Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK, ISBN: 978-1-922069-81-8
Technological Change and the Creative Destruction of
Electricity Industry Monopolies: Sectoral Systems of
Innovation Study
Paul Newbury
Using a lens of sectoral systems of innovation, this study examines how disruptive
technological innovation is impacting monopoly electricity distribution network utilities in
Australia. A qualitative case study approach was used with data collected throu gh semistructured interviews with representatives across the Australian electricity industry,
supplemented by participant archival documents and publically available information.
The data was analysed and emerging themes categorised in accordance with th e four
core pillars of the ‘sectoral systems of innovation’ framework, namely: ‘knowledge and
technology’, ‘demand’, ‘actors and networks’, and ‘institutions’. The research contributes
to the theory of sectoral systems of innovation, and show that when technological fluctuations
and disruptions occur within a sectoral system, institutions that have traditionally been stable for
long periods, all of a sudden can be vulnerable. Specifically, the results show a growing
divergence of what had historically been a synchronisation between the technological regime
(transitional linear electricity supply chain technologies disrupted by non-networks electricity
delivery technologies), the economic institutions (monopoly economic regulatory framework,
underlying incumbent business models, competitive intensity, government asset ownership
model, industry attractiveness), policy institutions (state and federal governments policies for
energy and environment) and informal
institutions (firm level organisational cultural
constraints).
Other findings to emerge from the study include: 1) technological
discontinuities in distributed electricity generation and storage may trigger the ‘creativ e
destruction’ of existing natural monopolies and lead to intense competition for selected
customer segments from new entrants, thus challenging the sustainability of incumbent
firm business models. 2) the task of adapting to technological discontinuities and
avoiding the ‘incumbent’s curse’ is made more challenging by the additional requirement
to simultaneously transition from a monopolistic to competitive marketplace. 3)
incumbents face a range of rigidities, inhibitors and path dependencies which limit their
strategic options and increase the risk of succumbing to the electricity ‘death spiral’ scenario.
Field of Research: Economics (Industrial Development)
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Paul Newbury – PhD Candidate, University of Queensland, Business School, Colin Clark 39 Blair Dr, St
Lucia QLD 4072, Brisbane, Australia, Mobile: +61 448 096 164 Email: p.newbury@business.uq.edu.au