Handling changes on and changes of the market: market–political ambidexterity in the Swedish market for solar energy

Victoria Kihlström, Susanne Åberg

Journal of Business & Industrial Marketing

ISSN: 0885-8624

Open Access. Article publication date: 14 January 2025

137

Abstract

Purpose

Firms regularly have to handle business-related market changes on the market, such as new market entrants, increased competition, changing prices and changing demand. However, firms active on a market subject to political interventions, resulting in changes of the market, also have to handle different support systems with subsidies, taxes, regulations, etc. As these interventions affect both firms and customers, it is important for firms to adapt to them, but if they continue to change, firms also need to adapt to changing conditions. The purpose of the paper is to study how firms handle continuous market changes and shifting governmental interventions through market–political ambidexterity.

Design/methodology/approach

Based on a qualitative approach, 13 in-depth interviews focusing on how firms handle market changes and political interventions over time were conducted during two time periods. The data was coded in several steps, using systematic combining.

Findings

The empirical results reveal that firm size is crucial in developing market–political ambidexterity; small firms lack the resources needed to handle all changes in an ambidextrous way. Changes on the market require firms to be active, whereas changes of the market, e.g. interventions, require internal stability in the firms. Changes on the market are easier to handle, wherefore there seems to be a need for firms to develop political exploration and exploitation activities related to market–political ambidexterity.

Originality/value

This study contributes to industrial marketing by increasing our understanding of how SMEs handle the simultaneous but sometimes contradicting demands from market changes and political interventions by developing market–political ambidexterity.

Keywords

Citation

Kihlström, V. and Åberg, S. (2025), "Handling changes on and changes of the market: market–political ambidexterity in the Swedish market for solar energy", Journal of Business & Industrial Marketing, Vol. 40 No. 13, pp. 13-29. https://doi.org/10.1108/JBIM-01-2024-0052

Publisher

:

Emerald Publishing Limited

Copyright © 2024, Victoria Kihlström and Susanne Åberg.

License

Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode


1. Introduction

The current dynamic business environment requires firms to continually adapt to existing conditions while simultaneously anticipate changing ones; “to guarantee their short-term and long-term survival, firms must be ambidextrous” (, p. 183). Environmental changes thus challenge firms both to adapt to the changes and to be flexible in order to survive. This requires an ambidextrous behavior where firms need to explore new opportunities to handle these changes while at the same time exploit already existing ones (; ). New markets are inherently more volatile than mature markets and firms active on these markets may find upcoming changes even more challenging. This entails that “new” solutions and innovations sometimes fight an uphill battle, so that in an early stage of a market construction process, institutional support activities are crucial – especially when private demand still needs to be formed. As the market reaches a stage of maturity, these supporting activities become less crucial ().

States are lead actors pushing for sustainability and the emergence of new technology solutions (; ; ; ). When states intervene by stipulating laws () and subsidize to speed up consumption (), the result is an extensive market–state relationship (). As states intervene on a market, they are often mission-oriented and use a mix of different tools (). For these interventions to be effective, however, they need to be both timely and predictable over longer periods of time (, p. 1567). Otherwise, the interventions may cause an unforeseen shift in conditions, which may lead to uncertainty and caution among the actors on the market ().

Hence, interventions may have the unintended consequences of disrupting the market () and therefore requiring the market actors to adapt behaviors to new or changed conditions (). In addition, effects of interventions may often result in a need for further interventions, thus prolonging and complicating the adaptation processes for the market actors. This means that firms active in a market subject to interventions will, besides handling business related changes on the market, such as new market entrants, increased competition, changing prices and demand, also have to handle interventions related to changes of the market. The process of handling these parallel and sometimes conflicting processes has been referred to as market–political ambidexterity, defined as “firms’ dynamic capabilities to manage influences from both markets and governments simultaneously” (, p. 206).

Markets for solar energy are typical examples of markets whose conditions have been changed repeatedly by different governmental interventions in many countries worldwide (). Governmental interventions can be divided into regulatory interventions and economic interventions (), where some actors benefit from them and others will feel disadvantages. The ambition of these interventions (for example, laws and regulations, feed-in-tariffs, tax reductions, direct capital subsidies, net-metering and green certification) is to meet an ever-increasing need to move to sustainable electricity production (). A transformation to sustainable energy solutions represents one of the most important tools to lower global greenhouse emissions and a continued rapid transition on a global scale is imperative (; ). For example, suggested early on that climate change must lead the political agenda to be part of the shift in the energy paradigm we witness today. Renewable energy sources may improve the sustainability of electricity production, but these alternative sources are to a large extent still not sustainable in economic terms when compared to existing fossil-based sources (). To achieve a rapid transition, political interventions to encourage investments in renewable sources are consequently still needed in markets for energy production.

Although market–political ambidexterity, with the simultaneous focus on influences from the market and from political actors, should be of great interest for industrial marketing scholars, there is a dearth of studies of the concept. In fact, very few marketing studies focus on ambidexterity (), despite the fact that many marketing activities are ambidextrous in nature (). To contribute to the industrial marketing field, this study aims to shed light on how firms handle changing market-related aspects, whereas at the same time having to comply with and adapt to a changing political landscape. The purpose of the paper is therefore to study how firms handle continuous market changes and shifting governmental interventions through market–political ambidexterity. The empirical study focuses on the Swedish market for solar energy and the various actors present on the market. Partly because of political interventions, the Swedish market for solar energy is growing rapidly, but on the other hand, the rapid market changes are causing problems for the incumbent firms (). We ask the question:

Q1.

How do firms in the Swedish solar energy market balance continuous political interventions and market changes?

The phenomenon of ambidexterity has been widely explored over the years and through different scientific fields (), but “none of the previous work has focused on the externally-oriented ambidexterity capabilities to embrace both governments and markets” (, p. 207). Furthermore, to the best of our knowledge, no study has focused on direct firm response toward continuous institutional and market changes. The relationship between strategies to become ambidextrous, direct insights in how these strategies are interconnected and under which circumstances they should be implemented has not been studied enough (). In addition, , p. 74) posit that the “impact of market-political ambidexterity on corporate strategy and performance represents a very promising area of inquiry”. This paper contributes to developing the concept of market–political ambidexterity by increasing the understanding of how firms simultaneously handle market changes in a new and volatile market and political changes such as government interventions. As we divide market–political ambidexterity into the constructs market exploration/exploitation and political exploration/exploitation, we develop the theoretical meaning and the potential use of the concept in a general setting. We also contribute to the field of industrial marketing by improving the understanding on how firms maneuver market and political challenges using different parallel capabilities. This requires the use of different internal resources but also external collaborations. The study also highlights managerial implications of handling parallel processes and shifts. For firms to handle different external processes, they need flexible internal systems led by experienced managers that allocate resources to both influence future changes and adapt to current changes. In addition, the paper contributes to an increased understanding of the development of the Swedish market for solar energy.

