DEPARTMENT OF TECHNOLOGY MANAGEMENT AND ECONOMICS DIVISION OF INNOVATION AND R&D MANAGEMENT CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden 2021 www.chalmers.se Report No. E2021:039 Investigating the adoption factors of new technologies: A case study of a milling innovation Master’s thesis in Management and Economics of Innovation Björn Breunissen Jacob Justad REPORT NO. E 2021:039 Investigating the adoption factors of new technologies: A case study of a milling innovation BJÖRN BREUNISSEN JACOB JUSTAD Department of Technology Management and Economics Division of Innovation and R&D Management CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden 2021 Investigating the adoption factors of new technologies: A case study of a milling innovation BJÖRN BREUNISSEN JACOB JUSTAD © BJÖRN BREUNISSEN, 2021. © JACOB JUSTAD, 2021. Report no. E2021:039 Department of Technology Management and Economics Chalmers University of Technology SE-412 96 Göteborg Sweden Telephone + 46 (0)31-772 1000 Gothenburg, Sweden 2021 Investigating the adoption factors of new technologies: A case study of a milling innovation BJÖRN BREUNISSEN JACOB JUSTAD Department of Technology Management and Economics Chalmers University of Technology SUMMARY This paper aims to investigate how different factors can affect the adoption of new technology. Based on existing literature and previous research a framework for the adoption of technological innovations has been set up. The framework includes external, internal, and technological factors that might impact an adopter’s decision when considering new technologies. Specifically, the considered factors are society, external institutions and market for the external part; internal institutions and risk, and path-dependency and resources & capabilities for the internal part; and ecosystem fit, relative advantage, maturity, and complementary services for the technological part of the factors. The study focuses on a new milling technology and, through a qualitative study, investigates five cases in which this technology is being considered for adoption. Each case is focused on a different industry and revolves around a company that is operative in the respective industry. Data was collected through semi-structured interviews with (potential) adopters and the producer of the new technology. The adopters consider society and relative advantage as the most important factors and although these were positive in each adoption case, they affect the adoption decision in different ways. Relative advantage acts as a gatekeeper to the remaining factors and the society factor is an underlying force that pushes the adopter in a certain direction. In situations where adopters are explorative, the maturity of technology does not seem to have a large effect and they are more willing to take on risk. Several adoption factors cannot be viewed independently from the others when looking at how they affect the adoption decision. In the end, it is the sum of all factors that will ultimately decide the outcome of the adoption decision. . Keywords: adoption, innovation, technology, factors Acknowledgements We would like to thank our supervisor Ksenia Onufrey for her continued support, enthusiasm, knowledge and input to our research. It has made our journey more effective and has helped us reach this satisfying result. We would also like to thank the chairman of the board of Technology X and the external innovation consultant for their efforts in providing us with information, input and contacts. Additional appreciation goes out to all interviewees who agreed to share their valuable knowledge and time with us, which proved to be a great contribution to our research. Gothenburg, 2021 Björn Breunissen Jacob Justad Table of Contents 1. Introduction ............................................................................................................................ 1 1.1 Background ...................................................................................................................... 1 1.2 Aim and problem discussion ............................................................................................ 3 1.3 Limitations ....................................................................................................................... 4 1.4 Disposition ....................................................................................................................... 4 2. Theoretical framework ........................................................................................................... 5 2.1 External factors ................................................................................................................ 6 2.1.1 Society ....................................................................................................................... 6 2.1.2 External institutions ................................................................................................... 7 2.1.3 Market ....................................................................................................................... 9 2.2 Internal factors ................................................................................................................ 11 2.2.1 Internal institutions and risk .................................................................................... 11 2.2.2 Path-dependency and resources & capabilities ....................................................... 12 2.3 Technological factors ..................................................................................................... 14 2.3.1 Ecosystem fit ........................................................................................................... 14 2.3.2 Maturity ................................................................................................................... 15 2.3.3 Relative advantage .................................................................................................. 15 2.3.4 Complementary services ......................................................................................... 15 2.4 Framework ..................................................................................................................... 16 3. Methodology ........................................................................................................................ 18 3.1 Research design .............................................................................................................. 18 3.2 Data collection and Analysis .......................................................................................... 20 3.3 Method discussion .......................................................................................................... 24 4. Empirical findings ................................................................................................................ 26 4.1 Technology Overview .................................................................................................... 26 4.2 Recycling tyres/rubber industry ..................................................................................... 28 4.3 Hemp industry ................................................................................................................ 30 4.4 Soil management/quality ................................................................................................ 31 4.5 Large international manufacturing firm ......................................................................... 32 4.6 General recycling and waste management ..................................................................... 34 5. Analysis ................................................................................................................................ 36 5.1 Analysis of factors per case ............................................................................................ 36 5.1.1 Recycling tyres/rubber industry .............................................................................. 36 5.1.2 Hemp industry ......................................................................................................... 38 5.1.3 Soil management/quality ......................................................................................... 42 5.1.4 Large international manufacturing firm .................................................................. 45 5.1.5 General recycling and waste management .............................................................. 47 5.2 Cross-case analysis ......................................................................................................... 49 5.2.1 Similar factor effects across cases ........................................................................... 50 5.2.2 Arbitrary factor effects across cases ........................................................................ 52 5.2.3 Inter-relatedness of factors ...................................................................................... 56 6. Conclusion ............................................................................................................................ 59 6.1 Research implications .................................................................................................... 61 References ................................................................................................................................ 63 Appendix A: Interview guide - experts .................................................................................... 67 Appendix B: Interview guide - cases ....................................................................................... 69 List of figures Figure 1: Thesis disposition ...................................................................................................... 4 Figure 2: Adoption factors ........................................................................................................ 6 Figure 3: Overview of adoption factors .................................................................................. 16 Figure 4: Overview of the research process ............................................................................ 23 Figure 5: The interrelatedness of the factors ........................................................................... 58 List of tables Table 1: Adoption factors ........................................................................................................ 16 Table 2: an overview of cases, interviewees, and abbreviations ............................................. 