Observing Startups to Understand Party Competition

The rise of the populist radical right wave in Europe is only the latest example of challenger parties grabbing the spotlight from incumbents. In their Political Entrepreneurs. The Rise of Challenger Parties in Europe (Princeton University Press) Catherine De Vries (Bocconi) and Sara Hobolt (London School of Economics and Political Science) draw an analogy with market competition as explained by Joseph Schumpeter and argue that political change is as much about the ability of challenger parties to innovate as it is about the inability of dominant parties to respond. Challenger parties employ two types of innovation to break established party dominance: they mobilize new issues, such as immigration, the environment, and Euroscepticism, and they employ antiestablishment rhetoric to undermine mainstream party appeal. Unencumbered by government experience, challenger parties adapt more quickly to shifting voter tastes and harness voter disenchantment. Bocconi Knowledge, courtesy of the authors and the publisher, publishes an excerpt from the book.

European politics is undergoing a transformation. The traditional political parties of the center that used to dominate elections are struggling to remain relevant. They are being forced to confront the fact that continuing to play by the old rules may no longer work. Meanwhile, agile political entrepreneurs are defying traditional ways of doing politics by setting their own rules. They are able to adapt faster to shifting voter tastes and successfully challenge the status quo that favors their dominant competitors. Like start-up firms, many challenger parties are destined to fail. The key question is when and why some break through and what are the consequences of their success. And, of equal importance, what can dominant parties do to face off political entrepreneurs that challenge their market power?

Answering these questions is complicated by the fact that we currently find ourselves in the eye of the storm. Being in uncertain times makes it difficult to distinguish the short-term ripple effects of an unexpected election result from a political sea change that affects the overall direction of the currents guiding the political system. While there is no doubt that election outcomes in Europe have become more volatile and political fragmentation is on the rise, we suggest that there are some key patterns in the kind of changes we observe. These patterns may be somewhat blurred around the edges and sometimes subject to temporal or country-level idiosyncrasies, yet they are important signposts for understanding the essence of the political transformation that we are experiencing and what the future might hold. In this book, we have presented a long view of the developments in West European politics from the post-war period until today. We have shown that these developments are as much about the resilience of dominant parties as they are about the rise of challenger parties. Our objective has been to contribute to the understanding of both resilience and change, of both challenger and dominant parties, and how the tug-of-war between them transforms European politics.

Who are the dominant parties, and how are they able to face off challengers? Who are the challenger parties and which strategies have allowed them to successfully defy the market power of dominant parties? And what are the consequences of the rise of challenger parties for the stability of European democracy? By building on the literature of industrial organization in economics, we have developed a theory of political change that focuses on the interplay between the market power of the dominant mainstream parties and the disruptive innovation of challenger parties. The notion of dominant market players and disruptive political entrepreneurs is familiar in the study of industry, where dominant companies appear to be unbreakable until innovation comes along. Kodak dominated film until digital technology destroyed its market power. Nokia was unbreakable in mobile devices until smartphones emerged. The dominant forces of computing in the 1990s, Microsoft, Intel, Cisco, and Dell, were challenged by the disruptive innovators of Google, Apple, Amazon, and Facebook, which have become the new goliaths. Change in industry might occur faster than in party politics, but in this book we have argued there are important parallels between the two.

Dominant parties have long been able to maintain their dominance in most of Western Europe by employing strategies aimed at protecting their market power-namely, distinctive convergence, issue avoidance, and competence mobilization. Recently, however, they have been less successful in doing so as the ties between parties and voters have weakened. This has created opportunities for challenger parties to disrupt the political system through two types of innovation. First, challenger parties acting as issue entrepreneurs offer policy innovations by mobilizing new political issues. Second, challengers employ antiestablishment rhetoric to prevent dominant parties from imitating their innovation and to challenge the dominant "brands." By focusing on the strategies of both dominance and innovation, we can explain why European party systems have remained so stable for decades, but also why they are now increasingly under strain.

Listen to Catherine De Vries and Sara Hobolt, guests of the Clarity in a Messy World podcast: "Does the Pandemic Spell the End of Populism?"