Environmental jolts, institutional change, and the creation of entrepreneurial opportunity in the US electric power industry

Abstract

The relationship between institutional change and entrepreneurship is poorly understood. We build the theory in this area by tracing institutional change in the US electric power industry over a 40-year period. Our analysis shows that environmental jolts mobilize actors to reformulate institutions, resulting in increased entrepreneurial opportunity. When the institutional environment is stable, we find that incumbent organizational forms and embedded logics present formidable obstacles to entrepreneurial activity. Environmental jolts, however, catalyze search processes and motivate the evaluation of current institutional logics. Specifically, in the case of the electric power industry, environments of abundance and regulation resulted in homogeneity of organizational structures and strategies, and few entrepreneurial opportunities. Environments marked by scarcity and crisis, however, witnessed heavy scrutiny of existing institutional arrangements that eroded their taken-for-grantedness and symbolic value, resulting in opportunities for entrepreneurial action.