Mistrust and Lack of Market Innovation

Abstract

The fundamental problem discussed in this article is the lack of accord between market adaptation and traditional production practices, which may result in a loss of competitiveness in some industries. A key question of this article is why salted fish consumers in Spain, formerly an important market for Norwegian salted fish producers, are seemingly unable to influence production practices within the Norwegian salted fish industry. The Norwegians have lost significant market share in Spain because of their failure to meet the demand for new products, which required different production methods. Based on institutional and evolutionary economic theories and focusing on production systems, institutional rigidity and path dependency, this article analyses two causes of market failure: the structural conditions for industrial adaptation; and mistrust among most of the core actors in the Norwegian salted fish industry. Mistrust is one significant reason for the failure to establish networks and collective innovation practices in order to adapt to market demands. The article concludes that, instead, actors in the seafood industry developed an ‘imaginary innovation system’ in which they believed that they were innovative and competitive, whereas in reality they were defending individual positions within traditional production practices.