pressures exerted on organizations by other organizations on which they are dependent and

further from cultural expectations in society in which the firm operates (Dimaggio & Powell,

1983). It normally originates from actors in the organizational field who have the power to

enforce certain standards, mandates or rules which have a direct financial or sanction impact

on a firm. This characteristic differs significantly from other institutional pressures, since

firms have less flexibility to choose whether they should adapt to the pressures or not.

The literature dealing with coercive institutional actors mainly focuses on governmental agen-

cies as the only actor within a firm’s institutional environment with legal coercion power

(Devereaux Jennings & Zandbergen, 1995; Zucker, 1987). Coercive governmental pressures

15

can be distinguished in two categories: market based incentives as well as command and con-

trol actions (Devereaux Jennings & Zandbergen, 1995). The first-mentioned is characterized

through the introduction of favorable condition for the adaptors of pressures that are more or

less free in their decision to adopt. Fiscal incentives, as a tax reduction for certain factor in-

puts (Johnstone, 2005) or the reduction of information and search costs linked to the adoption

of a new technology by providing technical assistance (Delmas & Toffel, 2004), belong to

this category. Additionally, tradable permissions, set by governments either on a national or

transnational level, which regulate the trade of e.g. emission allowances can also be consid-

ered as a market based incentive (Johnstone, 2005). Subsidies can also stimulate certain de-

sired investment of firms through direct financial support or via purchasing incentives on the

consumer side (Joosen, Harmelink, & Blok, 2004). Other instruments causing coercive pres-

sure are governmental policies that guide actions in the market towards behavior that is most

likely to achieve as a desired outcome. These policies often result in legislations in a later step

(Sharfman, Ellington, & Meo, 1997). As opposed to this, governmental command and control

actions typically restrict certain behavior through sanctions or prohibitions. One of the most

powerful actions for regulation is the establishment of laws (Amran & Siti-Nahiba, 2009;

Dimaggio & Powell, 1983; Frumkin & Galaskiewicz, 2004). But also the specification of re-

quirements regarding performance standards as binding limits for outputs like emission

(Johnstone, 2005; Noailly, 2012), technology forcing standards which regulate and restrict the

use of certain technologies (Johnstone, 2005), or reporting requirements for firms to measure

and publish results of definite examinations (Amran & Siti-Nahiba, 2009). Besides the in-

struction and establishment of such actions, theory shows also that the mere fear of being held

to strict policies can be considered as a coercive pressure as firms have started to introduce

their own policies before regulators enforce their, often even stricter, laws or regulations

(Clemens & Douglas, 2005). In that way, the fear coercive pressures, e.g. triggered through

law proposals in the parliament can affect the behavior of firms without or before actual regu-

lative action takes place.

Even though the literature mainly deals with governmental agencies as source for coercive

pressures, also collectives or consumers as well as other actors firms within an industry can

act as a source. In particular, DiMaggio and Powell (1983) emphasized the role of large con-

sumer groups or customers as an important source for coercive pressure. Regarding industry

actors, coercive pressure can be perceived through the active engagement of a firm in suing

processes or lawsuits against the government or other parties. As a recent example, the case of

16

the American insurance company AIG can be considered as they joined a 25 billion $ lawsuit

against the U.S government for forcing unacceptable high losses on shareholders in its bailout

during the financial crisis 2008 (Protess & de la Merced, 2013). Another form of coercive

pressure can be exerted through contractor or supplier boycotts (Henriques & Sadorsky,

1996).

The latter can also be executed from consumers or collectives, known as political consumer-

ism, and refers to the abstaining from particular products and services or also the particular

purchase of certain products (De Bakker & Den Hond, 2008; Sharfman et al., 1997). As al-

ready mentioned, lawsuits or suing processes in general are common expressions of coercive

pressures. Additionally to firms and individual consumers, collectives can exert this kind of

pressure as well (Stolle et al., 2005). Another form are occupations that make the normal op-

erations of actors impossible, examples are occupying buildings, blocking access routes or

cyber-attacks (Stolle et al., 2005). Shareholder activism through resolutions or influence of

firm’s strategies sourcing from the shareholders can also be considered as coercive pressure

originating from collectives (De Bakker & Den Hond, 2008).

2.2.2. Mimetic Pressure

Apart from coercive authority, mimetic pressure is encouraged by uncertainty within an insti-

tutional field or through technological changes. Firms tend to imitate similar organizations

,which they perceive to be more legitimate or successful (Dimaggio & Powell, 1983). This

process of imitation doesn’t necessarily need to be intentionally or directly as in the case of

adapting a practice that other organizations (such as competitors) successfully implemented

(Zucker, 1987). But it still leads to a higher amount of homogeneity within an industry, origi-

nating from credible industry leader or firms with superior resources and capabilities

(Clemens & Douglas, 2006). Oliver (1997) further stated that a later imitation of another firm,

especially a competitor, can prevent high first mover costs, which come along with the devel-

oping or the first implementation of a practice.

There are several events, which can take place within an institutional field that build up mi-

metic pressure. At first, the overall degree of the industry adoption, more specifically the

number of firms, which are adopting to an innovation can be a strong source for pressure on

other firms to follow (Haveman, 1993). Besides the overall degree of adopters to an innova-

tion, it is also important how many products or innovations are introduced to a market based

on a certain innovation like a new technology (Haunschild & Miner, 1997). But also the de-

17

gree of interconnectedness within an industry in terms of collaborations, partnerships or net-

works needs to be considered as a source for pressure (Galaskiewicz & Burt, 1991; Ramanath,

2008). The performance of individual firms regarding specific key figures also needs to be

considered as a strong origin of mimetic pressure for a whole institutional field. These key

figures cover the change in a firm / industry size, namely the amount of employees (Haveman,

1993); the change in firms profits and turnovers (Rogers, 1995), and the change in a firm’s

prestige as well as visibility (Burns & Wholey, 1993). Besides the overall degree of adopters

to an innovation, it is also important how many products or innovations are introduced to a

market, based on a certain innovation like a new technology (Haunschild & Miner, 1997).

In addition to other firms within an industry, mimetic pressure can also originate from profes-

sional sources. One source for this pressure is the publication of benchmarks or rankings

where firms are ranked for particular achievements, e.g. their sustainability performance

(Scott, 2008). Such publications make it easy for firms to compare their performance against

their competitors. The special training of staff in order to be capable of dealing with new

technologies or innovation can also exert pressure on industry actors (Dimaggio, 1988). The

same happens when professionals provide general and complex models that standardizes a

certain approach within a field (Rao & Sivakumar, 1988). Another case for mimetic pressure

originating from professional sources is the sharing of knowledge

2.2.3. Normative Pressure

Normative pressure originates from the search for legitimation of organizations and is trans-

mitted through norms, common habits, values, assumptions and general believes within a so-

ciety (Devereaux Jennings & Zandbergen, 1995; Oliver, 1997). Unlike coercive pressure, it

has not a direct financial or sanction impact on organizations that choose either to align or not

to align with the pressures. In general, normative pressures can be divided in social forms of

pressure, which mainly originate from the societal sources such as the general public, collec-

tives or NGOs, as well as in professional pressures depending on the industry knowledge and

practices (Dimaggio & Powell, 1983; Oliver, 1997). Firm’s compliance to these pressures is

mainly based on its taken-for-granted nature held by a larger community than the industry

itself.

Dimaggio & Powell (1983) stated that normative processes are primarily based on profession-

alization. They describe it as the collective struggle of members of an occupation to define the

conditions and methods of their work. Professionals such as universities, knowledge insti-

18

tutes, or industry experts need to compromise with nonprofessional clients, the public opinion,

or regulators (Dimaggio & Powell, 1983). Through the introduction of new norms and stand-

ards, professionals can put normative pressure on an institutional field as they have the power

to influence others (Bansal, 2005). The same applies to the development of knowledge in

form of reports or publications, which have an impact on the public opinion as well as on

firms or governmental agencies (Scott, 2008). Also the simple sharing of knowledge within

professional networks such as academic conferences or on consultancy levels (Benders,

Batenburg, & van der Blonk, 2006; van Everdingen & Waarts, 2003), as well as the express-

ing of opinions on specific topics (Campbell, 2007; Sharfman et al., 1997) needs to be consid-

ered as a way of articulating normative pressure. The last event that also fits in this category is

the training or educational program of schools or universities, which implements new ap-

proaches in their curricula. (Campbell, 2007).

Government recognition of key firms or organizations through the grant or contract process

may give these organizations legitimacy and visibility and lead competing firms to copy as-

pects of their structure or operating procedures in hope of obtaining the same or similar

awards. This governmental action can take the form of voluntary agreements with firms or

whole industries (Delmas & Toffel, 2004) as well as certification/normalization, which tend

to shape preferences of firms through the diffusion of norms (Vasudeva, 2013). Additionally,

public procurement in terms of that a governmental agency sets an example by taking action

or by being a lead customer can also build up normative pressure (Bulkeley & Kern, 2006).

Another form of governmental normative pressure is the launch of awareness campaigns, ed-

ucating and sensitizing the public about a certain topic through media (Bulkeley & Kern,

2006). But even the upcoming of a political discussion can trigger this kind of pressure, as it

puts it on the top of the political agenda. There can be several sources for political discussion,

reaching from external events until policy proposals from political parties. The latter can also

create petitions or motions calling ministers or other representatives to responsibility, this

normally results from a political discussion.

Besides the professionals, the industry actors and the government, the forth actor that can

built up normative pressure are the general public, collectives and NGOs. The attached events

can take the form of publicity activities like expressing public opinions in press or other me-

dia (Greening & Gray, 1994; Rao & Sivakumar, 1988), the introduction of alternative models

showing a different path (De Bakker & Den Hond, 2008) or the launch of campaigns like cul-

tural jamming or social movements (Etling et al., 2010; Stolle et al., 2005). Leading to the

19

same result, namely the building of normative pressure, the public also has the opportunity to

influence important stakeholders and institutional actors through lobbying in the same way as

firms can approach it (Ramanath, 2008). It also happens that collectives, mostly NGOs, form

coalitions with partners from the private sector (De Bakker & Den Hond, 2008) as well as

with governmental agencies (Ramanath, 2008) in order to not only influence them but also

benefit through knowledge exchange. In some cases the activities originating from public ac-

tors include and assimilate even illegal parts. This can reach from the reveal of information or

public disclosure (Ramanath, 2008; Stolle et al., 2005) until civil disobedience, which literally

means that laws or regulations are simply ignored or consciously broken (Stolle et al., 2005).

An overview of all identified events originating from the different kinds of pressures will be

provided in the methodology section in chapter 3.5 and more precisely in Appendix F.

2.2.4. Institutional Change

As mentioned in the beginning of this chapter, institutional pressures lead to isomorphism and

to behavior continuation of organizations (Oliver, 1997). Institutional theory delivers power-

ful explanations for stability and dominant paradigms within an organizational field but when

it comes to change, in particular to a technological change; it has less explanatory potential

(Greenwood & Hinings, 1996). While institutional theorists view changing technological en-

vironments as relatively unimportant, Kraatz & Zajac (1996) found that global and local tech-

nical environment conditions are strong predictor for occurring change. Van der Hoed & Ver-

gragt (2006) stated that technology could be seen the same way as every other set of practices

and therefore described in institutional terms of norms, standards and values.

Besides the described isomorphism effect of institutional pressures, there seems to be also

empirical evidence that institutional pressures can also result in changing existing paradigms

and institutions. Zucker (1987) states that institutional pressures can lead to forced behavior

adoption and separates the pressures into two motivational groups: reproduction and genera-

tion, which can explain why actors adopt or not adopt new products, technologies or services.

These parallel institutional processes compete for dominance; reproduction of the old para-

digms and generation of new solutions outside of the existing institutional field whereas the

former is a consequence of institutionalization and not a cause. Other researchers focused on

the sources of institutional change in order to understand the process of how institutions

change. Institutional change refers to the phenomenon of institutionalization (Scott, 2001),

which is defined as: “The process by which activities come to be socially accepted as ‘right’

20

or ‘proper’, or come to be viewed as the only conceivable reality” (Oliver, 1997). This defini-

tion gives insights of how formerly unaccepted organizational behavior becomes accepted.

Simultaneously to this institutionalization process, certain forms of behavior become obsolete,

redundant or not applicable to the changed organizational field. This process is called de-

institutionalization (Oliver, 1992; Scott, 2001): De-institutionalization refers to the erosion or

discontinuity of an institutionalized organizational activity or practice. Where the former

highlights the continuous process by which new routine legitimate behavior is developed, the

latter emphasizes the replacing of old rules and routines by new ones. The literature lacks of

comprehensiveness, especially when the question is about the reasons for potential institu-

tional change. Oliver (1992) identifies mainly political, functional and social pressures as rea-

sons for deinstitutionalization, either from inside of a firm or from external sources. Scott

(2001) views institutional change as a result of discourse and negotiation within an institu-

tional field. This negotiation arises around issues of dominant problem definitions as well as

dominant solution directions (Hoffmann, 1999). Van den Hoed & Vergragt (2006) proposed

five factors within an institutional field, which are likely to induce institutional change as they

are influencing the negotiation process: exit and entries of actors changing the power struc-

ture, external shocks or crises leading to instability, new technologies, new practices by estab-

lished members also called institutional entrepreneurship, and changes in the market or de-

mand. In the end, the result of a potential institutional change is depending on the sum of all

pressures generating an institutional change reduced by the sum of all pressures preventing a

change as well as reproducing the existing institutions. The study of (Greenwood, Suddaby, &

Hinings, 2002) developed a deeper evaluation of an explanatory framework for institutional

change.

These aspects, in particular the different kinds of pressures, define the institutional theory and

separate it from theories that regard decision making as a (strictly) rational process (Hille-

brand et al 2011) such as the resource based view (Oliver 1997, Clemens & Douglas 2006).

Some institutionalized activities even persist when organizations are not rewarded or in fact

lead to disadvantages (Oliver, 1997). Therefore, in the next chapter it needs to be evaluated

what the possible, strategic responses of firms assigned to institutional pressures are.

