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This paper uses the Dialectic Issue LifeCycle-model (DILC-model) to analyze the co-evolution of the climate change problem and strategic responses from the American car industry. The longitudinal and multi-dimensional analysis investigates the dynamics of the climate change problem in terms of socio-political mobilization by social movements, scientists, wider publics and policymakers. It also analyses how U.S. automakers responded to mounting pressures with socio-political, economic and innovation strategies oriented towards low-carbon propulsion technologies. We use a mixed methodology with a quantitative analysis of various time-series and an in-depth qualitative case study, which traces interactions between problem-related pressures and industry responses. We conclude that U.S. automakers are slowly reorienting towards low-carbon technologies, but due to weakening pressures have not yet fully committed to comprehensive development and marketing. The paper not only applies the DILC-model, but also proposes three elaborations: (a) the continued diversity of technical solutions, and ‘ups and downs’ in future expectations, creates uncertainty which delays strategic reorientation; (b) firms may develop radical innovations for political and social purposes in early phases of the model; (c) issue lifecycles are also shaped by external influences from other problems and contexts.

This paper focuses on the rise of state investment banks (SIBs) as lead funders of mission-oriented innovation in various countries’ agendas regarding smart (innovation-led) growth, and not just fixers of ‘market failures’. The market failure justification for public finance fails to capture the active mission-oriented role that such banks are playing in shaping and creating markets, rather than just fixing them. In tackling innovation priorities and shaping new markets, these banks are developing new financial tools that also help to reform the financial system from within, addressing issues of short-termism and financialisation. This paper documents and analyses the roles of such banks, building on the Neo-Schumpeterian work on mission-oriented policies (that is, policies that aim to address societal issues or challenges). The paper presents a rich analytical description of mission-oriented investments in two of the leading SIBs: Brazil’s BNDES and Germany’s KfW. We discuss the directionality of the investments, the various tools used, and the lessons to be learned for evaluating these tools outside of a market failure framework.

This thesis contributes to closing a gap in the field of science, technology and innovation (STI) policy research: despite many theoretical advances in the field, we still do not know why some urgent societal issues (or ‘challenges’) remain unaddressed, notwithstanding the technological advances that could potentially address them. In particular, radical technological innovations – innovations that depart from the established technological trajectory – would offer greatest potential to address societal challenges. While the source of radical innovations is often new entrepreneurial firms, established firms (‘incumbents’) are likely to play an important role in developing them because of the vast resources and complementary assets they possess. Incumbents however, face few immediate incentives to develop radical innovations in response to societal\ud challenges.\ud \ud The analytical puzzle of this thesis is thus to explain how, when, and why industries change (or not) their strategies (in particular, their technological strategy) in order to address a societal problem. This puzzle is disentangled into interrelated research questions:\ud \ud A) How do societal issue­‐related pressures (on the incumbent industry) from different domains (namely, civil society, science, political arena, economy) evolve?\ud \ud B) How does the incumbent industry respond to changing pressures around societal issues, in terms of technological, political, cultural and economic strategies?\ud \ud C) In particular, when and why do industry actors decide to develop substantive technological responses?\ud \ud To answer these questions, the thesis develops a new analytical perspective that combines insights from (a) issue life­‐cycle and issue attention cycle theories (from the Business & Society field) with (b) the so­‐called ‘Triple Embeddedness Framework’ and (c) concepts from business strategies, innovation management, corporate political strategies, and technology policy. This novel perspective represents an ideal­‐typical model of issue evolution (‘issue life ­‐cycle’). The model, which I call the Dialectic Issue Life­‐Cycle (DILC) model, is applied to three case studies of the American automobile industry’s responses to various societal problems (local air pollution, auto and highway safety, and climate change). Combining qualitative and quantitative research methods in an original way, the case studies aim not only to investigate the validity of the framework, which also provides conceptual answers to the research questions, but also to further refine it and nuance the conceptual answers. By explaining how incumbent industry actors respond to societal challenges, this thesis ultimately contributes to the practical policy debate of how incumbents can be stimulated to develop radical innovations that help address societal challenges.

Recent work has highlighted the need for innovation investments to be understood through a mission oriented approach rather than a market failure one (Foray et al. 2012). However, this work has only focused on state agencies, such as DARPA, overlooking the role of public financial institutions such as state investment banks. Indeed, with the increasingly short-term nature of private financial markets, the role of public financial institutions has become increasingly important, and yet they continue to be analysed and evaluated through the market failure framework. Beginning with the importance of SIBs today in the emerging green economy, the paper develops a conceptual typology of the different roles that SIBs play in the economy which together show the market creation/shaping process of SIBs, rather than their mere ‘market fixing’ roles. The paper discusses four types of investments, both theoretically and empirically: countercyclical; developmental; venture capitalist role; and challenge-led. To develop the typology, we first discuss how standard market failure theory (MFT) justifies the roles of SIBs, the diagnostics and evaluation toolbox associated with it, and resulting criticisms centred on notions of ‘government failures’. We then show the limitations of this approach based on insights from Keynes, Schumpeter, Minsky and Polanyi, and other authors from the evolutionary economics tradition, which help us move towards a framework for public investments that is more about market creating/shaping rather than market fixing. As frameworks lead to evaluation tools, we use this new lens to both discuss the increasingly targeted investments that SIBs are making, and to provide a new light on the usual criticisms that are made about such directed activity (e.g. crowding out and picking winners).

This paper aims to make two conceptual contributions to the greening of industry literature. Firstly, we propose that the greening process can be conceptualized as an issue lifecycle dynamics with multi-dimensional struggles between 'greening' pressures and industry response strategies. To capture the endogenous dynamics, we develop a Dialectic Issue LifeCycle model with five phases, which conceptualize how these struggles play out over time. Secondly, we propose that issue lifecycle dynamics are also influenced by (external) alignments with contextual field-level developments. This proposition accommodates the notion that industries not only face 'green' issues but also other relevant pressures. We apply the model to a historical case study: air pollution problems and responses from American automakers (1943-1985). The case study presents a good match with the first three phases of the model, but shows deviations in the fourth and fifth phase, which are due to: a) decreasing pressure from public opinion; b) limited spillovers from air pollution to consumer demand; c) rise of competing issues; and d) strong resistance from the car industry. The findings underline that the greening of industry cannot be fully understood by looking only at the focal issue (e.g. air pollution). Broader developments in industry and external contexts also need to be taken into account. © 2012 Elsevier Inc..

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