The study encompassed the literature on policy-induced eects and knowledge production factors that inuence the rate and direction in which knowledge is produced. The main hypothe-ses tested shed light on the positive impact of environmental policies and intrinsic characteristics of knowledge on environ-mental knowledge production.

We found that European environmental policies, considered as a whole, aect the worldwide production of environmental patents. Specically, tax-inclusive fuel prices, environmental vehicle taxes, European emission standards and CO2 stan-dards are the main drivers of this eect.

In doing so, we were able to provide some policy implica-tions that enhance the understanding of policy maker inter-vention consequences. The induced eects of environmental policies vary across the regional areas in which organisations are located. Our ndings suggest that relative distance in reg-ulation stringency assumes a pivotal role in transport-related inventions boosted by tax-inclusive fuel prices. On the other hand, it seems reasonable to think at the inuence of domes-tic and foreign regulations on inventive activities. That is, whereas domestic assignees are likely to nd long-term solu-tions to comply with domestic regulasolu-tions, foreign assignees should match the requirements imposed by their domestic and foreign environmental policies that regulate home and foreign markets. This may explain why the environmental policies

considered in this chapter have a greater impact on European (home) assignees than on foreign ones.

In addition, our ndings conrmed that both European and extra-European assignees anticipate the eective implementa-tion of general regulatory policy instruments by actively in-creasing their inventive performances when legislations are an-nounced.

Furthermore, trying to fully endogenize technological change, we analysed the inuence of internal and external knowledge characteristics, such as the potential stock of environmental knowledge and dynamic knowledge compositeness, on the de-velopment of environmental patents. We found that the variety of technological elds exploited by applicants favours their ca-pability to undertake technological opportunities that enhance the production of environmental patents.

Finally, the results emphasize that in a globalised indus-try such as the automotive one, cognitive proximity between knowledge produced is one of the main features to be consid-ered in the study of what triggers environmental patent pro-duction. That is, the more two assignees are closely placed in the technological space, the greater their possibility to un-dertake knowledge externalities from knowledge produced by other applicants. However, further research is required to in-vestigate what technological knowledge is more likely to be exploited by others and the potential interaction between this issue and institutional factors.

Table 2.4: Regression coecients for xed-eects negative binomial model (full, EU and extra-EU samples)

Full sample EU Extra-EU

(1) (2) (3)

ln F_PR (t-1) 4.1045*** 2.5298* 5.8484*** χ2 = 12.56***

(0.9723) -13.051 -15.744 Prob > χ2 = 0.000 ln VEH_T (t-1) 0.8896*** 1.1297*** 0.4826 = 3.04*

(0.2958) (0.3913) (0.4882) Prob > χ2 = 0.081 ln CO2 -0.3019*** -0.3122* -0.2535 = 0.00

(0.1170) (0.1651) (0.1763) Prob > χ2 = 0.976 ln STD -0.4082*** -1.2154*** -0.2692* = 8.53***

(0.1039) (0.3197) (0.1432) Prob > χ2 = 0.003 PSEK (t-3) 0.2311*** 0.3942*** 0.1036* = 7.19***

(0.0448) (0.0678) (0.0622) Prob > χ2 = 0.007 KC (t-1) 0.0764*** 0.0864*** 0.0642*** = 2.66

(0.0059) (0.0083) (0.0087) Prob > χ2 = 0.103 Controls

GSEK (t-3) 0.7761* 0.5919 1.8479***

(0.4140) (0.7832) (0.7091) CUM_PAT (t-1) 0.0000 -0.0003 -0.0003

(0.0002) (0.0007) (0.0004)

Year Dummies YES YES YES

N 4226 2057 2169

Chi2 334 213 154

AIC 9720.7 4574.7 5138.9

BIC 9848 4687 5253

Model results for the full sample, European assignees (EU) and Extra-European as-signees (Extra-EU) subsamples. In columns 4 we test the null hypothesis that two coecients are equal. Standard errors in parentheses. * p < 0.10, ** p < 0.05, *** p

< 0.01

Table 2.5: Regression coecients of Fixed-eects negative binomial for EU, Asian, North America subsamples.