The paper is structured as follows: After the introduction (1), the theoretical background (2) is outlined, which presents the concepts of ambidexterity, market–political ambidexterity and the model of analysis. Thereafter, the methodology (3) is presented, followed by the analysis (4), which also includes the empirical account. The paper ends with conclusions (5) that include implications, limitations and suggestions for further studies.

2. Theoretical background

The theoretical idea of an organizational balancing act emerged from the research field of organizational ambidexterity (). In its originality, the concepts exploration and exploitation were used to describe and analyze the phenomenon of business survival (), which later on has developed into viewing dynamic capabilities as crucial for performance, survival and competitive advantage (; ; ). Besides the case of exploration and exploitation, an ambidextrous approach is also recommended toward various contradictory phenomena such as incremental and revolutionary change or adaptability and alignment (; ; ). The use of the ambidexterity concept has progressed to a stage where it moves away from the original core of organizational ambidexterity toward a wider use of the concept (). Hence, multiple studies have used the concept to view the importance to handle institutional complexity (; ). These studies concern adapted forms of organizations (; ), distinctive capabilities (; ) and analysis of emerging markets and institutional risks (; ; ). More recently, the ambidexterity concept has also been discussed within marketing (; ; ; ; ).

2.1 Ambidexterity – to handle conflicting demands and activities

Many of the definitions of ambidexterity include the challenge of exploiting the existing while at the same time exploring the new; be it with regards to markets, technology, products, innovations or knowledge (see in the for some key references and definitions). In essence, to be ambidextrous, firms need to manage many and often conflicting demands and activities simultaneously, as ambidexterity can be seen as “the organization’s ability to provide different organizational responses to conflicting environmental demands” (, p. 1384). According to , p. 182), the main challenge for firms:

Is the need to exploit its existing assets, resources and capabilities to refine its products, services and processes efficiently, while exploring new technologies, discoveries and ideas to generate new products, services and processes so that the firm is not rendered obsolete by changes in markets and technologies.

Based on this description, ambidexterity becomes a market and marketing issue. This paper builds on and analyses ambidexterity in terms of activities performed and resources used when handling the many conflicting demands firms are facing. Building on , p. 71), who claims that “maintaining an appropriate balance between exploration and exploitation is a primary factor in system survival and prosperity”, we divide these activities into explorative and exploitative activities. According to , ambidexterity requires alignment of activities focused on both exploration and exploitation, as well as experienced management which supports both. Furthermore, the employment of resources for ambidexterity is an important issue, as “exploration and exploitation compete for scarce resources creating some degree of trade-off which is exacerbated by the fact that both require very different processes and activities” (, p. 218).

Based on , this paper uses the activities of sensing, seizing and reconfiguring to analyze ambidexterity. Sensing involves quickly detecting opportunities and threats in changing markets. The activities included in sensing are “scanning, searching and exploration” (, p. 190). In , sensing opportunities are thus activities related to exploration. When it comes to seizing, it “is about making the right decisions and executing, what others have referred to as strategic insight and strategic executions” (, p. 191). Building on definition of exploitation – where efficiency, implementation and execution were key concepts – seizing opportunities is related to exploitation. Finally, reconfiguring entails effective resource management, as “long-term success inevitably requires that leaders reallocate resources away from mature and declining businesses toward emerging growth opportunities” (, p. 191). Based on this definition, reconfiguring becomes key for ambidexterity, as it deals with “balancing between”; reconfiguring resources entails knowing when to move resources between explorative and exploitative activities. In line with , p. 52), we define elements as resources “if some actor identifies some use for them and hence considers them as valuable”. This means that firms decide what their resources are, but in this paper, we adhere to a simple definition or resources as physical, financial and human (; ).

2.2 Market–political ambidexterity and model of analysis

As outlined in the introduction, market–political ambidexterity relates to firms’ ability to simultaneously manage influences from business markets and political bodies (). In practical terms, this means handling market changes related to, among other things, market actors and resource availability, as well as changes in market interventions. , p. 276) argue that “a balanced approach must be adopted when seeking to shift from an existing market situation to a fundamentally different one”. introduced their concept market–political ambidexterity as a way to analyze changing institutional and market conditions. Firms exposed to shifting governmental interventions are already vulnerable and adding the complexity of market changes pushes the need to develop firm abilities even further. This is especially the case when changes on the market as well as of the market play crucial roles (). In order for firms to manage these two types of changes simultaneously, it is important to view the processes together (; ) and to give each of them sufficient attention (). This is complex, however, and demands the use of different firm resources as well as shifting strategies over time (). , p. 207) claim that “while most firms understand the importance of developing dynamic capabilities to manage markets and governments, few are truly good at both”. Nevertheless, success on the business market and in the political market are interdependent, making “an isolated analysis of how firms cope either with political risk or […] marketing strategy […] inappropriate as it overlooks the interrelationships between both activities” (, p. 74).

According to , p. 208), market–political ambidexterity “enables firms to achieve new resource configurations as political markets and product markets emerge, collide, and evolve”. Although our definition of market abilities is quite similar to interpretation, we differ when it comes to political abilities. , p. 209) discuss “firms’ efforts to reach out to work with governments” (and refer to this as “seizing”). Our utilization of the concept, however, does not specifically entail working with governments; rather, we see political abilities as firms’ efforts and abilities to work with – and adapt to – governmental agencies, interventions and policies.

In , market and political abilities during exploration and exploitation activities are outlined. In line with , p. 71), exploration includes activities and attributed like “search, variation, risk taking, experimentation, play, flexibility, discovery, innovation”, whereas exploitation is captured by “refinement, choice, production, efficiency, selection, implementation, execution”. In the context of the paper, ambidexterity does not only involve exploration and exploitation, but also being able to handle market and political demands at the same time, thus achieving market–political ambidexterity. In addition, the concepts of sensing and seizing () are used to describe different activities performed.

