Innovation strategies of energy firms

Abstract

Investment by energy firms in innovation can have substantial economic and environmental impacts and benefits. Firms engage in innovation for different reasons. The main objective of this paper is to analyse the role that the different innovation objectives have on firms' decisions to invest in each of three types of innovation activity: namely, internal R&D, external R&D, and the acquisition of advanced machinery, equipment, or software. We consider four objectives: process innovation, product innovation, reducing environmental impact, and meeting regulatory requirements.With this approach, we examine how energy firms innovate to reduce their environmental impact in comparison with other innovation objectives. In carrying out the empirical analysis, we draw on data for private energy firms included in the Spanish Technological Innovation Panel for the period 2004-2016. In the empirical analysis, we take the potential persistence of innovation activities into account and we use multivariate probit models to control for possible complementarities between the different R&D and innovation investments. Our results show that internal and external R&D are undertaken to address environmental objectives and to meet regulatory requirements whereas the acquisition of advanced machinery has the purpose of developing process innovations.

Energy Network Innovation for Green Transition: Economic Issues and Regulatory Options

“…Due to the high costs and range of innovation efforts, some companies are involved in R&D externally to share risks with other companies and reduce uncertainty (Cohen and Sanyal, 2008). Costa-Campi et al (2019) identify four innovation objectives for energy firms: innovation in process and product, reduction of environmental impact, and fulfilment of regulatory obligations. They find that both external and internal R&D are used to deliver the regulatory and environmental objectives, while advanced machinery (such as the acquisition of computer hardware or land and buildings) is procured in order to improve innovation in process.…”

Energy Network Innovation for Green Transition: Economic Issues and Regulatory Options

“…Due to the high costs and range of innovation efforts, some companies are involved in R&D externally to share risks with other companies and reduce uncertainty (Cohen and Sanyal, 2008). Costa-Campi et al (2019) identify four innovation objectives for energy firms: innovation in processes and products, reduction in environmental impact, and fulfilment of regulatory obligations. They find that both external and internal R&D are used to deliver the regulatory and environmental objectives, while advanced machinery (such as the acquisition of computer hardware or land and buildings) is procured in order to improve innovation in processes.…”

Sustainable innovation: Processes, strategies, and outcomes

“…The paper by Costa‐Campi, Duch‐Brown, and García‐Quevedo () shifts the focus to the antecedents (in terms of a firm's objectives and obstacles) leading to more environmentally friendly innovation efforts (i.e., internal R&D, external R&D, acquisition of machinery, and equipment and software) in the energy sectors, hence leading to increased environmental and, in turn, societal performance. On the basis of a sample of 535 Spanish firms form the PITEC database (2003–2016), results show that the identified innovation efforts do not always share the same antecedents, which implies that different actions may create tensions towards innovation efforts aimed at the same result (increased sustainable innovation).…”