Edited by Paula Kyrö
Chapter 12: The renewable energy industry: competitive landscapes and entrepreneurial roles
Emerging societal needs are a source of pressure for the development of new technology (Arthur, 2009). Improvements in existing products and services very often are not sufficient to narrow the gap and consequently the search for an entirely new technology paradigm starts, and usually ends with the emergence of a new industry (Day, 2000). The speed and effectiveness of this process of replacement depends on the one hand on technological and scientific progress, and on efficacious business strategies on the other. If it is true to say that new technological paradigms are the outcome of the combination of old and new knowledge (Arthur, 2009), it is also true to say that firms, by means of entry strategy decisions (Ghemawat, 1991), can select and foster the production of such new knowledge (Nelson and Winter, 1982). Unfortunately entrants to the new industry have to bear considerable risks. The time the development of a new technology takes, the amount of investments required and the possibility of being surpassed by competing technology platforms, are just a few of the sources of risk. Investments in such a scenario, where development trajectories are unknown and unknowable (Zeckhauser, 2006), are usually limited and will tend to follow rules that are very different from standard financial models. If competitors move late and/or with incremental investments only, the new industry will develop very slowly.
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