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Firm survival in complex value chains and global innovation systems : Evidence from solar photovoltaics

Hipp, Ann and Binz, Christian LU (2020) In Research Policy 49(1).
Abstract

Economic globalization and the modularization of value chains increasingly challenge long-held conceptual models explaining the spatial evolution of industries. This paper seeks to re-interpret early industry life cycle dynamics by disintegrating an industry's value chain into upstream, core and downstream parts and characterizing each part according to its underlying global innovation system (GIS) configuration. We distinguish between firms in parts of the value chain that depend on formalized, science-based innovation and cater for globally standardized mass markets (‘footloose’ GIS) and firms in parts of the value chain that rely on spatially more stable GIS structures, in which either the innovation activities or the valuation... (More)

Economic globalization and the modularization of value chains increasingly challenge long-held conceptual models explaining the spatial evolution of industries. This paper seeks to re-interpret early industry life cycle dynamics by disintegrating an industry's value chain into upstream, core and downstream parts and characterizing each part according to its underlying global innovation system (GIS) configuration. We distinguish between firms in parts of the value chain that depend on formalized, science-based innovation and cater for globally standardized mass markets (‘footloose’ GIS) and firms in parts of the value chain that rely on spatially more stable GIS structures, in which either the innovation activities or the valuation dynamics (or both) depend on spatial embedding in given territorial contexts. Our hypothesis is that firms which occupy parts of the value chain with footloose GIS characteristics will have shorter survival times than firms which operate in spatially more stable GIS types. Demand-side policies will accordingly produce stronger competitive advantages for firms operating in GIS with spatially stable valuation structures. The empirical context of our study is the solar photovoltaics (PV) industry. We analyze market entry and exit of 129 German and 127 Japanese PV firms from 1960 to 2016 using a Cox Proportional Hazards model. The results support the hypotheses that firm survival and policy effects depend on a value chain part's underlying GIS configuration.

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publication status
published
subject
keywords
Firm survival, Global innovation system, Industry life cycle, Photovoltaics, Value chain
in
Research Policy
volume
49
issue
1
article number
103876
publisher
Elsevier
external identifiers
  • scopus:85074248136
ISSN
0048-7333
DOI
10.1016/j.respol.2019.103876
language
English
LU publication?
yes
id
20a56c44-e88d-4032-bb60-f4086a705252
date added to LUP
2019-11-13 10:06:30
date last changed
2020-10-07 06:46:43
@article{20a56c44-e88d-4032-bb60-f4086a705252,
  abstract     = {<p>Economic globalization and the modularization of value chains increasingly challenge long-held conceptual models explaining the spatial evolution of industries. This paper seeks to re-interpret early industry life cycle dynamics by disintegrating an industry's value chain into upstream, core and downstream parts and characterizing each part according to its underlying global innovation system (GIS) configuration. We distinguish between firms in parts of the value chain that depend on formalized, science-based innovation and cater for globally standardized mass markets (‘footloose’ GIS) and firms in parts of the value chain that rely on spatially more stable GIS structures, in which either the innovation activities or the valuation dynamics (or both) depend on spatial embedding in given territorial contexts. Our hypothesis is that firms which occupy parts of the value chain with footloose GIS characteristics will have shorter survival times than firms which operate in spatially more stable GIS types. Demand-side policies will accordingly produce stronger competitive advantages for firms operating in GIS with spatially stable valuation structures. The empirical context of our study is the solar photovoltaics (PV) industry. We analyze market entry and exit of 129 German and 127 Japanese PV firms from 1960 to 2016 using a Cox Proportional Hazards model. The results support the hypotheses that firm survival and policy effects depend on a value chain part's underlying GIS configuration.</p>},
  author       = {Hipp, Ann and Binz, Christian},
  issn         = {0048-7333},
  language     = {eng},
  number       = {1},
  publisher    = {Elsevier},
  series       = {Research Policy},
  title        = {Firm survival in complex value chains and global innovation systems : Evidence from solar photovoltaics},
  url          = {http://dx.doi.org/10.1016/j.respol.2019.103876},
  doi          = {10.1016/j.respol.2019.103876},
  volume       = {49},
  year         = {2020},
}