The role of powerful incumbent firms: shaping regional industrial path development through change and maintenance agency

Abstract

ABSTRACT This article seeks to advance perspectives on powerful incumbent firms in (new) regional industrial path development. Drawing on recent insights from transition studies, it is argued that this actor group – hitherto often portrayed in a rather one-sided manner – plays a crucial role in shaping the pace and direction of regional path development through agency oriented towards both change and maintenance. Building on systemic perspectives at the intersection of evolutionary economic geography and innovation studies, a particular emphasis is placed on incumbent firms’ interventions to reconfigure or stabilize their surrounding regional innovation system to support their intentions. To this end, this article examines how incumbents exert their influence through various forms of power as means by which they promote or hinder regional industrial change. Empirically, the role of incumbent firms in three traditional automotive regions in Austria is investigated. It is shown how they leverage their power to propel the industry’s digitalization and suppress its decarbonization.