22 1 1. Introduction 1.1 Background The industrial mill is a century-old idea that has practically changed very little since its origination. Contrary to the old days, where a rope-attached donkey is powering the mill by walking in circles around it, nowadays the milling is done automatically. However, the basic concept of milling solid materials by grinding, crushing, or cutting has not changed. Presently, the two main drawbacks to the prevalent milling design are that it is an energy-intensive process that breaks materials apart and undesirably tends to break cell structures and material properties as well. A small Swedish company has, however, managed to overcome these problems through the development of a next-generation mill that is more sustainable and does not interfere with primary material features, from here on out referred to as “Technology X”. An often returning topic that impacts both of these groups is sustainability. Sustainability is an important selling point for Technology X, as the required energy per litre of output is uncontestably low. Additionally, the capabilities of Technology X allow customers to go down new paths of sustainability with their products that haven’t been wandered before. The quest for sustainability plays a large role in Swedish society and in the ecosystem of companies and ventures that go about their daily business. Economic and environmental sustainability gets strongly pushed from governmental levels (i.e. in education) and are hot topics that are included in companies’ codes of conduct and ethical policies (Olsson, 2018). While businesses try to meet the standards and requirements set by the government, they keep trying to improve their sustainability to seem more attractive to potential customers and suppliers. An increase in sustainability is often combined with technologies that are used in- house and environmentally friendly and therefore innovative ideas are commonly included in development efforts and (external) adoptions. Technology X’s mill can be regarded as a novel technology that its developers are trying to get diffused in industries where separation and/or milling of material is important. These are industries such as whole foods, coffee, or the mining industry; industries that rely on breaking 2 apart materials without damaging cell structures (e.g. protein extraction, grinding of coffee beans, etc.). A testimonial from an anonymous mining industry expert on the new milling technology: “I worked in the mining industry for a long time where traditional milling processes continue to limit production output. This new milling system will revolutionize all industries that require the liberation of materials into their parts. Nothing like this - at all - has ever come along until NOW”. Each industry contains many companies that are in some way contributing to the economic landscape of the industry that it is situated in. The consensus among Technology X’s leadership is that such companies could be interested in using the new milling technology and start the new era of next-generation milling. From an adopter company’s perspective, the superiority in the performance of the new technology is a compelling reason to adopt, but there are many factors and conditions that either argue in favour or against adopting this technology (Parente & Prescott, 1994). Superior performance, though, is not necessarily the deciding factor in technology adoption. A famous example of this is the decision of choosing a keyboard layout. “QWERTY”, which had a 20-40% lower typing speed than the later introduced “DSK” layout used by Apple, came out as the preferred choice (David, 1985) and is still the most applied layout on most keyboards to this day. Several factors and conditions, apart from performance, play a vital role in the potential adoption of any new technology. A new milling technology with superior performance may therefore remain unadopted and an understanding of different factors is needed to support adoption. Previous research has done extensive work on understanding developments on and the interplay between macro, meso, and micro levels of technology adoption, such as Bergek et al. (2018), Geels (2002; 2004), Schot & Geels (2008), Parente & Prescott (1994) and Hannan & McDowell, (1984). Also, technological adoption from the company’s point of view has been covered in various research (e.g. and Rogers (2003)). The goal of this research is to build upon previous publications and further narrow down how various factors influence the decision of adopting new technologies on the company level. Additionally, the research should be usable by technology developers to better understand what their clients (i.e. adopters) go through when presented with the choice of adopting new technology. Connections to and further developments on previous research will be made to shift the perspective from societal/industrial adoption factors to company-specific adoption factors, bridging the gap between both groups. 3 Additionally, a novel perspective will be offered to developers of new technologies to identify how their potential clients (i.e. adopting companies) are affected by and take into consideration various factors of adopting technology. Thus, hopefully, a contribution will be made to more successful launches of new technologies and the development of technology that uses society’s resources more efficiently. 1.2 Aim and problem discussion Adopting new technology is risky for the adopter because many unknowns (performance, maintenance, service level, etc.) come with the adoption and create uncertainty. Adopters deal with these uncertainties by setting criteria for themselves that new technologies have to fulfil to be adopted. Developers of new technology, in turn, are affected by adoption factors as well (Yu & Tao, 2009) and they cannot control every factor to fully satisfy an adopter. The aim of this research is therefore to investigate how adoption factors affect an individual company’s decision for adopting a milling innovation to better understand how new technology could be adopted in general. A framework that elaborates the interplay between adoption factors and that can be broadly applied to other companies that are in the position to adopt new technologies will be presented to further work towards uncovering adoption conditions for companies. Developers of new technologies could use this framework to understand what is being considered by companies when exploring the adoption possibilities of their technology. Additionally, adoption factors do not solely affect the adoption decision, but one another as well. Also, a combination of factors will affect a decision in a different way than a single factor will do. The interplay of factors shows how factors are related, how they affect the adoption decision, and what connections can be drawn. Based on this, the following research questions have been formulated: How do different factors affect an adopter’s decision on adopting a new milling technology? How do these factors interplay with each other? 4 1.3 Limitations The research is limited to companies/businesses/people that have already thought about adopting Technology X. They should have come in contact with the idea already and are not completely new to it. We will not be going deeply into the milling industry itself, but the focus will be more on different industries that are receptive to the outcome of the milling process; not the milling process itself. Examples of such industries are the tyre industry, manufacturing industry, recycling industry, and hemp industry. While many industries could fall inside the scope, we are specifically looking at companies within these industries that have an application for milling technology. 1.4 Disposition This thesis report will have a structure that is similar to other scientific research reports and allows a clear flow of information from introduction to conclusion. The introduction has served to introduce the topic and related matters to the reader and offer a first look into the research. Following the introduction will be the theoretical framework, where relevant academic research regarding external, internal, and technological adoption factors are presented and discussed. Next, the methodology is presented and offers a thorough description of the chosen research process and strategy. In the fourth chapter, the empirical findings from the qualitative interviews will be discussed and interpreted and the subsequent analysis section will look at similarities and differences, adoption factors in detail, and technological questions. Finally, the conclusion will finalise the thesis as the research questions will be answered and some managerial implications will be offered. See Figure 1 for a process flow of the disposition. Figure 1: Thesis disposition 5 2. Theoretical framework The theory chapter is divided into three separate sections of factors that influence an adopter’s decision on adopting new technology. The investigated literature covers the areas of transition theory, strategic management, and innovation strategies. From this literature, it can be concluded that adoption decisions are in broad terms influenced by external, internal, and technological factors. Often, they are intertwined and factors appear in different parts of the theoretical framework in different contexts. We describe the nature of each factor and how it relates to other topics mentioned. The distinctions are made as follows: external are the conditions that are set by the industry, society, and factors that come outside of the company, also known as system levels in other literature. The main areas from which the covered external conditions flow are society, external institutions, and markets. The internal conditions are set by the company and are factors that come within the company and can be specific for the particular company. The factors for the internal conditions that will be covered are internal institutions and risk and path-dependency and resource & capabilities. The technological conditions are defined as technology-specific factors, which might vary in different contexts. They can be put into both external and internal settings and bridge them through technological aspects. The technological factors that will be covered are ecosystem fit, relative advantage, maturity and complementary services. The factors will be presented from a broad-to-narrow perspective, starting with the large external environment, followed by the smaller firm’s internal environment, and ending with technology- specific factors. See Figure 2 for an overview of the factors. 6 Figure 2: Adoption factors 2.1 External factors External factors affect a company’s operations and strategy from the outside. They flow from conditions set by the market, industry, and society. They provide a broader context from which a decision for adoption could emerge. External factors in this literature review are categorized as society, external institutions and market. These factors follow from the included articles that describe phenomena that fit inside one of these categories. 2.1.1 Society The society factor has the potential to influence firms through culture and emerging trends. They generally do not have a direct effect on operations and competition but have an indirect impact through large-scale and slow changes in society. In literature, this is referred to as the landscape level (e.g. Rip & Kemp, 1998; Geels & Kemp, 2000; Geels, 2002), which is the largest - macro - level in the multi-level perspective. The multi-level perspective (MLP) on technological transitions is a widely researched and applied framework that describes the nested hierarchy of three interdependent levels in a socio- technical system. The system is categorized in a macro, meso, and micro level, defining them 7 as “landscape”, “regime”, and “niche” levels respectively. Rip & Kemp (1998) and Van den Ende & Kemp (1999) are among the earlier publications on this hierarchy in socio-technical systems, where they describe the interdependencies between the three levels. Geels & Kemp (2000) further develop this framework by describing technological transitions from a socio- technical perspective and Geels (2002) introduces the dynamic multi-level perspective on technological transitions. These sources define the macro-level, the landscape, as the collection of deep structural trends in society that define a set of heterogeneous factors. Examples of such structural trends range from low-impact to high-impact trends such as climate (change), war, financial paradigms, or fluctuations in oil prices (Geels & Schot, 2007). It draws on the explicit and implicit hardness of structures in systems in society, such as the structural properties of a building, but also society’s expectations of the nature of the said building. The landscape refers to technology-external factors and, while not impossible, it is hard to change and changes only slowly. Landscapes are seen as something that we (society) can travel through and as something that we are part of (Rip & Kemp, 1998). They provide a mould that does not determine the nature of future actions but simply makes some actions easier to be carried out than others. Similar to a physical landscape of mountains and rivers, there are many theoretically possible ways through a landscape, but some are easier than others. Pressure from the landscape level comes in changes that are out of society’s hands or that gradually happen as a reaction to other developments. Landscape pressure can come from (1) solid environmental conditions that don’t change such as climate, (2) large and long-term changes such as the technology boom of the late 20th/early 21st century, or (3) rapid external shocks from other developments that affect important concepts of the landscape such as war (Geels & Schot, 2007). These pressures don’t directly act on lower levels (regimes and niches), but on actors in the system that perceive and translate them, which leads to their shockwaves to be eventually felt in the whole system. To summarise, landscape pressures go beyond surface pressures (e.g. pricing, competition, tax, etc.) and point to larger political, economic, and socio-cultural changes. They can differ in strength and tend to inflict change to lower levels (Smith et al., 2005). 