Furthermore, introduces the concepts of market exploration and market exploitation. The concepts have been defined and used in previous research; for instance, state that market exploitation concerns a firm’s existing knowledge about current markets, whereas market exploration relates to new knowledge and markets currently unknown. , p. 297) define market exploitation as “the use and refinement of existing knowledge and skills in the current product market”, whereas market exploration involves “the search and pursuit of completely new knowledge and skills outside the firm’s current product market”. In addition to (knowledge about) products, this paper includes firms’ knowledge concerning customers and suppliers in the market concept (). Similarly, political exploration can be defined as the search and pursuit of completely new knowledge and skills regarding (new) interventions, whereas political exploitation refers to the use and refinement of existing knowledge and skills regarding existing interventions.

Summing up, this paper will analyze the concept of market–political ambidexterity using the four constructs of market exploration/exploitation and political exploration/exploitation outlined in . Ambidexterity is dynamic in that involves balancing between activities and choosing how to employ resources over time. This implies that ambidexterity evolves over time and as the firm grows. According to , new and small firms lack the resources and the experience to be truly ambidextrous. In a new and fast-growing market, firms’ abilities to be ambidextrous are therefore expected to vary significantly.

3. Method

To capture how firms handle shifting governmental interventions and continuous market changes through market–political ambidexterity, we chose to study the market for solar energy in Sweden. In 2017, the Swedish Government released a climate goal with very ambitious targets (), resulting in several policy regulations implemented on various markets (; ). Political leadership is necessary, however, for these targets to be reached (). Interventions on the market for solar energy mainly consist of tax regulations and direct capital subsidies directed toward small systems and private households (). Still, in 2022, solar energy only accounted for 1.2% of total energy production in Sweden (). During 2023, the installation rate of PV systems (i.e. solar panels) in Sweden doubled compared to 2022 (), but solar energy still only accounted for 1.9% of the country’s energy production (www.svensksolenergi.se).

Even though the aim of the Swedish Government is to create a stable policy framework of green recovery transition, the level and content of interventions have shifted during the years (). Several researchers relate the exponential growth in installed capacity to the introduction of governmental interventions and support in 2006 where a customer could apply for a subsidy of 70% (; ; ; ; ). With the establishment of a new support system in 2009 with subsidies of 55%–60%, the support rate has shifted downward with different speed for different actors (), ending up at 20% in 2020 (). The different support systems depended on a yearly budget for policy support where the demand always exceeded the allocated budget. This uncertainty resulted in delays, queues, high administrative burden and possible market-stagnation (; ). There were no changes in the support system due to the COVID-19 pandemic, however, firms experienced some market changes in production and delivery due to lockdown especially in Asia. At the beginning of 2021, for the seventh time since 2006, state interventions changed the conditions for policy support and up until 2024, there was a tax reduction of 20% on labor work only for private households (; ).

Single-family houses and commercial facilities are the biggest market segments in Sweden (). In addition, these segments have benefitted most from governmental subsidies. Other segments – like centralized PV parks, industries and multi-family houses – have not been recipients of these interventions (). The overall price to install solar energy has declined over the years, but barriers to install solar energy have remained the same; the main ones being high costs, administrative burdens, the installation process and lack of knowledge ().

3.1 Data collection

The Swedish solar energy market is immature and subject to many changes. To capture how firms handle these changes, we needed a method that is flexible and enables us to study the phenomenon in is real-life context (), wherefore we conducted a qualitative study based on interviews. A qualitative study was suitable since we “seek to describe, decode, translate, and otherwise come to terms with the meaning, not the frequency, of certain more or less naturally occurring phenomena in the social world” (, p. 520). By using qualitative tools, we were able to shed light on practical examples of how firms handle shifting interventions and market changes. Qualitative interviews benefit from the interaction between the interviewer and the respondents and commonly result in a story of past and present events using their own words, examples and experiences (). visualizes these stories as “mini-narratives” helping us gain in-depth information on how single firms handle upcoming changes. This qualitative approach has also given us the opportunity to view firm perceptions on past and present events as well as how they have experienced shifting market conditions. With the use of a qualitative approach, a study can benefit from experiences from different events in different period of time (), which was valuable and brought robustness to this study. The interviews were carried out in two rounds, the first in 2021 and the second in 2023. With the assumption that ambidexterity evolves over time (), as well as changing market conditions in 2022, the study benefitted from this approach. As the parallel processes of change both separately and together are complex processes (; ), it was important to reach these deep insights and practical examples (; ). The practical examples of activities were especially important, as complex processes of change often appear as different activities over time but also in relation to their context (). By using a qualitative study with interviews as a tool, we were able to capture firm-specific insights concerning single events but also follow the reasoning around different changes and shifts that over time resulted in specific market situations. Such deep-rooted understanding of a complex combination of events is seen as privileged information (), which must be interpreted and analyzed to reach understanding of the respondents’ experiences (; ). As the narrative of market and institutional changes is viewed both in past events and in the present, the use of a qualitative method gave us the opportunity to reach the level of analysis ().

Before the data collection for this paper commenced, an extensive collection of data in the form of industry reports, documents on rules and regulations, newspaper clippings, etc., was gathered. Industry reports on the Swedish market increased our knowledge of market characteristics; starting from 2015 and continuing through 2023 to capture changes. We also read remittances (approximately 30) with opinions and suggestions on up-coming changes from five different interest organizations between 2015 and 2022. Based on this material, the interviews could focus specifically on the firms’ experiences of market changes and political changes.

The study includes 13 interviews with nine different actors (). By using these interviews, we collected data from firms with different characteristics (for example, number of employees, business models and year of establishment) and after the final interview with an organization of interest (Svensk Solenergi), we found our data to be robust enough to answer the aim of our study. During a period of six months (June–December 2021), seven interviews were made with firms active on the Swedish market for solar energy. In 2022, Sweden witnessed an energy crisis with high costs for electricity and the Swedish Government proposed several policy interventions to limit the effects (). To be able to understand the effects of these major market changes, we conducted a second round of interviews in May–June 2023. In that round, we reached out to all our respondents in the first period and made interviews with four of them, together with one new firm and one interest organization, the Swedish Solar Energy Association (Svensk Solenergi), which has approximately 380 members. The interview with the Swedish Solar Energy Association provided general knowledge of the market characteristics but also insights in how they view firm responses. All interviews were carried out and recorded in Zoom (due to the pandemic) by the first author and each interview lasted approximately 45–60 min.

