Business Models as Market Formation Devices

Doctoral thesis, 2026

Many low‑carbon technologies have reached technological maturity and cost competitiveness, yet their deployment remains insufficient to meet climate targets. A key explanation for this gap is slow market formation, defined as the process by which suppliers and buyers are enabled to exchange goods and services. Market formation is commonly conceptualised as unfolding through three sequential phases, each associated with distinct challenges related to technology, actors and networks, and institutions. Although cost competitiveness is often treated as a signal that markets are self-sustaining, many low-carbon technologies continue to face challenges even after technological maturity has been achieved. This ambiguity is problematic, as it risks premature withdrawal of policy support and firm strategies that are misaligned with actual market conditions.

Existing research has generated valuable insights into early market formation, but less is known about later phases. More specifically, while firms in the downstream value chain play a particularly central role in these phases by matching heterogeneous demand with technological solutions, the mechanisms through which they shape market formation remain underexplored. In particular, business models are widely acknowledged to configure how firms facilitate exchange between supply and demand, yet their roles in shaping market formation for low‑carbon technologies remain insufficiently explained.

This thesis addresses this research gap by drawing on a literature review and three qualitative empirical studies of downstream firms in the Swedish solar photovoltaic market. The findings reveal that firms continue to face challenges spanning different phases of market formation even after technological maturity has been achieved. Contrary to previous assumptions, the thesis demonstrates that market formation phases overlap rather than unfold sequentially. Firms navigate these challenges through distinct business model approaches, with business models functioning as devices through which firms intentionally or unintentionally shape market formation. These findings underscore the critical role of downstream firms in market formation and highlight that managers should recognise the market-shaping potential of their business models. They also emphasise that business models can serve as important complements to policy instruments, underscoring the need for policymakers to create conditions that allow different business models to emerge to accelerate the deployment of low carbon technologies.