21

2.3. Strategic Responses

For firms within institutional fields, conformity to pressures and demands often constitutes an

attractive opportunity as it results in organizational legitimacy. However, total conformity to

pressures might result in tradeoffs between individual business objectives and resigning or-

ganizational autonomy (Oliver, 1992). Shifting away priority and attention from a firm’s self-

interest cannot be considered best for it. Zucker (1987) stated, as soon as organizational activ-

ities are institutionalized, they are sustainable, repetitive and normally stable over time. But

there seems to be empirical evidence that all these taken for granted norms, values and activi-

ties are less inescapable than traditional institutional theorists suggest (Oliver, 1992). More

specifically, the process of organizations responding to institutional pressures is not one-

dimensional but an interplay between organizational context and organizational action

(Greenwood & Hinings, 1996).

Several factors are identified that influence and limit the actions or responses of firms towards

particular pressures. Oliver (1991) developed a framework consisting of five so called institu-

tional antecedents; cause, constituents, content, control and context. ‘Cause’ deals with the

question about why an organization is being pressured, what are the underlying rationales,

expectations and intended objectives. ‘Constituents’ are defined as the source or the actor who

builds up pressure. Often, firms are confronted with varying and conflicting institutional forc-

es executed from multiple actors. The ‘content’ of an institutional pressure refers to the simi-

larity between the organizational goals and the expectations and demands exerted by the pres-

sure. Whereas ‘control’ is determined through the means by which pressures are imposed. It

can be distinguished between legal coercion or enforcement and voluntary diffusion. The last

antecedent ‘context’ deals with the framework conditions around the pressure, more precisely

the extent of uncertainty within an institutional field as well as the interconnectedness be-

tween organizations. All these factors influence to some degree decision of a firm whether to

comply with a pressure or to ignore it.

Between complying with a pressure and ignoring it, the literature reveals that there are various

alternatives for an organization in order to deal with these pressures and demands. Powell

(1985) stated that organizations can create a facade in which it seems that the organization

respects the existing standards and norms but in reality the operational activities are decou-

pled from its formal structures and processes. In particular relevant for this study is the theo-

retical framework, published by Oliver (1991), consisting of a set of strategic options that a

firm can execute when responding to institutional pressures. Varying from total passive con-

22

formity to active resistance, this framework can be considered as the most comprehensive for

understanding strategic responses towards institutional pressures (Clemens & Douglas, 2005).

In total, five different strategies are developed as follows: acquiescence, compromise, avoid-

ance, defiance and manipulation (Oliver, 1991). All these strategies contain a sub-set of tac-

tics, which further specify the different approaches that can be seen in figure 3.

Figure 3: Overview of strategic responses to institutional pressures (Jamali, 2010)

Acquiescence

The strategy of acquiescence refers to a firms attempt to passively conform to institutional

pressure which be executed via three types of tactics varying by their motives: habit, imitation

and compliance. Habit means the “unconscious or blind adherence to preconscious or taken-

for-granted rules or values”(Oliver, 1992); firms reproduce actions and practices according to

the institutional pressures. Imitation is consistent with the concept of mimicry or isomor-

phism. It is executed to reduce uncertainly by imitating successful organizations. Compliance

is a comparably more active way to acquiesce to institutional pressures as it is chosen in antic-

ipation of self-serving organizational interests.

Compromise

This strategy can be considered as a mixture between conformity and resistance, which typi-

cally occurs when different constituents build up conflicting pressures on an organization. The

attached tactics are balancing, pacify and bargaining. Balancing can be determined as a firms

attempt to achieve consensus among multiple stakeholders or internal objectives. Whereas

pacify is primary driven by the motivation to conform at least the minimum standards re-

quired by constituents in order to calm them. Lastly, the bargaining-tactic is described as

more active compared to balancing and pacify as the focus lays on negotiating with constitu-

ents and achieve some concessions.

Avoid

Oliver (1992) defines avoidance strategies as: “the organizational attempt to preclude the

necessity of conformity.” In order to execute this strategy, organizations can choose between

23

concealing their nonconformity, buffering themselves from institutional pressures, or escap-

ing from institutional rules or expectations. As mentioned earlier, Powell (1985) describes

concealment as creating a facade structure in order to hide non-conformity to institutional

pressures; this can also be described as ‘window-dressing’. With the buffering-tactic an or-

ganization tries to reduce the extent to which it can be inspected by the outside, e.g. by de-

coupling its technical activities from external and public contact. Escaping refers to an exit of

a firm from the domain where pressure is exerted by changing its goals, activities or location.

Defiance

If an organization chooses a defiance strategy, it shows an active form of resistance against

institutional processes. Typical reasons for these behaviors are comparable low overall costs

of not complying with or if the pressures are in conflict with the organizational objectives.

Attached to this strategy, three tactics can be identified: dismissing, challenging and attack.

Executing a dismissing tactic means that institutional pressures are ignored by an organiza-

tion, whereas the challenging tactic actively seeks confrontation with existing pressures. The

attack tactic refers to a more aggressive and intense form of challenging institutional demands

by “assault, belittle or vehemently denounce institutionalized values and the external constit-

uents that represent them.”(Oliver, 1991).

Manipulation

Within the scope of possible response strategies, manipulation can be considered as the most

active response strategy as it actively changes or exerts power on the content of a pressure

stream. This opportunistic approach also includes three sub-tactics: co-opt, influence and con-

trol. When an organization tries to convince the sources of pressures to form a coalition or

even join the organization, it can be considered as approaching a co-opt tactic. Influencing

goes a step further and tends to directly change the perceived institutional demands and ex-

pectations. The tactic of control builds up on that and tries to dominate institutional content

and sources in order to establish itself as opinion leader.

Additionally to this framework of potential responses an organization can approach towards

institutional pressures, researchers also developed a concept for firms that proactively influ-

ence institutional ideas and processes for their own benefit rather than just respond. DiMaggio

(1988) focused on this proactive part of firm’s actions and introduced the concept of institu-

tional entrepreneurship, consisting of organized actors with sufficient resources, which can

play a significant role as initiators or drivers of institutionalized change. These institutional

24

entrepreneurs try to challenge and re-construct existing institutional norms, rules and stand-

ards by creating new sets of social arrangements that better fit to their interests and objectives

(Fligstein, 1996). Actively breaking rules and challenging the status quo by not following

taken-for-granted norms stays in contrast with the traditional view on how organizations be-

havior is shaped (Greenwood & Suddaby, 2006). This concept, additionally to the mentioned

response strategies, can provide appropriate answers of how and why novel and innovative

organizational solutions are existent in the market (Garud, Hardy, & Maguire, 2007). By re-

vealing the literature of institutional entrepreneurship, different approachable tactics can be

identified consisting of a scale ranging from visionary framing up to concrete actions like

negotiating property rights (Klein Woolthuis, Hooimeijer, Bossink, Mulder, & Brouwer,

2013). Starting with the tactic of framing, which refers the depiction of a preferred institution-

al arrangement via commonly accepted narratives, it tries to elaborate on a ‘romantic’ vision

or image of a potential future (Pacheco, York, Thomas, & Saras, 2010). Theorizing builds

upon on this abstractions and categorizes them into chains of cause and effect to increase the

legitimacy and potential support for them (Pacheco et al., 2010). The following tactic of col-

laboration brings together the interests of different groups in order to build up a collective

entity like public-private partnerships (Klein Woolthuis et al., 2013). Lobbying refers to the

use of political tactics and power in order to progress the developed vision and interests

(Klein Woolthuis et al., 2013; Pacheco et al., 2010). Lastly, the tactic of negotiating with oth-

er actors within the institutional field can be approached, resulting in new arrangements like

contractual forms, property rights and financial incentives (Klein Woolthuis et al., 2013).

25

3. Methodology

This chapter discusses the research methodology, which is chosen to answer the research

question stated in the introduction chapter. The research will be executed by conducting an in-

depth case study consisting of archival data from newspaper releases, secondary research re-

ports and annual reports about the electric car in Germany. This will lead to a historical de-

scription of the development and diffusion of electric cars in Germany and of the changes in

the institutional context in this country.

In the beginning, I will provide criteria for the constitution of the research sample and in par-

ticular the case of the electric car in Germany. Second, before describing the data collection

procedure, I will elaborate on the research design and approach choices made for this re-

search. Third I give an overview about the used sources and the operationalization of the

search terms before drawing up on the chosen timeframe. Fourth, I present the database com-

position and measures based on the developed operationalized coding scheme. Finally, the

approached way of analyzing the data will be explained and issues of validity and reliability

will be addressed.

3.1 Sample - Introducing the electric car

In order to answer the research question and to examine the institutional factors influencing a

change in a particular industry, firstly a sample needs to be chosen. Four selection criteria

were applied to constitute the sample. First on a country level, the industry should have a sig-

nificant status, e.g. in terms of turnover or industry employment within Germany as this coun-

try is chosen to be examined in the context of this research. Second on an industry level, the

industry should be considered as a highly institutionalized field where firms have an incum-

bency status. Simultaneously sustainable innovations should exist, at least for a couple of

years, which compete for dominance with the existing institutions. Third, sales and diffusion

data as well as newspaper articles about the particular innovation should be available for the

entire research period. Fourth, key players within the industry should be on different levels

within the innovation adaption process. In order to examine processes of de-

institutionalization and institutionalization, it is significant that the strategic responses of the

focal firms to the pressures distinguish from each other. These four considerations resulted in

the decision for a longitudinal case-study approach on the electric car in the German automo-

tive industry.

26

The automotive industry in Germany is, measured by turnover, the key industry of the country

and after China and the US the biggest producer of automobiles worldwide (Bundesamt,

2011). In the case of the automotive industry, the existing institutions consist of the design of

the car, including the fuel based propulsion technology, the traffic rules or safety standards of

cars as well as the overall infrastructure and supplier network. All these factors can be seen as

taken for granted, as they all exist for several decades. The actors within this organizational

field, besides manufacturers, suppliers and oil companies are governmental agencies, profes-

sionals and consumer as well as collectives like NGO’s or environmental groups. The intro-

duction of the electric car as a result of ongoing R&D activities and raising sustainability is-

sues doesn’t fit into the existing institution. That is why pressures from different actors for de-

institutionalization of the existing logics as well as for the institutionalization of new logics

come along with it. This is in line with the research of van den Hoed & Vergragt (2006), who

stated that technological innovations can be considered as a institutional change, consisting of

both de-institutionalization of the dominant trajectory and simultaneously as an institutionali-

zation of a radically new technology located outside the current. The chosen firms whose stra-

tegic actions and responses towards pressures will undergo an in-depth analysis are BMW,

Daimler (Mercedes) and Opel. The former recently announced to launch a first electric car

“I3” in the end of 2013 whereas Mercedes still is in a phase of resistance. Opel actually was

the first German car manufacturer launching an electric car but, as Opel is part of the Ameri-

can company GM, it is questionable in how far they were independent on their strategic

choices (Appendix B).

3.2. Research Approach & Design

This research can be considered as inductive and qualitative focusing on an in depth analysis

of a single case. A significant part of this research is related to interpretations of the context as

it concentrates on causal relations within the research field, describing new phenomena and

questions. Further, the research is also explorative as it investigates the process of institutional

change and in particular the adoption strategic behavior within firms (Saunders, Lewis, &

Thornhill, 2009). However, in order to increase the generalizability of the results, findings of

other theories are included as well as their conclusions are tested by analyzing the found

events deductively. This explorative nature of the research question legitimates a case study

approach, which is preferably suitable when ‘how’ or ‘why’ questions are being posed (Yin,

2008). The case of the electric car in Germany, as mentioned in the chapter before, was cho-

27

sen according to Eisenhardt (1989) on the basis of the focus, goal and the ability to answer the

research question. Regarding the choice of data gathering, a mixed method approach is cho-

sen. Even though the collected data is mainly qualitative, it will be quantified through ap-

proaching a self-compounded coding scheme. The research question aims to analyze data and

casual relationships over a certain time frame in order to explore if future predictions can be

made. Therefore a longitudinal approach is chosen (Yin, 2008). In order to cope with the aim

of the research questions, each collected data event will be coded and analyzed by using pro-

cess analysis. This approach offers the opportunity of operationalizing and measuring dynam-

ics by relating them to events, further elaborated in chapter 3.6 (Langely, 1999). This overall

research strategy will enable the examination of different layers and perspectives within an

institutional field by gaining rich understandings of the context and the processes being at-

tached. Furthermore, this approach allows collecting comparative and contextual data

(Saunders et al., 2009). The gathered data consists of archival data like news releases, second-

ary research reports and annual reports about the electric car in Germany. The time frame

covers ten years from March 30th 2003 until March 30th 2013 and is chosen in reflection of

the diffusion rate and sales data of the electric car, the availability and amount of newspaper

articles as well as of the significance of innovation events.

3.3. Data Collection: Sources & Search Terms

As mentioned before, the empirical research will focus on archival data, mainly originating

from newspaper and annual reports. Multiple sources are used to create a comprehensive

event history timeline with minimal bias (Saunders et al., 2009, p. 181). In order to meet a

certain degree of validity and reliability, it is essential to specify some selection criteria for

the data sources. One of them is measurement validity, which implies only the collection of

that information, which is needed to answer the research question. Hereby the data validity

can be evaluated by comparing the data collection to similar research studies in similar con-

texts. Secondly, another important suitability criterion is the overall coverage. It is needed to

assure that the secondary data covers the overall structure and actors about which you need

data, for the time period you need, and contain data variables that will enable you to answer

your research question (Saunders et al., 2009). Based on these criteria, it is decided to choose

a broad range of different sources to capture a comprehensive description of historical events

and reduce potential bias. The source sample consists of a daily newspaper, a weekly business

28

news magazine, a weekly magazine particularly examining the related industry and a source

directly connected to the legislation:

Handelsblatt (daily newspaper): The most cited economical medium in Germany

Wirtschaftswoche (WIWO) (weekly business news magazine): The biggest and most cited

weekly business magazine in Germany

Auto Bild (weekly magazine): Germany’s biggest magazine for all topics related to the auto-

motive industry

German Parliament (www.bundestag.de): Additional source to cover all resolutions and

decisions made from the government

Even though a broad range of data sources is chosen, reporting bias might occur. Articles in-

clude political opinions, geographical differences or personal ideologies that increases the risk

of bias (Saunders et al., 2009). According to Franzosi (1987) selected newspaper should not

only be chosen by their circulation but should also cover different ideological stances and

proximities. Specific characters of newspapers like the writing style or the publisher’s visions

about certain content could lead to distorted reporting (Benders, Nijholt, & Heusinkveld,

2007). However, the above-mentioned three newspapers and magazines are not characterized

as particularly politically influenced and if so, a balanced range of different political views is

provided. In addition to this, articles of newspapers and magazines are in general not written

and published in a way that they can easily be approached to scientific work, they are aiming

to gain public interest and to motivate potential customers to purchase a copy (Stewart &

Kamins, 1993). Approaching database triangulation as suggested by Benders et al. (2006), it

was possible to compare the reporting of events from different sources and therefore minimize

bias. In addition to this, all sources were accessed in two different ways in order to capture a

comprehensive historical description. Firstly, the online archive on the website was used and

secondly the LexisNexis tool. Lexis Nexis is a global provider of billions of documents, rec-

ords and article from more than 45.000 newspaper and business sources. Especially when it

comes to older articles, some online archives from websites lack of comprehensiveness.

