SBE-RCUK Lead Agency: Co-location of manufacturing and innovation: drivers & impacts of technological innovation along wind energy global value chain

Completed

Renewable Energy Sources(Wind Energy)
Other Cross-Cutting Technologies or Research(Environmental, social and economic impacts)

Basic and strategic applied research

SOCIAL SCIENCES (Economics and Econometrics)
SOCIAL SCIENCES (Politics and International Studies)

Sociological economical and environmental impact of energy (Other sociological economical and environmental impact of energy)

Professor L Diaz Anadon
Land Economy
University of Cambridge

Standard

ESRC

24 September 2018

23 September 2020

24 months

£120,255

East of England

Grants

Professor L Diaz Anadon, Land Economy, University of Cambridge

Dr N Hultman, Maryland School of Public Policy, University of Maryland
Dr K Surana, Maryland School of Public Policy, University of Maryland

The objective of the proposed research is to study the drivers of international shifts of manufacturing location across the global value chain (GVC) for wind energy technology and how these shifts in manufacturing have impacted the nature and direction of technological innovation in the sector. The research focuses on the wind energy industry because-like other high-technology industries-it has seen major geographical shifts recently. Both demand and manufacturing of wind turbines have shifted from Europe and the US to emerging economies, notably China and India. Expansion to new countries is expected given ambitious policy targets for deployment. The shifts in manufacturing have potentially influenced the nature of innovation (technological focus of innovation) and the direction of innovation (time horizon for R&D activities). Research on innovation in the wind industry has primarily studied one part of the value chain: the original equipment manufacturers (OEMs)-i.e., the 10-15 manufacturers that assemble wind turbines-applying perspectives of public policy, innovation systems, technology transfer, and innovation management. However, little attention has been paid to hundreds of specialized firms that supply to OEMs. These component suppliers, often small and medium firms, constitute the backbone of the economy of most countries and must innovate to manufacture at low costs, or develop competences to stay competitive in global markets.

The proposed research will address the following questions: (i) How have different parts of the wind manufacturing value chain changed in terms of location? What factors explain these changes and differences across firms? (ii) How does the nature and direction of innovation (measured by the focus of patents) differ depending on the location of OEMs (including their R&D and subsidiaries) and suppliers? (iii) How does internationalization of manufacturing and R&D of OEMs and suppliers affect innovation in the wind GVC? The investigators will use mixed-method techniques to conduct this research, using a unique database of 12 major OEMs and their relationships with 470 suppliers (2006 to 2014). The preliminary database developed by the investigators includes firm-level information on the type of component, the locations of firms, etc. The investigators will significantly develop this database by adding new information on firms, public policies, and technology, and by conducting interviews to understand outcomes of internationalization. The analysis will employ a new methodology to characterize patents, social networks to depict the GVC, econometric techniques to determine the relationship between manufacturing shifts and patenting practices, and comparative case studies.Intellectual merit:The study of the impacts of manufacturing shifts on technology innovation will test emerging theories in a new sector (wind energy) that is strongly shaped by public policy interventions, while adding an important focus on components and supplier firms. The empirical and theoretical analysis, including the development of a methodology for studying drivers of manufacturing and R&D location decisions and their impacts, will be designed to apply to other industries. Comparative case studies and discussions on OEMs and on countries will further contribute to the understanding of the relationship between trade, energy policy, technology innovation, and local industry development in globally distributed manufacturing industries.Broader impacts:This research can have substantial impacts on public policy and on society. For policymakers in high-income economies (e.g., US or UK) interested in domestic manufacturing and employment generation in modern industries, this research will inform on the design of policies that spur local manufacturing and economic competitiveness with a granular understanding of the linkages along GVC. For policymakers in emerging economies interested in new industries, this research can provide insights on leveraging GVCs for local technology and capacity development in an industry greatly relevant for balancing economic growth with environment and climate targets. For society, this research can elucidate the ways in which manufacturing shifts affect the ability of technological innovation to meet climate and environmental challenges, thus supporting design of policies to meet societal goals.

19/03/19