Innovative Enterprise, Industrial Ecosystems, and Sustainable Transition: The Case of Transforming DONG Energy to Ørsted

This chapter examines how evolutionary and institutional economic theory can improve our understanding of the politico-economic dynamics of the green transition. The authors focus on how path dependency in technological systems perpetuate and reward unsustainable business practices, while mission-oriented policy programs can break the feedback loops that keep the trajectory in place. Significantly, policy programs creating sizable markets for renewable energy have generated sufficient learning curves to move renewable energy sources within the cost range of fossil fuels, thereby enabling private profit incentives to accelerate the transition in our immediate future. These gains have depended on managerial decisions to co-evolve their businesses with the institutional environment shaped by policymaking despite uncertainty of technological progress, market evolution, and political credibility. We explore the case of how the Danish energy company Dong Energy was transformed from a fossil fuel company to the world’s leading offshore wind developer. These dynamics point to the need to create markets through political institutions for the coming generations of sustainable technologies to enable potential gains from learning, network effects, and economies of scale to be identified and exploited.