After determining the data sources, certain key words or search terms need to be specified in

order to capture relevant data (Benders et al., 2007). Within a group of three researchers, gain-

ing data about the same topic and industry in different countries, two terms are chosen that

should cover the necessary content to answer the research question: ‘Electric car’ and ‘e-

29

mobility’. These keywords are translated in the native language of each examined country, for

this particular research they were translated into German: ‘Elektroauto’ and ‘Elektromobili-

tät’. However, further judgement of the researcher is necessary in order to select only those

articles or events that are suitable for answering the research question. (Benders et al., 2007).

The search results normally consist of every article, which includes one of the search terms

even if, no useful information is provided.

3.4. Setting the timeframe

Approaching a longitudinal process study is very time-consuming and requires a large amount

of multidimensional data in order to meet a certain level of generalizability (van de Ven &

Poole, 2005). The amount and ambiguity of available data often presents an issue to find an-

chor points, namely to define the beginning and the ending of a research timeframe, as events

referring to a particular topic might be immensely widespread over time and space (Pettigrew,

1992). Researchers need to keep the balance between choosing the length of this timeframe

appropriately for the sake of completeness as well as also focusing on precise and in-depth

data gathering (Pettigrew, 1992).

In the case of the electric car, the story already starts in 1881, five years before Carl Benz

invented the fuel car. Gustav Trouvé introduced the first electric vehicle, an adapted version

of a tricycle produced from the English manufacturer ‘Starley Coventry’ (Lang, 2012). Be-

tween 1900 and 1912 there were more electric cars registered than fuel cars especially in the

USA, Germany and Austria. They were produced by a large number of different firms, includ-

ing Daimler, Ford and Porsche (Lang, 2012). Due to fast technological developments of the

fuel engine, the electric propulsion technology found its way into a niche market where it

stayed, besides a few futuristic concept cars, until the early 1990s without having any impact

on the general mobility behavior. In 1995, as result of several smog alerts, the state of Cali-

fornia passed a law stating that until 2003 at least 2% of all registered cars should be emis-

sion-free (Postinett, 2006). This law led to highly increasing innovation activities of almost all

car manufacturers but especially the American ones like GM, Chrysler, Ford but also Honda

and Toyota. But after the automotive industry successfully sued the state of California in

2003, all cars were gone immediately within months and all firms stopped their electric car

research programs, besides Toyota, which still developed and sold their hybrid car ‘Prius’

(Postinett, 2006). Henceforth, the German Federal Motor Transport Authority started to track

30

the diffusion data of electric as well as hybrid cars (Kraftfahrt-Bundesamt, 2013). Considering

the whole timeframe, the history of the electric car covers more than 130 years from the be-

ginning until today. Referring back to the necessary sake of data completeness as well as the

availability of precise and in-depth qualitative and quantitative data, it is decided within the

research group to cover a time frame of ten years from the January 1st 2003 until December

31st 2012 in consideration of the diffusion rate and sales data of the electric car, the availabil-

ity and amount of newspaper articles as well as of the significance of innovation events.

In total, 622 significant events where gathered within this timeframe based on 509 listed arti-

cles. Overall, 2696 articles were inspected to achieve a certain level of generalizability and

comprehensiveness. In the Appendix D an overview about the apportionment of articles based

on the different sources can be found. Additionally, all used articles are documented and ar-

chived in Appendix G.

3.5. Database composition

To create a suitable base for the analysis of these 622 events, a database needs to be com-

posed storing all relevant or significant information, which can be used for the interpretation

of the events (van de Ven & Poole, 2005). The group of researchers developed a framework,

which will be further explained in this chapter, and agreed on the exclusiveness of all codes

and all corresponding. In addition to this, precise definitions including examples were at-

tached to the scheme file to ensure a high level of understanding and reliability. The database

is based on a logical way starting with general information in the first 5 columns. Firstly a

unique event number is attached to each event for identification reason. In the second column

a description of the main message of each event is made and translated into English building

the base for later qualitative analysis. Further, every event was labeled as a particular type of

institutional pressure, coercive (C), mimetic (M) or normative (N), and subsequently by the

actor executing this pressure, government either European or national (G), industry actors (I),

collectives (Col) or professional sources (P). These labels refer back to the identified institu-

tional pressures from the literature review in chapter 2.2. According to this, a coercive pres-

sure imposed by the government is coded as ‘CG’. In chapter 2.2 different event actions for

each kind of pressure and each actor are shown, which are included in the coding scheme and

attached by a number. For example, if the government provides subsidies for industry players,

this event is coded as ‘CG7’. However, while conducting final reliability tests of the overall

31

coding scheme within a group of three researchers, we added additional codes to the scheme,

which were not based on the literature review but would further increase the reliability and

comprehensiveness of the framework. These additional codes are marked in green in the

attached figure that gives an overview of all codes.

For some events there is also duration provided. This column is only applicable for govern-

ment action in order to show duration of a policy plan, a subsidy or other temporary events.

The next four columns show reference information to ensure appropriate data archiving and in

order to diminish coding error as well as prevent misinterpretation of the text (Franzosi,

CG1 Law proposal CI1 Contractors/suppliers

boycott

CCol1 Political consumerism

CG2 Policies CI2 Sueing / Lawsuits CCol2 Embargoes, lockouts

CG3 Laws / bans CCol3 Occupation

CG4 Technology-forcing

standards

CCol4 Shareholder activism

CG5 Fiscal measures

CG6 Monitoring and law

enforcement

CG7 Subsidies

CG8 Reporting requirements

CG9 Investments in

Infrastructure

MI1 Degree of industry

adoption

MP1 Rankings (e.g. %

companies that have

adopted ISO norm)

MI2 Degree of industry

interconnectedness

MP2 Training staff

MI3 Change in firm / industry

size (no. of employees)

MP3 Spread of dominant

management models

MI4 Change in firm / industry

turnover - profit

MI5 Change in firm prestige

and visibil ity

MI6 Change in no. of

innovations

MI7 Change in no. of

inventions

MI8 Change in level of

competition

NG1 Voluntary agreements NI1 Advocacy NCol1 Public expresses

opinion

NP1 Introducing new norms

and standards

NG2 Public procurement NI2 Industry association

membership-action

NCol2 Introducing alternative

business models

NP2 Knowledge development

NG3 Awareness campaigns NI3 Coalition NCol3 Campaigns NP3 Knowledge sharing

NG4 Political discussion NI4 Self-regulation NCol4 Revealing information,

disclosure

NP4 Expressing expert

opinions

NG5 Petition / motion NCol5 Civil disobedience NP5 Training / education

NG6 Certification and

normalisation

NCol6 NGO/Business

partnership

NCol7 Lobbying

NCol8 NGO-Governmental

relations

NCol9 Champion

Mimetic

Normative

Government Action Industry Action Public Action Professional Action

Coercive

Figure 4: Overview of identified events from institutional pressures

32

1987). Hence, at every time other researchers could reconstruct the inclusion of particular

events. In addition to the labeling approach of events as described before, the next columns

give further insights of each event’s contribution to the diffusion of the electric car in Germa-

ny. For each kind of institutional pressure the researcher can choose from a five-point scale

ranging from ‘-2’ until ‘+2’ in order to indicate a negative or positive impact of the event. A

‘2’ implies a comparably strong negative or positive impact on the diffusion rate whereas a

‘1’ shows a minor effect. An event can also be coded as a ‘0’ if the impact is not clear yet or it

constitutes relevant information but without any direct impact. The next four columns exam-

ine actions and responses of the focal firms, which were chosen in chapter 3.1. After stating

the name, the researcher can fill in a particular company action from a range of possibilities.

These actions are not directly deduced from literature but should be considered as an open

framework that can be extended for future research. Within this research group we aligned to

use the following company actions:

The next columns approach the potential response strategies and tactics based on the frame-

work of Oliver (1991), which is also covered in chapter 2.3 of the literature review. The very

last column in the coding scheme refers back to origin of the institutional pressure. Here the

researcher can fill in whoever is the recipient of the pressure, either one of the other actors,

Company Action Impact on Diffusion

Investment in internal capabilities +

De-Investment in internal capabilities -

Innovation, product introduction +

Decreasing market offering -

Partnering (for development, production, distribution) +

Quit Partnering (for development, production, distribution) -

Marketing of new product / market development +

Stop Marketing of new product / market exit -

Set up of new BU / facility +

Shut down BU / facility -

Introducing new business models +

Shut down new business models -

Mergers and Acquiring other businesses +

Selling / Spinning out a company -

Lawsuits / IP wars etc. -

Increase prices -

Decrease prices +

Figure 5: Overview of identified company actions

33

multiple recipients or ‘not specified’ if no one can be identified. The coding scheme including

all coded events can be found in Appendix E.

The following example will explain how the coding procedure works. On December 16th

in

2008, the Handelsblatt published an article stating that Daimler and Evonik start a cooperation

to develop a better battery technology for electric cars ([162] = Unique event number within

the database). This event matches the event action ‘Degree of industry interconnectedness’

(label = MI2) and can also be considered as a strong mimetic pressure (‘+2’) as it originates

from an important industry actor. As Daimler is one of the focal companies, additional col-

umns need to be filled out. Under Company Action this event matches with ‘Partnering (for

development, production, distribution of focal products)’. A particular response strategy as

well as a recipient cannot be identified.

3.6. Analysis

After gathering all relevant data and integrating them into the database, an appropriate analy-

sis approach is needed that employs quantitative as well as qualitative techniques in order to

distill dynamics and gain theoretical insights about generation of new institutions and the way

firms respond to them (Poole, Van de Ven, Dooley, & Holmes, 2000). The process analysis

offers the opportunity of operationalizing and measuring these dynamics by relating them to

events (Langely, 1999). It aims to understand why and how events happen over time and the

evolution processes can be explained. Theory is rather built than tested with this approach as

events do not serve as variables but need to be conceptualized and patterns need to be detect-

ed (Langely, 1999). In general, process analysis contains multiple levels of data examination,

as events are unfamiliar to the researcher. Naturally, this kind of analysis comes along with

different strategies or ways to approach it. Langley (1990) provides an overview of these in-

cluding an examination of their strengths and weaknesses. Based on that, three different strat-

egies are combined for this research; narrative, quantification, temporal bracketing.

The narrative strategy aims self-explaining to the construction of a narrative, or better said a

plot or story line, consisting of sequences of events, which stick closely to the original data.

The construction of a narrative needs to be done as objective as possible even though the in-

terpretation of the researcher is a significant factor. To minimize bias, the narrative is based

on multiple sources of quantitative data (including external reports) as well as qualitative

components like expert opinions or interviews gathered from the newspapers. This strategy is

34

in particular suitable if only one or a few cases are examined as it results in a high level of

accuracy but simultaneously to a lower degree of generalizability. However due to fact that

the group of researchers conducts the same study, focusing on the same industry in different

countries, a certain level of transferability is ensured. This qualitative approach leads to in-

depth examination of data and can further be used for validation or contextualization purposes

(Langely, 1999). It is mixed with the temporal bracketing strategy to structure data in periods

which enables the researcher to examine how certain events in one period influenced others in

following periods (Langely, 1999). Approaching quarterly periods will especially support the

visualization process. Further, temporal bracketing can be in particular useful when aligning

the coded events to other secondary data like diffusion data or even company reports as these

data are also only available in monthly or yearly timeframes. This combination simultaneous-

ly means that tracts of the content analysis are combined with the process analysis as reported

data are systematically examined which is especially valuable when determining the appraisal

of firms or whole industries (Benders et al., 2006). Coming back to the strategies of process

analysis, adding the quantification strategy helps to reduce the complexity of data and in-

crease simplicity through systematically listing and coding of qualitative incidents according

to predetermined characteristics (Langely, 1999). The possibility of statistical tests on the

generic coded events further increases the generalizability of the study. But there is also an

opportunity for an increase of the reliability in the execution of this strategy. Based on Landis

& Koch (1977) an inter-related reliability test can be conducted within the group of research-

ers. This statistical test focuses on the degree of agreement amongst multiple observers or

researchers and provides a score of how much consensus is reached in the ratings given by

them (Landis & Koch, 1977). Based on that, the Kappa score can be calculated by approach-

ing mathematical formulas. This research shows a Kappa score of 0.76, which indicates a sub-

stantial reliability according to Landis & Koch (1977). More details on the conduction of this

test as well as on the operationalization process of theoretical concepts can be found in the

attached Capita Selecta report (Appendix H).

35

4. Results

According to the research strategy described in the methodology section, this chapter will

present the results gathered from the newspapers and coded within the shown theoretical

framework. Firstly, general findings are exposed including an overview about the diffusion

development of the electric car within the examined timeframe. Based on that, different tem-

poral phases or episodes are identified which will conduce as the underlying structure for an

in-depth qualitative analysis in a second step. A particular phase might be characterized by

important trends, by the occurrence of specific events having a high impact on the diffusion of

an innovation, or by considering significant external factors. These phases guide the reader by

implementing a narrative. After each statement, which refers back to an event, the unique

event number will be stated in brackets for identification reasons. Due to the high amount of

available data from the coding scheme (Appendix E), not every interrelation or potential con-

nection will be tested. Hence, this analysis will be executed with the purpose to gain insights

that can be used for answering the research question.

