Energy Policy 124 (2019) 206–214

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Energy Policy
journal homepage: www.elsevier.com/locate/enpol

Technology development strategies and policy support for the solar energy T
industry under technological turbulence☆
Sunyoung Yuna, Joosung Leeb, , Sungjoo Leec
⁎

a
Graduate School of Innovation and Technology Management, Korea Advanced Institute of Science and Technology, 291 Daehak-ro, Yuseong-gu, Daejeon 34141, Republic
of Korea
b
Division of Interdisciplinary Studies, Soonchunhyang University, 22 Soonchunhyang-ro, Asan, Chungnam 31538, Republic of Korea
c
Department of Industrial Engineering, Ajou University, 206 Worldcup-ro, Yeongtong-gu, Suwon 16499, Republic of Korea

ARTICLE INFO ABSTRACT

Keywords: This study examines effective technology development strategies—diversification and collaboration—for solar
Technological turbulence energy companies facing technological turbulence. It used patents and financial data over a five-year period
Technological diversification (2008–2012) for 50 solar photovoltaic (PV) technology firms. This study shows that adopting a strategy of
R&D collaboration technological diversification and R&D collaboration exerts a positive effect on firm performance. In addition, the
Solar energy industry
relation between R&D collaboration strategy and firm performance is strengthened under technological turbu-
lence. This study contributes to the field of sustainable innovation management, as well as energy policy under
technological turbulence, through an empirical analysis.

1. Introduction this purpose, firms broaden their technological portfolio in order to

Technologies gradually move through different phases of develop-
ment, with the performance improving over their lifetime. The gradual
improvement in performance against developers’ resource investment is
slow in the initial stage, accelerates, and then reaches the mature stage.
Utterback (1994) categorises three technological development
phases (fluid, transitional, and specific), and suggests that firms im-
plement different kinds of strategies during each technology evolution
stage to ensure their competitiveness. Firms developing technologies in
the fluid phase are subject to high technological turbulence, which
refers to the degree of volatility, change, and unpredictability related to
the technology (Achrol, 1991). A variety of designs create a misalign-
ment between the technology in development and that in the market.
Firms experiment with different form factors or product features to
assess the niche market response. Therefore, high uncertainty is asso-
ciated with product innovation efforts, especially in an emerging in-
dustry, such as renewable energy.
Therefore, firms developing a technology in the fluid stage should
carefully consider the technological and business environment.
Predicting the technologies that will be the standard and coping with
such technologically turbulent environments are critical for top man-
agement to mitigate risk and uncertainty (Calantone et al., 2003). For
have the flexibility to capture a dominant design and acquire and ex-
ploit a new technology effectively. To do this, firms have mainly
adopted two technology strategies. The first one is technology diversifi-
cation, which is a way of using internal resources for broadening their
technological assets. The second strategy is R&D collaboration, which is
an approach that explores broad technological opportunities and
quickly responds to environmental changes by accessing external re-
sources.
Recognising the significance of such strategies, several previous
studies have investigated the effect of technology diversification and R
&D collaboration on a firm’s performance, with conflicting results. This
inconsistency may be because of the differences of the firms’ external
environments and internal capabilities. Thus, this study restricts its
focus only to the technological turbulence stage, which is defined by
Chatterjee (2004) as “the degree to which technology changes over
time within an industry and the effects of those changes on the in-
dustry.” Then, it aims to investigate the effectiveness of the two types of
technology strategies—technological diversification and R&D colla-
boration—to mitigate the impacts of technological turbulence on a
firm’s financial performance. To achieve this research objective, we
employ a set of new measures and empirical data applicable to firms’
management of technological turbulence, as it examines the solar

It is confirmed that this paper has not been published nor is it currently being submitted elsewhere. This study was supported in part by Soonchunhyang
☆

University Research Grant 20180408.

⁎
Corresponding author.
E-mail addresses: sunyoung.yun@kaist.ac.kr (S. Yun), jsl@sch.ac.kr (J. Lee), sungjoo@ajou.ac.kr (S. Lee).