2.1.2 External institutions Underlying the landscape level is the technological regime on the meso level. The context of a technological regime is best described by Rip & Kemp (1998, p.340): “A technological regime 8 is the rule-set or grammar embedded in a complex of engineering practices, production process technologies, product characteristics, skills and procedures, ways of handling relevant artefacts and persons, ways of defining problems; all of them embedded in institutions and infrastructures”. In the regime’s institutional environment, rules are made, set, and followed that steer every actor’s actions and decisions. Firms in a regime are bound by these rules and their adoption patterns are a consequence of them. Transition literature uses regimes to describe socio-technical changes and while this paper does not necessarily look at socio-technical transitions, the MLP approach can however still be used to create an understanding of how higher-level influences and dynamics trickle down to the company level and set implicit conditions for the adoption of technology. A company that is part of a regime resides in the regime’s technological trajectory and profits of its stability created by the set rules. These rules are aimed at the “coordination and structuration of activities’’ and are part of external institutions (Geels, 2004). Bergek et al. (2018) refers to the rules in a regime as the external institutional environment and offers a broader conceptualization of regimes through the distinguishment of the institutional and task environment. The external institutional environment has been acknowledged in previous research throughout the past three decades. This environment tends to put pressure on its actors, forcing them to follow similar paths in terms of actions, innovations, and methods (Teo et al., 2003; Geels, 2004; Bergek et al., 2018). The pressure on following existing paths deepens the paths in the regime, making other actors dependent on them as well. The path-dependency of such actors has a snowball effect on future decisions and actions in science, technology, and culture. Path- dependency is a phenomenon that exists due to the nature of external institutions and the rules that they set. Berkhout (2002) recognizes its existence and bundles various definitions of path dependency, which can be summarized in the following way: innovations are institutionally trapped by rules, expectations, and assumptions and their development takes place along the pathways that these set. Path-dependence gives stability to a system and new developments take place in small incremental steps (Geels, 2004). The thinking process of actors happens along such pathways as well. If incumbent actors are under the assumption that the solutions to certain problems can be found within the regime, they will keep their attention focused on existing technical trajectories and won’t be incentivized to invest in radical innovations (Dosi, 9 1982). Similarly, if they think that user preferences are satisfied, no change of product (e.g. to further increase user satisfaction) will take place (Christensen, 2013). Paths are not just shaped by developments in a regime, but also by social and cultural pressures on the landscape level. If a certain agenda is pushed by society, a firm will be incentivized to follow this agenda to satisfy user and customer expectations. The shift to sustainable consumption and behaviour is a good example of affecting adopters. They are biased to select new technology that checks sustainable and environmental expectations and will be in harmony with goals set by them. Neo-institutional theory, NIT, suggests that many of a firm’s actions are a reaction to social and cultural pressures from other organizations, thus being able to explain organizational behaviour that contrasts rational economic actions (Suddaby et al., 2013). The external institutional pressures that point organizations in the same direction are often viewed as irrational actions by firms that, against expectations, are not solely based on economic incentives. NIT focuses on the effect of external institutional pressures on firms and uncovers that such firms often base decisions on legitimacy effects instead of performance effects, responding to the regimental construction of efficiency and effectiveness, instead of a rational construction of these. Specifically interesting in our case is if the new technology is compatible or incompatible with the social-cultural values and beliefs. Rogers (2003) brings up examples such as embeddedness in values and beliefs that hinder innovations. For example, American farmers place a strong value on increasing farm production rates. This has led to the slow adoption of innovative soil conservation methods because it limits production rates and is thus unpopular amongst farmers (Rogers, 2003). 2.1.3 Market The market environment can be considered as a very specific subset of institutions and consists of the competitors, clients, customers, and suppliers of the focal firm. An institution, on the other hand, covers all rules, pressures, and actor relations in a regime. The market has a direct influence on a firm’s (strategic) decisions and competitive picture. The market can accept or reject new technologies (Rogers, 2003), decide on the “fit” of innovation to the market environment (Holström & Stalder, 2001), impact technological trajectories of regimes (Geels 10 & Schot, 2007), which in their turn pressure individual firms, and provides the podium for actors to negotiate and emerge. The market also can change external institutional rules, even though it is also impacted by those rules (Geels & Schot, 2007). Rules can either be indirectly changed by market preferences and product variations, or they can be directly changed where actors negotiate on rules in communities (Geels & Schot, 2007). The remainder of this section also looks at external institutions but investigates how these can be influenced/changed from the market’s point of view. In the previous subsection, it was highlighted how external institutions affect actors and behaviour, while this section describes the changing of external institutions by these actors. It becomes clear that both parties can affect one another. Organisational variety is the main driver of indirect rule changes and is defined by the selection environment of the firm. Users, customers, policy agents, etc. are part of the selection environment and their preferences and wishes drive a firm’s investments, competencies, and strategic choices to make its products fit better to the users. Once a path towards strategic fit has been successfully created, it becomes an established method and becomes more dominant as other firms adopt similar practices. Thus, the market environment has successfully impacted the technological trajectory of a regime and its innovations (Geels & Schot, 2007). An adopter’s perspective on innovations changes accordingly and provides an important factor for the decision. New technologies that get introduced to the market level commonly occur in technological niches. Niches, on the micro-level, are small technological clusters that act as incubation rooms for new technologies. The development of new technologies happens either in the marketplace or in a protected area, where regular market conditions don’t apply and the technology can slowly develop and adapt better to society’s needs and views (Kemp et al., 2001). Protection is offered in ways of R&D programs, sponsoring, and lower external institutional influence. Niches provide a learning-by-doing experience because they demonstrate the viability of new technologies and set in motion new learning processes, which tends to lead to increased customer and actor support and gaining new financial support (Kemp et al., 2001). The new milling technology is a good example of niche technology that is gradually exposed to forces on the market. 11 To show the hardships of new technology adoptions, Christensen & Bower (1996) explain that current customers and markets guide the resource allocation of incumbent firms, which often leads to failure of investing in new radical innovations that are either unknown or missed by the market. Most radical innovations, however, were focused on niche segments and small markets which are of little importance to the balance sheet of big incumbent firms. The incumbent firms were guided to invest in current technology and incrementally improve it. Disruptive innovation theory discusses this phenomenon of incumbents vs. new entrants and their respective behaviours towards novel technologies. 2.2 Internal factors This section will mostly focus on the conditions which arise from the company’s perspective. Covering organisational behaviour towards change, path-dependency, and how current resources and capabilities affect companies choose to adopt. 2.2.1 Internal institutions and risk Peng et al. (2009) introduce the institutional-based view, which, along with the resource-based and industry-based view, forms the three legs of strategic decision making by a firm. It has been brought forward to complement the resource-based and industry-based views in the aspect of bringing context to the decision. According to Peng et al. (2009), the institutions set the rules of the games in which companies are competing and it is vital to making good decisions leading to better performance. Informal rules consist of norms, ethics, and culture. If it is assumed that companies are rational, it becomes a potentially vital factor to understand how these internal conditions could affect strategic decisions to better understand the decision of adopting new technology. However, the concept of bounded rationality shows that humans do not always base decisions on reasoning, due to cognitive limitations, motivation, and being affected by emotions (Selten, 1990). Culture can be defined in a myriad of ways and is not a phenomenon that is isolated to companies, but one can find it anywhere from a family, sports team, group of friends to a nation. Shani et al. (2009) bring forth a summary of different definitions and defines it as a system of values and beliefs that is shared by all or almost all members of a social group. In organisational culture literature, the focus is mainly put on leaders of an organisation and how to manage it (Willcoxson & Millett, 2000), but the definition of culture fits on different levels and could 12 theoretically be on the national level, family level, or team level. Rogers (2003) describes that the factor compatibility is one of the important factors for an innovation to diffuse, compatibility in sense of the innovation to fit into the beliefs, values, and social systems. Hofstede (2001) focuses on a national level and distinguishes cultures based on different characteristics to better understand their behaviours. One characteristic that Hofstede uses is uncertainty avoidance. If someone has a high uncertainty avoidance, one likes to have predictable everyday life which often is filled with rules, norms, and no abrupt changes; opposite to low uncertainty avoidance. Uncertainty avoidance has then been used in different research as a measure of risk tolerance, which will be most relevant in adopting new technology. Thus, although the initial characteristics have aimed to be for a national level, we argue that at an organisational level it would still be applicable in the definition of culture, and the concept of risk tolerance, willingness to change could potentially be important to understand an adopter’s decision. Locket & littler (1997) showed that risk-averse households were less likely to adopt direct banking. Early adopters coined by Rogers (2003) are more risk-tolerant. Further, Aurigemma & Mattson (2018) concluded that risk-aversion is affecting adoption. However, they also could conclude that risk is not perceived as homogenous. For example, customers perceive the risk of new technologies which are similar to old ones as lower. Rogers (2003) argued that the individual’s characteristics affect the adoption and those individuals who are reluctant to change and generally sceptical to new ideas will lag adopting the innovation, and on the other side of the coin people who show a positive attitude towards new ideas and display leadership will naturally be more willing to adopt early. The perception of risk and the characteristics of the adopters to tolerate risk can be used to understand the adopters’ decision. Further, the informal institutions and characteristics of the adopters and the behaviours that come with it, display the potential of being one of the main factors which affect the adoption decision. 