The following figure gives an overview about the development of the electric and hybrid car

diffusion within the examined timeframe in Germany. It shows a clear and constant trend with

an average yearly growth of 48%. The highest growth rate can be found between 2005 and

2006 with 65%, while between 2007 and 2008 the lowest growth rate is indicated with 27%.

However, in the end of 2012, there were only 7.114 electric cars and 64.995 hybrid cars regis-

tered in Germany. Comparing these numbers to the number of traditional fuel cars, they only

account for 0,02% (electric cars) and 0,21% (hybrid cars) of the total amount of registered

cars. Figure 6 illustrates this development and distribution between electric cars and fuel cars.

Additionally, Appendix A gives an overview about the sales data of traditional cars during the

examined timeframe as well as the development of the oil price. While the latter is fluctuating

strongly, the traditional cars sales develop comparably stable over time with an average de-

crease of 1% per year. Overall, more than three million cars are sold annually in Germany.

36

In order to examine which factors influenced this development, a first high-level analysis of

the institutional pressures is conducted. Figure 7 will provide an overview as well as a base

for creating a narrative.

It exhibits the development of each type of institutional pressure over time as well as the total

quantity of articles containing the search terms. From the beginning of 2003 until the end of

2006, there were not a lot of articles published dealing with electric cars or e-mobility in gen-

eral, thus pressure for institutional change remains on a comparable low level. This indicates a

relatively low interest on the topic from the majority of institutional actors. Only a small peak

Figure 6: Electric Car Market Diffusion 2012 (Kraftfahrt-Bundesamt, 2013; Masson, 2013)

Figure 7: Amount of Institutional Pressure 2003-2012

37

of mimetic pressure can be spotted in 2005. In 2006, mimetic pressure rises as well as norma-

tive pressure, before in the mid of 2007 in particular the mimetic pressure increases strongly

and stays on a high level until the mid of 2009. Within this time, also the coercive pressure

starts to grow in 2009. But it falls again at the same time when the mimetic pressure decreas-

es, both pressure continue to stay on a comparable low level until the end of 2010. From then

onwards, especially the mimetic pressure rises again until the end of 2011 followed by the

coercive peak in the mid of 2011. The normative pressure curve shows a high level of fluctua-

tion, which also hits the negative area a few times. From the end of 2011 the mimetic pressure

declines strongly and shows a negative peak in the mid of 2012, also the normative and coer-

cive pressure remains on a comparable low level during this time. Overall, the average of in-

stitutional pressure towards a change is slightly positive during the whole examined

timeframe.

In addition to the institutional pressure, a closer look during this chapter will lay on the exam-

ination of company actions and how they interact with the pressure as well as in how far they

are reflected in a higher diffusion rate.

Looking closer on the origin of the pressures, an interesting phenomenon can be spotted. 97%

of the mimetic pressure is originating from industry actors as a consequential result of com-

pany actions. Normative pressure is mainly exerted by professionals (65%) but also to a lower

Figure 8: Overview Actor per Institutional Pressure

38

amount by public actors (14%) and industry actors (12%). The Government primarily exe-

cutes coercive pressure accounting for 73%. In sum, industry actors are the most active con-

tributors of institutional pressure; they account for 63% of the overall exerted pressures, fol-

lowed by professionals with 23%, the government with 9% and public actors only responsible

for 5%. An overview of the distribution of actors per pressure as well as the overall stake per

actor is given in figure 8.

This very comprehensive analysis of the overall development is necessary to identify certain

periods or phases that can be summarized in order to form narratives. As a result, six phases

are detected which will be submitted an in-depth analysis in the next chapters.

4.1. A Niche Market (Q1 2003 – Q3 2006)

Description

In 2003, the first relevant event is the announcement of Ford to stop the production of its elec-

tric car ‘e-think’, after GM and Honda already did the same [2]. This was the last sample orig-

inating from the electric car hype in the 1990s as described shortly in chapter 3.4. It can be

interpreted as an anticipated response to the court decision in California in April 2003. After

the automotive industry successfully sued the state of California for introducing new stand-

ards, which forced them to offer a certain amount of zero emission cars within their portfolio,

a court skipped the mandate again [3]. This court proceeding received high interest from au-

tomotive industries worldwide, as the outcome would have a significant signal effect on glob-

Figure 9: Overview of Pressures during Phase 1

39

al governmental initiatives. These two events are responsible for the negative institutional

pressure at the beginning of this phase as shown in figure 9.

The court decision to skip the zero emission mandate gave a signal to the whole automotive

industry and as a consequence the topic of electric mobility sank into insignificance for the

moment as leasing contracts were not extended and the sales of new electric vehicles was

stopped immediately [3]. As late as in the beginning of 2005 when the Kyoto was ratified in

Germany and nations obliged themselves to reduce CO2 emissions between 2008 and 2012 by

50%, the topic found its way back into wider public interest [6]. Firms like Mitsubishi [7] and

Volkswagen [10] as well as knowledge institutes like the national aeronautics and space re-

search centre in Germany started to research again on electric as well as hybrid cars and even

showed first concepts [8,9,11]. Alternatively, this can also be seen as response to the unex-

pected successful launch of Toyota’s ‘Prius II’ in Japan and the US in 2003 [2]. Solely in the

United States, more than 150k units were sold between 2003 and 2005 ("Alternative Fuels

Data," 2013).

In the mid of 2006, the documentary “Who killed the electric car” was published by some

independent filmmakers drawing an unpleasant picture of the automotive industry and their

involvement in the mentioned lawsuit against the state of California in 2003 [12]. “We made

the movie because no one was telling the whole story”, said director Dean Devlin2. This pub-

lic pressure pushed the electric car again in the focus of public and political discussions.

However, looking at the overall media attention, the amount of pressures as well as the com-

parable weak sales data, this phase is characterized as a niche market existence of the electric

car, even though weak institutional pressures in favor of electric cars can be spotted (figure 9).

Findings

The negative coercive pressure originating from the court decision in California in 2003 char-

acterizes this phase. Even though figure 8 shows only a small negative peak, evaluating this

event from a qualitative perspective, the real impact can be seen as described before. It can be

seen as reproduction process of the existing paradigms triggered through company actions

that led to negative coercive pressure. These pressures prevented the generation of institution-

al change processes and dominated the automotive industry for the next three years. Mimetic

pressure did not start to rise until the mid of 2005 as an effect of industry actors starting to

2 "Wir haben den Film gemacht, weil nie jemand die ganze Geschichte erzählt hat”, sagt er heute [12] (Han-

delsblatt, 2006)

40

research again on hybrid as well as electric cars in response to economic success of other in-

dustry actors. Normative pressures, besides the release of the documentary, however were

almost not existent during this phase.

4.2. The Beginning (Q4 2006 – Q1 2008)

Description

The next period started eventfully; in November 2006 the Californian start-up firm Tesla

launched its ‘Roadster’, a full-electric car based on a revolutionary battery technology consist-

ing of lithium ions [16]. This was in particular interesting as Tesla introduced a high-end elec-

tric car with a range of over 400km to the market, without having any deep knowledge about

the automotive industry. The feedback from professionals, more specifically from test drivers

and journalists from the Auto Bild, can be summarized as very positive, all comes to the same

conclusion; It pioneers the technology for the future of the automotive industry3 [32,63,65].

While public actors as well as governmental agents remained quiet, in particular Japanese car

manufacturer like Mitsubishi, Nissan or Toyota started to show electric concept cars as a re-

sult of their R&D initiatives on trade fairs in 2007 and announced to develop new propulsion

technologies [33,38]. But also French and American car manufacturers like Renault, GM or

Chrysler followed the trend and presented electric car concepts to the public. A lot of test

drives are done during this phase and important insights for further developments were gath-

ered. Following the example of Tesla, a high amount of start-up firms from around the world

entered the market and showed their concept versions of electric cars as well as alternative

charging solutions or battery technologies [23,28,31,35,37,53,56,68].

The following figure gives an overview about the general development of institutional pres-

sure within the second phase and shows in particular the entering of new start-up in the mar-

ket. Entry points are marked as black circles:

3 Er bildet die Vorhut für die automobile Technologie der Zukunft [63] (Auto Bild, 2008)

41

While their foreign competitors as well as start-ups actively worked on evaluating this new

market opportunity, the German automotive industry stood back and observed. Opel, a Ger-

man subsidiary of GM, is in the end of 2007 the only German car manufacturer that published

results of their R&D activities towards electric cars in form of a concept car [48]. In the

meanwhile, VW is more skeptical regarding this upcoming trend and only stated that they

plan to implement certain electric components in all of their traditional cars4 [34]. But in

2008 a certain level of consent within the German automotive industry was reached. All man-

ufactures aligned on establishing a research community in cooperation with the supplier in-

dustry, in order to develop norms and standards for lithium ion technologies5 [61]. Stating

that these technologies are the key competence for the success of electric cars, the research

community announced to get the market leadership back to Germany [49]. This is an indicator

for the rising importance of industry as well as cross-industry partnerships and cooperation.

While BMW announced to cooperate closer with Renault for the development of new engines

[62], GM and Citroen started partnerships with battery suppliers [14,73].

4 Künftig wollen die Wolfsburger alle Verbrennungsmotoren um elektrische Komponenten erweitern [34] (Auto

Bild, 2007) 5 die unter anderem Standards für Lithium-Ionen-Batterien erarbeiten und Entwicklungsarbeiten koordinieren

soll. [61] (Handelsblatt, 2008)

Figure 10: Overview of Pressures during Phase 2

42

Looking from a professional’s perspective, more specifically from the perspective of test

drivers and journalists of the Auto Bild [28,32,50], the tenor is quite positive on average to-

wards the future of electric cars. But the level of exerted normative pressure originating from

them remained low as it can be seen in figure 10. But also scattered negative or skeptical

opinions can be spotted; the chief scientist of Ford stated that he doesn’t believe in a high dif-

fusion rate of electric cars within the next years, “the fuel engine will remain the dominant

technology for the next 20 years”6 [69].

Regulative forces were almost non-existent during the second phase. The German government

passed a law in the mid of 2007 which classifies every car according to its CO2 emission.

Based on that classification a mandatory badge needs to be put on every car [43]. However,

this initiative didn’t directly aim at a higher diffusion rate of electric cars, in particular effi-

cient fuel cars should benefit from it. Besides this political initiative the government didn’t

exert any pressure towards the diffusion of electric cars.

Findings

Compared to the first phase, a general increase of institutional pressure can be seen, mainly

originating from industry actors. Whereas coercive pressure didn’t contribute to this devel-

opment, start-ups like Tesla played a significant role by creating mimetic processes on the

institutional field. Overall, mimetic pressures were dominant during this phase also triggered

by actions of Japanese and French car manufacturers. All other actors remained predominant-

ly silent. Almost no actions from the German and European government as well as from the

public could be spotted. Professional sources, in particular journalists, started to execute nor-

mative pressure by publishing positive test drive results and opinions about the electric car

technology. However, by looking at the strategic responses and actions of the focal firms,

these generation processes for institutional change didn’t seem to be strong enough to lead

them to strategic adoption towards the electric car.

4.3. First Hype (Q2 2008 – Q2 2009)

From April 2008 onwards, the positive trend from phase 2 continued and resulted into a first

hype. Figure 6 in chapter 4 shows that during this period, the institutional pressure in favor of

the electric car is the strongest within the whole examined timeframe. Again, in particular the

6 Rudolf Menne, Forschungsleiter von Ford in Europa, geht davon aus, dass “auch in 20 Jahren Autos noch vor

allem mit Benzin und Diesel betankt werden.” [69] (Handelsblatt, 2008)

43

mimetic pressure originating from the actions of industry actors is the main driver of this

trend; it pushes the topic in the focus of the industry as well as in public and political discus-

sions.

Description

In phase 2 a lot of start-up firms entered the market, exerting mimetic pressure on other indus-

try actors. This development continues in the third phase. At the London Motor Show in July

2008, start-ups upstaged the established car manufacturers with innovative concepts even

without having high amounts of resources [114]. Industry Experts of Auto Bild warned that

these firms were about to outperform the traditional ones. This applies in particular for Ger-

man car manufacturers; the supplier industry criticized their lack of interest and innovation

activities towards e-mobility [77]. Representatives claimed that the supplier industry solely

doesn’t have the power and the resources to invest in this new technology without having a

clear declaration of intent from the car manufacturers: “As long as the European automotive

industry focuses their R&D activities on diesel technology instead of alternative propulsion

technologies, no supplier will be able to invest into e-mobility”, they stated.7

While the German government still remained quiet, an influential law was discussed within

the European Union between politicians, representatives of the automotive industry and envi-

ronmental groups to cut down the average CO2 emissions of each sold car within a firm’s

product portfolio [98]. Each violation might be sanctioned with high penalty payments for the

manufacturers that was not further specified yet. All these mentioned events combined with

increasing mimetic pressure sourcing from new strategic partnerships and joint ventures with-

in the industry, led to a change in strategic thinking [125]. Almost all key players established

partnerships with battery producers, as this technology is considered as groundbreaking for

further development.8 After Toyota [76], Peugeot Citroen [99], Mitsubishi [99,122] as well as

the American manufacturers GM, Ford and Chrysler [124] announced new partnerships with

the aim to progress the development of electric cars and in particular the development of new

battery technologies, first German manufacturers showed serious attempts to follow this trend.

