An Analysis of Innovation and Performance in U.S. Biofuel Firms: Implications for the Biofuel Technological Innovation System
Sharmistha Bagchi-Sen Principal Investigator
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The project focuses on an analysis of the evolution of the biofuel technological innovation system within the United States, with emphasis on both first- and second-generation biofuels. The biofuel industry, characterized by new and incremental process innovation, differs from other manufacturing because it is resource-based, it is localized, it is driven by policy and alliances, and it has high levels of uncertainty in the incubation and commercialization of new feedstock-based production. These conditions facilitate risk-balancing organizational networks that result in the formation of a geographically embedded technological innovation system. The development of second-generation biofuels using cellulosic technologies has introduced new process-development possibilities, which cannot be accomplished within the boundaries of a single firm or a region. This project will examine firm-level adjustments as biofuel production expands from kernel-based to second-generation (cellulosic) technologies. The investigators will analyze firm performance and the role of the producer within the U.S. biomass-based biofuel technological innovation system. They will focus on analysis of answers to two specific sets of questions: (1) What internal and external factors determine innovation and business performance in biofuel firms, and to what extent do biofuel firms depend on local policy and partners to improve performance? (2) How do adjustments in firm-level processes affect system-wide functions, and how do firms shape and reshape the overall environment of biofuel innovation and production? Data will be gathered from surveys and archived documents, with both quantitative and qualitative methods used to understand factors affecting the evolution of this industry.<br/><br/>The project will advance basic understanding of localized renewable energy production. It will develop a conceptual and analytical framework transferable to other energy industries, industries with non-assembled products, or any emerging geographically embedded technological innovation system. It will advance studies of innovation and firm performance, which occupy a central place in economic geography. While most studies have focused focus on product innovation and manufacturing, this project will focus on a resource-based industry and process innovation. Resource industries have critical and distinct roles to play in the debate over economy and environment. Process-oriented technological change is vital to firm performance and industrial advancement. The project will contribute toward economic geography theorizing by moving beyond industrial demography and case studies through its analysis of many firms and the effect of their actions on the larger industry. The project also will have policy implications, which will emerge from the analysis of firm adjustments to changes in their external environment.