Stakeholder dynamics play a large role in any changes that occur in large socio-technical systems. As a result, literature exploring stakeholder dynamics was investigated.
3.2.1 Stakeholder Relationships
The role of stakeholder relationships has been broadly studied in the context of the corporation.
Work has been broken down into understanding how to identify stakeholders, determining the goals of stakeholders and then how these goals are achieved. Frooman proposes that the underlying goal of stakeholder theory is to manage “potential conflict stemming from divergent interests” [28]. A comprehensive study into the identity of stakeholders was
distinguish stakeholders [29]. The relative amounts of these attributes is used to understand the importance of each stakeholder.
In studying how stakeholders achieve their objectives, Frooman identifies four key strategies that are used between stakeholders: direct withholding, direct usage, indirect withholding and indirect usage. He develops propositions governing when particular strategies are chosen, depending on the power relationships (e.g., resource dependency) between the stakehold-ers.
The ideas discussed in this body of literature apply to understanding the role that stakeholders play in system change. Who they are, how they interact, and the impact that they can have on influencing the course and outcome of a transition.
In addition to the more traditional stakeholder literature, specific work has been done on stakeholder interactions in the context of air transportation. Marais and Weigel developed a framework for analyzing cost benefit dynamics through the use of cost benefit matrices, and illustrated its application in the case of ADS-B [30]. The works points out that while a proposed system change may provide a positive overall cost benefit analysis, there is no guarantee that individual stakeholders will derive value from the transition. Some stakeholders may reap a disproportionate share of the benefits, while others may incur a disproportionate share of the costs. Stakeholders who are asked to bear a disproportionate share of costs while reaping little benefit may be expected to be reluctant or unwilling to cooperate with a technology transition effort. Ensuring a successful technology transition therefore requires looking at the cost and benefit distribution between stakeholders. The work of Marias and Weigel is used and extended in this document on order to understand stakeholder actions in particular cases of transition.
3.2.2 Lock-in
The phenomenon of lock-in refers to the case when it is difficult or impossible to make a change or update to an existing system: it is possible to decide on a change but find that it can’t be implemented because of lock-in. Lock-in occurs due to high switching costs or perceived switching costs of changing the system from a current to a new state. Technical and organizational lock-in are two types that can occur. While the sources of lock-in don’t necessarily deal with stakeholder dynamics, this literature is included in this section because ultimately stakeholders are the ones who object to a proposed change and take actions to prevent it. It is such actions that result in lock-in.
Technical lock-in occurs when a standard or way of operating (e.g., a de-facto standard or a
“consensus standard”) is well adopted and embedded in the system. Over time other changes to the system are made to be compatible with this standard further ingraining it into the structure of the system [31, 32]. If a change has to be made that is not compatible with the standard significant changes to many areas of the system would have to be made to accommodate this change resulting in high switching costs. Stakeholders can be resistant to changes involving high costs especially since they are often financially invested in the existing state of the system.
Policy lock-in comes from the resistance of individual stakeholders, bureaucracies or even whole industries to making changes to policies that they are invested in. Policies may need to be changed or updated since new information, new technologies, and new methodologies are certain to emerge as time passes; such advances may allow for better policies or may simply obsolete existing ones. Another possibility is the need to adopt new policies that will interact with old ones.
However, the existing policies are in place as a result of time and resources invested by organizations in developing policies, ensuring that they are passed, adopted, and implemented and organizations may resist further change [33]. It takes effort and time to convince others that a policy should be passed and how it should be implemented. Once the organization or
bureaucracy has managed to convince the right individuals to back their ideas they do not want to repeat the process and spend resources on the same problem. Yet, adapting the policy would be seen as spending time and resources on a problem that was already tackled. Having to correct the policy after it has been implemented can be seen as failure of the organization to do the job correctly on the first attempt. As a result, making corrections can delegitimize the importance of a policy. Since the organization invested time and money in getting the policy implemented, any action that would take legitimacy away from it would clearly not be in their interest. In addition, given the limited resources and attention span of those working in government, selling the policy or idea for a second time and getting individuals to back it again will be harder than the first time.
As Stigler points out, policies also lock-in because they support or create an industrial structure [34]. As part of this process some companies and industries benefit and survive or thrive, while others die. It is in the best interest of the companies that are surviving or thriving, under the current regulatory structure, to make sure that that structure does not change. Manufacturers of an aging but entrenched technology, for example, may not want to see a policy that will effectively shut down their market. Organizations are also likely to resist changing and implementing a new or updated policy because this would require a change in operating procedures, and a reallocation of resources either within the organization or between organizations. This puts the organization at risk of having its funds diverted or having to learn new procedures for doing their work. To avoid such risks, companies engage in regulatory capture where they lobby and strive for regulation that benefits them.
It is possible that a change in policies might actually make some companies better off, but those who are currently doing well will lobby for policies that help them stay in their current state. These companies are likely to form a concentrated and powerful lobbying group and as a result have more influence than those being hurt by the current regulatory structure. A change in policy would create a new regulatory environment and, since policy can be viewed as experimentation, there is uncertainty associated with what this new environment will be.
As a result, the currently powerful companies would rather protect the current environment
where they are doing well, than risk being one of the companies who doesn’t make it under new conditions.
Literature on lock-in provided a starting point for understanding why system transition is difficult. However, for the purpose of this document an understanding of Air Transportation System dynamics was needed to understand where lock-in and other barriers to change occur.