In September 2009, Daimler notified to cooperate with RWE, an electric utilities company, to

run a field test in Berlin by providing 100 electric cars while RWE would implement the nec-

7 "Solange die europäische Autoindustrie in Richtung Diesel unterwegs war und alternative Antriebskonzepte

nicht ernsthaft verfolgte, konnte es sich kein Zulieferer leisten, in Vorleistung zu gehen und eine Serienfertigung

von Hochleistungsbatterien für Elektroautos aufzubauen.” [77] (Handelsblatt, 2008) 8 Fast alle großen Hersteller haben schon Bündnisse mit großen Akku-Hersteller geschmiedet, da die Bat-

terietechnologie beim Elektrofahrzeug als Schlüsseltechnologie gilt. [125] (Handelsblatt, 2008)

44

essary charging point infrastructure consisting of 500 charging stations [126]. In total, Daim-

ler plans to invest approximately 14bn. € until the end of 2010 in researching alternative pro-

pulsion technologies [94], accompanied by the announcement to launch a first electric car in

2010 [85]. Opel even planned to launch two electric cars within the next four years [88], ben-

efiting from the innovation activities within their parent organization. In this regards, the par-

ent GM recently announced to sell their premium SUV brand ‘Hummer’ in order to focus on

environmental friendly cars [91], simultaneously they will launch their first electric car ‘Volt’

in 2010 [90]. Opel followed and planned to launch the ‘Volt’ in Europe in 2011 under their

brand; the car would be called ‘Ampera’ [121].

Another particularly interesting case for strategic adoption processes of German car manufac-

turers was the case of BMW. On the 7th

of July 2008, the chairman of BMW described the

discussion about electric cars as a short-term hype [107]. To a journalist’s questions if he be-

lieved in the electric car becoming the dominant vehicle within the next years, he replied: “In

ten years – definitely no! The hype about the electric car is unreasonably high at the mo-

ment”9. He further stated that they are not planning to mass-produce electric cars within the

next years [108]. Only three weeks later on the 1st of August 2008, the company had already

changed its course and BMW announced to launch 500 electric versions of the ‘Mini’ for

long-term consumer tests in California in the end of 2008 [117].

September 15th

represented a drastic incident in the beginning of the twenty-first century. On

the ‘Black Monday’, the investment bank Lehman Brothers felt into insolvency and thrilled

the global economy into a financial crisis [135] including dramatic impacts on the global au-

tomotive industry. Sales figures dropped dramatically and led to a climacteric situation for

most of the car manufacturers; “The global car markets are facing a historical downturn as it

has never happened before”, Matthias Wissmann, president of the German Association of the

Automotive Industry (VDA) stated.10

The following figure gives an overview about the sales

development of different car manufacturers on the USA market in 2008. It can be spotted that

especially the American manufacturers had significant issues, their average sales decreased by

24%. But almost all manufacturers faced sales decreases of more than 10%.

9 In zehn Jahren – nein! Die Euphorie für das Elektroauto ist momentan etwas überzogen.[107] (Auto Bild,

2008) 10

„Die Automobilmärkte haben eine Talfahrt genommen, die in dieser Geschwindigkeit und Ausprägung noch

nie vorher stattgefunden hat“ [156] (Handelsblatt, 2008)

45

This presents an additional obstacle to the automotive industry next to different kinds of up-

coming technologies and the attached high investments [173]. Following this, a change in

national governmental behavior can be perceived towards a more active policy. In November

2008, the first edition of the ‘National Strategic E-Mobility Conference’ was held in Berlin,

initiated by the Federal Ministry of Transport and the Federal Ministry for the Environment.

The goal was to establish a close cooperation between politics, the automotive industry, elec-

tric utilities companies and the Bochum University of Applied Science aiming to increase the

diffusion rate of electric cars [157]. This is just one part of the introduced policy plan by the

German government to gain a leading market position on the global electric car market within

the next 10 years [159] aiming at a diffusion of one million electric cars until 2020 [163,172].

“In 2050, urban transportation and traffic should even get along without any fossil fuels”11

,

as stated in the policy proposal. Concrete measures for this policy plan were not announced

yet. More governmental initiatives provided subsidies for the development of new propulsion

and battery technologies; more than 500 million € were invested as part of the economic

growth package until the end of 2010, which is a response to the global financial crisis

[158,178,203,238]. But the biggest subsidies to support the automotive sector as the key in-

dustry in Germany, doesn’t particularly aim at electric car diffusion or development. In Janu-

ary 2009, car holders with vehicles older than nine years were supported with 2500 € ‘Scrap-

ping Bonus12

’ to purchase a new car, not limited to any particular type or engine [187]. Ex-

11

"Bis 2050 soll der Verkehr in Städten überwiegend ohne fossile Brennstoffe fahren", heißt es in dem 16 Seiten

umfassenden Plan [172] (Auto Bild, 2008) 12

Abwrackprämie

Units sold +/- % Share 2008 Share 2007

07/08 in % in %

Chrysler Corp. 1.447.736 -30,3 11,0 12,9

Ford 1.986.268 -20,6 15,1 15,6

GM 2.955.964 -22,7 22,4 23,8

American Manufacturers 6.389.968 -24,0 48,4 52,2

Toyota 2.218.337 -15,4 16,8 16,3

Asian Manufacturers 5.915.139 -12,2 44,8 41,9

BMW 303.190 -9,7 2,3 2,1

Mercedes 249.760 -1,4 1,9 1,6

Porsche 26.035 -25,0 0,2 0,2

VW 310.888 -4,1 2,4 2,0

German Manufacturers 889.873 -6,1 6,7 5,9

In Total 13.194.980 -18 100 100

Figure 11: Sold Cars in the US 2008 ("VDA Jahresbericht 2009," 2009)

46

perts were criticizing, that without any regulations, the government misses a big chance to cut

down the average CO2 emissions [261]. “This initiative destroyed the market for electric

cars”13

, an expert from a green political party stated. Car purchases were artificially acceler-

ated and would lead to less future demand for electric cars as those are not launched yet.

Meanwhile, the interconnectedness within the global automotive industry as well as between

the supplier industry increased further. In total, twenty new partnerships or collaborations

were announced during this phase that can also be seen in figure 11. BMW cooperates with

Vattenfall to start an additional long-term consumer test in Berlin [160]. Daimler found with

Evonik a new partner for developing batteries [169] and even acquired shares of the success-

ful electro-pioneer Tesla in May 2009 to get access to their battery technology [231]. The

German environment minister, Sigmar Gabriel is happy about this development14

. Figure 12

gives an overview of the established cooperation between the focal firms and their partners. It

is interesting to see that all chosen R&D partners are based in Germany. Besides Opel, as sub-

sidiary of GM, no German manufacturer established collaborations with international part-

ners.

In April 2009, the twenty biggest car manufacturers and electric utilities firms came to an

agreement on a European level for common charging infrastructure standards [212]; “three-

13

die Abwrackprämie habe "den E-Auto-Markt kaputtgemacht [261] (Auto Bild, 2009) 14

Umweltminister Sigmar Gabriel ist glücklich. [160] (Auto Bild 2008)

Figure 12: Overview of Industry Cooperation

47

phase, 400 volt, up to 63 ampere. A common standard is crucial for a successful establish-

ment of charging infrastructure”, they stated.15

This was a result of ongoing discussions with-

in the European Automobile Manufacturers’ Association, the umbrella association of the Eu-

ropean automotive industry. However even if it seems that most German firms comply with

the trend of e-mobility, the representatives of the German automotive industry association

VDA continued to lobby against stricter regulations and stated that, “an optimized version of

the traditional fuel engine will remain state of the art for the next 10-20 years”16

[130,156].

This resulted in the peak of negative pressure against the diffusion of the electric car in Q3

2008 as seen in figure 13.

In addition to the rising degree of interconnectedness, various concept cars were shown and

electric cars dominated the leading international automotive fairs like the LA Auto Show

[151] or the International Automotive Exhibition in Frankfurt (IAA) [237]. This showed the

growing consumer interest in this topic. Survey results, published by the automotive supplier

Continental, indicated that German consumers are generally open to the purchase of an elec-

tric car, 45.8% would consider electric cars for their next purchase [102]. Two eco-rallies

were hosted in the US and Norway where only electric and hybrid cars were allowed

[205,217] and on a European level the organization ‘Going Electric’ claimed more general

support from the European Government [220]; demanding: Subsidies for R&D, incentives for

city councils and tax incentives for consumers.17

Further details on these claims were not pro-

vided by the NGO.

The end of this phase was characterized by the entering of first results of the extensive inno-

vation activities from Japanese firms. In June 2009, Mitsubishi launched the ‘i-MieV’ in Ja-

pan. It was first limited to public organizations before consumers could purchase it in 2010

[235]. Also Subaru launched an electric minivan called ‘Stella EV’ in Japan [236]. But the

overall reaction from professionals could be considered as noncommittal, especially concern-

ing the price: “34.000 € for a city car that needs to be handled with kid gloves – how disap-

pointing“18

, a journalist from Auto Bild concluded.

15

dreiphasig, Spannung 400 Volt, Stärke bis zu 63 Ampere. Ein Standard ist entscheidend für den erfolgreichen

Aufbau eines Tankstellennetzes für Elektroautos. [212] (Auto Bild, 2009) 16

Der optimierte Verbrennungsmotor werde in den "nächsten zehn bis 20 Jahren noch das Rückgrat der indi-

viduellen Mobilität bleiben". [156] (Handelsblatt, 2008) 17

Fördermittel für die Forschung, Anreize für Städte, auf E-Mobilität zu setzen und Steuervorteile für E-Auto-

Käufer.[220] (Auto Bild, 2009) 18

“34.000 Euro für ein Stadtauto, das man behandeln muss wie ein rohes Ei – wie ernüchternd!” [240] (Auto

Bild, 2009)

48

Figure 13 gives an overview about the development of the institutional pressures during phase

3 and highlights the entering of new competitors (circles), the establishment of partnerships

(squares) as well as the launch of electric cars (triangles).

Findings

The average institutional pressure towards the diffusion of electric cars has a value of 15 (fig-

ure 13), for comparison the overall average during the examined timeframe has a value of 4.

For the first time, coercive pressure played a significant role during this phase. Firstly exerted

through EU plans to cut down average CO2 emissions of each sold car within an automotive

firm’s product portfolio. Later, pressure sourced from national policy plans that claimed a

leading role on the global e-mobility market as well as from high amounts of provided subsi-

dies for R&D activities. However, mimetic pressures from industry actors were dominant

again resulting from the rising degree of industry interconnectedness as well as the increasing

level of competition through the entering of new competitors. Normative pressures were pre-

dominantly positive based on actions from professionals as well as from public. But the ongo-

ing lobbying activities from the VDA against stricter regulations and for the future of tradi-

tional cars need to be emphasized particularly as it showed that the German automotive indus-

try did not totally adapt to e-mobility. Their reactions and initiatives could be seen as a re-

sponse to the coercive pressure exerted by the European government and more generally to

generation processes of institutional change, which are in sum the strongest over the total ex-

amined timeframe (2003-2012). However, their actions are mainly limited to the establish-

Figure 13: Overview of Pressures during Phase 3

49

ment of national partnerships without taking too much risk. This also needs to be considered

against the background of the financial crisis.

4.4. Rising Skepticism (Q3 2009 – Q3 2010)

Description

The phase of ‘Rising Skepticism’ was still characterized by the financial crisis and the global

economic downturn even though governments provided high amounts of financial support in

order to reduce the impact. This also affected the innovation activities of firms and their in-

vestments and risk-taking. Looking at the sales data presented in figure 5 at the beginning of

chapter 4, it can be seen that the high amounts of governmental subsidies to support the falter-

ing automotive industry was not reflected in the diffusion of electric or hybrid cars. In Ger-

many, only 1.588 electric cars were registered in the end of 2009, an increase of only 136

vehicles compared to the end of 2008.

Firms continued to show concept cars [271,314,373] and announced to launch electric cars

very soon [343,367]. In particular French firms like Renault [278] and Peugeot Citroen

[263,279] as well as the Japanese manufacturer Nissan [252, 333] were striving for the lead

again, also Smart [258] and Volvo [272] published first launch dates. However, compared to

the third phase the amount of company actions as well as the created mimetic pressure was

regressive. This trend was mainly driven by a decreasing amount of start-ups entering the

market as well as less announced partnerships. Even though in the end of this period the

Chevrolet ‘Volt’ was launched [365], there were still only a few electric cars available on the

market. Bob Lutz a former Vice Chairman of GM stated that he was “disappointed about the

innovation results of the big car manufacturers concerning e-mobility in particular because

small start-ups like Tesla achieved more than any other company”19

[266]. Later in this peri-

od, Tesla that also faced financial issues, successfully went public on the stock market to gen-

erate additional income for the investment in a second electric car, the ‘Model S’, which

should be launched in 2012 [300,352]. After Daimler already did, Toyota bought shares of

Tesla as well for around 50 million $ to establish an extensive partnership for the develop-

ment of electric cars [346].

19

“All die versammelten Entwicklergenies von General Motors schworen uns hoch und heilig, dass die Lithium-

Ionen-Technologie noch mindestens ein Jahrzehnt entwickelt werden müsse, und Toyota nickte dazu. Und da

kam Tesla. Und so musste ich mich fragen: Wie kann es geschehen, dass eine kleine Start-up-Klitsche, noch

dazu von Leuten geführt, die keinerlei Ahnung vom Autogeschäft haben, das schafft, wir aber nicht?" [266]

(Handelsblatt, 2009)

50

The German automotive industry focused on exerting normative pressure through lobbying on

the government to get more financial support for R&D activities. The VDA as well as manag-

ers of individual firms were continuously claiming that more incentives were necessary to

stay ahead of the competition from other countries [286,302,303,317,344]. Daimler CEO Di-

eter Zetsche stated: “To support the development of alternative propulsion technologies, we

need positive framework conditions and an appropriate charging point infrastructure”20

In

general, they were supported by professionals and other industry associations although they

differed in their view on what kind of support was needed. Industry experts from McKinsey

and Fraunhofer were mainly in favor of purchase support for consumers as it is practiced in

other countries like the USA, France or Denmark [282,318,322] as well as fiscal incentives

for consumers [291, 313], they stated that, “this is the only way to overcome the high cost of

purchase for consumers”21

. Meanwhile, electric utilities firms focused their lobbying efforts

on financial support to establish a charging point infrastructure and technological standards

[301]. In particular the high purchasing subsidies claimed by industry experts as mentioned

before, were rejected by the German automotive industry at this moment. They were stating

that this kind of support would only strengthen foreign car manufactures as these were the

only ones that already launched electric cars and therefore would increase their sales volume.