In Sweden, the solar energy market mainly consists of small to medium-size firms with different business models and market interests (installers, retailers, consulting firms, R&D companies, universities and foundations, module manufactures, utilities) and the number of active firms have increased steadily since 2010 (). We actively chose to contact firms aiming for different target groups (private consumers, organizations of multi-family houses, agricultures, companies, solar parks and real estate companies) as their experiences may differ due to different regulations (). Some respondents had experiences of one of these target groups and some of nearly all of them, resulting in a diverse and broad spread of data. As the market for solar energy in Sweden must be considered as relatively young (), we aimed for companies entering the market at different times (between 2010 and 2019) and we used the membership register of the Swedish Solar Energy Association. As our questions demanded good insights in firm perceptions of market changes, contact with the appropriate respondent in each firm was important. All respondents were either CEOs, founders or head of marketing and/or sales with high level of firm and market knowledge.

Interviews were conducted as semi-structured interviews with a flexible and open perspective. Semi-structured interviews are a common tool when researchers aim for an open conversation within a planned frame of themes (). Respondents were asked to elaborate on specific events (important market and institutional changes) and the questions did not follow a rigid questionnaire with a specific order of questions (; ). In the beginning, respondents were asked to describe the firm, overall experience of market development over the years, regulative changes important to them or the market, but also experience of market insecurity in some matter. In the second round, they were asked to elaborate on central market actors, what it takes to be successful on the market, regulative changes and outcomes, but also to give practical examples of a typical market change and how they acted in that specific situation.

3.2 Coding and analyzing

The narrative of the empirical fieldwork has evolved through an abductive process where we have gone back and forth between empirical data and theoretical framework (; ); a nonlinear process aiming to match theory and data (; ). Consequently, the theoretical framework was developed during the coding process, which “stems from the fact that theory cannot be understood without empirical observation and vice versa” (, p. 555). Before the interviews in 2023, we went back to the theoretical framework and developed the concept ambidexterity further, which emerged as an important aspect when we reviewed the first round of interviews. During our coding process, we used the concepts exploration and exploitation. Firm characteristics like target group, number of employees, year of establishment and business model were outlined in advance. We then started coding based on information from our respondents. Using codes derived from the interviews, we were able to see similarities but also differences between the firms ().

In the second stage of coding, we used terms and concepts derived from theory to include data based on our first level of coding but also to exclude data from our set. The main part of excluded data consisted of general perceptions of the market, product development and prior regulative framework. These are important aspects for the overall understanding of market development, but not for the aim of this study. With the interaction between terms from interviews and theory in these two stages of analyzing, the systematic approach improved the rigorousness of the data (). At this stage, theory helped us to navigate between the set of data with great similarities but also data that at first glance had huge differences. In the end, the first and second level of coding combined with a parallel systematic combining of theory, made it possible to collectively derive important data for the analysis ( and ). In , the results for market exploration activities and market exploitation activities are outlined, followed by with political exploration activities and political exploitation activities.

4. Firms in the market for solar energy in Sweden

The short introduction to the market for solar energy in Sweden depicts a landscape in rapid change, both when it comes to changes in market actors and changes in political interventions. The firms in the study show examples of activities aimed at handling changes both on the market and of the market, which requires “simultaneously pursued, multiple, discrete capabilities” (, p. 456). The former relates to market exploration and market exploitation activities, whereas the latter deals with political exploration and political exploitation activities. Performed together, these activities show market–political ambidexterity.

4.1 Market exploration activities

Market exploration has been defined as “the search and pursuit of completely new knowledge and skills in the new and/or emergent market” (, p. 298). A number of the firms (especially B, C and E) on the solar energy market claim that it is necessary to be proactive because of changing market conditions. Some of the changes relate to an influx of new actors who are not always providing up-to-standard products and services. The market mainly consists of SMEs and the overall market competition has increased (). With an increased number of installations and companies, the pressure on safe installations has also increased. Installation companies have to be registered at The Electrical Safety Agency and the companies need to have certified employees (). At the same time as the number of installations has increased, so has the number of complaints to The National Board for Consumer Disputes (ARN). In 2021, 15 complaints were registered, compared to 134 complaints in 2022 (), and multiple experts warn customers about unprofessional firms with inferior product quality, no guaranties and who do not follow safety regulations having entered the market.

Other changes relate to customers. As outlined in the theory part, sensing is related to exploration () and involves quickly detecting opportunities and threats in changing markets () and searching for opportunities is akin to exploring opportunities. With market expansion, new firms as well as new potential customers enter the market. As the overall competition has increased and some of the new actors offer a significantly lower price to the customers, existing firms need to handle that issue. Some firms (B, C, F, G, H) stress the importance of not falling for the temptation to try to compete on price:

Price levels are under pressure all the time and by itself it is not something that we can or want to be part of. […] It is not possible for us to subsidize markets with lower prices (Firm B).

In this matter it may even be necessary to turn some customers down, which can be hard: As a salesperson, it is genetic in a salesperson’s brain not to turn down a deal (Sales manager, Firm E). One answer is to offer something else than low prices for the end-customer. Multiple firms state that, to keep product quality, they have actively chosen not to push their prices down. Instead, they aim to compete with existing quality and competence, which comes with a higher cost. Firm C exemplifies this as a key asset to attract high-end real-estate companies seeking high quality, safe installations and a sustainable way to do business.

The market for solar energy in Sweden is a new and rapidly emerging market, making exploration activities important (). Several firms talk about activities that can be described as searching for market opportunities. One is the importance of managing customer segments, as the fragmented market characteristics mean that the firm either has to decide on segments served or on the products offered. Although some of the firms have customers within all segments (Firm A, D, F, G), others have decided to drop segments, and/or develop new customer segments (Firm B, C, E). One firm had abandoned the private household segment (Firm B), but served this segment indirectly through a whole seller. This was seen as a market opportunity, as it was a way of spreading the risk while at the same time accessing even more customers. However, this approach also comes with risks (), because firms experiment with different approaches at the same time.

