The Value Chain Dilemma of Navigating Sustainability Transitions : A Case Study of an Upstream Incumbent Company

An increasing body of literature on sustainability transitions addresses the business strategies of incumbents but overlooks upstream companies. Addressing this, we aim to explore how upstream incumbents navigate sustainability transitions. Theoretically, we introduce an industry value chain perspective, integrating the concepts of center of gravity, patterns of strategic change and organizational adaptation. Empirically, we conduct an in-depth case study of how an upstream incumbent firm navigates the established value chain for lead-acid batteries and the emerging value chain for lithium-ion batteries of electric vehicles. The company faces a dilemma of whether and how to maintain a vertically-integrated position in the established value chain, and how and when to expand into the emerging value chain. Findings demonstrate that navigating sustainability transitions is not only a question of business models or niche-regime dynamics, but also a matter of anticipation and adaptation to the complex changes in industry value chains