Environmental groups and green political parties criticized the previous governmental initia-

tives as not appropriate. They claimed that too few results were shown, proving that govern-

mental actions actually were successful and led to a higher diffusion of electric cars [342].

They described these actions as staging without content and a lot of undeserved self-praise22

.

In general, the German government now started to play a more active role. In November

2009, a new branch was set up in Berlin by the Federal Ministry of Transport and the Federal

Ministry for the Environment, which should be responsible for everything concerning the top-

ic of e-mobility [280]. In the beginning of 2010, the German government further announced

to not provide consumers with any kind of purchasing support23

[321], besides potential re-

duction of the motor vehicle tax for electric cars and vehicles with a low level of CO2 emis-

sions [242]. Instead, R&D activities related to electric cars and the necessary technology

20

"Um die Entwicklung alternativer Antriebe zu unterstützen, brauchen wir positive Rahmenbedingungen. Paral-

lel ist es notwendig, eine geeignete Infrastruktur aufzubauen", forderte Zetsche im Gespräch mit dem Han-

delsblatt. [317] (Handelsblatt, 2010) 21

Nur wenn die Regierung zunächst auf die Besteuerung von Autostrom verzichte, könnten sich Elektroautos

durchsetzen [291] (Handelsblatt, 2009) 22

Die Grünen nannten das Treffen eine Inszenierung ohne Substanz und mit viel unverdientem Selbstlob [342]

(Auto Bild, 2010) 23

Die Bundesregierung will den Kauf von Elektroautos in Deutschland nicht finanziell bezuschussen.[321] (Au-

to Bild, 2010)

51

would be subsidized with 2.5 billion € until the end of 2013 [329]. Meanwhile, the European

Parliament refused the idea of providing any kind of long-term purchase support as a negative

response to lobbying activities from the automotive industry [320]. They published instead a

comprehensive policy plan aiming to establish a European alignment on norms and standards

as well as the setup of a charging infrastructure [337]. Results and more details should be

published until the end of 2010 and would be ratified on a country as well as on a European

level in 2013.24

Also professionals were more involved, the University of Muenster and the Karlsruhe Insti-

tute of Technology (KIT) established research centers in the first half of 2010 [264,359]. Fur-

thermore, the consultancy firm Oliver Wyman published market reports and forecasts

[262,292] while McKinsey and The Boston Consulting Group focused on creating rankings

comparing the progress towards e-mobility between countries [298,338] and the market de-

velopment of electric cars [355,356]. The tenor was a mix between very positive evaluations,

predicting that until 2020 every fifth car will be based on an electric engine”25

[355] and even

warnings that the demand for lithium ion batteries would not be as high as expected which

would lead to the buildup of overcapacities [308].

A similar trend could be spotted when analyzing the public opinion about electric cars in

Germany mainly expressed through conducted surveys on behalf of Fraunhofer [334,336] and

mobile.de [273]. Contradictory results were published from these market researches, showing

that most consumers were feeling unsecure about the future of electric cars which might in-

hibit potential purchases [339]. This uncertainty was additionally triggered through upcoming

discussions about the safety of electric cars. Representatives of the German fire and rescue

service pointed out that there might be an additional risk of electric shocks after accidents

because of the strong car batteries [330].

The average pressure towards a higher diffusion of electric cars however remained on a com-

parable high level and decreased only by two points to thirteen. The described relationship

between the industry exerting normative pressure on the government and its response in form

of subsidies can be seen in the following figure:

24

Die Ergebnisse des Aktionsplans sollen noch in diesem Jahr vorgelegt werden und bis 2013 auf nationaler

sowie europäischer Ebene in Kraft treten [337] (Handelsblatt, 2010) 25

2020 soll jedes fünfte Auto einen E-Motor unter der Haube haben. [355] (Auto Bild, 2010)

52

Findings

In order to provide an appropriate conclusion for this phase, it is necessary to approach a more

qualitative perspective compared to the previous phases. The announcement of launch dates

for electric cars from companies and the introduction of the Opel ‘Volt’ exerted mimetic pres-

sure on the institutional field, which can also be seen in figure 14. Even though it is not as

strong as it was before, mimetic processes were still dominant from a quantitative perspective.

However, company actions in form of advocacy and lobbying, supported by claims from pro-

fessionals like consulting agencies, were responsible for the comparable strong normative

pressure during this phase. The recipient of this pressure was the national government, which

in response announced the claimed subsidies to support R&D activities of companies. This

series of events and interactions is presented in figure 14. The increase of coercive pressure in

the end of this phase can be considered as a result of these particular governmental actions

aiming on industry actors to work towards a higher diffusion of electric cars. Eventually, in-

dustry actors didn’t strategically respond to institutional pressures but were the initiators of

processes leading governmental actors to certain responses.

4.5. Second Hype (Q4 2010 – Q4 2011)

Description

In the end of 2010, institutional pressures in favor of the electric car rose again resulting in a

second hype period after phase 3. This time the trend was not only driven by industry actors

Figure 14: Overview of Pressures during Phase 4

53

but also by the government which continued to exert coercive pressure in order to increase the

electric car diffusion within Germany.

Right at the beginning of 2010, the efforts and investments of French and Japanese manufac-

turers from the previous years resulted in the market introduction of five different electric

cars. Citroen started with the introduction of the ‘C-Zero’ [381] and the ‘Berlingo First Elec-

tric’ [382], before Mitsubishi showed the ‘i-MieV’ now also for consumers [412], Peugeot

introduced the ‘iON’ [412] and Nissan launched its ‘Leaf’ [410]. They all received a lot of

positive feedback from experts [400,407] and the ‘Leaf’ even got the title ‘Car of the year

2011’ as the first electric car ever, chosen by 57 journalists from 23 different countries [406].

While the ‘Leaf’ as well as GM’s ‘Volt’ showed first economic successes in the subsequent

time in form of long waiting lists [420] and the increase of production volumes [432], another

car manufacturer had to stop the production because of absent sales. Subaru’s ‘Stella EV’

which was introduced mid 2009 disappeared again from the market [419]. However, also the

easing financial situation on the global car market contributed to this second hype as well as

the trend on the stock market did, where for instance Tesla’s stock value doubled within the

second half of 2011 [424].

While the German automotive industry continued to lobby for more financial support

[395,404], the German government in fact planned to continue with providing support for

R&D activities even after the economic growth package expired [383]; the level of R&D sup-

port for e-mobility projects will remain on a high level also after 201126

. Further a discussion

about potential tax reduction for electric company cars started and resulted in an alteration of

the existing tax systems in October 2010. The law that user of a company car are taxed by 1%

of the overall value per year was skipped for electric cars for an indefinite period of time

[388].

Against the background of the car launches mentioned earlier in this chapter, industry experts

from consultancy agencies as well as representatives of the European Automobile Manufac-

turers’ Association (ACEA) started again to advocate for extensive purchase support [414].

But German politics stated very clearly that there would be no financial purchase supports for

consumers in order to buy electric cars as long as there are no cars from German manufactur-

26

“(…) um auch„nach 2011 für Forschung und Entwicklung im Bereich Elektromobilität die Förderung auf

hohem Niveau“ fortzuführen [383] (Handelsblatt, 2010)

54

ers available [411]. Peter Ramsauer, the German transport minister argued: “There would be a

huge public dispute if the German state would finance foreign employments”27

.

In response to the strong competitive pressure coming from French and Japanese manufactur-

ers and the commitment from the government to further support the development and diffu-

sion of electric cars, new partnerships were established and announcements from firms were

made to invest high amounts of resources within the next years. The VDA notified that the

German automotive industry would invest 10-12 billion € within the next three to four years

in alternative propulsion technologies, in addition to the provided subsidies [396]. “The de-

velopment of powerful, lightweight, compact and fast-charging batteries is the focus of all

research activities”, Wissmann emphasized.28

In cooperation with partners from chemical and

electric industries, even 17 billion € would be invested from 2010 until 2014 [465]. BMW set

up a new brand and business unit within the company for the introduction of electric and hy-

brid cars called ‘BMW i’ [437]. Later, first concepts cars were shown, one of them will be

launched in 2013 [480]. Further, BMW established extensive partnerships with Peugeot [439]

and Toyota [520] which both already had a lot of experience concerning electric and hybrid

cars. Daimler approached a similar strategy with a focus on strong partnerships. Firstly, a joint

venture with Bosch was started to develop and produce electric engines [459], later the coop-

eration with Peugeot was expanded to research on lithium ion batteries [477] and additional

shares of Tesla were acquired for 17 million € [478]. Opel remained quiet until the end of

2011 when the first German electric car the ‘Ampera’ was launched [513], accompanied by a

lot of positive feedback from professionals [527]. The General German Automobile Associa-

tions (ADAC) stated: “Opel managed to develop an electric car suitable for daily use with a

high range and low resource consumption”29

. Only one month later, Opel needed to stop the

production again as unexplainable fires during crash tests of the Chevrolet ‘Volt’ occurred

[525]. Both firms are part of GM and use the same kind of propulsion technology as well as

the same components and materials [525]. Besides this setback for Opel, progress was made

concerning investments in the necessary infrastructure for electric cars. RWE was taking the

lead and established partnerships to build up a comprehensive charging point structure

27

"Es gäbe ein erhebliches Problem mit der Argumentation gegenüber dem Steuerzahler, warum wir

ausländische Arbeitsplätze finanzieren [411] (Handelsblatt, 2010) 28

"Dabei steht die Entwicklung von leistungsstarken, leichten, kompakten und schnell aufladbaren Batterien im

Mittelpunkt der Forschungs- und Entwicklungsaktivitäten. [396] (Auto Bild, 2010) 29

Das Ergebnis: Opel hat ein alltagstaugliches Elektroauto mit hoher Reichweite und günstigem Verbrauch

entwickelt. [527] (Handelsblatt, 2011)

55

[390,516] and further announced that, “electricity for electric cars will be free of charge until

2012”30

.

In Q2 2011, government support reached an all-time peak as they introduced different new

incentives for holders of electric cars. In Germany, special parking slots for electric cars were

established [456], the motor vehicle tax was skipped until 2015 [471] and 1 billion € for R&D

and the support of e-mobility model regions were provided until the end of 2013 [469]. Addi-

tionally, a public procurement program was initiated, implying that 10% of all future official

car purchases by governmental organizations should be electric cars [470]. This would in par-

ticular contribute to “the public acceptance of this future technology”31

, the German transport

minister stated.

On a European level, the policy changes were not that significant. A project called ‘Green

eMotion’ with a financial volume of 42 million € was introduced to support the diffusion of

common standards and norms [455]. This project aimed at conducting research on the basic

conditions that need to be fulfilled for Europe-wide e-mobility. Also the policy plans were

sharpened, aiming to reduce the number of traditional cars in metropolitan areas by 50% until

2030; from 2050 onwards, a general ban shall prevent all traditional cars from driving on

European streets32

[445].

In general, this period was also characterized by the emergence of a lot of new inventions,

coming either from professional or industry sources. Especially on the topic of the battery

performance and the charging technology, progress was made. DBM Energy, a German

startup, showed a new type of battery technology, which enabled a new distance record of

more than 600km for electric cars with only one charge [393]. But the automotive industry in

general seemed not to be particularly interested in this technology. Instead, the president of

the VDA was stating, “we already know this kind of technology but we don’t think that it will

become prevalent in the market.”33

Without prevailing more details about the used technolo-

gy, Mirko Hannemann the CEO of DBM Energy countered these disappointing reactions:

“There is just a huge amount of frustration in the industry”34

However, only a few weeks later

the customized car including the battery was found burned out in a warehouse on the compa-

30

Für Autofahrer ist der Strom bis Ende 2012 kostenlos [516] (Auto Bild, 2011) 31

"zur Akzeptanz dieser Zukunftstechnologie beitragen", so der Minister. [456] (Auto Bild, 2011) 32

Ab 2050 sollen dort gar keine Autos mit konventionellem Antrieb mehr fahren dürfen, berichtet das "Han-

delsblatt" [445] (Auto Bild, 2011) 33

"Wir kennen die Technik, halten sie aber für noch lange nicht serientauglich", sagt Wissmann [399] (Auto

Bild, 2010) 34

. "Bei den deutschen Autobauern herrscht doch nur Frust" lästert Hannemann [399] (Auto Bild, 2010)

56

ny site of DBM Energy [422]. According to the police it is likely that the fire was caused by

arson and not by an accident.

But also the joint venture between GM and LG showed first results, a prototype of a battery

which costs only half the price and has the double amount of power [493]. Siemens, Nissan as

well as Volvo introduced a new charging technology that improved the charge time of electric

cars [454,523].

Looking from a public perspective, representative studies from TÜV Rheinland [392] and

KredtiPlus Bank [507] showed growing acceptance and interest of electric cars within the

society. They were consistently showing that over 50% of the German population is generally

interested in a purchase. The results of BMW’s long-term test were also very positive con-

cerning the customer experience. The gathered insights were directly integrated in the innova-

tion activities concerning their new brand ‘BMW i’, which were mentioned earlier [394].

They were stating that this test results would “change the whole automotive industry as we

know it today significantly”35

.

However, looking at the diffusion data from 2010 and particularly 2011 in figure 6, a positive

development can be noticed but in consideration of the technological progress and the increas-

ing number of available cars, the amount of registered electric cars in Germany (4541 units in

total) was still very low. A survey conducted by the consultancy agency Deloitte indicated

that German consumers saw the comparably high costs of purchase as the main burden for

favoring traditional cars over electric ones [450,507]. The General German Automobile Asso-

ciations published a study comparing the overall costs of electric car to traditional cars. The

results showed that electric cars are only affordable for the upper class as they are still way

too expensive compared to fuel cars36

[438]. These insights changed the way of how car man-

ufacturers thought about their distribution channels; new business models were tested and

established to circumvent high cost obstacles. Besides offering batteries for leasing, car-

sharing models were implemented. BMW, in cooperation with Sixt, launched the joint venture

‘Drive-Now’ to offer 800 electric cars in Berlin and Munich for car sharing [447]. “There is

an increasing demand for flexible mobility models in urban areas”, said chief of sales and

35

"Es wird die Automobilindustrie, wie wir sie heute kennen, in erheblichem Maß verändern." [394] (Han-

delsblatt, 2010) 36

Durch die hohen Anschaffungskosten von bis zu 60.000 Euro sind Elektroautos zurzeit einer kaufkräftigen

und umweltbewussten Elite vorbehalten, [438] (Handelsblatt, 2011)

57

marketing Ian Robertson.37

Daimler announced to offer 500 Smart ‘fortwo ED’ after its

launch in 2012 for car sharing in Stuttgart; partners were Car2go, EnBW, several public

transport firms as well as the city council of Stuttgart [515].