https://doi.org/10.1016/j.enpol.2018.09.003
Received 27 September 2017; Received in revised form 3 September 2018; Accepted 6 September 2018
Available online 16 October 2018
0301-4215/ © 2018 Published by Elsevier Ltd.
S. Yun et al.
photovoltaic (PV) development over time.
Solar energy is currently the third most important source of re-
newable energy after hydroelectric and wind power (EPIA, 2012). The
solar PV technology-based energy systems have seen rapid growth and
the demand for solar energy is expected to increase further in parts of
North America (i.e., California) and Asia, particularly in Japan and
China. While the solar PV industry as a whole (i.e., renewable energy
sector) shows tremendous promise, the firms that manufacture solar PV
cells and modules face an unstable financial future. The growth that the
solar PV industry has experienced since 2004 has been primarily owing
to strong government support for the industry in the European and
Asian countries (e.g., see Wang et al., 2016; Xiong and Yang, 2016).
Government subsidies eventually led to an oversupply of PV modules.
Coupled with the intense price competition in the market, the over-
production drove a number of prominent companies to bankruptcy.
What makes the situation more difficult for solar PV firms is the
industry’s technological turbulence. Solar PV technologies can be di-
vided into three generations, as summarised by Wu and Mathews
(2012). The first generation (1G) technologies, which are still dominant
in the market, are based on crystalline silicon, in both their simple
crystalline and polycrystalline forms. On the other hand, the second
generation (2G) technologies mainly use amorphous silicon as semi-
conductor materials along with other materials (i.e., cadmium telluride
and indium copper selenide, indium and gallium-diselenide). These
thin-film solar modules, where the semiconductor material is painted
on glass, are regarded as promising future solutions and becoming
prevalent. Finally, the third generation (3G) technologies adopt the
organic compounds (e.g., dye-sensitized solar cell) that enable cost-re-
duction, efficiency and flexibility in the production of solar cell and
modules. The new concepts embodying these technologies are still in
development and thus have not yet reached commercialisation
(Sampaio, 2018).
Even though wafer-based crystalline silicon solar PV dominates the
market with a share above 90% (Moro et al., 2018), technological ad-
vances for lowering cost and increasing energy efficiency are creating
various technological changes and a competitive environment for
technology development. That is, while thin-film solar cells (2G) seem
to be the main competitor of wafer-based silicon solar cells, current
technology development efforts focus largely on 3G technologies. Ac-
cording to Moro et al. (2018), the most frequently occurring keywords
in scientific documents including publications, project reports and pa-
tents, are “dye-sensitized solar cells” and “organic solar cells”. Simi-
larly, the findings from Sampaio et al. (2018), which analysed the
22,689 patents published between 2004 and 2013 on PV technologies,
also indicated the prominence of organic PV cells based on polymers
(1073 patents, 3G), followed by cadmium telluride (211 patents, 2G),
and compounds III-V (112 patents, 3G). These phenomena are observed
due to the continuous search for technologies with low cost and high
efficiency (Sampaio, 2018) and the time lag between PV technologies
and the market; it takes approximately 10 years for a new PV tech-
nology to reach the market (Liu et al., 2011).
Furthermore, the solar PV industry inherently has a variety of
technological areas that developed and converged to generate photo-
electric effects in a more energy- and cost-efficient manner. For in-
stance, there are numerous options for potential materials that improve
electricity generation on the surface of a solar panel. As Moro et al.
(2018) argued, a wide variety of technologies can be a solution to hedge
against possible barriers in exploiting solar PV technologies, when
technical obstacles or material limitations are expected to hinder fur-
ther development of technologies. Another example includes the con-
vergence of solar technologies and energy storage technologies to im-
prove the reliability of renewable energy sources (GTM Research). The
current perspective of PV technologies is to find new markets and to
satisfy all the different requirements in those markets (Moro et al.,
2018).
Consequently, the early-stage technology development in the solar
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Energy Policy 124 (2019) 206–214
PV industry faces high turbulence, in terms of its technology targeting,
and becomes an appropriate case to be analysed in this research. This
research makes a unique contribution to the field of sustainable in-
novation management, through its methodology for analysing the
technology development strategy of the dynamic solar PV industry,
which is in line with the previous studies on innovation strategy in this
industry (e.g., de Paulo and Porto, 2017). Theoretically, this study ex-
tends the use of resource-based theory by proposing an approach to
implement internal and external resources for enhancing competitive
advantage under technological turbulence. Methodologically, we adopt
panel data in identifying technology strategy and measuring perfor-
mance, where patent data are linked with financial data to draw
meaningful implications. We also develop a patent index that can
measure the degree of technology turbulence by reflecting technolo-
gical uncertainty and unpredictability. In practice, we make re-
commendations for solar PV developers and policy makers to cope with