EU NA H0: β Eu  β NA=0 AS H0:β Eu  β AS=0

(1) (2) (3) (4) (5)

ln F_PR (t-1) 2.5298* 4.8093* χ2 = 0.22 3.8553* χ2 = 23.35***

-13.051 -26.175 Prob > χ2 = 0.640 -21.478 Prob > χ2 = 0.000 ln VEH_T (t-1) 1.1297*** 11.520 χ2 = 0.01 0.3814 χ2 = 6.57**

(0.3913) (0.7596) Prob > χ2 = 0.907 (0.7348) Prob > χ2 = 0.0104

ln CO2 -0.3122* 0.3173 χ2 = 1.21 -0.3461 χ2 = 0.26

(0.1651) (0.3400) Prob > χ2 = 0.271 (0.2215) Prob > χ2 = 0.609 ln STD -1.2154*** 0.2557 χ2 = 0.05 -0.5334*** χ2 = 16.77***

(0.3197) (0.2797) Prob > χ2 = 0.828 (0.1756) Prob > χ2 = 0.000 PSEK (t-3) 0.3942*** 0.0520 χ2 = 6.00** 0.1214 χ2 = 4.75**

(0.0678) (0.1020) Prob > χ2 = 0.014 (0.0821) Prob > χ2 = 0.029 KC (t-1) 0.0864*** 0.1257*** χ2 = 2.62 0.0421*** χ2 = 6.33**

(0.0083) (0.0193) Prob > χ2 = 0.105 (0.0109) Prob > χ2 = 0.011 Controls

GSEK (t-3) 0.5919 9.5067* -32.163

(0.7832) -50.119 -40.800

CUM_PAT (t-2) -0.0003 -0.0040 0.0016

(0.0007) (0.0044) (0.0017)

Year Dummies YES YES YES

N 2057 980 1141

Chi2 213 71 127

AIC 4574.7 1943 3135

BIC 4687 2041 3236

Model results for North American assignees (NA), European assignees (EU) and Asian assignees (AS) subsamples. In columns 3 and 5 we test the null hypothesis that two coecients are equal. Standard errors in parentheses. * p < 0.10, ** p < 0.05, *** p

< 0.01

Chapter 3

Variation, selection and retention patterns in

technological knowledge

evolution: the case of electric and hybrid vehicles


Abstract: This chapter aims to investigate the dynamics of electric and hybrid vehicle technological advances through patterns of technological evolution, i.e. variation, selection and retention. To do this, we apply a methodological frame-work based on patent citation netframe-work and patent technolog-ical classes. We also map the main directions in which de-velopment of these technologies has moved, combining main path analysis with a knowledge retention index that weights citations by the knowledge retained among patents.

This approach allows us to recognise technological knowl-edge that has been selected and retained over time and em-phasise the trends in variation and selection. Our ndings suggest that the evolution of electric and hybrid technologi-cal knowledge went through an outstanding explorative phase during the 1990s in which variation increased, followed by an increase in selection that can be interpreted as the beginning of an exploitative phase.

3.1 Introduction

An overwhelming body of literature acknowledges that techno-logical advances should be understood through an evolutionary processes (Nelson and Winter (1982); Basalla (1988); Mokyr (1990); Dosi and Nelson (1994); Ziman(2000); among others).

The analogy with biological evolution is pointed out and re-sides on the concept of 'blind variations selectively retained' (Campbell, 1960) through which elements such as variation, selection and retention can be used to explain the dynamics of technology.

Even though there is a strong similarity between these pro-cesses (i.e. biological and technological evolution), the extent to which evolutionary theory is applicable to the technologi-cal context is somewhat blurred. It has been argued that the process underpinning the evolutionary theory of technology is Lamarckian, instead of being Darwinian or neo-Darwinian.

Indeed, the required `blindness' in variation creation that char-acterises the latter fails in a Lamarckian evolutionary model and in technology evolution, the variations oered to the selec-tion environment are `directed' towards the selecselec-tion process (Nelson,1994). In other words, variations are directed towards the creation of technologies that are t to endure (Schot and Geels, 2007).

