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The Evolution of the Green Building Supply Industry: Entrepreneurial Entrants and Diversifying Incumbents
Abstract
The chapter asks a number of questions: what determines when and why a particular firm will enter an ecologically relevant industry? How does this differ for new firms vs. existing firms that already operate in another industry? And, what role do firms play in shaping the industry once they become part of it? The chapter addresses these questions by offering a theoretical explanation of the emergence and evolution of the green building supply industry that grew in tandem with the emergence of the green building construction industry following the introduction of the LEED (Leadership in Energy and Environmental Design) standard in 1998. The chapter first outlines existing scholarly theories that could explain who would enter new industries—such as the green building industry—during their emergence. Finally, the chapter outlines how these theories bore out in the emergence of the green building industry.
... Energy prices had declined and decision-making in new construction projects focused on maximizing return on investment, not environmental performance (Henn & Hoffman, 2013;Walsh, Urban, & Herkel, 2009). Information asymmetries were pervasive, in that buyers and residents could not easily observe the health and environmental implications of a building, while sellers could make any claim they liked about such qualities (Conger & York, 2013). It was unclear what role the commercial building industry could play in supporting environmentally beneficial practices, or even what a "green" building would look like if it did (Duckles, 2013;Gottfried, 2004). ...
... Existing companies and entrepreneurs alike met this demand by creating greener products and services. Ranging from improving air quality to paper print reduction, the legitimacy of a new market for environmentally beneficial practices created opportunities for the diffusion of LEED (Conger & York, 2013). ...
... Success stories from LEED APs created legitimacy for environmentally beneficial practices in a shifting industry. The resulting crop of entrepreneurial entrants established the viability of the market for green products in the building industry and paved the way for diversifying incumbent firms to enter (Conger & York, 2013). We argue that this small, but highly motivated, group of LEED APs engaged collectively in the cultural entrepreneurship process (Lounsbury & Glynn, 2001, 2019 essential to legitimizing green building practices. ...
Diffusion of environmentally beneficial practices is often portrayed as either the result of regulatory action or the heroic leadership of powerful actors within an industry. But, is this characterization accurate or universal? We assert that the transition toward environmentally beneficial practices within an industry is a journey that involves the contributions of numerous stakeholders. When there is no powerful central actor, we maintain that industries can still transition toward environmentally beneficial practices through multiple forms of collective and
entrepreneurial action. Drawing from entrepreneurship, sustainability, and institutional theories of change, we analyze and discuss the Leadership in Energy and Environmental Design (LEED) standard for the commercial building industry. We present theory related to four phases of the
transition: 1) initiation of new practices through effectual entrepreneurship, 2) adoption of new practices through voluntary standards, 3) legitimation of new practices through framing, and 4) commercialization of new practices through new market entrants and alternatives. We advance a new perspective on the industry evolution toward more environmentally beneficial practices that illuminates how industry change may be institutionalized through the complementary actions undertaken by diverse actors.
... Energy prices had declined and decision-making in new construction projects focused on maximizing return on investment, not environmental performance (Henn & Hoffman, 2013;Walsh, Urban, & Herkel, 2009). Information asymmetries were pervasive, in that buyers and residents could not easily observe the health and environmental implications of a building, while sellers could make any claim they liked about such qualities (Conger & York, 2013). It was unclear what role the commercial building industry could play in supporting environmentally beneficial practices, or even what a "green" building would look like if it did (Duckles, 2013;Gottfried, 2004). ...
... Existing companies and entrepreneurs alike met this demand by creating greener products and services. Ranging from improving air quality to paper print reduction, the legitimacy of a new market for environmentally beneficial practices created opportunities for the diffusion of LEED (Conger & York, 2013). ...
... Success stories from LEED APs created legitimacy for environmentally beneficial practices in a shifting industry. The resulting crop of entrepreneurial entrants established the viability of the market for green products in the building industry and paved the way for diversifying incumbent firms to enter (Conger & York, 2013). We argue that this small, but highly motivated, group of LEED APs engaged collectively in the cultural entrepreneurship process (Lounsbury & Glynn, 2001, 2019 essential to legitimizing green building practices. ...
A contentious debate has arisen regarding what roles governments and markets should play. Some analysts believe that market forces should be left unfettered; a laissez-faire system of development should direct urban growth patterns, sustainable or otherwise. Others maintain that government involvement is necessary to plan for the future and prevent building that is driven by real estate speculation rather than sustainability concerns. Political economy perspectives from sociology and urban studies provide a middle-ground approach that views both market and political forces as inseparable—they often work in concert. The different theories on urban growth are reviewed in this chapter and the stage is set for a study of Smart Growth entrepreneurs on the west coast of the USA.
PurposeThis study applies theoretical perspectives from urban, environmental, and organization studies to examine if “smart growth” represents an ecological restructuring of the political economy of conventional urban development, long theorized as a “growth machine” (Molotch, H. (1976) The city as growth machine: Toward a political economy of place. American Journal of Sociology, 82, 309–332; Logan & Molotch, 2007); the purpose is to determine if there is a “smart growth machine.”
DesignNine smart growth projects (SGPs) in four cities in California and Oregon were identified and semistructured interviews were held with the respective developers, architects, and civic officials involved in their implementation process. Comparative, descriptive, and grounded approaches were used to generate themes from interviews and other data sources.
FindingsThe findings suggest that an ecological modernization of urban political economy occurs through the coordination of entrepreneurial action, technical expertise, and “smart” regulation. Individual and institutional entrepreneurs shift the organizational field of urban development. Technical expertise is needed to make projects sustainable and financially feasible. Finally, a “smart” regulatory framework that balances regulations and incentives is needed to forge cooperative relationships between local governments and developers. This constellation of actors and institutions represents a smart growth machine.
OriginalityThe author questions whether urban growth can become “smart” using an original study of nine SGPs in four cities across California and Oregon.
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