The Two Faces of Market Support – How Deployment Policies Affect Technological Exploration and Exploitation in the Solar Photovoltaic Industry

ETH Zurich, Department of Management, Technology, and Economics, Weinbergstrasse 56/58, 8092 Zurich, Switzerland
Research Policy (Impact Factor: 3.12). 02/2013; 42(4):989-1003. DOI: 10.1016/j.respol.2013.01.002


The recent years have seen a strong rise in policies aiming to increase the diffusion of clean energy technologies. While there is general agreement that such deployment policies have been very effective in bringing technologies to the market, it is less understood how these policies affect technological innovation. To shed more light on this important question, we conducted comparative case studies with a global sample of 9 firms producing solar photovoltaic (PV) modules, complemented by in-depth interviews with 16 leading PV industry experts. We propose that, on the one hand, policy-induced market growth serves as an important catalyst for innovative activity as it raises the absolute level of firm investments in technological exploration. On the other hand, however, deployment policies create an incentive for firms pursuing more mature technologies to shift their balance between exploitation and exploration toward exploitation. Firms focusing on less mature technologies cannot tap the potentials of exploitative learning to the same extent as those with more mature technologies. Therefore, stimulating strong market growth may raise the barrier to market entry for less mature technologies. We conclude that, when designing deployment policies, great care should be taken to avoid adverse effects on technological diversity and a premature lock-in into more established technologies.

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Available from: Joern Hoppmann, Mar 15, 2014
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    • "This shift of research focus to a more detailed level compared to previous studies on knowledge flows (cf. Nemet and Johnson (2012)) has relevant theoretical implications, as the issue of (premature) lock-in of technologies and sub-technologies has been raised in the literature but has never been thoroughly analyzed (Hoppmann et al., 2013). "
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    ABSTRACT: Literature on technological change has highlighted the importance of the cumulative character of knowledge. Typically, knowledge produced in a technology inspires subsequent knowledge within the same technology. But knowledge spillovers across technologies can also occur, i.e., technologies can benefit from knowledge that originated in other technologies. Such spillovers support technological variety, one potential goal of technology policy. The extant literature on knowledge diffusion, however, has not been able to explain which characteristics of knowledge increase the likelihood that knowledge will remain within its own technological field or spill over to other technologies. To address this gap, in this paper we test a set of hypotheses on how the diversity of prior art and the degree of technological centrality of knowledge affect the subsequent flow of this knowledge within and across technologies. Drawing upon a comprehensive set of more than 40,000 battery patents, we show that knowledge that is based on comparably less diverse previous knowledge is more likely to be related to intra-technology knowledge flows, and less likely to be related to knowledge spillovers to other technologies. Similarly, compared to peripheral knowledge, core knowledge is more likely to go along with intra-technology knowledge flows and less likely to spill over to other technologies. These findings have important implications for the design of science, technology and innovation policy. Policy measures that encourage the development of specialized and core knowledge are likely to foster the development of stable technological trajectories, whereas measures targeted at developing diversified and peripheral knowledge more strongly contribute to technological variety.
    Full-text · Article · Feb 2016
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    • "This demands a technological domain in the exploitation of these new energy sources, reducing costs of manufacturing, installation and maintenance of related equipment. One of the most promising renewable energies being exploited by man is the photovoltaic energy, both in electricity production in isolated systems and in systems connected to the power grid [2] [19]. "

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    • "The literature provided large evidence on the relevance of both demand-pull and technology-push instruments in shaping the dynamics of eco-innovation (see for instance Del Río 2009; Horbach et al. 2012; Newell 2010; Rennings 2000). However, a crucial issue is represented by the balance between the two categories of instruments in the policy mix and the differentiated effects with respect to the dynamics of environmental innovation at different stages of technological and commercial maturity, and with respect to the different types of innovative activities (Hoppmann et al. 2013; Nemet 2009; Sagar and van der Zwaan 2006). In particular, it has been claimed that public financial resources invested in demand-pull measures aimed at stimulating the deployment of renewable technologies (like those related to photovoltaic and wind energy) largely exceed investments in R&D supply policies (Laleman and Albrecht 2014). "
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