Theoretical perspectives on innovation 59
have long been their central profit- generating activities. The firms’ core competencies closely relate to these activities, making it hard to change technologies (Laestadius, 2000). Moreover, the capital intensity of the industry implies
that firms have made large investments in existing equipment. Consequently,
few commercial- scale investments target the conversion of side- streams into
new high- value products, which require obtaining knowledge about new
markets and techniques. Furthermore, adding new technologies to an existing
production system in a mill is highly complicated due to the economic
importance of avoiding pauses in the production process (Bauer, Coenen,
Hansen, McCormick & Palgan, 2017; Hansen & Coenen, 2017). However,
in some cases bottlenecks in the production process may be overcome by
extracting components (e.g. lignin). Subsequently, these substances may form
the basis of new product lines. This underlines the importance of considering
economies of scope in moving up the waste pyramid (Gregg et al., 2017). For
lignin, this allows moving into a variety of new products from binders to fuels
and speciality chemicals, rather than simply recovering the energy for use in
the production process. See Chapter 4 for more details on this case.
In urban waste systems, path dependence is created by large investments in
technological and physical infrastructure. In the municipality of Oslo, investments in an optical sorting plant and a biogas plant constitute an advanced
system for managing organic household waste. Organic waste is sorted by the
households in plastic bags with different colours, collected at the kerbside and
sorted optically at the sorting plant. The waste is then treated mechanically
and chemically and used for producing biofertiliser and biogas. The biofertiliser is sold to regional farms and the biogas is used for public bus transport. It
exemplifies a circular system for waste recycling. Yet it is also a system that
depends on constant flows of organic waste (Uyarra & Gee, 2013), and which
may create disincentives for reducing or preventing waste generation in the
first place (Bulkeley & Gregson, 2009; Mourad, 2016). Therefore, investments in one system of waste treatment create path dependence where economies of scale (e.g. investments in infrastructure) and scope (e.g. optical
sorting of multiple waste fractions) are mechanisms that prevent leaps up the
waste pyramid. See Chapter 5 for more details on this case.
The dairy sector provides a third example of how lock- in mechanisms can
influence and reinforce innovation and value chain development in the bioeconomy. The Danish dairy cooperative Arla Foods is one of the largest dairy
companies in the world. Because of a series of mergers and acquisitions, as
well as specialisation in whey, over the past few decades, Arla Foods benefits
from economies of scale, economies of scope and learning effects. The subsidiary Arla Foods Ingredients was created to find solutions to whey processing and utilisation at a time when new regulations restricted the disposal of
whey as waste. This move not only created a long- term learning effect
through a niche specialisation in whey handling and processing, but also
expanded the product range of the company. Today, Arla supplies proteinbased food ingredients within six product categories: paediatric nutrition,
have long been their central profit- generating activities. The firms’ core competencies closely relate to these activities, making it hard to change technologies (Laestadius, 2000). Moreover, the capital intensity of the industry implies
that firms have made large investments in existing equipment. Consequently,
few commercial- scale investments target the conversion of side- streams into
new high- value products, which require obtaining knowledge about new
markets and techniques. Furthermore, adding new technologies to an existing
production system in a mill is highly complicated due to the economic
importance of avoiding pauses in the production process (Bauer, Coenen,
Hansen, McCormick & Palgan, 2017; Hansen & Coenen, 2017). However,
in some cases bottlenecks in the production process may be overcome by
extracting components (e.g. lignin). Subsequently, these substances may form
the basis of new product lines. This underlines the importance of considering
economies of scope in moving up the waste pyramid (Gregg et al., 2017). For
lignin, this allows moving into a variety of new products from binders to fuels
and speciality chemicals, rather than simply recovering the energy for use in
the production process. See Chapter 4 for more details on this case.
In urban waste systems, path dependence is created by large investments in
technological and physical infrastructure. In the municipality of Oslo, investments in an optical sorting plant and a biogas plant constitute an advanced
system for managing organic household waste. Organic waste is sorted by the
households in plastic bags with different colours, collected at the kerbside and
sorted optically at the sorting plant. The waste is then treated mechanically
and chemically and used for producing biofertiliser and biogas. The biofertiliser is sold to regional farms and the biogas is used for public bus transport. It
exemplifies a circular system for waste recycling. Yet it is also a system that
depends on constant flows of organic waste (Uyarra & Gee, 2013), and which
may create disincentives for reducing or preventing waste generation in the
first place (Bulkeley & Gregson, 2009; Mourad, 2016). Therefore, investments in one system of waste treatment create path dependence where economies of scale (e.g. investments in infrastructure) and scope (e.g. optical
sorting of multiple waste fractions) are mechanisms that prevent leaps up the
waste pyramid. See Chapter 5 for more details on this case.
The dairy sector provides a third example of how lock- in mechanisms can
influence and reinforce innovation and value chain development in the bioeconomy. The Danish dairy cooperative Arla Foods is one of the largest dairy
companies in the world. Because of a series of mergers and acquisitions, as
well as specialisation in whey, over the past few decades, Arla Foods benefits
from economies of scale, economies of scope and learning effects. The subsidiary Arla Foods Ingredients was created to find solutions to whey processing and utilisation at a time when new regulations restricted the disposal of
whey as waste. This move not only created a long- term learning effect
through a niche specialisation in whey handling and processing, but also
expanded the product range of the company. Today, Arla supplies proteinbased food ingredients within six product categories: paediatric nutrition,