Abstract
In this paper, we study the evolution of governance structures in technological niches. At the case of public funded research projects and the resulting cooperation networks related to smart grid and systems in Denmark, we raise the questions which actors over time inherit a central position—associated with high influence on the development of research trajectories—in the network. We are particularly interested in what role incumbent actors, connected to the old regime of fossil based energy production, play in shaping future technological trajectories. The protected space theoretically created by such public research funding offers firms an environment to experiment in joint learning activities on emerging technologies, shielded from the selection pressure on open markets, thereby facilitating socio-technological transitions. Generally, the engagement of large incumbent actors in the development of emerging technologies, particularly in joint research projects with entrepreneurial ventures, is positively perceived, as their resource endowment enables them to stem large projects and bring them all the way to the market.
However, growing influence of incumbents might also alter niche dynamics, making technology outcomes more incremental and adapted to the current technological regime. Potential influence on rate and direction of the technological development can to a large extend be explained by actors’ positioning in the network of the niche’s research activities. We create such a directed network of project consortium leaders with their partners to analyze if network dynamics of joint research projects in technological niches favor incumbent actors in a way that they are able to occupy central and dominant positions over time. To do so, we deploy a stochastic actor-oriented model of network dynamics, where we indeed discover path-dependent and cumulative effects favoring incumbents. Our findings suggest a development of the network towards an incumbent-dominated structure.
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- 1.
One can broadly distinguish between competence-enhancing innovation building upon existing technological and organizational structures, and competence-destroying innovation turning them obsolete (Tushman and Anderson 1986). This distinction to a certain extent reflects the notions of incremental and radical innovation.
- 2.
A detailed description of the applied classification methodology is described below
- 3.
The Jaccard index as a measure of similarity between two network waves is computed by \( \frac{N_{11}}{N_{11}+{N}_{01}+{N}_{10}} \), where N 11 represents the number of ties stable over both waves, N 01 the newly created and N 10 newly terminated ties in wave 2 (see Batagelj and Bren 1995).
- 4.
Besides all its merits, the usage of estimations based on continuous-time Markov processes also has its drawbacks. It by definition does not allow for path dependencies. Yet, it is still possible to include variables aggregated over time to the current state.
- 5.
Where local and global refer to the network position of the actor and not to a geographical context.
- 6.
The experts are three energy related association managers from the Copenhagen Cleantech Cluster, Intelligent Energy alliance and the Lean Energy Cluster respectively.
- 7.
In the interpretation of this effect, one should take in the understanding that the outdegree effect itself is also included, and the parameters will be estimated such that the balance between creation and termination of ties agrees with the data. Taking a given function and then adding a positive coefficient multiplied by a quadratic function of the outdegree, (and note that the added quadratic function will because of the estimation be centered at the value where the balance occurs) imply that for current low oudegrees, the push to lower values will be relatively amplified, while for high outdegrees, the push to higher values will be relatively amplified.
- 8.
Note: We here do not compare the characteristics of individual nodes, but the aggregated characteristics of the whole resulting network.
- 9.
While we first categorized new entrants separately, we decided to in our final analysis only contrast incumbents with all other actors, who we assume to not share the same incentives to stabilize the existing system. Further, in an unreported analysis including also a dummy for new entrants, we find no significant effect for this variable.
- 10.
Note that all parameters in SAOM are standardized (divided by their mean), thus making a direct comparison of their magnitude difficult within a model, but easier between models.
- 11.
Alternatively, dynamic approaches drawing from unstructured data, as demonstrated by Jurowetzki and Hain (2014), represent a promising new avenue to map an analyze the evolution of technology.
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Acknowledgments
We would like to thank all participants of the Jena ISS conference 2014, the Nice KID workshop 2014, the Copenhagen DRUID society conference 2014, the Stanford Network Forum ST2014, the IKE research seminar series 2014, the Oxford AIE conference 2013 and the Halle ENIC workshop 2013 for invaluable inspiration and feedback. All opinions, and errors, remain our own.
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Hain, D.S., Jurowetzki, R. (2017). Incremental by Design? On the Role of Incumbents in Technology Niches. In: Pyka, A., Cantner, U. (eds) Foundations of Economic Change. Economic Complexity and Evolution. Springer, Cham. https://doi.org/10.1007/978-3-319-62009-1_14
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