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A NTECEDENTS OF C OMPANY B EHAVIOR IN E NERGY T ECHNOLOGY D EVELOPMENT : I NSIGHTS FROM THE S OLAR I NDUSTRY Meagan S. Mauter, Ph.D. Assistant Professor,

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Presentation on theme: "A NTECEDENTS OF C OMPANY B EHAVIOR IN E NERGY T ECHNOLOGY D EVELOPMENT : I NSIGHTS FROM THE S OLAR I NDUSTRY Meagan S. Mauter, Ph.D. Assistant Professor,"— Presentation transcript:

1 A NTECEDENTS OF C OMPANY B EHAVIOR IN E NERGY T ECHNOLOGY D EVELOPMENT : I NSIGHTS FROM THE S OLAR I NDUSTRY Meagan S. Mauter, Ph.D. Assistant Professor, Chemical Engineering and Engineering & Public Policy Carnegie Mellon University mauter@cmu.edu

2 Enabling water and energy efficient technologies by identifying and addressing the technical and structural barriers to their implementation 2

3 A NTECEDENTS AND E FFECTS OF C OMPANY B EHAVIOR IN E NERGY T ECHNOLOGY I NNOVATION AND I MPLEMENTATION The trajectories and dynamics of energy innovation are intrinsically linked to the companies invested in energy technology development. Innovation ◦How do firms respond to energy technology innovation policy instruments? In particular, do instruments influence the type of innovation alliance formation? ◦How do technology characteristics affect a firm’s propensity to form exploration and exploitation alliances? Implementation ◦How much variation exists in the extraction of energy resources? ◦Does firm level variation dominate technology level or resource level variation? Environmental Impact ◦How do lessons from “Innovation” and “Implementation” change the outlook for the costs of water/energy impact abatement? 3

4 Impact of Technology Characteristics on the Formation of Exploration and Exploitation Alliances – Insights from the Solar Photovoltaic Industry 4

5 ETI Policy Instruments 5 Anadon and Holdren, 2008

6 Theoretical Framework 6 Deployment (Market Pull) Policies Contextual FactorsCorporate Investments in Technology Innovation Technology Push Policies Policy Induced Market Growth Firm and Technology Characteristics Investments in Exploration (e.g. R&D) Investments in Exploitation (e.g. production) Policy Induced Technology Push

7 Innovation Partnerships Amid trends towards increasing speed of innovation and rising complexity of products, firms no longer rely exclusively on in-house capabilities for innovation Increasingly rely on external partners who provide complementary resources and serve as a source of learning in fields where a company might possess little expertise (e.g., Mowery et al., 1998; Rosenkopf and Almeida, 2003) 7 http://americanenergyinnovation.org/

8 Exploration vs Exploitation Exploration ◦“search, variation, risk-taking, experimentation, play, flexibility, discovery, and innovation” (March, 1991) ◦search for new technologies ◦e.g., R&D alliances Exploitation ◦“refinement, choice, production, efficiency,selection, implementation and execution” (March, 1991) ◦enhance the firm’s capacity to commercialize existing technologies ◦e.g., production and marketing alliances, Exploitation alliances enhance learning by doing, potentially lowering costs faster than learning by searching (R&D) A strong focus on technological exploitation relative to exploration will yield less radical innovations, reduce technological diversity, and may increase technological lock-in (Malerba, 2009; Sandén, 2005). 8

9 Previous literature attributes a firm’s balance between exploration and exploitation using ◦industry-level antecedents such as competitive intensity (e.g. Jansenet al., 2006; Levinthal and March, 1993) ◦firm-internal factors such as firms’ slack resources (e.g. Greve, 2007; Nohria and Gulati, 1996) or their technology portfolio (Quintana-García and Benavides-Velasco, 2008) ◦Alliance type may be influenced by the complexity, maturity, or the tacitness of the knowledge they draw upon (Grant, 1996) ◦Theory, but no empirical analysis to date Empirically test how technology characteristics affect a firm’s propensity to form exploration vs exploitation alliances? 9 Exploration vs Exploitation

10 Hypothese s H1: The larger the technological complexity of a firm’s product, the more likely the firm is to form an exploration rather than an exploitation alliance. H2: The larger the technological maturity of a firm’s product, the less likely the firm is to form an exploration rather than an exploitation alliance. H3: The larger the tacitness of technological knowledge of a firm’s product, the more likely the firm is to form an exploration rather than an exploitation alliance. --------- H_b: The larger the _____ of a firm’s product, the more likely the firm is to form an exploitation alliance which involves a stronger exploratory component. Increased complexity, reduced maturity, and greater tacitness leads to investment in R&D partnerships 10

11 Hypotheses Relevance to PV The solar PV industry is a suitable research setting for analyzing the effect of technological characteristics on exploration and exploitation alliances as 1) A large part of the industry’s evolution occurred over the past 15 years. There was a 200 fold increase in installed capacity between 1998-2012. 11

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13 Hypotheses Relevance to PV The solar PV industry is a suitable research setting for analyzing the effect of technological characteristics on exploration and exploitation alliances as 1) A large part of the industry’s evolution occurred over the past 15 years. There was a 200 fold increase in installed capacity between 1998-2012. 2) There are several PV technologies with different characteristics which may turn out to become the ‘winning technologies’, each at different stages of technological maturity 13

14 Overview of PV Technologies 14

15 Hypotheses Relevance to PV The solar PV is a suitable research setting for analyzing the effect of technological characteristics on exploration and exploitation alliances as 1) A large part of the industry’s evolution occurred over the past 15 years. There was a 200 fold increase in installed capacity between 1998-2012. 2) There are several PV technologies with different characteristics which may turn out to become the ‘winning technologies’, each at different stages of technological maturity 3) Technology development has played a key role for firm strategies in the solar PV sector 4) In the face of a highly dynamic environment, firms have made extensive use of alliances 15

16 Research Methodology Information on inter-firm alliance agreements was obtained from the Factiva database. 1079 alliances for which we extracted the announcement year, the partner’s identities, and the type of agreement. ◦exploration alliances as those alliances that include knowledge generating R&D agreements ◦exploitation alliances involve joint marketing and services, original equipment manufacturer/value added reseller (OEM/VAR), licensing, production or supply. Technological complexity -> product position in the value chain (ingots and wafers vs final PV system) Technological maturity -> wafer-based crystalline silicon, thin-film PV and emerging PV. Tacit knowledge -> geographic proximity between the alliance partners 16

17 likelihood of exploration vs. exploitation alliance 17

18 Summary of Hypotheses Tests 18

19 Implications propensity to form exploration vs exploitation alliances depends on the characteristics of the technology, namely maturity and tacitness exploration alliances are particularly common in the early stages of a technology in the life-cycle when there is a considerable amount of technological uncertainty success of exploration alliances may more strongly depend on developing close ties to a number of trusted partners, rather than a mere reliance on formal, well-developed contractual relationships measures used by policy makers to support a specific industry may need to evolve in response to changes in the technology life-cycle 19


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