Innovation and Entrepreneurship in Renewable Energy
We document three facts related to innovation and entrepreneurship in renewable energy. Using data from the US Patent and Trademark Office, we first show that patenting in renewable energy remains highly concentrated in a few large energy firms. In 2009, the top 20% firms accounted for over 40 percent of renewable energy patents in our data. Second, we compare patenting by venture capital-backed startups and incumbent firms. Using a variety of measures, we find that VC-backed startups are engaged in more novel and more highly cited innovations, compared to incumbent firms. Incumbent firms also have a higher share of patents that are completely un-cited or self-cited, suggesting that incumbents are more likely to engage in incremental innovation compared to VC-backed startups. Third, we document a rising share of patenting by startups that coincided with the surge in venture capital finance for renewable energy technologies in the early 2000s. We also point to structural factors about renewable energy that have led the availability of venture capital finance for renewable energy to fall dramatically in recent years, with potential implications for the rate and trajectory of innovation in this sector.
We thank the editors of the volume, Adam Jaffe and Ben Jones and our discussant, Steven Kaplan, for very helpful comments. In addition, we are grateful to Lee Branstetter, Guido Buenstorf, Ronnie Chaterji, Jason Davis, Chuck Eesley, Mazhar Islam, Matt Marx, David Popp and the participants at the NBER pre-conference, the Petersen Institute for International Economics and Stanford Social Science and Technology Seminar for helpful comments. Dan DiPaolo and Guan-Cheng Li provided excellent research assistance. Parts of this chapter draw extensively on Ghosh and Nanda (2014). For support we thank the Division of Faculty Research and Funding at Harvard Business School, the Kauffman Foundation's Junior Faculty Fellowship, the Fung Institute for Engineering Leadership at UC Berkeley, and the National Science Foundation (1064182).
Sources of funding: NSF (1360228): Beyond Patent Citations as Measures of Innovative Search and Success ($364K). United States Trademark and Patent Office and American Institute of Research: Inventor disambiguation, automatic updating, and application data of the U.S. patent record ($149K). NSF (1064182): From bench to biosphere: a critical analysis of effective deployment and commercialization of clean energy technologies ($657K). No material relationships.