2.2.2 Path-dependency and resources & capabilities In a more organisational context on intangible operations, Sydow et al. (2009) describe that there are many different definitions of path-dependency and they are not very well explicitly stated. Sydow et al. (2009) define the core of the phenomena of self-reinforcing mechanisms that lead to organisational lock-in. Sydow et al. (2009) state that organisations, due to their social character, have more complex lock-ins, but they might not be as extreme. As previously mentioned, self-enforcing dynamics are all about bringing forth preferred actions, which then 13 get deeply rooted in the organisation. A positive loopback that reinforces the behaviour, which ultimately leads to actions without actual explanations and answers, is achieved when questioning if “this is the way we always have done it”. Intangible resources and capabilities are to be taken into account as potential factors hindering or pushing the adoption. Arthur (1989) was one of the first to model path-dependency and did it in the context of competing technologies. He argued that increasing returns of economies of scale and learning curve would lead to technical lock-in effects, which would exclude new competing technology even if it is superior in some aspects. This will affect the current resources and capabilities an adopter has and the view of their future. One famous example is David (1985) who investigated the keyboard layout, “QWERTY”, which hasn’t changed till today, even though rivals have surfaced with better performance. David argued, like Arthur, that this was due to economies of scale, but also technical interrelatedness (fit into a system) and quasi-irreversibility of investments (investments specific to the technology). The latter two are related to company incentives of avoiding switching costs of changing from old to new technology. Technical interrelatedness in a system could be relevant in both external and internal views. Internally it is how it would fit with other internal processes and general resources and capabilities that the company possesses. The technological section covers a link and a broader perspective of fit into the ecosystem. The quasi-irreversibility of investments could be in knowledge, plants, or other processes which would make the incentives to change technology decrease, there are also the resources and capabilities which the company might lack which is necessary for the new technology. Further, Weiss et al. (1994) could, based on quantitative research with empirical data, conclude that a greater switching cost will reduce the probability of early adoption. Christensen (2013) explains, in his famous management book “The innovator’s dilemma”, that companies are locked into established processes and capabilities. The creative destruction that new radical technology can inflict lowers the incentives to invest and according to Schumpeter (1934) is why innovations mostly come from entrepreneurs, outside the current system. Thus, the current resources and capabilities that the company currently possesses matter in the decision and could be an important factor when studying the cases of the new milling technology. 14 2.3 Technological factors The last group of factors focuses on the technology itself and its properties that could potentially influence an adopter’s decision. 2.3.1 Ecosystem fit In contrast to the external and internal fit, which has been covered in the previous sections, this section is dedicated to the whole picture of the ecosystem in which the technology will be implemented. Although the technology might fit with external standards and internal processes, other aspects have to be concerned, such as the suppliers. The simple fact of the connection between internal-systems with the technology and external might not fit. The current fit into the ecosystem of integration of external and internal parts could potentially be one of the main factors in the study. The performance of the new technology is one of the most important features and plays a big role in societal acceptance of technology. However, performance is not the only and often not even the most important factor, so it does not draw the whole picture. While the standalone value of technology is the isolated technological value itself, it is not the entirety of value for a user. Pianura (2012) showed that the standalone value of new technology is limited to the systems and subsidies to complement the technology could prove to be pivotal in the adoption of technology. This is also the case when looking at the new entrants’ and incumbent firms’ performance when a new technology enters. Adner (2006) is in similar ways investigating innovations and focuses on the whole picture and not only on the internal levels. He proposes that adoption in the value-chain is also very important for an innovation to be successfully adopted, which is called the integration risk of innovation. He defines the integration risk of the innovation as the risk that occurs when actors in the value chain accept innovations and handle new output, input, or maintenance. The technology should fit the value chain and the integration risk for the innovation should be low for it to be successfully adopted (Adner, 2006). Further, Adner (2006) also proposes that there might be complementary innovations that have to succeed during the adoption stage, which is adding to the risks. Depending on which ecosystem the technology is being implemented in, the adoption conditions will vary and are important to take into consideration when either adopting or trying to get it to be adopted. 15 2.3.2 Maturity Turnheim & Nykvist (2019) set up key conditions in their study to assess the feasibility of potential pathways of a transition in a sector. Factors to be assed are maturity and momentum of options. They argue that it is important to consider the readiness of the technology and commercial availability at a given time. In our case, this is applicable, and to draw upon what previously has been discussed about risk; a more mature technology will be less risky. The track record of the new technology can be used to examine if it has been delivered in a specific context. This may vary through the different cases and although the fundamental technology will remain, the contextual maturity may vary and it could potentially be the main factor to be considered. 2.3.3 Relative advantage Although performance has been argued to not be the sole factor of adoption, it is still a factor that has to be considered. In this study, the same technology will be studied in different contexts and the standalone value of the increased performance in these will most likely differ. These different effects are the reason that current performance will be compared to the old performance of the technology. The risk-reward ratio will most likely differ in the context and was explained more in the internal conditions. Additionally, Rogers (2003) describes one factor that determines the diffusion of technology as a relative advantage. This is not solely the objective view of relative advantage, but it is whether an individual perceives innovation as advantageous. A company, however, has the obligation of explaining the actions to stakeholders. Actions will still be influenced to a large extent by subjectivity and the perceived reward could potentially be the main factor. Venkatesh et al. (2003) formulated a unified model based on eight previous models on determinants of technological adoption with empirical data. They found that the most important factor determining adoption is the performance expectancy a user believes it has. 2.3.4 Complementary services In industries all over services are increasing and off-the-shelf products with no strings attached are becoming less general and more specific. Manyika et al. (2012) of McKinsey argue that the lines between services and products in manufacturing are blurring more and more and the mindset of separating them is outdated. The increase of smart products and integrated services 16 has great potential to change industries fundamentally (Porter & Hepppleman, 2013). The value does not only come from the new technology itself but the services around it as well. Grönroos & Svensson (2008) describe the provider to be a facilitator of value and not the creator. The customer is the creator of value; the value that they can create, enabled by the product/service, is important. Thus, the complementary services which the provider may offer can provide value in different forms. For example, operational services, data gathering and analysis, warranties, knowledge, and so on, which will increase the value for the customers in terms of risk diversity, operational efficiency, safety, etc. This factor is offered in combination with the new technology itself and could be an important factor for adopters when they decide to adopt. 2.4 Framework The literature analysis on the topics of external, internal, and technological factors provides a list of factors and shows how these are connected. We propose that the connection between the three-factor “umbrellas” can be illustrated as seen in Figure 3. The adoption conditions that adopters sets for the adoption of new technology depend on several factors that together create the conditions in which technology is to be adopted. Figure 3: Overview of adoption factors Technological, internal, and external factors are the “umbrella” factors that other related factors are grouped into. See Table 1 for an extension on the adoption factors. 