Government׳s role in disruptive innovation and industry emergence: The case of the electric bike in China

•We present a case study of how government shaped the development trajectory of a disruptive innovation and the industry associated with it.•We show how the industry and the institutional environment co-evolved in the process.•Our study has practical implications for policy makers on catching-up strategies and the strategies about the new energy automobile industry.

The role of the government has rarely been examined in the previous literature on Disruptive Innovation (DI). We present a case study of how government shaped the development trajectory of a DI through both promotional and restrictive policies in the emergence of the electric bike (E-bike) industry in China. We also show how the distinctive nature of DI influenced the strategies of the E-bike firms and how the industry and the institutional environment co-evolved in the process. We believe our study has practical implications for policy makers in making catching-up strategies as well as strategies about the pollution prevention industry and the new energy automobile industry in transition economies.