Why do some new markets succeed, while others falter and fail? The focus of our research on market formation dynamics is to analyze, understand, and measure the ongoing efforts by which actors seek to form alternative markets in the face of uncertainty and changing environments in which organisations operate.
We can conceptualize and study these efforts as market formation processes because significant uptake of, for example, alternative fuel vehicles and healthy food is not simply a matter of individual consumers making different choices. Different choice options have to be offered and become appealing, infrastructure must be built to provide these offerings, and consumer familiarity and norms have to be developed. An entire market ecosystem needs to grow with supply, demand, and market support emerging together.
Our motivations: transformations towards sustainability
This research program on market formation dynamics is particularly motivated by our ongoing collective failure to apply credible, available solutions to pressing global problems. Mounting pressure on the environment and accelerating economic, social, and technological change challenge managers and policy makers to transform markets towards sustainability; and, to altogether rethink sustainability of present consumption patterns and lifestyles. Yet, while markets offer opportunities for transforming societies and organisations, many organisations, bottom-up initiatives, or policy interventions fail to produce impactful and lasting results. Underlying these challenges are the dynamic complexities actors face when seeking to form new markets or transform existing ones. Therefore we must learn how to design, alter and manage complex systems with multiple feedback effects, long time delays, and nonlinear responses to our decisions. Actors seeking to design high-leverage and robust strategies and policies for transforming markets towards sustainability also need access to methods and processes for improving systems thinking skills, to represent and assess such dynamic complexity, and tools that they can use to accelerate learning individually and collectively.
Our research program analyses market formation from a systems lens, focusing on the over-time interactions across stakeholders working through both social and material adoption challenges. In this approach of market formation the lens of observation is the system, meaning the various forms of interdependencies among actors and how they dynamically produce the complex behaviour of market formation, in successful cases, and market failure, in unsuccessful cases.
This research program contributes to both theory and practice for understanding of and developing strategies for market formation. It develops organisational theory about collective action during market formation as well as about dynamics of new product category emergence. In addition, our research offers guidance to strategic decision-makers in corporations and governments.
Applying our analysis to specific real-world market formation problems is instrumental for broader theory development. To this end we have conducted some of our research in partnership with organisations like Royal Dutch Shell, Ford Motor Company, the National Renewable Energy Laboratory, the Public Health Agency of Canada, and Wholesome Wave. Our research also provides insights into the challenges and opportunities to transition towards sustainable practices. Part of our research into alternative mobility transformation has been presented in a briefing for Senior Congressional and Executive Office Staff of the United States Congress.