Abstract
This chapter is about the interplay of technological innovation and industry structure. In Chap. 7, we discussed how technologies and the products that contain them are adopted and diffused into society. In this chapter, we build upon those concepts (such as the S-curve) with a focus on how technological innovation in industries and markets comes about and the underlying system dynamics that drive innovation and shape industrial ecosystems. The usefulness of these concepts is to better understand how to successfully implement and “seed” the adoption of a new innovation, and its associated technologies, once the direction and targets of R&D investments have been determined through the underlying technology roadmaps.
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Notes
- 1.
The dynamics described here apply particularly well to consumer products and services that are purchased by individuals. In specialized business-to-business markets, high margins and nonstandardized products and services are more likely to survive in specific market niches.
- 2.
The model does not capture exogenous events – such as a major pandemic – that may accelerate the rate of exit of firms from the market.
- 3.
The recent history of shale gas development in the United States, for example, in Pennsylvania, shows that while the balancing loop B1 is real, the reinforcing loop R1 was able to overpower it during periods of high oil and gas prices. Production in the Marcellus Formation, for example, increased to about 20 billion cubic feet of dry gas per day [bcfd] between 2010 and 2020.
- 4.
Although not modeled in Fig. 19.18, the rate of expansion of nuclear capacity in France slowed over time as domestic demands were met with the installed base. The growth in nuclear power capacity was checked when market demand no longer justified new domestic installations, and a series of balancing cycles (that inhibited further growth and maintained a saturation level for the technology) came into action. In addition to reduced growth in domestic demand, some of the key inhibiting factors included a shift in policy toward increasing the share of renewable energy sources in the European context (the European Directive of December 4, 2012 [EC, 2012]). The implementation in France (The “Grenelle de l’Environment” and EU directives) calls for a target of achieving 23% renewables in total energy consumption in France by 2020. The “Grenelle de l’Environment” has set the reduction of energy use in residential and commercial buildings as one of its main objectives. A 38% decrease in the residential energy consumption by 2020 is also planned (FMSD, 2014).
- 5.
The government also committed €250 million in soft loans, by extending a subsidy of €5’000 for buying an EV and coordinating public purchase orders for fleets of EVs (FG,2011).
- 6.
Additionally, public orders were encouraged by the French Government, for instance, Renault is providing more than 10,000 EVs to the French mail company (La Poste) (FME, 2014) and are collaborating together to explore EV advances. Furthermore, a number of partnerships are being established between automakers, electricity utilities, and parking companies (EDF, 2010; FME, 2014).
- 7.
This fits within the proposed theory offered in Phaal et al. (2011) that suggests that a technological substitution occurs if at the time of sudden disruptions (such as shocks, crises) there is a niche technology that occupies a share of 5% or more in the market.
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de Weck, O.L. (2022). Impact of Technological Innovation on Industrial Ecosystems. In: Technology Roadmapping and Development . Springer, Cham. https://doi.org/10.1007/978-3-030-88346-1_19
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