Figure 15 gives an overview about development of institutional pressures during phase 5,

highlighting product launches (triangles), new partnerships (squares) and describing briefly

the peaks of the coercive and normative pressure.

Findings

Similar to the previous phases, mimetic pressure still was dominant in the institutional field

also during this phase. It was created through the actions of French and Japanese firms

launching electric cars especially in the end of 2011 as well as by the establishment of new

partnerships within the automotive industry. But also normative pressure towards the diffu-

sion of electric cars reached a comparable high level. Professionals, in form of test drivers and

journalists, published a lot of positive test results and articles about the newly introduced elec-

tric cars that caused an increase of normative pressure especially in the beginning of this

phase. But also positive public opinions expressed through surveys as well as consumer tests

influenced this development. When the Stimulus Package, consisting of several incentives for

electric car holders, was discussed and finally announced by the German government in May

37

"Es besteht zunehmender Bedarf an flexiblen Mobilitätsangeboten im urbanen Umfeld", sagte BMW-

Vertriebsvorstand Ian Robertson. [447] (Handelsblatt 2011)

Figure 15: Overview of Pressure during Phase 5

58

2011, it caused an all-time peak of coercive pressure on strategic adoptions of firms. The focal

firms seemed to partly adapt to this generation processes as they increased their commitment

to electric cars by announcing high investments and intensifying research activities and part-

nerships. This can also be seen as a reaction to the successful car launches of French and Jap-

anese car manufacturers at the beginning of this phase.

4.6. Disenchantment (Q1 2012 – Q4 2012)

Description

The last identified phase of the examined timeframe is called ‘Disenchantment’ and started in

the beginning of 2012 right after the second hype. The high expectations regarding the newly

introduced electric cars were not met and the governmental support was declining. The aver-

age institutional pressure during this phase was still slightly positive but with a value of three

it was twelve points below the average of the previous phase. For the first time, almost as

many partnerships between industry actors were stopped [576,591] as co-operations were

started [541,554,577] during 2012. Further details on company actions will be provided later

in this chapter.

Analyzing the public opinion, rising concerns could be spotted as studies stated that electric

cars were not as environmental friendly as thought [535,549]. According to Freiburg Institute

of Applied Ecology, the reasons for that were based on the high amount of fossil fuels, which

were used for the energy sourcing process during the production of electricity: “A simple re-

location of the CO2 emissions from the car exhaust to a power plant is nothing more than

window dressing”38

. Even NGOs like Greenpeace claimed that electric cars were not efficient

and would not cause a significant environmental impact, they rather argued for a general

change in individual mobility habits [555]. Despite the fact that other publications from

Fraunhofer and Windreich AG showed contradicting results [556,561], the general uncertain-

ty on consumer side increased and resulted in inhibited purchasing behavior.

During this period at the beginning of 2012, the German government faced budgeting issues

because of decreased fiscal revenue. This led to the announcement that the assigned budget

for the funding of e-mobility shall be shortened by 50% [537]. Experts from the University of

Duisburg-Essen harshly criticized this approach as it would slow down the further progress of

38

"Eine bloße Verlagerung des CO2-Ausstoßes vom Auspuff zum Kraftwerk ist Augenwischerei" [535] (Auto

Bild, 2012)

59

e-mobility in Germany, stating “E-mobility in Germany seems to slowly fade away.”39

[538].

However, four regions were elected by the German government which shall serve as exhibits

and test sites for a comprehensive deployment of electric cars and the associated installation

of a charging infrastructure [540]. In total, 180 million € were assigned for this initiative to

the regions Baden-Württemberg, Berlin/Brandenburg, Niedersachsen and Bayern/Sachsen

until 2016, which aimed to raise awareness and fascination for electric cars within society

[558].

As already mentioned in the beginning of this chapter, the high expectations regarding the

launched electric cars were not fulfilled. This was in particular reflected by weak sales data

and low customer demand in Q1 of 2012. GM’s subsidiary Chevrolet even had to stop the

production of the ‘Volt’ for a few weeks due to high inventory levels [543]. In January, elec-

tric cars lost 30% of their market share in the US and even hybrids lost 7% [545]. During the

following months the situation on the electric car market didn’t improve significantly, GM

had to announce another production stop for the Chevrolet ‘Volt’ in the end of August 2012

[588]. One of their key partners and simultaneously a global market leader on the develop-

ment of lithium ion technology A123 felt into insolvency in October 2012 [603]. Whereas

experts from Handelsblatt claimed that this bankruptcy doesn’t necessarily need to be a bad

sign for the future development of the electric car40

[605], it still resulted in negative mimetic

pressure on the institutional field and the diffusion of electric cars.

Renault tried to respond to this negative development and announced already in March 2010

to reduce the prices of electric cars on up to 60% when they launched another electric car

called ‘Twizy’ [548,550]. However, this strategic initiative couldn’t prevent Renault from

facing serious financial issues after claiming losses of 819 million € for the first half of 2012

[582]. Even the French government had to intervene with additional financial support. Similar

to GM, they stopped the production of the ‘iON’ and the Citroen ‘C-Zero’ because of weak

sales data [585]. In the meantime, the German car manufacturers announced to focus more on

China as a potential market for e-mobility; high financial incentives were mentioned as an

important factor for this decision. “China is the country with the best framework conditions

39

"Das Thema Elektromobilität scheint in Deutschland wieder einzuschlafen" befürchtet Ferdinand Dudenhöffer

von der Universität Duisburg-Essen [538] (Handelsblatt, 2012) 40

Fazit: Ein Grund zum Abgesang auf die Elektromobilität ist die A 123-Pleite nicht. Eher ein ganz normaler

Vorgang. [605] (Handelsblatt, 2012)

60

for the introduction of electric cars”, said the Head of Asia from Daimler Ulrich Walker.

41 Ian

Robertson from BMW agreed; “The Chinese government encouraged us to develop zero-

emission cars for the Chinese market.”42

In particular Daimler in cooperation with the Chi-

nese manufacturer BYD and VW partnering with FAW stated their interest to launch an elec-

tric car on the Chinese market until 2015 [552,553].

Environmental groups condemned this approach as well as the ongoing lobbying of the auto-

motive industry for more subsidies and financial support [573]. “It sounds a bit like, we didn’t

receive enough money, so we cannot progress with the development”, Viviane Raddartz,

transport expert of the WWF stated.43

And indeed, the VDA as well as individual car manu-

factures resumed with their extensive advocating activities, claiming for more financial sup-

port and less strict environmental regulations within the EU [559,580,616]. This approach

resulted in a partial success as the German government extended the timeframe in which elec-

tric cars were exempted from the motor vehicle tax from 5 years to 10 years [608]. Also the

EU planned to double their total budget for the support of R&D activities within the automo-

tive industry on 2 billion € from 2014 until 2020, further details have not yet been announced

[612].

Meanwhile, Daimler finally launched the ‘Smart fortwo ED’ in June 2006, including a battery

rent model and the announced start of the car sharing program [570]. Tesla launched its sec-

ond electric car the ‘Model S’ of which 6500 preorders already arrived [572], and continued

to grow their business in Europe where they announced to setup a new facility in the Nether-

lands and new sales offices across Europe [621]. BMW accelerated their innovation activities

and their strategic adoption towards e-mobility and reemphasized the introduction of the ‘i3’

in 2013 [533,619,622]. “Now is the right time to totally focus on e-mobility and lithium ion

batteries”, Norbert Reithofer, the CEO of BMW stated.44

41

"China ist das Land mit den besten Voraussetzungen für die Einführung des Elektroautos", sagt Daimlers

Asien-Mann Walker, der auch Vorstandsmitglied des Gemeinschaftsunternehmens ist [552] (Auto Bild, 2012) 42

"Die Regierung ermutigt auch uns, entsprechende Nullemissionsautos im Inland für den chinesischen Markt zu

entwickeln", sagt BMW-Vertriebschef Ian Robertson dem Handelsblatt auf der Automesse [552] (Auto Bild,

2012) 43

"Der Unterton ist ein wenig, wir haben entsprechende Gelder nicht bekommen, also kommen wir nicht so

recht voran", sagte Viviane Raddatz, Verkehrsexpertin des WWF, mit Blick auf NPE-Bericht. [573] (Auto Bild,

2012) 44

"Zum jetzigen Zeitpunkt ist es absolut richtig, auf Elektromobilität mit Lithium-Ionen-Batterien zu setzen",

sagte Reithofer der WirtschaftsWoche [622] (Handelsblatt, 2012)

61

Figure 16 provides a final overview about the development of institutional pressures and the

significant events during phase 6 focusing in particular on the production stops (tools) and

financial issues (dollar symbol) as well as electric car launches (triangles).

Findings

In this last phase of the examined timeframe, institutional pressure towards the diffusion of

the electric car decreased strongly. Coercive pressure caused by governmental actions was

almost not existent as the German and the European government stayed primarily quiet. At

least on a national level, this could be attributed to the mentioned budgeting issues. Also the

newly elected model regions were not able to suspend this negative trend. Although more

electric cars were launched from Daimler, Renault and Tesla in the beginning of this period,

the created mimetic processes were weaker compared to the phases before and even became

negative when bad sales figures were announced by industry actors and production had to be

stopped. These figures had also a negative impact on the created normative pressures as they

can be interpreted as support for critics, strengthening the beliefs that e-mobility will remain a

niche-market for the next years. In combination with the rising skepticism of the public as

well as environmental concerns of professionals, critics and their assumptions that electric

cars would not be economically relevant for manufacturers within the next years were sup-

ported. Based on these mimetic and normative processes, only weak pressure was exerted on

companies to adapt their strategies towards e-mobility. However, BMW and Volkswagen

were reacting to exerted coercive pressures caused by the Chinese government. They com-

Figure 16: Overview of Pressure during Phase 6

62

plied with governmental actions in form of higher amounts of incentives and subsidiaries

compared to the German government, leading them to focus their innovation activities on the

Chinese markets.

63

5. Conclusion

This chapter will provide a brief summary of the results and observations made within the

previous chapters before they are linked to theoretical concepts based on the literature review

in order to answer the research question.

According to the sub-conclusions at the end of each phase, it can be aggregated what also was

expected in the beginning of chapter 4. The institutional environment was dominated by

strong mimetic pressure originating from industry actors, accounting for 58% of the overall

pressure, followed by professionals mainly causing normative pressure (21%), which can be

seen in figure 8. From a quantitative perspective, public as well as governmental actors appear

to be of minor importance. However, at the end of the examined timeframe, electric cars are

still a niche product in Germany accounting only for 0,02% of the overall cars sales. After

more than ten years of research and billions of investment costs, this draws a disillusioning

picture on the activities of all involved actors. Figure 17 gives a final overview about the six

identified phases including a brief description for each period, which helps to understand how

it came to this development.

Figure 17: Overview of important Events during Phase 1-6

64

Combining this brief summary with the insights of the empirical results that cover a

timeframe of 10 years and bringing it in the context of the extensive literature review, the time

has come to consolidate all these information to find an appropriate answer to the research

question. The question that underlies this research is:

“In the context of institutional theory, can sustainable innovation lead to the generation of

institutional change and how can it explain the relatively small diffusion of the electric car in

Germany and the lack of firm’s innovation activities?”

The first part of the research questions approaches the possibility of sustainable innovation to

initiate generation processes of institutional change as described by Kraatz & Zajac (1996) as

well as Van der Hoed & Vergragt (2006). And in fact, it can be affirmed – at least partly.

By looking at figure 18, it can be seen that a lot institutional pressure is generated, leading to

a high level of isomorphism within the institutional field. This resulted in the mentioned low

level of electric car diffusion by the end of the examined timeframe.

But the results also showed that sustainable innovations display, especially for entrepreneurs,

a big market opportunity and a way of entering an existing market, which is characterized

through high density. Between 2006 and 2007, the emergence of entrepreneurial firms is not

only an important factor for the rise of mimetic pressure within the industry, but it also shows

evidence that institutional change is actually happening. In particular the case of Tesla Motors

is interesting in this sense, which was described during phase 2. In 2006, the Californian start-

up suddenly introduced a high-end electric car to the market without having any deep

knowledge about the automotive industry [16]. This market entry led to an increase of the

Figure 18: Overview Institutional Pressure & Focal Company Action

65

degree of competition within the industry and more importantly it changed common beliefs

and values about transportation technology. It could be compared to the case of Kaiser Wil-

helm II when more than 100 years ago, the first motorized vehicles appeared on the streets.

Even though it didn’t result immediately in high diffusion rates, normative pressure was cre-

ated as Tesla showed for the first time that e-mobility is actually working. Subsequently, other

entrepreneurs followed Tesla’s example and approached similar strategies to enter the market.

During the whole examined timeframe, 25 new competitors tried to enter the automotive in-

dustry with their versions of electric, summarized in figure 18. However, the established au-

tomotive companies remained stuck in old beliefs and norms and adapted very slowly to these

generation processes, also depending on their country of origin. They focused on the estab-

lishment of partnerships and the conduction of extensive tests. First electric cars, which were

ready to go into production, were initially shown in 2009 by Japanese manufacturers

Mitsubishi [235] and Subaru [236]. But most of the car launches took not place until the end

of 2011 by American and French manufacturers [381,382,410,412,513], almost five years

after Tesla launched its ‘Roadster’. When these car launches were announced, the German

automotive industry even tried to indirectly stop their international competitors from entering

the market as they were advocating against any kind of purchase subsidies for consumers.