Another way of searching for market opportunities was through suppliers. When they first started in the solar energy sector, many of the firms kept their supply chains short, or even used just one supplier, but with the expansion of the market, this changed. Even though quality and price are still important, the main supply issue today is delivery on time. Therefore, several of the firms have chosen to increase the number of suppliers, as keeping just one, or even a few, has become too risky: We have chosen not to be locked in with one or two specific suppliers, so we have broadened our portfolio (Firm C). With that approach firms sense up-coming threats of late delivery and choose to search for new opportunities (). These complex issues evolve outside the firm, resulting in the importance of using different ways of handling changes over time (). One firm (E) claims that being flexible and dynamic to secure delivery means that you have to act quickly and sometimes buy entire containers filled with material that you have to store. There are also several examples where firms skip steps in the supply-chain through direct contact with manufacturers.

When it comes to developing fit between internal structure and market segments, one of the firms (B) had recognized that they had to change their internal organization and develop specialized units which could cater for different customer segments’ needs in terms of knowledge and flexibility. This change resulted in an increased competence vis-à-vis the customer; with the ultimate goal to circumvent intermediary firms and have direct contacts with the customers. Another way to explore market opportunities had to do with developing internal competencies to fit high-end customers. One of the firms (E) went as far as building up their own instalment team inside the firm. This internal competency development was initiated to avoid delays, poor installations and unclear agreements. As outside uncertainty may lead to an incentive to hold back on further investment (; ), this is an approach aiming to secure future profit and growth ().

A third aspect of developing fit between the internal structure and the market is somewhat different. Some of the firms mentioned that entering the market in the first place was based on feelings of contributing to changing the world and saving the environment. This change is also present in customer preferences and motives to install solar energy. At the beginning, technological innovations and sustainable solutions motivated customers to install. Today, customers seek economic gain to lower costs of electricity and make a profit (). The firms have therefore realized that they must become professional; to monitor the competition and to calculate things like profit, investment rate, etc. As customer preferences change, firms need to adapt their approach and contact with the customer. All firms agree that customer motives have changed from early adopters eager to take part in a technology revolution to customers seeking economic benefits. This approach is reflected both in the internal structure and in the culture of the firm and demands experienced management (). One firm even expressed that not all of the employees fit in this culture, and they have left, whereas others have entered. The change is most evident on the consumer market, however, while, for example, real-estate companies are motivated by green certifications and increasing the property value, rather than strict cost aspects.

4.2 Market exploitation activities

Market exploitation involves “the use and refinement of existing knowledge and skills in the current market” (, p. 298). This entails working with the firm’s current customer base and growing already existing knowledge (ibid.). For the firms in our study, some of the aspects involve seizing opportunities with existing customers, developing existing routines and educating existing staff and customers. One of the aspects of market exploitation relates to “doing what you already do better” (). As the market developed and expanded, several of the firms had focused on improving existing internal routines. One example relates to improving and creating awareness of safety routines connected to installations; for instance, everyone in one firm had to be aware of fall prevention routines, regardless of position in the firm. Another aspect had to do with purchasing routines such as cost minimization and building up stock. These examples may seem contradictory, but they serve different purposes. On the one hand, chasing costs was important for the incumbents as new actors entered the market. On the other hand, as touched upon above, timely delivery has become increasingly important, wherefore a build-up of stock in some cases was necessary to guarantee delivery. Once again, outside uncertainty leads the firms to make important choices about further investments, choices all firms will not (or cannot) make (). Thus, routines for creating awareness and understanding of the importance of searching for effective solutions were introduced.

Some of the opportunities that were seized based on existing competencies had to do with educating the customers. As the customer segments vary widely, so does the knowledge the customer has. Private house owners have very little prior experience and need a lot of help; help which was provided in different ways by different firms. Some firms also saw an opportunity in completing their product offering with the service of guiding customers through the regulatory framework. Even though commercial customers have more knowledge when entering the business relationship, they also benefit from an active selling-firm with high-end competence. The benefits relate to understanding the complexity of the product and the importance of providing the solution that maximizes the buyer’s assets. It is also important to keep in mind that commercial customers tend to a have a broader picture and motives for solar energy that exceed direct profit. Providing an integrated service system to help customers is thus part of market exploitation. This also evolves over time, demanding different activities at different periods of time (). In addition, it is important to educate the staff so that they are able to seize market opportunities, something that was also highlighted by some of the firms.

4.3 Political exploration activities

Political exploration activities partly have to do with proactively influencing and participating in changes of the market and partly to anticipate future interventions. Some of these political exploration activities were carried out in collaboration with the Swedish Solar Energy Association. While some firms interact extensively with this organization, others are more passive and see the association mostly as a key source for information and statistics. All firms in the study are members of the Swedish Solar Energy Association, which in turn meets with decision-makers and authorities, writes debate articles and takes an active part in developing industry standards (Swedish Solar Energy Association, Web page). Some of the firms are very active in their contact with this association, trying to get them to influence regulatory frameworks or governmental actors. It was stated that by joining together, it is easier to influence political actors to make changes. Even so, it was commented that one can only influence governmental decisions if political actors benefit from the change as well. To influence political actors, it seems to be necessary to also navigate market aspects that have to do with other firms in the market. One firm (B) mentions initiating an interest organization (“The Solar Energy Commission”) together with other actors within the industry to try to influence state interventions by writing remittances on regulatory changes. Another firm (C) has taken an active role in developing the business standards of certification to ensure political actions and high standards for certifications. Thus, networking skills seem to be an important part of especially influencing actors outside the market; indicating perhaps that market exploration capabilities are also needed for political exploration activities.

When it comes to anticipating future interventions, firms generally seem to be more focused on gathering information from different organizations than anticipating future changes. It probably lies in the nature of interventions, however; before they are introduced, there will have been studies, suggestions and potentially even possibilities to affect the process of developing interventions. In some ways, these changes can be more predictable than market changes. Even so, the search for information about future interventions is an explorative activity () that demands both time and staff resources. If the firms gain proper information, they will be more willing and able to invest in new ways to handle these changes (). Gathering information, firms sense upcoming opportunities but also upcoming threats and seek ways to handle these (). Firms in this study clearly express the importance of accessing information on upcoming institutional changes, but they also express the importance of acting once they can rely on that information.