17 Table 1: Adoption factors Type Factor Example External Society Environmental trends, financial climate External institutions Regulations, standards, industry norms Market Market expectations of product, resources allocations, norms of customers, and beliefs Internal Internal institutions and risk Organisational culture, Adopter characteristics, perceptions of risk, norms, beliefs Path- dependency and resources & capabilities Current processes and systems, perception of the cost of switching, new investments, capital restrictions, previous commitment to different technologies Technological Ecosystem fit Fit with suppliers/partners/buyers current processes and systems, fit with complementary systems such as after- services or addons. Maturity Proof of concept, data of past performances in efficiency, wear, cost, etc. Relative advantage The perceived advantage/disadvantage the technology has, objective performance, opening up for other opportunities, the market position being first Complementary services Warranties, after-services, on-call support, financial options, business models, customer supports 18 3. Methodology In this report, research is presented on adoption conditions for companies concerning a new milling technology. This implicitly requires that perspectives from different actors are needed to be considered to be able to draw righteous and objective conclusions. To gain knowledge and understand what conditions may be important, a literature review was done before gathering empirical data. The approach to the empirical data analysis is from a qualitative research perspective where the data gathering was primarily done in the form of semi-structured interviews. The interviews were done on several cases of companies that have adopted or considered adopting the new radical milling technology. Then, the cases were (cross-)analysed and in the end, a conclusion was formulated. 3.1 Research design This research has been qualitative. According to Bryman (2003), a qualitative approach reveals many different emphases and would allow the data to be viewed from different perspectives, which is needed to fulfil the purpose of this study. The empirical evidence was based on several qualitative case studies in different contexts. A qualitative research approach is highly suited to gain a deep understanding of phenomena and according to Yin (2003) qualitative case studies are preferred when trying to understand why and how something is occurring or not. Additionally, Berkwits & Inui (1998) argue that a qualitative approach, as opposed to a quantitative approach, captures expressive information, such as beliefs, values, feelings, and motivations for underlying behaviours. The subjective aspect of a company’s decision to adopt or not is important to understand. Further, Black (1994) explains that a qualitative approach is excellent when seeking answers to questions formulated as “what …”. Lowhorn (2007) explains that “It is a subjective way to look at life as it is lived and an attempt to explain the studied behaviour.”, trying to understand why a behaviour is occurring. Thus, the chosen qualitative approach will fulfil the purpose of this study which is to understand how adoption factors affect an individual company’s decision for adopting a milling innovation and how these factors affect this decision. The choice of cases was limited to companies that have considered adopting Technology X, which has either failed, succeeded, or is still in process. These companies have all been 19 (potential) clients of the mill developers at a certain point in time. Making contact with these companies has been dependent on the ability and willingness of the producer of Technology X to connect them to the authors. The choice of cases was therefore limited and not every potential client has been interviewed. The cases are all focused on the same technology, but within different contexts (e.g. industrial differences such as the rubber industry or waste-management industry ), which implicates different adoption environments. Further, this study has been performed in collaboration with the company that has developed Technology X. Below follows a short description of the cases that have been covered. Technology X was developed from ideas that came up during the development of silent submarine engines. The development of the technology to fit milling started in the late 1990s and the first commercial product was sold in 2003. Currently, there are three mills active in the world. Further, there are 25 potential customers which have either accepted to adopt or in the process of adopting it, the order stock of Technology X with these clients goes up to 5000 units combined. The study has been covering five cases, including companies that have adopted, failed to adopt or are in the process of adopting it. Case (1): The first case focuses on a Swedish company in the recycling of tyres/rubber industry, where Technology X was adopted in 2012 and was used for about two years, only to be discarded later on. Case (2): The second case is about a Swedish company in the hemp industry that is in the process of adopting Technology X. The first contact was made in 2019. This is a very small client for the producer of Technology X and is not their main focus, which might have some effect on how HP perceives their experience. Case (3): The third case is on a soil management and quality company from the United Kingdom. The first contact was made in 2014 and the company soon after adopted the technology and in 2020 upgraded their mill to the next generation of Technology X. Further, the product will not be disclosed in this case due to the request by the company. Case (4): number four focuses on a large international manufacturing firm. The industry in which this company is operating and the product it is producing will remain undisclosed, due to a request from the company that wishes their competitors not to find out about their new operations. The first contact with Technology X was in 2018 and it was just recently adopted on a first-test project. 20 Case (5): The final case is on a general recycling and waste management company in Sweden. The company was first in contact with Technology X in mid of 2020 and is currently in the process of negotiation of the adoption. In all cases but (2) and partly (1), the purpose of adopting Technology X has been to approach something new or something that doesn’t require any substitution of older technology. This could have a potential effect on the bias of our data, especially factors such as maturity, resources, and capabilities that will have a lower impact in these cases. 3.2 Data collection and Analysis To gain an understanding of the importance of each factor and an insight into previously done research, a literature review has been done in the early stages of the process. The following topics, amongst others, have been looked into: socio-technical transitions, innovation adoption, technological change, organisational behaviour, disruptive innovations, path-dependency, strategic management, and resources and capabilities theory. The search through literature was done by using combinations of words such as “innovation”, ”new technology”, “performance”, “adoption” and “transition” in Google Scholar and the Chalmers library search engine. Additionally, previous literature materials from Chalmers courses have been consulted as well. A multi-level classification of adoption factors could be deduced from the literature. The factors to be considered are displayed in Table 2. The primary data on each case has been collected through semi-structured interviews. The developer of the new technology and an independent sales consultant have been interviewed as well. A separate interview guide has been used for these two interviewees, see Appendix A. This has increased the validity of the data since there are different actors in the same case. Transcripts from each interview were made to further increase the transparency of the study and was a part of the analysis. The thesis was written in collaboration with the company which develops the new milling technology (Technology X); disclosure of the relationship is needed for transparency reasons. One interview was conducted with every company in each case. In the interview, the general theme of the thesis, the expectations for the interview and questions regarding adoption, external, internal and technological perspective has been covered. See Appendix B for the 21 interview template that has been sent to every interviewee beforehand. The two additional experts have also been interviewed once each. Every interview took between 40 and 90 minutes, depending on the answers and explanations of the interviewees. The same template of questions was used for the five case interviewees, while another template was used for the two experts that was more focused on general parts. See Appendix A for the questionnaire for the experts. Finally, each interview was recorded and subsequently transcribed. During the interview, notes were taken as well for quick access and refreshing the memory. A summary of the interviews is shown in Table 2. Case (1): The interviewee was the head of the R&D apartment and will be referred to as RT. Another interview within this case has been conducted with an external innovation consultant, TC, who purchased the first mill with Technology X and used it in cooperation with the Swedish tyre recycling company. Case (2): The CEO, referred to as HP, was interviewed in this case. This is a very small client for the producer of Technology X and is not their main focus, which might have some effect on how HP perceives their experience. Case (3): The CEO, SQ, was interviewed in this case. SQ is personally very involved in the adoption process. An e-mail with more detailed follow-up questions has been sent to and answered by SQ after the initial interview. Case (4): LI, the interviewee in this case, is the sustainability manager of the company and responsible for the Nordic countries and has been one of the frontrunners of introducing Technology X to the company. The person has been in the company for over 20 years and was previously the technological manager. Case (5): A business development manager, RW, has participated in the interview and sheds light on the possibilities that Technology X brings to the table. Producer interviews: The first additional interview was done with the chairman of the board of Technology X who qualifies as the technology expert on the milling technology, TE. They share their insights and views on Technology X, the adoption, and dealing with customers. The second additional interview has been conducted with an independent sales consultant, IC, who connects Technology X with potential client companies and scouts the market horizon and networks for companies that could benefit from the adoption of Technology X. The innovation consultant’s independence is based on the fact that they work for themselves, but they are receiving a commission of 3% on the sale of a Technology X mill to a customer, which incentivizes them to the selling/leasing/etc. of these mills. 