Only manufacturers that already launched cars would have benefited from these kinds of sub-

sidies so they would not affect German firms. The overview of the traditional car sales data

(Appendix A), as already discussed in chapter 4, supports the initial claim that established

manufacturers remained stuck in old beliefs, as it provides a reason why in particular the

German industry didn’t considered a strategic adaption as urgent. The figure shows the com-

parable stable development of car sales over time, don’t giving the industry the necessity to

change their behavior.

The second part of the research question addresses the explanatory potential of institutional

theory in regards to the small diffusion of the electric car in Germany. In the end of 2012,

7114 electric cars were registered. In Denmark for instance, the registration rate of new elec-

tronic cars is 30 times higher than in Germany and even The Netherlands have a rate that is 8

times higher (Masson, 2013). Different explanations can be given for this phenomenon; in the

end it is most likely an interrelated combination of all.

Scott (2001) views institutional change as a result of a negotiation processes between new

solutions outside the institutional field and existing paradigms which needs to be de-

institutionalized. While pressure for change is generated by the emergence of new competi-

66

tors, the pressures for the de-institutionalization of existing paradigms, namely traditional fuel

cars are quite weak. Looking again on the stable development of the sales data of fuel cars

(Appendix A), over three million annually sold cars only in Germany don’t result in very

strong pressure for de-institutionalization. In addition, ongoing lobbying activities of the au-

tomotive industry to avoid strict governmental regulations and provide purchase support for

consumers reveal that they are not really interested in a rapid institutional change. Referring

back to the generation of institutional pressure in favor of the electric car, during all identified

phases the dominant created pressure was mimetic caused by actions of industry actors. In the

first phases, these actions led to rising level of competition due to the emergence of new start-

ups that account for 12% of the overall mimetic pressure: Later, company actions were mainly

characterized through the establishment of partnerships (14%) and shown concept cars or in-

ventions (16%). Obviously these competitive processes were not sufficient to trigger exten-

sive innovation activities of firms or lead to a higher diffusion rate. Only 7% of the overall

pressure was coercive. Even powerful actors like governmental agencies didn’t cause strong

coercive pressure that could have resulted in institutional change like strict regulations, laws

or bans. These kinds of events generally show a significant impact on the behavior of industry

actors, which can be seen for instance on the zero-emission mandate from the State of Cali-

fornia [3] or the law from the European government to cut down average CO2 emission [98].

Both initiatives resulted in company actions and responses in line with the claims of the exert-

ed pressure. But the main focus, particularly of the German government, was on providing

financial support and subsidies for necessary research and investment activities

[203,329,469,476]. As it can be seen in figure 18 and more explicitly described in phase 4,

this correlates exactly with the claims of the industry. DiMaggio and Powell (1983) addition-

ally emphasized the power of large customers as a source for exerting coercive pressure on an

institutional field. The absence of those and the missing demand for electric cars further de-

creased the motivation of firms to adapt as they had no economic interest in this innovation.

In the end, the created pressures for de-institutionalization processes as described by Scott

(2001) seemed not to be strong enough to accelerate a higher diffusion of electric cars.

Another explanation can be found in the geographical embeddedness of industry actors. Even

though the automotive industry can be considered as globally interconnected with powerful

actors making business on international markets, a higher level of isomorphism and imitation

behavior on country levels can be spotted. Firms mainly act uniformly within the same geo-

graphical level. In the second phase, Japanese firms Mitsubishi, Nissan and Toyota as well as

67

American firms like GM and Chrysler were taking the lead on the topic of e-mobility. During

the first hype, the French manufacturers Peugeot Citroen (PSA) and Renault strove for the

lead. German car manufacturers, which were submitted a particular in-depth analysis in this

research, remained comparable quite besides establishing partnerships. In the end of the ex-

amined period fourteen different electric cars were available from established manufacturers

but only two of them are produced by a German firm (Appendix B). Opel, as part of the

American parent GM and Daimler’s subsidiary Smart were the only German provider of elec-

tric cars. They remained stuck in their old beliefs and norms; competitive processes from for-

eign car manufacturers seemed not to be strong enough to initiate strategic adaption and

change.

Other explanations for the lack of innovation activities within the German automotive indus-

try refer back to the framework of institutional antecedents, which tries to explain the reasons

why organizations adopt or not adopt to certain pressures (Oliver, 1991). In particular interest-

ing is the antecedent ‘context’ that deals with framework conditions around the exerted pres-

sure and more precisely the extent of uncertainty within an institutional field. According to

Oliver (1991) and DiMaggio and Powell (1983), in the context of uncertainty, organizations

are more likely to imitate or mimic other organizations in order to reestablish the illusion or

reality of control, stability and predictability over future organizational outcomes. In this case,

a relatively high amount of uncertainty can be spotted within the German automotive indus-

try. Different upcoming technologies make the decision for adoption more complex and risky

and simultaneously unsettle potential customers. For instance, while VW still believes in the

future of more efficient fuel cars [423], Daimler also runs tests using fuel cell technology

[268]. Furthermore, the financial crises in the end of 2008 had a drastic impact on the global

automotive industry [135]. As a result, firms had to face serious financial issues resulting

from strongly decreasing car sales on key markets like the US. Such jolts lead to higher levels

of uncertainty within industries and societies (van den Hoed & Vergragt, 2006). In addition,

the circumstance that until the end of 2012, none of the established market players launched

an electric car which actually is an economic success [543,545,588], further triggers the gen-

eral uncertainty leading to a high level of isomorphism within the industry.

68

Figure 17 summarizes conclusively the findings of this study allowing for the initial research

question:

Overall, institutional theory can provide powerful explanations for strategic adaption and in-

novation diffusion processes within an institutionalized field, even if the innovation has not

yet succeeded as in the case of the electric car. Because the shift towards a new innovation

reflects the rules, norms and cultural beliefs that are prevalent in society, organizations are

granted in social legitimacy. However, this research also showed contradicting findings to

certain pillars of institutional theory. These will be further elaborated and discussed in the

following and last chapter.

Figure 19: Summary of Results

69

6. Discussion

Institutional theory provides indicators and explanations for answering the research question,

but the examined case of the electric car in Germany induces further questions. Parts of the

approached theoretical framework seem to be inappropriate in order to analyze and under-

stand the dynamics within the institutional field.

The frameworks of Oliver (1991) and Klein Woolthuis et al. (2012), further examined in

chapter 2.3, describe a set of strategic options that a firm can execute when responding to in-

stitutional pressures. It varies from institutional entrepreneurship over total passive conformi-

ty to active resistance of firms. But in the case of the electric car in Germany, this approach is

not convincing, because the automotive industry is not acting as respondent to institutional

pressure but mainly anticipatory as origin of pressure. Phase 4 and 5 are exemplary for this

phenomenon. Coercive pressure exerting from governmental sources results from strong nor-

mative pressure executed from industry actors (figure 13 & 14). These pressures in form of

advocacy and lobbying activities forced the government to take action. Another indicator for

this kind of interdependency can be found when looking on the type of coercive pressure that

was exerted. Almost all governmental actions were in line with the claims of the automotive

industry. In phase 4 for instance, the VDA as well as individual car manufacturers exerted

strong normative pressure on the government claiming more financial support

[286,302,303,317,344]. Shortly afterwards, regulators provided billions of subsidies for R&D

activities [329] instead of issuing stricter regulations or standards as well as not passing any

kind of purchase support for consumers, as it was claimed by other institutional actors

[282,318,322]. Coming back to Oliver’s strategic response framework, this sequence of

events shows that the approach solely is not sufficient to explain the low diffusion of electric

cars in Germany as it implies a more passive role of industry actors. But in fact, the industry

is the dominating force within this institutional field, responsible for strong isomorphism and

the weak diffusion rate of electric cars.

However, that doesn’t implicate that governmental regulations don’t have a big influence on

innovation activities of firms or the diffusion rate in general. Looking on a European level, the

situation is different. In fact, the only coercive pressure within the whole examined timeframe

where particular strategic responses of firms could be identified [175,288] was the introduc-

tion of a law forcing the industry to cut down the average CO2 emissions of each sold car

within their product portfolio [98]. This action from the European government was contrary to

70

the interest of the German automotive industry which in total shows a smaller level of adop-

tion than foreign automotive industries by offering less electric car models (Appendix B).

Other countries don’t seem to have such dominant industry actors inhibiting governmental

actions for institutional change. The following figure gives an overview about policy

initiatives from different countries as well as their diffusion data.

In regards to the diffusion rate, it seems that direct purchase support seems to be the most

effective governmental action. Denmark, France as well as the Netherlands provide this kind

of support resulting in diffusion that is multiple times higher than in Germany. They are fo-

cusing less on providing R&D subsidies, which exclusively address industry actors. As dis-

cussed in the conclusion, German firms were even actively advocating against these kinds of

purchase subsidies.

6.1. Limitations of this study

Although this thesis contributes to a better understanding of the process of institutional

change as well as of the existing dynamics within an institutional field, some limitations need

to be mentioned. Based on the approached research method, bias can occur for instance in

form of diminished accuracy or content gaps. This might also influence the fact that almost no

strategic company responses were found within the examined timeframe. Logically, every

action is in some way a response to a previous event but it is difficult to spot these responses

Figure 20: Overview of current National Policy Initiatives (Masson, 2013; Ministerial & Agency, 2013)

Country

Reg. E-Cars 2012 % of tal reg. Cars Financial Infrastructure R&D

Denmark 4.358 3,16%

Exemption from

registration and road

taxes. Purchase support

DKK 70 mill ion for

development of charging

infrastructure.

Focus on integrating EVs

into

the smart grid.

France 5.663 0,30%

EUR 450 mill ion in

rebates given to

consumers buying

efficient vehicles.

EUR 50 mill ion to cover

50% of EVSE cost

(equipment

and installation).

EUR 140 mill ion budget

with

focus on vehicle R&D.

The Netherlands 5.076 0,82%

Tax reduction on vehicles

amounting to 10-12% net

of the investment.

Purchase support

400 charging points

supported

through incentives.

Focus on battery R&D

(30% of 2012 spending).

United Kingdom 1.262 0,06% -

GBP 37 mill ion for

thousands of charging

points for residential,

street, railway, and

public sector locations.

Available until 2015.

The UK Technology

Strategy Board has

identified 60 collaborative

R&D projects for low-

carbon vehicles.

Germany 2.956 0,10%Exemption from road

taxes.

Four regions nominated

as showcase regions for

electric cars

Financial support granted

for R&D for electric

drivetrains, creation and

optimisation of value

chain, ICT, and battery

research

National Governmental InitiativesDiffusion Rate

71

only from newspaper articles. Furthermore it can be assumed that companies know in advance

about new regulations and developments on the market and adapt as early as possible to any

given situation, which implies that if a company action is mentioned in the newspaper, it is

likely to involve a time lag. Concerning the strategic responses part of the used framework,

additional research could have been conducted in form of interviews with decision makers

within the focal companies in order to get a better understanding of how firms respond to

pressures.

Even though an extensive period has been studied, the results show that the institutional

change is still continuing. The negotiation between processes of generation and those of de-

institutionalization hasn’t come to an end yet. Therefore, it is hard to predict if institutional

theory ultimately can provide sufficient explanations for the success or the defeat of e-

mobility. This will also be dependent on technological factors like the efficiency, durability

and eventually the costs of important components. Especially when these need to compete

against established trajectories like the traditional fuel or diesel engine as well as alternative

propulsion technologies like the fuel cell.

6.2. Future Research

The case of the electric car in Germany including its institutional environment is unique. The

way dominant industry actors shape the market according to their perceptions by influencing

others, in particular the government, to follow their lead, might not be that distinctive in other

countries. Figure 18 already gave an indication about national policy initiatives in comparison

with the diffusion data. This should be a first approach for future research. Different institu-

tional environments need to be compared in order to identify deviations and to increase the

generalizability of this study. This research shows why Germany has a comparable low diffu-

sion but simultaneously it provides no insights on the reasons for high diffusions in other

countries like Denmark, The Netherlands or even France.

Considering the density of the German automotive industry and the high developed car mar-

ket, new game-changing inventions face very high entry burdens. Other markets are charac-

terized through different factors. Industry players might be not so dominant as well as signifi-

cant for the overall economy and have to deal with more international competition. Hence,

future research could not only compare sustainable innovation from the same product catego-

ry between different countries, but also diverse products within the same geographical envi-

72

ronment. This would deliver more general insights on the behavior of institutional actors

within a country, in particular of the government and the public. While in this kind of re-

search, the industry actors and to a high extent also the professional actors would be replaced

by equivalents, the government as well as the public or the consumers predominantly would

be similar. This could provide further details on the balance of institutional power within a

market, in particular between the government and industry actors. In this case, it is clearly in

favor of the industry.

From a theoretic point of view, this research identified a gap within the strategic response

framework presented in chapter 2.3. Firstly, the range from institutional entrepreneurship over

total passive conformity to active resistance of firms is not sufficient to actually illustrate and

capture the entire response portfolio of firms. The automotive industry is not acting as re-

spondent to institutional pressure but mainly anticipatory as origin of pressure, in-depth elabo-

rated before. Future research should focus on extending this framework, in order to enhance it

with more a more active approach in addition to the concept of institutional entrepreneurship.

73

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8. Appendices

Appendix A: No. of sold traditional Cars & Oil Price Development

81

Appendix B: Available Electric Cars in 2013

82

Appendix C: Overview of Industry Actions

Appendix D: Source Distribution

Appendix E: The Coding Scheme

Industry Action Amount of Events in Percent

Advocacy 4 1%

Change in firm / industry size (no. of employees) 7 2%

Change in firm / industry turnover - profit 29 8%

Change in firm prestige and visibility 15 4%

Change in level of competition 44 12%

Change in no. of innovations 95 25%

Change in no. of inventions 61 16%Coalition 1 0%Contractors / Suppliers boycott 0 0%

Degree of industry adoption 50 13%

Degree of industry interconnectedness 53 14%

Industry association membership-action 0 0%

Sueing / Lawsuits 1 0%

Gesamtergebnis 374 100%

090813 Coding e-car Germany_FG.xlsm

83

Appendix F: Coding Backup Definition

Appendix G: Overview of coded Articles

Appendix H: Capita Selecta Report

120613 Coding Backup Definition_FG.xls

Capita Selecta_21.08.docx

090813 Overview Article_FG.docx