Focusing on the cumulative nature of technological advances, the aim of this study is to shed light on the evolution of tech-nical knowledge related to electric and hybrid vehicles (EVs, HVs), an alternative technological trajectory that is challeng-ing the dominant internal combustion engine (ICE) design.

To do this, we use the evolutionary framework of analysis described above, assessing evolution patterns such as varia-tion, selection and retention and building on a methodologi-cal framework based on patent network analysis and patent technological classes. Although we are aware that the

anal-ogy between technologies and biological organisms is limited by several factors that we will explore in the next section, we use these elements as a lens for an ex post analysis that will allow us to explore how automotive technical knowledge evolved from 1970 to 2010 and dene 'what' has been selected and retained. What makes the study of these technologies so appealing for our purposes is the presence of two main techno-logical paths that drive vehicle propulsion systems towards the achievement of environmental objectives and the competition between them. We have, on the one hand, the greening of the dominant design, i.e. the internal combustion engine vehicle (ICEV), and the development of alternative low-emission ve-hicles (LEVs) on the other, i.e. hybrid, electric and fuel cell vehicles.

What is more, environmental and innovation policy im-pact technological regimes and demand conditions (Oltra and Saint Jean, 2009a). In turn, the policy framework is con-ditioned by these two elements due to the acknowledged co-evolutionary relationship that characterises technology, insti-tutions and industrial structure advance (Nelson, 1994). In this regard, the automotive industry has been challenged, over the last few decades, by growing concern over its environmen-tal impact. Environmenenvironmen-tal policies have provided incentives to develop a variety of technologies that may represent valid solutions in the short run (e.g. hybrid and electric vehicles) as well as in the long run (e.g. fuel cell vehicles fuelled with hydrogen) (Frenken et al., 2004). However, the related liter-ature has provided little evidence on the knowledge base and learning process that characterise the development of environ-mental technologies (Oltra and Saint Jean, 2009a), especially when they compete to become an alternative for substituting established technologies. In this complex scenario, three main sources of uncertainty impact the innovative process. The rst source is related to innovative outcomes, the success of which is

dened through an ex post selection that cannot be fully pre-dicted ex ante (Nelson and Winter, 1982). This is mainly due to bounded rationality for which the search process is substan-tially blind (Nelson and Winter, 1982) and is channelled into satiscing (Simon, 1956), instead of optimal, paths. Secondly, another source of uncertainty derives from future expected im-pacts of climate change and, therefore, on how policy responds to them (Jae et al., 2005). Finally, there is uncertainty over what technologies should substitute the established one, be-cause the best alternative vehicle technology cannot be iden-tied at this stage, at least from both an economic and an environmental perspective (Frenken et al., 2004).

In Section 3.2 we provide a brief overview of the dierent technological evolution theories that has been proposed in re-cent decades (Basalla, 1988; Mokyr, 1990, 1996). Using these theories, we propose an analogy between technological and bi-ological evolution through which we hypothesise that techno-logical knowledge proceeds through the main mechanisms that steer the evolution of organisms, i.e. variation, selection and retention.

In Section 3.3 we present the methodological framework.

As far as variation is concerned, we identify the number of technological class combinations proposed by the community of inventors each year. We then use citations among these combinations to assess technological knowledge selection.

In addition, we present the two algorithms proposed by the literature on main path analysis that we employ to investigate large citation networks and identify the most selected part of the patent network. The main path analysis helps us to exam-ine `what' knowledge has been selected. Furthermore, in this section we describe how we calculate the Index of Knowledge Retention (IoKR) that we employ, combined with the main path algorithms, to detect the most selectively retained knowl-edge in the network. This latter will allow us to observe the

main technological components with a high degree of knowl-edge retention.

Section 3.4 describes the technology examined in the chap-ter and highlights the most important historical events that inuenced its knowledge pattern. Finally, Section 3.5 presents the results while Section 3.6 oers a conclusion.

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