22 Table 2: an overview of cases, interviewees, and abbreviations Case Position of interviewee Referred to as Important to know (1) Recycling tyres /rubber Head of R&D RW RW wanted to use the mill for an innovative recycling process (1) Recycling tyres /rubber External innovation consultant, a previous stakeholder in the company RT Purchased the first mill of Technology X and used it in cooperation with the Swedish tyre recycling company. (2) Hemp Chief executive officer HP This is a very small client for the producer of Technology X and is not their main focus, which might have some effect on how HP perceives their experience. (3) Soil quality /management Chief executive officer SQ SQ is personally very involved in the adoption process (4) Large international manufacturing firm Sustainability manager in Nordic countries LI LI has been in the company for over 20 years and was previously the technological manager. (5) General recycling and waste management Business development manager RW Technology X should ideally be used as a substitution for obsolete technology and improve sustainability Technology X Chairman of the board / Technology expert/founder TE Have been there since the beginning and helps clients on the technological side and has knowledge through many different cases Technology X Independent sales consultant IC Connects Technology X with potential client companies and scouts the market horizon and networks for companies that could benefit from the adoption of Technology X The analysis of the data has been divided into three main areas (external, internal, technology) to try to understand which factors are relevant and try to explain why adoption occurred or not through the literature that has been chosen. The analysis process can be summarised by Figure 23 4 and it is more of an agile approach and an iterative process. The start is at the theoretical level to grasp the landscape and know where and what to look for in the data collection. Then, data is collected. During the interviews, notes were taken to highlight the sections or factors that would potentially be of most interest in the particular case. After the interviews, transcriptions were made. These transcriptions and the interview notes were analysed and informally discussed by the authors. Timestamps in the recording of the interview were highlighted where the interviewee, either explicitly or implicitly, describes a factor that is being considered in this study. Further, these highlighted sections are then focused on and trying to analyse it with the “theoretical lens” to try to understand the situation. As the factors are not easily quantifiable, there will be a certain subjectivity when interpreting the data. To understand how the factors have been fulfilled, the analysis will first consider every case separately and in the second part compare, look for similarities and connect lines between cases. Also, other interesting findings of the interviews were used to extend the theory and add parts that affect the adoption process as well. At the end of this process, a complete revelation of the theory was done to see if anything had to be changed, added, or removed to be able to fulfil our aim of the research, as inspired by Altmann (2020, 05-14). Additionally, if necessary, additional data was collected through e.g. follow-up questions through email. Figure 4: Overview of the research process 24 3.3 Method discussion Several processes and choices in the method are open to discussion as to why exactly a certain approach has been taken. The sections where such a discussion would be appropriate are highlighted here and comments on how weaknesses were mitigated are provided. The focus of the study is on Technology X and thus the company that develops it plays an important role in the design of the research. As the aim of the study requires to closely look at (potential) adopters of Technology X, every client that the developers have been in contact with becomes interesting and can contribute to the depth of research. To find out who these clients are and how to contact them, though, the developers have to be willing to share this information, as they are the only party that knows about every client that has considered adopting Technology X (as they have to provide the technology themselves eventually). Therefore, the data collection has been very dependent on the willingness/ability of the developers to share (ex-)client information. The developers could therefore have been selective of the cases that they provide and there is a possibility that the analysis based on the available information has been drawn to a certain direction. To mitigate the effect of potential selectiveness, two out of five cases have been acquired through an independent sales consultant and one case through an early adopter of Technology X. Both parties do not directly work for the developers, although the sales consultant works with them to connect potential clients. The parties will have different stakes and views than the developers of Technology X, which allowed the connection to different clients that did not surface directly when in contact with the developers. When looking at the cases themselves, there is always one interviewed person per case who has in some way been (partly) responsible for the decision on adopting Technology X. There is a risk that one individual is not the sole decision-maker or does not understand or see the whole picture when it comes to adopting Technology X, so there could be a certain bias in the answers to the interview questions. Some factors, for example, might have played a smaller role for the interviewee than for another individual in the same company in a different role. To mitigate this bias, every factor has been mentioned in each interview to at least “force” the interviewee to think about it. Therefore, on every factor, an explanation has been given on what role it played and why - also if the interviewee thought that it wasn’t important in their adoption case. 25 In the interviewee with the technology producers, every factor has been mentioned from the interviewers’ side as well to see if the producers thought about it and to get a larger understanding of their train of thoughts on their client’s adoption process. Continuing, the research was started on the biased idea that in every case the adopters were trying to substitute older technology with Technology X. It was found, however, that in every case the potential adopters were trying something new with Technology X - not substituting old technology - in terms of sustainability, performance, and discovering new applications. This is something that can only be highlighted at the end of the data collection phase and is something that has been observed, rather than a requirement for every case. The research and data collection have been conducted by two students. To keep a structured interview process, it was decided that one student would lead the interview while the other one took notes and assisted with checking all questions and touching every subject. Additionally, it was decided that one student would always contact - and stay in contact with - the interviewees, so that a direct and undisturbed line of communication with interviewees could be established. Finally, the results of this study are generalizable within a certain degree of innovation studies. The context of the study was limited to a unique innovation that can be applied in several new manners that previously was unheard of. The application of Technology X has been in developed countries within companies/businesses that had resources to facilitate some kind of adoption. The findings of this research can be used in similar cases where a new, high-tech technology revolutionizes the way of working for applicable companies/businesses. 26 4. Empirical findings In this section, a summary of the findings from the interviews of the cases will be covered. The first two presented interviews are with the technology producer and the independent innovation consultant, respectively. The latter five sections will cover each case and the findings from the interviews are presented there. 4.1 Technology Overview Technology X was developed from ideas that came up during the development of silent submarine engines. The development of the technology to fit milling started in the late 1990s and the first commercial product was sold in 2003. Currently, there are three mills active in the world. Further, there are 25 potential customers which have either accepted to adopt or in the process of adopting it, the order stock of Technology X with these clients goes up to 5000 units combined. The study has been covering five cases, including companies that have adopted, failed to adopt, or are in the process of adopting it. The technology expert, “TE”, is the chairman of the board of the company behind Technology X and is the most technologically experienced person on board. TE has also been very included in the process of attracting customers. TE has been working on Technology X for about 20-15 years and has developed it on different continents in the world. Currently, Technology X is being further developed and promoted in Sweden. This mill is different from the classical mill, which operates with steel balls and grinders, managing to keep particle properties unchanged while still drastically reducing the size of the material. A jet mill is another type of mill that is highly specialized, very expensive to buy and operate, and can work with a lower volume than Technology X. The large difference in performance between both mills is that Technology X could practically work with most materials - depending on the way that it is put in the mill -, is inexpensive to operate and is unique in its milling properties and output. According to TE, customers tend to be positively surprised about the output quality and are very eager to send many different kinds of materials through the mill for extensive testing. During the testing phase, the uniqueness of the mill becomes clear and most customers are fully convinced of Technology X’s superior performance after the first set of tests. The uniqueness 27 of what Technology X can output is one of the things that TE regards as the biggest reason why companies adopt, it gives them something that they didn’t have before and could give both opportunities and potential advantages. However, while Technology X is relatively inexpensive to operate (when measured in cost per milled litre), the initial investments are rather high and tend to scare potential customers away a bit. This is the point where TE has to try to make a case of superior milling technology and offer reminders of the sustainability that comes with Technology X. Sustainability in this regard is another very positive factor that is created with Technology X. Direct sustainability is achieved due to the low energy demand and the low wear and tear of the particles of the mill. Indirect sustainability is created through the application of the mill and the opening up of new possibilities for different materials. TE notes that Technology X can isolate specific substances from materials that can be applied in completely new ways. An example is the extraction of pure protein from peas, which can be mixed with other food substances to create vegetarian/vegan meat replacement products or vastly increase the shelf life of conservatives. While this is an example specific to the food industry, it is up to the customer to isolate specific materials that can greatly contribute to a more sustainable society. The independent innovation consultant, IC, has met the developers of Technology X through a mutually known third party. Interest in the milling technology behind Technology X was aroused through the IC’s previous knowledge of the food industry where they saw several application fields for Technology X. Generally, the IC introduces interested parties to the milling technology, its possibilities, pricing, and some core technical specifications. For more in-depth technological questions and explanations the main developer of the mill is invited to a meeting where all three parties exchange information and primary needs. A good point that the IC always mentions to potential adopters is the sustainability of the mill as the mill guarantees environmental sustainability to a large degree. While the mill’s energy use is relatively high, it manages to process more material than previous techniques and thus the used energy per milled piece of material is a lot higher. Pressure on the environment will thus be less and there is an interesting cost incentive to the customer as well. The IC describes the first step in the adoption process as a testing phase, where a potential customer can send some to-be-operated-on materials to the developers who then mill the material. If the required substances have been successfully liberated - or if the output has the 28 expected qualities - the adoption process is usually taken to the next level. This first testing phase is pretty broad and serves as the first “wow-moment” to the adopter. According to the IC, Technology X is such an innovative improvement on the general milling technology that customers either do not know what to expect, or their expectations have been exceeded. On a technological aspect, Technology X manages to impress many interested parties and opens up new ways of processing material. However, for a process to continue after the initial tests of performance, the performance has to reach its previous performance at least for it to move forward. However, the IC has pointed out several times that a mill is usually part of a production process and that new mills are required to fit in that existing process. To every client, it is important that they can fit new technology in their current processes, or that there is a way to make it fit (better). A misfit generally requires a large investment in additional machines that can work both with the material and with Technology X. A specific example that IC mentioned was a recent decision by a potential client to not adopt Technology X because it could not work with the raw materials that were just extracted. The material had to be processed abroad in the US and Denmark first before it could be processed in the mill. This proved to be a too cost-intensive process for it to be profitable. To fit the mill better into the existing ecosystem of market standards and existing machines, IC stated that the developers are working on pre-processing techniques that can prepare the material in a way that it can be used in the mill, such as sorting machines or conveyor belts. Gradually, Technology X is ramping up from serving small business and material sizes to more substantial material sizes. When it comes to financials, the developers and IC prefer to offer Technology X as a service, where a customer pays a monthly fee based on the processed material. Such fees are determined during the testing phase, where it is looked at how much material is processed, how successfully, and how fast. Cost packages are tailored to the client so that financial limits will not be the deciding factor for adoption, if within reasonable limits. 