the technologically turbulent environment and to prepare for growth by
making strategic decisions regarding the industry’s technology devel-
opment. Given that policies play a significant role in the transition of
energy systems (Chowdhury et al., 2014; Jung and Tyner, 2014; Wang
et al., 2016), the policy implications from this study will be significantly
useful in developing the solar PV industry, and promoting the shift from
traditional to new and renewable energy sources.
The rest of the paper is organised as follows. In Section 2, the pre-
vious studies on technological diversification and R&D collaboration
strategies are introduced, based on which five hypotheses are devel-
oped. Section 3 explains the research method and Section 4 presents
analysis results. Finally, Section 5 discusses the limitations, future re-
search possibilities, and policy implications.
2. Literature review and hypotheses
2.1. Technological diversification strategy
Technological diversification indicates the firm’s expansion of its
technology base into a wide range of technologies (Koren and Tenreyro,
2007). Firms can invest more in R&D expenses through diverse tech-
nologies, meaning that their diversified research portfolios carry re-
duced risk of performance success or failure (Garcia-Vega, 2006). Even
if the technology is not effective in a certain product, it can be applied
to other products or even be transferred to other firms’ R&D activities.
Furthermore, technological diversification accelerates the search for
complementarities and novel solutions achieved through the cross-fer-
tilisation between different technologies (Kim and Kogut, 1996).
Several studies show that technological diversification has a positive
effect on a firm’s innovation and financial performance by reducing the
lock-in effects, and increasing the advantages of economies of scope
(Suzuki and Kodama, 2004; Watanabe et al., 2005). Indeed, diversity of
internal resources can increase the flexibility of a firm by providing a
wider range of options in strategic decision making. However, opinion
on the relationship between technological diversification and firm
performance is split, as high technological diversification might result
in negative effects because of the degeneration of core knowledge. That
is, excessive technological diversification may lead to large amounts
being devoted to research and product development, as well as too wide
a scope of research and knowledge spillover (Leten et al., 2007b). Lin
et al. (2006) suggest that a firm without high technological competency
should carry out core-field diversification strategies, rather than broad-
field technology development, to improve firm performance.
However, in a technologically turbulent environment, we posit that
the firms with high technological diversification have more opportu-
nities to apply their technological solutions, which subsequently lead to
higher market profits. Thus, hypothesis 1 is proposed as follows:
H1. Technological diversification strategy has a positive effect on firm
performance in a technologically turbulent environment.
S. Yun et al.
2.2. R&D collaboration strategy
In recent decades, rapid technological changes in an aggressive and
competitive environment have incentivised firms to acquire external
technological knowledge through collaboration (Chiaroni et al., 2011).
Duysters and de Man (2003) specifically refer to the preferred types of
alliances—called transitory alliances—that have been commonly
adopted of late to survive industry turbulence. R&D collaboration is the
way to acquire and exploit technologies effectively (Teece, 2007). In
knowledge-based economic systems, innovation does not result from a
single entity’s efforts; rather, it is the outcome of collaboration between
many entities. In addition, the partnership with other entities to use
external resources offers benefits, including access to novel knowledge,
and reduced risk for an initial stage investment. For instance, lateco-
mers (firms or countries) initially build a partnership with suppliers and
buyers to acquire technical knowledge or to understand market de-
mand. Tether (2002) shows that strategic alliance for a well-defined
purpose positively influences firm performance. Belderbos et al. (2004)
also conclude that R&D cooperation is beneficial in improving pro-
ductivity and innovative performance.
Particularly, in a technologically turbulent environment, R&D col-
laboration enables a firm to access a partner’s resources, and further-
more, to improve its own resources quickly to adapt to emerging un-
certainties, affecting its performance positively. Based on previous
studies, hypothesis 2 is proposed:
H2. R&D collaboration strategy has a positive effect on firm
performance in a technologically turbulent environment.
2.3. Technological turbulence
The business environment’s turbulence entails rapid change and
unpredictability in both the market and technology standards, making
it difficult for firms to plan for upcoming technologies and market
opportunities (Buganza et al., 2009). In particular, technological tur-
bulence is a significant factor influencing business conditions faced by
high-tech industries (Wang et al., 2004). Some scholars have proposed
that the turbulence and continuously changing competition in the in-
dustry can lower the low entry barriers and benefit new firms
(Chakravathy, 1997; Lee and Wong, 2011; Auh and Menguc, 2005).
However, for existing firms, the dynamic capability model stipulates
that uncertainty and turbulence help firms achieve competitive ad-
vantages when they are prepared to respond to ambiguity effectively
(Eisenhardt and Martin, 2000; Noda and Collis, 2001). If a firm fails to
reorganise its skills and resources in response to a turbulent environ-
