The value chain dilemma of navigating sustainability transitions: A case study of an upstream incumbent company

• Published in: Environmental innovation and societal transitions 2022-12, Vol.45, p.114-131
• Main Authors: Chizaryfard, Armaghan, Karakaya, Emrah
• Format: Article
• Language: English
• Subjects: Center of gravity; Incumbent strategies; Industry value chain; Organizational adaptation; Transition; Upstream
• ISSN: 2210-4224; 2210-4232; 2210-4232
• DOI: 10.1016/j.eist.2022.10.002

•We explore how upstream incumbents navigate sustainability transitions.•We introduce an industry value chain perspective and conduct a case study.•The case is related to value chains of lead-acid and lithium-ion batteries.•We provide insights about the upstream dilemma of how to navigate transitions. An increasing body of literature on sustainability transitions addresses the business strategies of incumbents but overlooks upstream companies. By addressing this gap, we aim to explore how upstream incumbents navigate sustainability transitions. Theoretically, we introduce an industry value chain perspective, integrating the concepts of center of gravity, patterns of strategic change and organizational adaptation. Empirically, we conduct an in-depth case study of how an upstream incumbent firm navigates the established value chain for lead-acid batteries and the emerging value chain for lithium-ion batteries used in electric vehicles. The company faces a dilemma as to whether and how to maintain a vertically integrated position in the established value chain, and how and when to expand into the emerging value chain. We argue and demonstrate that for upstream companies, navigating sustainability transitions is highly dependent on the anticipation of and adaptation to the complex changes in industry value chains.