4.2 Recycling tyres/rubber industry The rubber industry is an international industry that is interested in recycling tyres. Black carbon, amongst oil, carbon, steel, and gasses, can be extracted from tyres and gives the tyre 29 rubber its tear-resistance and flexibility. Without black carbon, tyres wouldn’t be as nearly effective as they are today. A tyre is about 30% black carbon. The company has one full-scale plant operating in Sweden and around 25 employees. According to RT, the industry is rather slow-paced, as it has taken about 20 years to start up a plant that extracts materials from tyres. The industry is characterised by heavy environmental regulations and standards that require plants and technologies to earn various certificates. RT’s company’s plant is in the final stages of acquiring every certificate, which has taken about 20 years. RT’s customers set very strict specifications and requirements based on these regulations. RT came in contact with Technology X when looking for a mill that could reduce milled particle size below 20 microns. Technology X was able to produce material under five microns during the initial test phase, which allowed it to skip a few steps in RT’s testing process. The wear and up-time reliability of the mill were two other very important criteria that were still unclear for Technology X after testing, as it had no ISO or other certifications or adhered to other accepted standards. RT decided to adopt anyway and was promised that an updated version of Technology X, with improved wear and up-time numbers, was to be delivered. The first version quickly proved that it was susceptible to high levels of wear, vibrations, and many other smaller problems. This led to a long-lasting back and forth with the developers of Technology X, as at that time extensive on-site service, good customer support, and continuous contact wasn’t taken care of. Finally, after 1,5-2 years, RT decided to exchange Technology X for another type of mill that had proved itself on the market and backed by large multinationals. RT stated that they would have continued to use Technology X if complementary services would have been much better. A change back to the newest current version of Technology X is, however, out of the question as RT has invested a lot of the company’s resources and time in their current technology. The external innovation consultant acted as the bridging factor between Technology X and the Swedish tyre company. “TC”, the consultant, established early contacts with the developers of Technology X and purchased the first fully developed mill, and used it in the tyre company to try to increase the recycling rate of old tyres. This was about 20 years ago. TC saw the environmental trends forcing the tyre industry into a more sustainable corner and creating some 30 real incentives to try and recycle the black carbon in these tyres. Regulations dictated that tyres were not allowed to be stored as complete tyres and that they had to be shredded, ideally recycled, and used again. A simple mill would have covered the shredding part, but not the recycling part. TC discovered that Technology X was able to liberate black carbon at a rate that had never been seen before and saw the potential behind Technology X. As black carbon is a precious material for which high prices are bid when offered in pure form, there was a good reason to pursue the recycling efforts of tyres anyway. As the tyre industry is very slow-moving and 20 years ago wasn’t as complete as it is today, TC saw that the company was not very locked into its processes and techniques. This offered a good chance to introduce a unique technology that later turned out to be rather slow on the output level in comparison to other machines in the company’s plant. Along the same lines as RT, TC stated that eventually, Technology X underperformed too much on levels of speed, which eventually outweighed the technological performance and the mill was replaced for an alternative. 4.3 Hemp industry The Swedish hemp industry is a small industry that is not as fully developed as in other countries such as the U.S., Canada, and France. The processing of industrial hemp focuses on the whole plant where every bit between the root and the stem is being taken into account. The interviewee is the owner of a Swedish hemp processing company HP and is looking to extend the range of operations that it carries out on the hemp plant. Bales of hemp consist, amongst other things, of shives and fibres, mixed that have a broad range of applications when separated. The Swedish hemp industry is operational in the part of the processing chain after shives and fibres have been separated and in the case of shives only with a considerable low percentage of dust. Technology X has already proven that it can reduce the dust in pure shives to a percentage below the required maximum. This is a promising outlook, as only a few other technologies in Sweden have been able to produce similar low dust percentages when processing shives. Unpacking bales and fully separating and processing fibres and shives are part of the upstream processing steps of the hemp industry. The physical properties of Technology X don’t allow a smooth fit to the upstream, but HP is currently collaborating with the developers of Technology X to find out it can isolate fibres and shives to skip one step. While there are already 31 technologies that can achieve this, these are generally used overseas and not sustainable, the latter being a non-negotiable requirement for the Swedish hemp industry. If Technology X would be able to deliver on the isolation of critical materials, HP sees a possibility to alter harvesting methods to provide hemp in a way that is compliant with Technology X, though requiring another investment and the acceptance to change old industrial habits. HP is thought to be the first hemp processing company in Sweden that has had trial runs with Technology X and is convinced that a shift in the hemp industry is on the horizon due to this technology. For HP it would be a large investment sum in the event of potential adoption of Technology X, so it desires to complete many test runs with different kinds of materials to exactly know what Technology X is capable of. The technology will be deployed for the long term and many Swedish actors in the hemp industry would benefit from the outputs of Technology X, that is if it passes all the prior tests. Also, traceability, various accepted certifications, low use of energy, and after-market services are important criteria for potential adoption, although underlying to performance. HP, as of the time of writing, has not adopted Technology X but is in the midst of its decision process. 4.4 Soil management/quality Companies in the soil management/quality industry help increase the quality and sustainability of soil for land managers in all different areas, such as farming or golf courses. The company that has been interviewed is operating for 80% in the UK and 20% internationally. The founder and CEO, “SQ”, has been interviewed and founded his company in 2018 and currently employs ten people. SQ had been in contact with Technology X before founding the company. It left such a great impression that SQ took the following five years to develop a product that could extract great potential from Technology X. This was a product and service that hadn’t been introduced before and proved to be crucial to SQ’s business, further to remain undisclosed. SQ is very excited in a visionary way about Technology X and talked about the endless possibilities that it potentially has. The founding of SQ’s business comes hand in hand with the technology and according to SQ the passion that is involved with Technology X will bring it to great applicable heights. A quote from SQ: “Passion is everything, isn’t it, gentlemen, you know, and I’m very passionate about this because I really know it could change mankind. Okay. Yes. There’s going to change 32 the game even more. I need the amount of resources. We will be able to recapture alone, start to stop wasting if this thing were rolled out and there were 10,000 of these across the planet right now doing that 12 sectors that we could easily identify. We’d be looking at savings in the multiple trillions of dollars per year for the planet. I mean, it’s just ridiculous growth.” (12:49). Further, SQ revealed that apart from the offered opportunities, there were more factors behind his adoption of Technology X. Environmental regulations, pressure to become more sustainable, and EU-wide goals are underlying trends that favour the application of Technology X and helped SQ’s company greatly. The United Nations Sustainable Development Goals (UNSDG) were specifically named as being key drivers to pursue Technology X. Across the UK’s recycling and processing industries there remain strong concerns for high-performing and efficient mills. Technology X can help to realize SQ’s vision, fitting in the culture of doing things. The risks that innovations carry with them, though, weren’t ignored, as there was no proof of concept or standards that fit with other systems, such as ISO certificates, board certificates, etc. SQ highlights that for Technology X to break through, a streamlined package has to be delivered. Pragmatic support methods such as very personal customer service is a must. When discussing the future of the technology in the industry, it is very possible that many will adopt it and, according to SQ, around 70% of all mills in the world could be replaced by Technology X. 4.5 Large international manufacturing firm The industry is global and consists of a few very large actors and the market is high-volume. The product is an everyday product that everyone comes in contact with each day. The company is actively manufacturing, developing, and selling the product. The company operates internally and is one of the biggest manufacturers of this product in the world, with 34 production sites and 25000 employees in 100 countries. A agreed, the product and industry will not be disclosed as the company fears that competitors will take advantage of the information. The initial contact LI made with Technology X was at a sustainability conference where TE was presenting Technology