Firms working with B2B customers have no support system to respond to (for consumers there are several support systems in place that the firms have to adapt to), which several of the firms find positive: Very happy that we are in a commercial market that lives without support. It avoids uncertainty and the market lives its own life (Firm B). On the other hand, firms with B2B customers have other regulatory issues to take under consideration; one being a tax limit which slows down the magnitude of installations tremendously. Several of the firms tried to influence decision-makers to remove this limit, but without success. When this limit was raised, however, some of the firms informed their established customers and started to plan how to level up their installations. When the regulation was implemented, the solution was already there.

4.4 Political exploitation activities

Political exploitation implicates the ability to handle changes of the market through seizing opportunities and threats and to make use of internal competencies. When the regulatory frameworks change and the changes are known to the market, firms handle this through exploitation activities. Firms that have the internal resources of both knowledge and time seize the opportunities to influence political actors with their market and product skills. Sometimes the firms do this on their own, but quite often they do it together with other influential actors. One firm (B) has initiated an education program to ensure present and future knowledge and competence on the market. With that approach, they use their existing competence to try to increase overall market knowledge. A wide spectrum of knowledge is beneficial for the market as a whole and they see it as their responsibility. Another example of a firm seizing opportunities is when they know about a change in regulation that will benefit one or more customers and they prepare and send business proposals to the customers as soon as possible. This approach can be seen as an implementation triggered by using existing internal competencies and by that, seizing the opportunity (). They use the knowledge of an upcoming regulative change to their advantage in contact with the customer.

Firms within the industry do not only adapt to known interventions, they help others to do so as well. Some of the firms stated that they keep track of changes in regulations and contact their customers prior to the changes in regulations that the customers may benefit from. Here, we see again that network competence plays a role for the industry. Some of the most important regulations, which were mentioned by nearly all firms, have to do with safety regulations and certifications. This is the only area where firms saw a need for more and stricter regulations and more demands on certifications. Some firms claimed that the existing safely regulations are the absolute minimum, but that they strive to be a lot better than that.

One of the governmental organizations that all firms have to deal with is the Swedish Tax Agency. It is claimed that the tax regulations concerning solar energy is exceptionally difficult to understand, wherefore the firms have to discuss both with the tax authorities and other actors. As one firm (A) explains it: Sometimes it feels like the tax authorities are trying to write it as vaguely and difficult as possible. In this case, it is mainly about compliance, i.e. adapting to the existing interventions.

It is clear from the study and the analysis that the firms need to perform a balancing act between the market and the political spheres and that these different spheres require different capabilities (). There is also, however, a balancing act between exploration and exploitation activities, not least in the political sphere. A key actor within this area is the Swedish Solar Energy Association, toward which the firms take different roles; some take an active part and try to influence, whereas others are more passive and exploit opportunities that are already there. The same goes for contacts with for instance the Swedish Tax Agency, where some firms are in contact with them to try to influence them, as well as inform them, whereas other firms take a much more passive role.

5. Conclusions

The purpose of the paper was to study how firms handle continuous market changes and shifting governmental interventions through market–political ambidexterity. In analyzing the market for solar energy in Sweden, we have shown that to be successful in a changing market, firms have to handle both changes on the market, i.e. market changes, and changes of the market, i.e. political changes (in this case in terms of interventions). The results show that firms experience more possibilities to influence changes on the market than changes connected to regulations, i.e. changes of the market, and they display more ways of handling market changes. In many ways, this result is to be expected, as market ambidexterity to a large extent relates to the core activities of the firm, i.e. to provide customers with products and services and to develop new customer offerings. The study indicates that firms are generally more accustomed to, as well as willing to handle changes related to customers and suppliers. A common opinion among the firms in the study is that political changes only happen when politicians have something to gain, but business cannot be planned based on election campaigns and promises; these are transient things. However, that characteristic goes both ways, as firms only try to influence political decisions if they have something to gain from it. Previous interventions have created market conditions that have resulted in a demand for new interventions. With more mature market characteristics because of former interventions, new actors have entered the market, which have disrupted the stability once again. What the firms wish for is fewer but more long-term regulations that stimulate (as well as restrict) demand for solar power equipment.

How firms handle changes on the market tends to change over time, whereas the ways firms handle changes of the market are more stable. This approach can be seen as a way for firms to balance these two dimensions, where changes on the market demand active choices and actions, whereas changes of the market demand stability and steadiness. Changes of the market are harder to predict and influence and therefore demand internal stability from firms. Changes on the market demand flexibility, quick responses and use of both new and existing knowledge. These are dynamic capabilities of both flexibility and stability (). Although firms work with changes both on the market and of the market simultaneously, they are more attentive to changes on the market since these are easier to predict and influence. claim that few are truly good at handling both changes, but these changes have different characteristics, which result in different demands for actions but also different possibilities. If performed properly, market exploration activities may influence and help develop political exploration activities by seizing upcoming opportunities. It is important to note, however, that while market changes demand flexibility, political changes tend to demand stability, resulting in the overall need for ambidexterity. One can also argue that firms respond to market changes by developing the internal organization, whereas responses to political changes often occur through collaborations and networking.

5.1 Theoretical implications

While organizational ambidexterity has caught increasing attention over the years (; ; ; ), the concept of market–political ambidexterity has received less consideration. One of the reasons for this could be that market–political ambidexterity was initially used to describe firms’ success in handling market entry in less-developed countries () – where both market and political conditions are volatile – whereas we claim that the concept contributes to describing how firms maneuver market and political challenges in immature markets generally. By using the concept on the market for solar energy in Sweden, this study thus adds to developing it further. The development of the market–political ambidexterity concept is a contribution business marketing literature in general when trying to understand how firms simultaneously handle customers, suppliers, competitors, governments, governmental agencies and regulations. Within the business network approach, for instance, market–political ambidexterity could add to the understanding of firms’ interaction with socio-political actors (; ). Furthermore, previous studies have not focused on what activities and resources market–political ambidexterity involve; by dividing the concept up into the different constructs market exploration/exploitation and political exploration/exploitation, it becomes clearer what the concept may entail.

5.2 Managerial and policy implications

Market–political ambidexterity demands firm responses of different and parallel approaches and capabilities. discuss the importance of using different resources and activities over time, and from a firm perspective, it is crucial to be flexible in terms of developing the internal structure and culture to handle changes on the market. It is also important to regularly question and develop the internal organization in terms of competence and routines. The first managerial implication thus involves flexibility toward change and an internal system that allows for this flexibility.

