Chapter 2
Anchoring Global Networks in Urban Niches –
How onsite water recycling emerged in three Chinese cities
C
hristian Binz
1
and Bernhard Truffer
2
1
Sustainability Science Program, Kennedy School of Government, Harvard University
christian_binz@hks.harvard.edu
2
Eawag, Swiss Federal Institute of Aquatic Science and Technology, ESS and Faculty of Geosciences,
Utrecht University, The Netherlands
K
eywords: urban transition, anchoring, niche upscaling, onsite water recycling, China
1. Introduction
Analyzing the spaces and places in which sustainability transitions evolve - and especially the crucial
role of cities in this process - has moved center stage in academia and policy circles (Bulkeley et al.,
2011; Hodson and Marvin, 2010). Evidence is growing that transition dynamics in urban contexts
cannot be understood based on the specific actors and dynamics inside a city alone, but that they
span actors and processes at multiple interrelated spatial scales (Betsill and Bulkeley, 2006; Hodson
and Marvin, 2010). Yet, transition literature to date only provides a limited understanding on how
multi-scalar spatial contexts influence transition pathways. It thus lacks explanations on why
transitions emerge in specific places while they fail in others (Coenen and Truffer, 2012; Raven et al.,
2012; Smith et al., 2010). As a consequence, it remains rather unclear by what strategies and under
which conditions specific urban actors can make a difference in furthering sustainability transitions,
for instance by acting as strategic niche managers for new technologies.
The present chapter aims at addressing this research gap by elaborating on the ability of urban actors
in mediating local and global resource flows as a precondition for niche formation. Our analytical
framework will draw on recent insights from economic geography and argue that an important
element in explaining early niche formation processes is urban actor’s ability to combine territorially
embedded innovation processes with mobilizing resources through networks reaching outside the
city. We propose the concept of socio-spatial anchoring to analyze how local niche activities get
connected to international technological innovation systems and analyze what key role urban actors
fulfill in these multi-scalar innovation systems.
This is an Accepted Manuscript of a book chapter published by Routledge in
Urban Sustainability Transitions on 14 June 2017, available online:
https://doi.org/10.4324/9781315228389
2. Urban actors as intermediaries between local niches and global networks
Transition studies generally assume that sector-wide transformation is the outcome of interrelated
processes at a niche, regime and landscape level (Geels, 2002). Especially the emergence and
development of socio-technical niches and the mechanisms through which they build up a
constituency behind new technologies is crucial for transition theory (Kemp et al., 1998). Recent
empirical evidence shows that actors in specific urban contexts can play crucial roles in such niche
upscaling dynamics (Bulkeley et al., 2011; Hodson and Marvin, 2010): E.g. urban governments can act
as strategic niche managers by providing ‘protected space’ for experimentation (Hodson and Marvin,
2010), induce targeted niche policies (Carvalho et al., 2012), and often even coordinate niche
experiments in wider inter-city networks (Betsill and Bulkeley, 2006). As Hodson and Marvin (2010,
477) put it, urban governments increasingly “have political aspirations to develop purposive and
managed change in the socio-technical organization of infrastructure networks that can be
characterized as ‘systemic’ transitions.”
Yet, much of the work dealing with such urban transitions is still preoccupied with niche formation
and governance processes at regional to national scales and rather ignores international
interdependencies (Coenen et al., 2012). Existing literature does also not specify in much detail how
pre-existing urban institutional and sectorial configurations influence niche formation processes.
Recently, economic geographers have criticized this simplistic concept of geographic contexts in
transition literature: In a globalizing knowledge economy, both regional (urban) contexts and global
networks are key building blocks of a thorough understanding of innovation and niche formation
processes (Bathelt et al., 2004; Coenen et al., 2012).
2.1 Insights from economic geography: Endogenous and exogenous transition dynamics
Economic geography literature provides two helpful perspectives for analyzing cities’ role in niche
formation: On the one hand an ‘endogenous’ view, which emphasizes innovation dynamics
stemming from pre-existing social and institutional capital of territorial innovation systems; e.g.
specific capabilities, industrial structures and local institutional arrangements (Boschma and Frenken,
2011; Moulaert and Sekia, 2003). In this view, regions or cities with a diverse actor base and
historically grown culture fostering reciprocal trust and mutual learning have a higher propensity for
innovation and industrial renewal (Moulaert and Sekia, 2003). Urban niche actors would arguably
profit from such dense localized institutional arrangements (Dewald and Truffer, 2012) and from
historically grown positive externalities like specialized workforces, knowledge infrastructures and
governance arrangements that support continuous innovation (Boschma and Frenken, 2011). To
understand the determinants of successful niche upscaling, a close focus on the local socio-
technological contexts is thus indispensable.