X around the year 2018. LI saw an opportunity to be able to liberate a particular material, which then is to be recycled into their current products, something that has previously not been able to be done in a great manner. The direct motivation of the potential adoption of Technology X was to improve waste management and recycling. Three years after 33 the initial contact there is a first agreement struck between the company and the producers of Technology X and a first project is underway. The industry itself is very slow-moving and to a large extent the market as well. LI mentions that the environmental regulations of the industry and in Sweden are very far behind other industries, so the industry is not pushed towards sustainability and recycling. The market and customers do not value sustainability aspects such as recycling. Customers are not willing to pay a premium price for a recycled product. LI explains that some competitors get away with “planting some trees” to offset their pollution, which the customers seem to buy. LI argues for more regulations that would push the industry towards action, describing the Swedish reduction law in the diesel industry as effective regulation. At the current stage, a large investment towards increased recycling products is not justifiable from an economic aspect. However, LI has taken the initiative to be more sustainable by setting up various goals. For example, 30% of their products should consist of recycled materials by 2030. Currently, they are at 12%. Their vision is to become a fully circular company. LI explains that at first the recycling and circularity of processes was a lot about making the processes more efficient and saving money but that has shifted and is now more about contributing to a sustainable climate. LI was asked if a project like this was to be initiated for about 20 years, the answer was that It would be very unlikely. LI also explains that they see this investment and the focus on sustainability as a strategic decision and as a preparation for the future and regulations to come. LI would argue that the company is a classic production company that is focusing on production and efficiency and is not very flexible, which can be seen in some R&D efforts. However, he argues that there is a great business climate and an entrepreneurial mindset in the Nordics that is suited for these types of new technologies. This project would have been much harder in France and impossible in Germany. The informality and lack of bureaucracy in this project were very helpful. According to LI, performance is the deciding factor. If the technology would not work as expected, it would not have been adopted. The current project is not full-scale, and if the technology is to be implemented full-scale it is not to substitute a current process but establish a new one. One of the primary benefits of Technology X is its flexibility and if a full-scale investment is to take place it would be used for several different materials. This would entail investments around the technology, and it would have to fit with other solutions such as 34 logistics. If a logistic solution would not have been found, they would not be able to move forward. 4.6 General recycling and waste management In this section, a recycling and waste management service company is covered that provides solutions for companies that cannot take care of their waste. The company is active in Sweden, Denmark, Norway, and Estonia and handles 6.3 million tons of material of different waste each year. It is a large company with annual revenue of 6.4 billion SEK, 2300 employees, and about 60-65 waste handling sites in Sweden, varying in size and expertise. The initial contact was in person and a former employee told RW to look into Technology X. The material that RW receives to recycle is highly mixed and has to be separated before the recycling process, or it goes to waste. This led to a discussion with the producer of Technology X, since one of their key advantages is to liberate materials. An initial test was conducted and showed great potential. A material that had previously always been put in a landfill was managed to be recycled. Based on this success, there is currently an ongoing process of taking the collaboration further. The industry is very slow-moving and RW would characterize the business and branch as very conservative. They have done the same thing in the last 20 years. However, there are strong trends that are affecting the industry. The EU is, under pressure from climate change, going green, and regulations in Swedish society are pushing towards circular economy strategies. The new regulations have led to change. Waste ordinance laws have been established in Sweden and have gone into effect in 2020, demanding that companies that produce waste are responsible for that waste. Further, if RW takes the waste and there is a possibility to recycle it they have to do it. This has pushed new investments in technology. Further, the market and customers are also pressuring towards a change since they want to lower their CO2 footprint. This has led to increased competition among the players in the industry and RW mentions that they need new technology to stay competitive. However, when it comes to material handling processes, innovative sustainable recycling is expensive and the customer will have to pay. As the customers’ main concern is financially motivated, they will not go with more expensive options, even though they might be more sustainable. As no company wants to take the first step in this, RW feels that someone just has to step up and that the others will soon follow after. 35 The new goal of the company is to be climate-positive by 2030. In general, RW would characterize the company as rather reluctant to change, although there are a few people that drive the changes. The implementation of Technology X would require some new processes and knowledge, but RW does not see a big challenge and thinks that it is not hard to handle. RW describes that they didn’t see any larger risks and was quite confident that it would work. The performance of Technology X was great, and it provides an interesting financial benefit. Currently, the costs for putting processed materials in landfills are about 1200 SEK/ton. If they manage to recycle the material, however, they could sell the material for 500 SEK/ton, which leads to a financial incentive of an increase of almost 2000 SEK/ton. RW mentions that Technology X has to bring a lot of value and outperform the current processes significantly. In this case, no technology can perform as well as Technology X. A problem related to Technology, though, is that there is high uncertainty in terms of payment. It is unknown what payment model the producers of Technology X will use and the adoption costs are unknown. This makes the evaluation of cost versus reward very hard and is currently the main issue that prevents larger investments in Technology X. Further, RW can see the industry adopting more new technology that pushes in this direction. Especially the initial projects will take time, though, but once they are up and running following investments should go quicker. 36 5. Analysis In the first section of the analysis, each case will be looked at separately. The adoption factors that have been introduced in the theoretical framework will return here and it will be looked at if they appear in a case, how they influence the decision for adopting, and how it relates to the case in general. The second part of the analysis will be a discussion where cases are compared and where an in- depth analysis of each occurring factor will take place. Comments will be made on the perceived importance and effect of each factor and their applicability across the cases. 5.1 Analysis of factors per case The analysis will be conducted per case and a sub-division of sectors across the external, internal, and technological points of view will be presented. Factors that belong to these three groups and that occur in a case will be marked in bold. 5.1.1 Recycling tyres/rubber industry External The society factor is affecting the whole industry in terms of environmental pressure and climate support. The landscape pressures have already partially affected external institutions, as many regulations, standards, and certificate requirements were already put in place. This, however, focused more on the production of tyres and the disposal of used tyres and acted as barriers to further environmental harm by these actions, rather than supporting the adoption of new technologies. Rather, it acted as a hindrance to new approaches and slowed down innovation processes to protect the environment. The industry is rather conservative and slow- moving - evidenced by the 27 years that RT needed to get their plant fully up and running. The regime is therefore strong and actors are very path-dependent (Geels, 2004), which makes the diffusion of innovations more difficult. Societal pressures are, however, forcing the industry to work more towards sustainability and especially innovate in the area of recycling. This opened a door for Technology X and helped to break in the regime, potentially destabilising it with other, similarly working, technologies (Smith et al., 2005). 37 The market was not specified as having a positive or negative impact on the decision of adopting Technology X. The market was only exposed to a selective range of technologies that were accepted by the regime and followed by external institutional pressures. As RT’s company had just been founded when the adoption of Technology X was considered, it acted as a niche- level player in the tyre regime (Geels & Kemp, 2000). It brought Technology X to the surface of the regime, but was largely protected from market influences through R&D funding and allowed Technology X to slowly develop. Internal The internal institutions and risk, in this case, are a positive effect of adopting the technology. The culture and mindset of the company are very entrepreneurial and, as early adopters, very risk-tolerant (Rogers, 2003). The company was aware of the risk and had to deal with uncertainties in terms of performance and specifications. However, in line with theory (Locket & Littler, 1997; Aurigemma & Mattson, 2018), RT’s company resided in an explorative phase that allowed larger risk and higher uncertainty. The path-dependency and resources & capabilities factor at an initial stage was a positive effect of adoption. The resources and capabilities that the company possessed were very limited and it created a condition that allowed them to be flexible and could start building production processes from the bottom up. There were no established lock-in effects or barriers either. The initial situation is what Schumpeter (1934) described as the introduction of an innovation by an external party and introducing it to the regime. Technology X, however, did not manage to live up to expectations after adoption and RT replaced it with another technology. The complementary services of Technology X were lacking or non-existing, which proved to be too big of an issue to ignore and led to the demise of Technology X in the tyre industry. Once Technology X was replaced, the lock-in effects by replacing technology were huge and the switching costs of once again using an updated version of Technology X too high. Technological The maturity of Technology X was almost non-existent in pre-adoption and the readiness of the technology (Turnheim & Nykvist, 2019) was very low and increased the risk that comes with adoption. The lack of certificates and proof of concept in the material to be processed was a big uncertainty that hurt the adoption. Relative advantage, however, is considered by RT to still offset the risk in a pre-adoption stage. They perceived the opportunities as larger than the 38 risk and this would be a positive factor (Rogers, 2003). However, the risks after the adoption were realised t