As markets evolve, firms need to be aware and have the ability to respond with both political and market exploration and exploitation activities. To be able to align these competencies, experienced management is required (; ). Management needs to balance these approaches and sometimes even push for them at the same time (; ). This balancing act is crucial and requires good timing (). The second managerial implication points toward the need for managers that are experienced both when it comes to market changes and political changes.

Our study indicates that market–political ambidexterity requires multiple and different resources. Sensing and trying to influence future changes demands one set of resources, whereas adaptability and use of existing knowledge demands another set. However, as firms can acquire new resources when market and political changes occur (), sensing upcoming changes may result in new capabilities. Another managerial implication from this study is the importance of sensing the own ability to handle a market and/or political change and allocate the proper resources to the process. Handling changes on the market is more accessible than handling changes of the market since those often come with a political agenda. Perhaps firms should work with what they can actually influence and develop their own business – but be aware of and prepared to act on new regulations.

Although this study focuses on firm perspectives related to market–political ambidexterity, we identify a few policy implications. Firms prefer stable conditions and pre-planned interventions. To facilitate, governments and governmental agencies should therefore be transparent about changing conditions, presenting changes in interventions in a structured manner. As upcoming interventions may have huge impacts on market conditions and firm performance, policymakers could also reach more beneficial outputs from the interventions implemented if they take the perspective of lobbying actors under consideration. Finally, SMEs have fewer resources and can therefore be more susceptible to change. It may therefore be beneficial if policymakers take the situation of SMEs into account when designing interventions (). To offer more concrete policy implications in this matter, however, more research is necessary.

5.3 Limitations and further research

Market–political ambidexterity stems from internal capabilities as well as adaptations to external changes and contingencies. To handle both the market and the political facets of the context, firms need to be able to, at the same time, make use of their capabilities to sense changes and seize opportunities (). discuss sensing capabilities and seizing capabilities, which are developed in interactive relationships and state that sensing capabilities were developed in the pre-collaboration stage, whereas seizing capabilities were developed during collaboration. Although this study has mainly focused on how individual firms handle changes and display market–political ambidexterity, other studies (; ) also stress the importance of interorganizational relationships for firms’ ambidexterity. A future study of how capabilities related to market–political ambidexterity are developed in interactive relationships would shed further light on what aspects are important for firms to successfully handle changes both on the market and of the market.

An extension of dynamic capabilities to handle changes on the market seems to be the competency to handle relationships, or in other words, the networking capabilities (). Our study shows that networking capabilities play an important part in market–political ambidexterity but is not clear how and to what extent. It would therefore be interesting to look not only at relationship-specific capabilities but also networking capabilities and see what role they play in developing market–political ambidexterity.

Another avenue for further research relates to the size of firms. It has been claimed that most ambidexterity studies focus on large firms, as they are more likely to have the resources needed to develop ambidexterity (). Our study implies that big firms, which can afford keeping “opposing cultures and organizational structures” (, p. 456) in-house, have a greater possibility for market–political ambidexterity. Even though this study only included SMEs, it is evident that the larger SMEs have more resources to both handle and try to influence changes on the market. The larger firms are more proactive; both in how they try to influence decision-makers and in how they make firm-internal changes to adapt to external changes. Firms with adequate internal resources of both knowledge and time have the ability to seize the opportunities to influence political actors as well as continuously develop the internal organization in terms of structure and routines. As our study only includes a small number of SMEs, however, it would be valuable to conduct a quantitative study including different sizes of companies to test this finding.

A final interesting research avenue would be a combination of two of the suggestions above. Research has shown that “Resource constrained firms like small and medium enterprises (SMEs) become ambidextrous by searching and accessing external knowledge in addition to learning through internal organizations” (, p. 121). According to this, SMEs would be more likely than large firms to develop ambidexterity through relationships and networks. A business network study () of how firms’ business relationships impact their development of market–political ambidexterity could be a valuable contribution to the field, and it could also tie in with research on interaction between firms and sociopolitical actors in business networks (; ), thus adding other facets to market–political ambidexterity.

Market–political ambidexterity during exploration and exploitation activities

Exploration Exploitation
Market (handling changes on the market) Searching for new customers and market opportunities
Sensing opportunities and threats
Managing existing customers and markets
Seizing opportunities based on existing competencies
Political (handling changes of the market) Anticipating future interventions
Influencing political actors
Sensing opportunities and threats
Adapting to known interventions
Seizing opportunities based on existing competencies

Source: Authors’ own work

Companies and interviews

Company Founded in year No. of employees Respondent Target groups Time and date
A: HESAB 2013 4 Operations manager Single-households, multi-family houses, agricultural properties, business-to-business, municipalities June 30,
1-h interview Zoom
June 20, 2023
45-min interview Zoom
B: Solkompaniet 2010 ≤100 CEO, vice president utility scale Business-to-business, solar parks, real estate company, municipalities, installers October 22, 2021
1-h interview Zoom
July 6, 2023 1-h interview Zoom
C: SavebySolar/
Luma Energy AB
2014 60 Founder/business developer Business-to-business, real estate company November 23, 2021
40-min interview Zoom
June 20, 2023
1-h interview Zoom
D: Energi Solvind 2010 1 CEO Single-households, multi-family houses, business-to-business October 13, 2021
45-min interview Zoom
E: ElavSol 2014 ≤15 CEO, Market director Agricultural properties, multi-family houses, business-to-business, solar parks November 18, 2021
50-min interview Zoom
July 12, 2023
1-h interview Zoom
F: Cellsolar 2016 70 CMO Single-family houses, multi-family houses, business-to-business, agricultural properties October 21, 2021
50-min interview Zoom
G: Nordic Solar 2010 40 CEO Single-households, multi-family houses, business-to-business, municipalities September 10, 2021
1-h interview Zoom/telephone
H: DSEG 2020 15 Head of project planning Installers July 5, 2023
50-min interview Zoom (English)
I: Svensk Solenergi (Interest organization) 1989 CEO Member companies July 13, 2023
1.20-h interview Zoom