A second – ‘exogenous’ - perspective argues that innovation is increasingly shaped by international
networks, mobile actors and multi-locational knowledge dynamics (Crevoisier and Jeannerat, 2009).
In today’s globalizing knowledge economy there is a shift “from specialization within regional
production systems to [...] knowledge and resources within multi-location networks of mobility and
anchoring” (Crevoisier and Jeannerat, 2009: 1225). Innovation is still conditioned by territorial
agglomeration, but exchange processes between distant places gets increasingly important, too. This
applies in particular to cities, whose actors often occupy central positions in global knowledge-,
capital- or specialized labor networks (ibid.). Cities can accordingly be seen as unique spatial contexts
in which radically new products and technologies can profit from locally specific institutional
structures as well as resources stemming from trans-local networks (Binz et al., submitted).
The early formation and later development of niche technologies in a given city thus depend on how
well urban actors are able to mobilize extra-regional networks, resources and knowledge, and
mobilize them in sustained local niche formation processes. This involves a series of mediation
activities between production and consumption, between different political priorities and between
planning and implementation (see Hodson and Marvin, 2010:482), which we conceptualize here as
‘anchoring’ (Crevoisier and Jeannerat, 2009). We understand anchoring as a systemic process
through which actors in a city manage to actively embed external knowledge, actors and resources
into local supply and demand structures and the wider institutional context.
1
2.2 Analytical framework: Anchoring of global innovation system resources
We conceptualize anchoring by drawing on recent insights from the technological innovation system
(TIS) approach. TIS are generally defined as “a set of networks of actors and institutions that jointly
interact in a specific technological field and contribute to the generation, diffusion and utilization of
variants of a new technology and/or a new product” (Markard and Truffer, 2008: 611). Besides the
core structural elements (actors, networks and institutions) TIS research focuses on seven key
formation processes (also called ‘functions’)
2
to analyze early gestation processes in socio-technical
niches (Bergek et al., 2008; Markard and Truffer, 2008). How well a niche is developing, diffusing and
utilizing an innovation can be analyzed by assessing the performance of these processes (Bergek et
al., 2008).
In the present chapter we thus assume a direct relationship between TIS formation and the evolution
of urban niches: The better the TIS performs in a specific urban context - i.e. the more system
building processes its actors activate and the more system structure they build in a cumulative
causation process - the better the development potential of an emerging niche technology in a city.
We furthermore posit that TIS performance cannot be assessed with a myopic focus on local system
structure, but that international connections have to be equally taken into account (Gosens et al.,
2013). The development of the TIS thus depends on connections between actors and processes
emerging both endogenously in the city and exogenously in wider networks of a ‘global TIS’ (for a
more detailed discussion see Binz et al., 2014; Binz et al., submitted).
Based on these foundations, we define “anchoring” as the buildup of a local innovation system,
which embraces and supports local actor’s capability to access, interact with and ‘capture’
knowledge, information, ideas or any form of tangible and intangible asset from other places in the
global TIS. Through interactive learning and the increasing integration of local and extra-regional
inputs, TIS formation may be anchored in a specific urban context, leading to increasingly spatially
1
Note that we understand anchoring in a geographic sense of Crevoisier et al. (2009), not related to regime-niche
interaction (Elzen et al., 2012).
2
Knowledge creation, entrepreneurial experimentation, market formation, guidance of the search, creation of
legitimacy, resource mobilization and creation of positive externalities (for an overview see Bergek et al. 2008
and Hekkert et al. 2007). We refrain from analyzing positive externalities here as urban studies usually see them
as a cumulative outcome of the other system building processes.
‘sticky’ resources for (radical) innovation. Over time, the relevant actors, networks and institutions
stabilize and the proto-TIS scales up, evolving into a proto-regime that increasingly challenges
dominant regime structures inside and beyond a given urban context.
