The Role of Informal Institutions for Institutional Co-evolutionThe Case of the Wind Energy Industry in Germany and Britain

Camilla M. Chlebna MSc#12112222, Department of Planning

Supervisors:Prof. James SimmieDr. Dave VallerSellafield Nuclear Power Station, Cumbria, NW-England, UK

• Introduction• Theoretical proposition

• Key elements• Hypotheses

• Research Design and Method• Analysis

• Framework• Early Findings

PRESENTATION STRUCTURE

Eclectic approach, influenced by economic geography as well as evolutionary, political and institutional economics

Development from invention/innovation to industry is non-linear(Nelson & Winter, 1977; Kline & Rosenberg, 1986; Llundvall et al, 2002)

Three kinds of institutions (formal and informal, organisational)(Polanyi, 1957; North, 1991; North, 1996; Rafiqui, 2009)

Co-evolution of institutions and technology(Perez, 1983; Nelson, 1998; Strambach, 2010)

Multi-layered approach (Geels, 2002)

THEORY BACKGROUND

HYPOTHESES

Institutions need to co-evolve to enable new technologies to enter and develop

As new technologies emerge they are not usually immediately able to compete but are relying on protected spaces, created through institutional frameworks, in which they can develop.

Informal institutions influence how well institutions co-evolve

The prevalence of certain informal institutions has an important impact on how well the institutions are able to co-evolve with new technologies (how “up to date” institutions are).

Fieldwork Research QuestionsWho tried to shape formal institutions over the years?

What motivated them?Were they successful?

Why? Why not?What are the interactions with and between institutions?

RESEARCH DESIGN AND METHOD

Explanatory Design

Quantitative elementQuantitative, secondary data will be drawn in for descriptive purposes

Qualitative element36 semi-structured expert interviews in 2015• 4 pilot interviews with academics• 32 interviews in main fieldwork• 18 German, 18 British• 26 face to face, 10 phone

ANALYSIS FRAMEWORK

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EARLY FINDINGS

How do informal institutions impact on institutional co-evolution and technological development?

What this means for theory

Civil society: Attitudes and values -> engagement and investment, motivation to act

Institutions:Prevalence of attitudes -> setting of political priorities; inter-dependency of institutions

Economic landscape:Technological paradigms -> ability to innovate and adapt, consumers/investors -> business practice

What the data shows

Civil society: German inventors ideologically motivated, David against Goliath, Chernobyl and Fukushima - Anti nuclear sentiment not equally strong in Britain

Institutions:Energy trilemma: energy security (GER), affordability (UK) and climate change (GER)Political pressure to consider climate and anti-nuclear attitude in GER, overhaul of support mechanisms only in response to EU directive in the UK

Economic landscape:large scale focus for energy generation everywhere; consumers’ power, divestment movement

EARLY FINDINGS

What is the ‘context’ for informal institutions to form and persist?

What the data shows

Variety of CapitalismBritish market ideology in the way of supporting new industries; German cross party consensus on direction, then creation of environment for innovation

HistoryNuclear power very much top-down decision for Germany (1950s), Britain first nation to use nuclear power for civil purpose

Culture‘Made in Germany’, but also excessive protection for large industry from energy levyBritish focus on service industry and lowest cost delivery

What this means for theory

Variety of CapitalismVoC -> state expected either to implement and encourage ‘systems of innovation’ or to stay out in order to ‘keep markets free’ (industrial strategy, political priorities)

HistoryHistorical experiences -> values and norms

Culture= behavioural norms and common practice, ideas of what deals may be ok or not

THANK YOU FOR LISTENING

Camilla M. Chlebna MSc12112222@brookes.ac.uk

Please do not hesitate to contact me with any suggestions or feedback that you can offer.

