“Managing dual business models: Structural separation strategies of incumbents in the energy and automotive sectors.”

Abstract

Purpose The incumbents of the energy and automotive sector in Europe are facing discontinuous change. Sustainability transitions have created new markets (renewables and electric vehicles) that require the introduction of new business models (BM) that have the potential to substitute the established ones. This research part from the idea that structural separation, derived from the organizational ambidexterity literature, is an option for organizations to adapt their BM to discontinuous change. Previous studies have provided a framework that suggests strategies for competing with two BMs, however they do not provide specifics regarding what activities or elements need to be separated or integrated between the two BMs. The objective of this study was to provide an understanding of the factors - name, equity, internal organizational environment, value chain, and location - that illustrate the degree of structural separation by building a typology that highlights the structural separation strategies implemented by the studied sectors.

Method To answer this question a multiple case study was the chosen design. As a result, 4 case studies from energy sector and 4 case studies from automotive sector in Europe were selected. An event chronology for each case was created. The event chronology was analyzed using Qualitative Content Analysis (QCA) in the form of Direct Content Analysis (DCA). Subsequently, the factors were operationalized using a binary codification which allow patterns regarding the structural separation strategies to arise between the case studies.

Findings and Conclusion The typology, resulting from the analysis, was built by cross-tabulating two dimensions: (1) visible separation and (2) operational separation. Which resulted in four separation strategies, frontstage separation, backstage separation, hard separation, and soft separation. Each expresses the level of separation on each dimension the incumbents in the energy and automotive sector chose to implement. The typology revealed that a distinctive view of incumbents’ strategies to implement new business models is needed. The cases analysis showed that energy incumbents prefer a stronger approach to separation than automotive incumbents. Concerns regarding the financial and policy state, the stage of transition and reputation arose as possible reasons behind the preference of implemented separation strategies. The research could be improved by adding interviews or surveys to acquire direct information from the companies and better construct and enrich some of the factors. Moreover, opening the scope of the research to include other sectors dealing with sustainability transitions to prove the patterns exhibit in this research.