3 On-site water recycling as an empirical case and methodological approach
We will illustrate this framework with the transition to onsite water recycling (OST) technology in
China. OST is based on washing-machine sized wastewater treatment plants that produce recycled
water in the basement of buildings. It represents a disruptive innovation with transformational
potential to the wastewater sector’s dominant regime: Instead of relying on extended sewer
networks and centralized, utility-based organizational forms, OST allows for mass-produced modular
treatment and decentralized operation and maintenance.
The technology has not yet left the niche stadium. Except for Japan and the USA, OST niches are
mainly served by small to medium enterprises and no dominant design for OST plants has emerged
yet (Truffer et al., 2012). Nevertheless, OST technologies’ R&D networks are globalized with
associations and epistemic communities integrating experiences from different OST niches at an
international level. A relevant ‘global OST TIS’ has formed and OST applications are gradually
expanding in many places around the world (Binz et al., 2014).
We focus on OST in China for two main reasons. First, Chinese cities are all latecomers in the OST
field, so focusing on China allows reconstructing the full development cycle of OST niches over a
relatively condensed timespan. Second, desk research showed that China’s pressing urban water
problems created a lot of activity in the OST field, leading to easily comparable success and failure
cases. So far, a considerable OST niche emerged only in Beijing, where 2’000 to 3’000 OST systems
have been installed over the last twenty years. Its success story was chosen for in-depth investigation,
whereas Shanghai and Xi’an represent contrasting failure cases.
According to the existing literature elaborated in section 2.1, we would expect strong OST niches to
emerge in regions which provide either strong endogenous innovation potential (incumbent related
industries, supportive institutional arrangements) and/or have strong access to international
knowledge networks.
Table 1: Initial development potential and TIS performance in three Chinese cities
Location
Endogenous
potential
Exogenous
potential
Landscape
pressure
Performance
of OST TIS
Beijing
+
+
+++
+++
Shanghai
+++
+++
+
+
Xi’an
+
++
+++
+
+=weak, ++=medium, +++=strong
Among the three considered city regions, endogenous development potential was arguably strongest
in Shanghai. When first OST experiments started in the late eighties, the city could already provide
basic know-how and a specialized workforce in related industries (e.g. pumping, process engineering).
Xi’an and Beijing could not provide comparable industrial capabilities. Also in terms of exogenous
development potential, both Xi’an and Shanghai had more promising preconditions than Beijing:
Shanghai was the most internationalized commercial center of China, while Xi’an hosted a very active
returnee entrepreneur
3
who tried to push OST from the early nineties (see section 6.3). Finally, in
terms of landscape factors, both Beijing and Xi’an historically have very pressing water shortages that
exert a strong push on local governments to explore new water-saving solutions. This pressure is less
pronounced in Shanghai, which however struggles with heavy water pollution (Lee, 2006). As can be
seen from this short discussion and Table 1, Beijing initially provided quite weak endogenous and
exogenous development conditions, but still developed into the only Chinese city where substantial
TIS development can be observed. In the remainder we will try to explain this seemingly
contradictory observation based on our framework.
Methods
Applying functional TIS analysis (Bergek et al., 2008; Hekkert et al., 2007) with a focus on
international linkages poses specific challenges to the research design and methods (for an overview
see e.g. Binz et al., 2014; Gosens et al., 2013). In this study we decided to use an expert interview-
based, comparative case study design. 40 interviews were conducted between November 2010 and
May 2011, covering experts from all relevant TIS actor groups (Table 2). Interview transcripts were
codified and analyzed with qualitative content analysis and the results triangulated with secondary
data sources and existing literature.
Table 2: Interviews in China
4 The emergence of onsite water recycling in Beijing, Xi’an and Shanghai
In the remainder we will first describe the emergence of Beijing’s OST niche (for a more detailed
discussion see Binz et al., submitted) and then shortly compare it to the two unsuccessful cases in
Shanghai and Xi’an.
4.1 OST in Beijing
1990-2000: OST is established in an internationalized hotel niche
3
Prof. Wang Xiaochang at Xi'an University of Architecture and Technology (XAUAT)
Actor group
Interviews
Beijing
Interviews
Shanghai
Interviews
Xi’an
Sum
Academia
10
2
1
13
Companies
12
6
0
18
Policy experts
3
2
1
6
Associations
2
0
1
3
Total
27
10
3
40
