Week 5: Opportunity emergence
Helping new Organisational Formats emerge
Background
new forms can differ in "newness" - some significant others marginally
Newness distinguished based on 4 dimensions
new
technology
structure
goals
served markets
challenge: new forms need to become accepted
not automatic process , entrepreneurs need to work to convince others. This involves justifying & legitimising
Social movements can contribute to process
Key Scenarios
inadequacy of normal incentives
failure of market mechanisms to reduce social costs
Failure of Trade Associations
Organisation Forms that are novel, must acquire support to become accepted. Assumed this happens through trade associations, enable securing of support from consumers and financial markets
can be very complex, difficult to manage
different members want different things
try and influence decisions to own good
= agreements hard to negotiate and coordination to get new form accepted can fail
EXAMPLE
Early automobile manufacturers
when emerging, previously relied on horses -> A lot of fear resulted in opposition from groups concerned about speeding
some automotive trade associations emerged to campaign on behalf of car manufacturers, disappeared again bc financial issues and disagreements
early fans banded together in clubs and promoted automobiling movement
promoted image in 2 ways:
support of state-wide laws on speed, to reduce criticism
official rules for races, building trust by professionalising activity
Overall: efforts helped manufacturers and product be accepted and be seen legitimate by society/government
central problem of establishing new form: free-rider problem
Why? -> Those who incur the costs/efforts of working to establish new form are not sole beneficiaries, those who benefit may not have shared the cost
Eg. early entrepreneurs incur costs of developing technical standards/ establishing supply and distribution networks
entrepreneurs play key role in familiarising consumers, financial markets, governments with new form
of course: once established, benefits also extend to later entrants
Central idea: when faced free-rider problem and thus demotivated, SM activists can help by investing own time, energy, efforts and resources to help establish new form
EXAMPLE:
Standard-setting organisations
in 1894, association of insurance companies commissioned to certify the fire-resistance of wires and lights for houses. By that, they became first standard setting organization
however, even increasing need for standard setting, it did not lead to emergence of further standard setting organizations, because free rider problem
only when activists gathered at national conferences and formed "standards movement" - focus reduce waste and inefficiency in industrial production
campaigned against "wasteful variety" , recruited business to follow
success of activists in recruiting big companies showed importance of standard setting and organisations -> acceptance
Overall: passionate activist helped establish idea of standard setting, thereby overcoming need for single organisations to do all the work
Helping new Markets Emerge