International Student Initiative for Pluralism in Economics: http://www.isipe.net/

World Interdisciplinary Network for Institutional Research: http://winir.org/

Fieldwork supported by

Slide 1Atomkraft Nein Danke!: Schoolmann S. http://www.nordland-virus.de/wordpress/?p=94. Hamburg, Germany. Accessed on 23rd February 2016. Nuclear Power Station, Sellafield, Cumbria, UK: http://www.thetimes.co.uk/tto/business/industries/utilities/article3247657.ece The Times Online, London, UK. Accessed on 19th May 2016.Slide 3Geels FW (2002) Technological transitions as evolutionary reconfiguration processes: a multi-level perspective and a case-study. Research Policy. 31, 1257–1274.Kline SJ and Rosenberg N (1986) An overview of innovation. In: R. Landau & N. Rosenberg eds. The Positive Sum Strategy: Harnessing Technology for Economic Growth. Washington D.C., USA: National Academy Press. 275–305.Lundvall B-Å, Johnson B, Andersen ES and Dalum B (2002) National systems of production, innovation and competence building. Research Policy. 31, 213–231.Nelson RR (1998) The Co-evolution of Technology, Industrial Structure, and Supporting Institutions. In: G. Dosi, D. Teece, & J. Chytry eds. Technology, Organisation and Competitiveness - Perspectives on Industrial and Corporate Change. Oxford, UK: Oxford University Press. 319–335.Nelson RR and Winter SG (1977) In Search of Useful Theory of Innovation. Research Policy. 6, 36–76.North DC (1991) Institutions. Journal of Economic Perspectives. 5 (1), 97–112.North DC (1996) Institutions, Institutional Change and Economic Performance. Cambridge, UK: Cambridge University Press

BIBLIOGRAPHY & SOURCES I

Perez C (1983) Structural Change and Assimilation of New Technologies in the Economic and Social Systems. Futures. 15 (5), 357–375.Polanyi K, Arensberg CM and Pearson HW eds. (1957) Trade and Market in the Early Empires - Economies in History and Theory. Glencoe, IL, USA: The Free Press & The Falcon’s Wing PressRafiqui PS (2009) Evolving economic landscapes: why new institutional economics matters for economic geography. Journal of Economic Geography. 9, 329–353.Strambach S (2010) Path dependence and path plasticity: the co-evolution of institutions and innovation - the German customized business software industry. In: R. Boschma & R. Martin eds. The Handbook of Evolutionary Economic Geography. Cheltenham, UK: Edward Elgar. 406–429.Slide 5Eurostat (2015). Employed 15 – 64 year olds in 2014. Brussels, Belgium.OECD, REGPAT database, July 2013.O’Sullivan M, Lehr U, Edler D (2015). Bruttobeschäftigung durch Erneuerbare Energien in Deutschland und verringerte fossile Brennstoffimporte durch Erneuerbare Energien und Energieeffizienz. – Zulieferung für den Monitoringbericht September 2015. BMWE. Berlin, Germany.RenewableUK (2015a). Wind Energy in the UK. State of the Industry Report Summary October 2015. London, UK.RenewableUK (2015b). Onshore Wind: Economic Impacts in 2014. Executive Summary April 2015., London, UK.TheWindPower.net (2016). Wind Turbine Manufacturers. Database, April 2016. Tournefouille, France.Slide 10Rethinking Economics Conference 2015. Greenwich University. London, UK. Own picture.

BIBLIOGRAPHY & SOURCES II

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Wind power related applications as share of total applications [1978 - 2012]

GER GermanyGB Great Britain

Wind energy relatively recently developed industry (with pioneers still around)

Germany world leader in turbine manufacturing until recently, Britain initially had companies but did not pursue or were sold(TheWindPower.net, 2016)

Construction / manufacturing is the most employment intensive part of wind energy development, but UK lacks companies in this part of the supply chain(RenewableUK, 2015b)

Similar rates of invention but in UK tendency to sell IP to companies abroad What motivates inventors? Profit vs idealism?(OECD, 2013)

CHOICE OF CASES

Employment in wind energy:UK 15.500 [2014/15 – 0.05% of about 29.5m employed total]

GER 149.200 [2014 – 0.4% of about 38.9m employed total](RenewableUK, 2015a; O’Sullivan et al., 2015; Eurostat, 2015)