Development and deployment drivers of clean technology innovations

Erzurumlu, S. Sinan; Erzurumlu, Yaman O.

doi:10.1016/j.hitech.2013.09.001

Cited by 42 publications

(24 citation statements)

References 43 publications

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“…These circumstances have weakened the enforcement of environmental policies and regulations. Meanwhile, investment in clean production and environmental innovation is high, yet the lack of economic incentive policy has hindered the development of cleaner production [10][11][12]. Fortunately, market and community pressure has become a crucial driving force to supplement government regulations [13].…”

Section: Related Workdmentioning

confidence: 99%

Firm Environmental Innovation Behavior Under Heterogeneous Demand: An Adaptive, Agent-Based Modeling Approach

Zhao¹,

Du²,

Guan³

2014

TOCSJ

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Because of the complexity and diversity of human behavior, social systems are unpredictable and difficult to quantify. With the development of computer technology, scholars have begun to construct artificial systems to simulate real social systems in order to explore the trajectory of social phenomena. In this paper, we combined complex system modeling theory with a computational experimental method to construct an adaptive, multi-agent-based system. For this purpose, we constructed heterogeneous firm and consumer agents. Each agent has its own properties, behavioral rules, and interaction rules, which can be adjusted according to its experiences. Our model is based on an abstraction of the real world. We first applied the model to simulate consumers' product selection process and firms' product innovation decision-making process. Then, we analyzed the internal mechanisms affecting consumers' green demand and firms' environmental behavior. The experimental results revealed that consumer preferences for products with high environmental performance encourage firms to pursue environmental innovation. When green demand among consumers is sufficiently high, firms can obtain high economic profits when they engage in environmental innovation, whereas when green demand among consumers is low, the government should intervene with mechanisms such as subsidies or incentives to encourage firms to engage in environmental innovation. However, as a rapid increase in green demand would quickly lead to a market monopoly, firms should respond to changes in the market in a timely manner to avoid being eliminated from the market.

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Section: Related Workdmentioning

confidence: 99%

Firm Environmental Innovation Behavior Under Heterogeneous Demand: An Adaptive, Agent-Based Modeling Approach

Zhao¹,

Du²,

Guan³

2014

TOCSJ

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“…One of the most significant policy adaptations is the renewed emphasis on investment in green technology by many nations to help improve environmental performance of their citizens and industries by providing incentives such as tax benefits (e.g. Erzurumlu and Erzurumlu 2013;Zhou, Levine, and Price 2010). Additionally, there are market based regulatory mechanisms such as carbon pricing (taxes) and carbon markets requiring organisations to internalise former externalities such as environmental costs (Speck 2013;Weitzman 2013).…”

Section: Introductionmentioning

confidence: 99%

Integrating carbon market uncertainties into a sustainable manufacturing investment decision: a Bayesian NPV approach

Dhavale

Sarkis

2015

International Journal of Production Research

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Net present value (NPV) is a widely used technique in capital budgeting. In this paper, we develop a Bayesian NPV framework using a Gibbs sampler. This approach allows decision-makers to integrate their knowledge, past experience, and uncertain and volatile cash flows from carbon emissions credits into decisions dealing with energy efficient, sustainable manufacturing equipment. The results indicate NPV is highly dependent on the nature of volatility and uncertainty of the cash flows. Without inclusion of this information through the Bayesian framework results, NPV becomes overstated, and thus it may provide biased guidance for the investment. The results developed in this paper further show that the frequency of very high and low cash flows and to a lesser degree their variability adversely impacts NPV. The results may also explain reasons for the economic phenomenon known as the energy efficiency gap.

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“…These innovations typically require long development times (5-15 years) to meet their anticipated performance goals, need in situ experimentation for scaling up production, and must be designed for 30 plus year life span. Further, commercialization of these projects involves difficult decisions for cash-starved start-up managers who have to justify the uncertain prospects for the underlying technologies in emergent markets [21]. The drawn out timing of the cash flows and the risk profile make these highly innovative projects unattractive to conventional funding sources, such as debt financing, venture capital (VC) funds and corporate investors [18].…”

Section: Introductionmentioning

confidence: 99%

“…Betting on the highly innovative projects has been a constant challenge for investors owing to the scope of the innovations, risks in the underlying scientific processes, the scale of funding, and the requirements to link emergent technologies into the existing infrastructure [21], [22], [38]. Thus, no matter how innovative and significant may be the idea, risk minimization is essential to an organization's potential for receiving funds.…”

Section: Introductionmentioning

confidence: 99%

Managing Highly Innovative Projects: The Influence of Design Characteristics on Project Valuation

Erzurumlu

Davies

Joglekar

2014

IEEE Trans. Eng. Manage.

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The climate change debate and economic recovery strategies in various industries demand highly innovative projects featuring stretched performance goals for developing clean technology. These projects face multiple sources of uncertainty in high risk situations, and require specialized know-how and longer periods for revenue growth than their counterparts in other industries. We use data from 207 clean technology projects funded by the U.S. Advanced Research Projects Agency-Energy to conduct a comparative study of how operations design can hedge risk and enhance project valuation in technology development and deployment stages. We find that deployment feasibility is significantly and positively related to project valuation. On the other hand, stretched technical performance goals, development feasibility and market growth targets are associated with lower valuation. We also find some significant differences for these results across institution types: mature firms, start-ups, universities, and research centers. We examine the risk profile of these projects by technology and institution type, and discuss the managerial and policy implications for these findings. Index Terms-Advanced Research Projects Agency-Energy(ARPA-E), clean technology, government funding, innovation management, operational hedging, operations design, resource-based view (RBV), risk management, technology entrepreneurship.

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Development and deployment drivers of clean technology innovations

Cited by 42 publications

References 43 publications

Firm Environmental Innovation Behavior Under Heterogeneous Demand: An Adaptive, Agent-Based Modeling Approach

Firm Environmental Innovation Behavior Under Heterogeneous Demand: An Adaptive, Agent-Based Modeling Approach

Integrating carbon market uncertainties into a sustainable manufacturing investment decision: a Bayesian NPV approach

Managing Highly Innovative Projects: The Influence of Design Characteristics on Project Valuation

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