Source: Authors’ own work

First and second level of coding – market exploration/exploitation activities

First-order concepts Quote from respondents Second-order themes Aggregate dimensions
Increase the number of suppliers “We have chosen not to lock ourselves in to one or a few specific suppliers, but we have broadened our portfolio” (C) Searching for market opportunities Market exploration activities
Abandon some segments, develop others “We left private households as customers in 2018 but instead started our wholesale company together with a German supplier where we sell materials to installers, and we thus partially retain that segment with us anyway” (B) Searching for market opportunities
Take over the role of the procurer – direct contact with the customer at a higher level “An important issue for us is that we work a lot to take over the procurement consultant’s role and project and procure directly with the property companies” (B) Develop the fit between internal structure and market segment
Keep install team in-house and strategic recruitment to fit the customer “A big and important thing that we have done is that we have moved away from working with subcontractors for assembly and installation but felt compelled to invest in our own installers that we now have in-house to be able to keep up and install” (E) Develop the fit between internal structure and market segment
Develop safety routines and certifications “To really succeed, you have to create internal structures for security” (C)
“For example, everyone with us has to go through fall protection training, even the salespeople who are never actually on the roof” (E)
Managing and developing existing internal routines Market exploitation activities
Routines for strategic purchase, profits, cost minimization and build stock “We have become much better at purchasing and it is done much more strategically and long-term” “Today we are building more stock to make sure we have storage” (E) Managing and developing existing internal routines
Educate staff about institutional or market changes “We work to create fixed routines, inform all employees about news and changes” (E) Firm seizing opportunities based on existing competencies
Educate the customer in product preferences and safety regulations “For us, it is most important to get the property companies to understand what they are ordering and to educate them”
“We work actively for a safe working environment, safe installations and to inform customers” (C)
Seizing opportunities based on existing competencies

Source: Authors’ own work

First and second level of coding – political exploration/exploitation activities

First-order concepts Quote from respondents Second-order themes Aggregate dimensions
Write remittances for new regulations “We initiated a network to have the opportunity to drive changes in the market and update regulations” (B) Influencing political actors Political exploration activities
Initiate a network to be a strong market actor We take the initiative for a network together with a few selected companies that have taken a strategic position for solar energy and start (B) Influencing political actors
Push for changes in regulations together with other actors “Concrete amendments to a legal text and a justification are better than a general desire to bring about a certain change” (I) Anticipating future interventions
Be part in developing certifications “We then took a great deal of responsibility in these matters, and we have developed our own certification, training courses and we require companies to have personnel who are certified” (I) Anticipating future interventions
Contacts with influential actors “The strength in our network is that we all have a strong market position and brand within our segments” (B) Seizing opportunities based on existing competencies Political exploitation activities
Write debate articles “We are happy to write articles together with others” (I) Seizing opportunities based on existing competencies
A need for more safety regulations and certifications “Staffing companies staff parts of the market with international labor at installations. The state needs to do some work here” (B) Adapting to known interventions
Contact the customer prior to changes in regulations they may benefit from “When the tax limit was raised from 255kW to 5000kW, we went out to our customers and informed them that they could expand their installations and that we were prepared to help them” (C) Adapting to known interventions

Source: Authors’ own work

Some key references and definitions

Theoretical concept Author(s) Definition of key concept(s)
Exploration/exploitation Exploration includes things captured by terms such as search, variation, risk taking, experimentation, play, flexibility, discovery, innovation. Exploitation includes such things as refinement, choice, production, efficiency, selection, implementation, execution. (, p. 71)
Market exploration/market exploitation , [Export] market exploitation relates to the improvement, refinement and elaboration of a firm’s existing knowledge about its current [export] markets.’ ‘[Export] market exploration concerns dealing with new knowledge and seeking new markets currently unknown to the firm. (, p. 214)
Market exploration refers to the search and pursuit of completely new knowledge and skills outside the firm’s current product market, whereas market exploitation emphasizes the use and refinement of existing knowledge and skills in the current product market. (, p. 297)
Ambidexterity , , Ambidextrous organizations: The ability to simultaneously pursue both incremental and discontinuous innovation and change results from hosting multiple contradictory structures, processes, and cultures within the same firm (, p. 24)
Ambidexterity: describes the challenges of concurrently exploiting existing markets and technologies to make the most of what works now, while at the same time exploring new markets and new technologies as the organization seeks to benefit from important future opportunities. (, p. 276)
Ambidexterity: the ability to dynamically balance exploration and exploitation, which emerges from combining capability-shifting processes (to balance exploration and exploitation) with capability-shifting processes (to adapt the exploration-exploitation balance). (, p. 449)
Organizational ambidexterity (OA) , , , OA: the ability of an organization to both explore and exploit – to compete in mature technologies and markets where efficiency, control, and incremental improvement are prized and to also compete in new technologies and markets where flexibility, autonomy, and experimentation are needed. (, p 324)
OA: simultaneously achieving both exploitation or gaining efficiency in current business operations and exploration of new business ideas even in the face of markets as well as technological shifts (, p. 121)
Market–political ambidexterity , firms’ dynamic capabilities to manage influences from both markets and governments simultaneously (, p. 206)

Source: Authors’ own work

Summary of the Swedish direct capital subsidy program

Ordinance Start date Maximum coverage of installation costs Initial stop date
2005:205 Energieffektivisering i offentliga lokaler April 14, 2005 70% December 31, 2008
2009:689 Stöd till solceller July 1, 2009 55% for large companies
60% all others
December 31, 2011
2011:1027 ändring av 2009:689 January 1, 2011 45% December 31, 2012
2012:971 ändring av 2009:689 February 1, 2013 35% December 31, 2016
2014:1582 ändring av 2009:689 January 1, 2015 30% companies
20% all others
December 31, 2016
2016:900 ändring av 2009:689 October 13, 2016 30% companies
20% all others
December 31, 2019
2017:1300 ändring av 2009:689 January 1, 2018 30% December 31, 2020
2019:192 ändring av 2009:689 May 8, 2019 20% December 31, 2020
2020:489 ändring av 2009:689 June 30, 2020 20% June 30, 2021
2020:1263 ändring av 2009:689 February 15, 2021 10% companies September 30, 2021

Source:

Note

1.

These interest organizations are Svenskt Näringsliv (Confederation of Swedish Enterprise), Företagarna (the organization does not provide an English translation, but they represent Swedish SMEs), Svensk Solenergi (Swedish Solar Energy Association), Solelekommissionen (The Solar Energy Commission) and Energiföretagen Sverige (Swedenergy).

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Corresponding author

Victoria Kihlström can be contacted at: vki@du.se

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