Technology demonstration and the accumulation of experience
Hanna Hellman
Last modified: 2007-09-08
Abstract
Technology probes and the accumulation of experience
The case of a sustainable energy technology
Purpose of the paper
This paper addresses the uncertainty of decision making in the pre-commercialisation phase of a new technology illustrated by the case of fuel cell technology. This novel and current case can provide valuable lessons for the management of technological innovations and sustainable technologies in particular. Fuel cell related firms face numerous decision making challenges. Notably, there are a multiplicity of market applications to choose from, whilst it is unclear which markets will gain market acceptance at which point in time. Additionally, there is immense potential for mass market application, but it is preceded by a long pre-commercial period of demonstration, experimentation and learning. FC firms show heterogeneity in decisions to apply their technology. With a study of fuel cell firms and projects this paper aims to understand how decisions on technology application are related to the accumulation of technological and product-market experiences.
Related work
Innovation studies describe the uncertainty of new technology application due to a lack of understanding of customer demand and, vice versa, a customers unfamiliarity with the technology. Additionally, the operation of a new technology in practice may be uncertain. Furthermore, commercialising sustainable technologies is described to be inherently complex and subject to scrutiny (Kemp et.al. 1998). To manage such uncertainties a process of experimentation, probe and learning has been described (Lyn et.al.1996). Firms learn and can reduce uncertainty by, for example, the development of prototypes, field test operations, demonstration projects and application in early niche markets. Similarly, Jolly (1997) explains that mobilizing interest for, proving the value of and demonstrating a new technology are critical activities in the process of technology commercialisation. Within this process of commercialisation, firms may apply heterogeneous strategies.
This paper applies a resource based view to explain the heterogeneous decision making behaviour of FC firms. From this perspective, differences between firms can be explained by the heterogeneous allocation of resources and competences, which in turn determine the competitive position of a firm. But how are these resources accumulated in the first place? A number of scholars have proposed that a firms resources often develop as a function of its different experiences (e.g. Barnett and Hansen 1996, Ingram and Baum 1997). Based on this theoretical framework this paper therefore assumes that different types of technological and product-market experiences lead to different types of firm assets.
The development of resources is particularly relevant in the case of young entrepreneurial firms. Entrepreneurial high technology firms generally face a scarcity of resources to allocate and a limited capacity to develop competences. Literature suggests that the experiences a firm accumulates are determinant for a firms competitive position. However, how are the decisions with regard to market application and demonstration related to the experiences a firm gains? This research proposes that there is relation between a firms decisions on market application and demonstration strategy and the experiences a firm gains.
Approach
Case study research has been utilised to examine four fuel cell firms. Additionally several demonstration projects, subsidized by the Dutch government and the European Union, have been observed. The selection of cases and projects was based on a maximum difference in market application strategy. The construct experience is operationalised as technological experience in terms of operational and performance data and product-market experience in terms of demonstration and field test data.
Findings
A typology for demonstration projects is presented. Subsequently, the demonstration types are related to the experiences gained by firms and in projects. Finally the paper discusses: what experiences influence market application decisions and what decisions determine the experiences gained?
Research Limitations
The findings presented in this paper are based on preliminary data. On the short term future field research will be conducted. On the longer term, a larger sample of firms and a quantative analysis may provide further validation of the findings.
Practical implications and value of the paper
For now, the research provides initial insight into the implications of demonstration types on experience accumulation and the effect of accumulated experience on market application decisions. Considering that decisions on the market application of a technology are likely to be determinant for the competitive position of a firm, the research findings may provide relevant insights for managing the early phases of commercialisation.
The case of a sustainable energy technology
Purpose of the paper
This paper addresses the uncertainty of decision making in the pre-commercialisation phase of a new technology illustrated by the case of fuel cell technology. This novel and current case can provide valuable lessons for the management of technological innovations and sustainable technologies in particular. Fuel cell related firms face numerous decision making challenges. Notably, there are a multiplicity of market applications to choose from, whilst it is unclear which markets will gain market acceptance at which point in time. Additionally, there is immense potential for mass market application, but it is preceded by a long pre-commercial period of demonstration, experimentation and learning. FC firms show heterogeneity in decisions to apply their technology. With a study of fuel cell firms and projects this paper aims to understand how decisions on technology application are related to the accumulation of technological and product-market experiences.
Related work
Innovation studies describe the uncertainty of new technology application due to a lack of understanding of customer demand and, vice versa, a customers unfamiliarity with the technology. Additionally, the operation of a new technology in practice may be uncertain. Furthermore, commercialising sustainable technologies is described to be inherently complex and subject to scrutiny (Kemp et.al. 1998). To manage such uncertainties a process of experimentation, probe and learning has been described (Lyn et.al.1996). Firms learn and can reduce uncertainty by, for example, the development of prototypes, field test operations, demonstration projects and application in early niche markets. Similarly, Jolly (1997) explains that mobilizing interest for, proving the value of and demonstrating a new technology are critical activities in the process of technology commercialisation. Within this process of commercialisation, firms may apply heterogeneous strategies.
This paper applies a resource based view to explain the heterogeneous decision making behaviour of FC firms. From this perspective, differences between firms can be explained by the heterogeneous allocation of resources and competences, which in turn determine the competitive position of a firm. But how are these resources accumulated in the first place? A number of scholars have proposed that a firms resources often develop as a function of its different experiences (e.g. Barnett and Hansen 1996, Ingram and Baum 1997). Based on this theoretical framework this paper therefore assumes that different types of technological and product-market experiences lead to different types of firm assets.
The development of resources is particularly relevant in the case of young entrepreneurial firms. Entrepreneurial high technology firms generally face a scarcity of resources to allocate and a limited capacity to develop competences. Literature suggests that the experiences a firm accumulates are determinant for a firms competitive position. However, how are the decisions with regard to market application and demonstration related to the experiences a firm gains? This research proposes that there is relation between a firms decisions on market application and demonstration strategy and the experiences a firm gains.
Approach
Case study research has been utilised to examine four fuel cell firms. Additionally several demonstration projects, subsidized by the Dutch government and the European Union, have been observed. The selection of cases and projects was based on a maximum difference in market application strategy. The construct experience is operationalised as technological experience in terms of operational and performance data and product-market experience in terms of demonstration and field test data.
Findings
A typology for demonstration projects is presented. Subsequently, the demonstration types are related to the experiences gained by firms and in projects. Finally the paper discusses: what experiences influence market application decisions and what decisions determine the experiences gained?
Research Limitations
The findings presented in this paper are based on preliminary data. On the short term future field research will be conducted. On the longer term, a larger sample of firms and a quantative analysis may provide further validation of the findings.
Practical implications and value of the paper
For now, the research provides initial insight into the implications of demonstration types on experience accumulation and the effect of accumulated experience on market application decisions. Considering that decisions on the market application of a technology are likely to be determinant for the competitive position of a firm, the research findings may provide relevant insights for managing the early phases of commercialisation.
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