Why do (some) German car manufacturers go electric? The role of dynamic capabilities and cognitive frames

Abstract

After the internal combustion engine was the dominant technology in the automotive industry for more than a century, a transition to electric cars is now under way. However, not all car manufacturers seem equally determined to move away from fossil fuels. Based on a comparative case study of German automakers, we discuss some underlying factors associated with variation in electrification strategies. Conceptually, we focus on firms' dynamic capabilities—in particular, their ability to sense low-carbon risks and opportunities in a changing business environment. Building on qualitative interviews, we gauge sensing capabilities through industry executives' cognitive frames. Our analysis reveals striking differences in the way executives perceive the opportunities and risks associated with electric mobility. In particular, firms' dynamic capabilities to shape the low-carbon transition are tied to their conceptions of consumer preferences and the economics of the transition, their perception of network embeddedness, prior experiences with technological innovation, and leadership.