ment, its competitive advantage can be quickly weakened (Barney,
1991).
Therefore, most firms operate under unstable and volatile condi-
tions associated marked by technological turbulence and are forced to
exit the market owing to financial difficulties brought on by the lack of
revenue and production capability (Slater and Narver, 1994; Wang
et al., 2004). Thus, hypothesis 3 is proposed:
H3. Technological turbulence has a negative effect on firm
performance.
2.4. Technology strategy and technological turbulence
Firms’ financial performance is maximised when the strategy and
resources are aligned with market opportunities. A number of re-
searchers have shown that market-oriented organisations achieve high
performance in innovation and new product development (Jaworski
and Kohli, 1993). In particular, technology firms should examine
technological turbulence in the market carefully in order to respond to
rapid and unpredictable changes. Thus, under high technological tur-
bulence, agile innovation management is emphasised to meet the
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Energy Policy 124 (2019) 206–214
performance requirements in a company. With high technological tur-
bulence, firms may choose multiple technology development trajec-
tories, based on the available resources. According to Fan et al. (2013),
a positive relationship exists between such reactive strategic flexibility
and innovation performance in a highly uncertain environment. Con-
sequently, technological diversification can lead to effective responses
to changes in the business environment and positive returns for the
firms. It should be noted that most market-focused studies use tech-
nological turbulence as the moderator of an external environmental
factor, which exerts the moderating influences of external environ-
ments on the performance (Lee and Wong, 2011). Therefore, hypothesis
4 looks at the moderating role of technological turbulence between
technology strategies and firm performance:
H4. If technological turbulence is greater, the positive relationship
between technological diversification strategy and firm performance is
strengthened.
R&D collaboration with other entities is affected by high environ-
mental uncertainty (Wang et al., 2011). Firms try to reduce the risk of
investment through strategic alliances when the business environment
becomes less stable. As technologies change rapidly, sharing knowledge
between firms also becomes a more beneficial way to reduce the time
and costs in technology development. Thus, we propose hypothesis 5 as
follows:
H5. When technological turbulence is greater, the positive relationship
between R&D collaboration strategy and firm performance is
strengthened.
Based on the review of the previous literature and the discussion
above, Fig. 1 shows our research model. This model indicates the re-
lationship between technology strategies (diversification and R&D
collaboration) and firm performance and then tests the moderating
effects of technological turbulence.
3. Methodology
3.1. Data
To test the hypotheses between technology strategies and firm
performance, we construct panel data from solar PV technology patents
and publicly available annual reports of solar PV firms for the period
2008–2012. The patent database was searched with query terms “Solar
Photovoltaic” or “Solar PV” in Thomson’s Innovation Patent database,
and we collected 38,352 patents published from 2000 to 2012. We
obtained data for 50 firms, giving the firms’ financial information from
their annual reports on Factiva.
Patent information was adopted as the main source of data for
analysis in this study. According to MIT news office, renewable energy
sector has been focusing on technological innovation recently.
Specifically, the annual growth in patents (between 2004 and 2009) in
the solar (13%) and wind (19%) energy industry is extremely high,
exceeding the historical rates of semiconductors and digital commu-
nication industry sectors. With such increases in patent activities, the
Technological
H1
diversification
Firm
performance
R&D H2
collaboration
H4 H5
H3
Technological
turbulence
Fig. 1. Research model.
S. Yun et al. Energy Policy 124 (2019) 206–214

researchers working on solar PV technologies have started to use the technological diversification variable is constructed as follows:
number of patents as a proxy for innovation management. For example,
2
Tseng et al. (2011) selected top 20 companies and research centres to TDit = 1 (TDitf / TDit )
f (1)
analyse their technological capabilities in solar PV industry, using the
accumulated number of patents. Wu and Mathews (2012) compared the
number of solar PV patents in Taiwan, Korea, and China to investigate
the patents for innovation in the solar PV sector at the country-level. 3.2.3. R&D collaboration
On the other hand, patents include patent information regarding The degree of R&D collaboration can be measured from various
their technological fields, as denoted by the international patent clas- perspectives—the input perspective to consider R&D funding for colla-
sification (IPC) codes. Analysis of applicants’ technological fields pre- boration, the process perspective, which emphasises R&D activities for
sents the industry boundary of their technologies, their technological collaboration, and the output perspective, focusing on the results of
strength and weakness, and relationships between technologies. Braun collaboration. Among the three perspectives, the patents-based index
et al. (2010) defined five domains of solar technology (mineral pro- takes the view of output because patents are regarded as a specific type
ducts, metal products, energy machinery, electrical motors, and elec- of R&D outputs: co-assigned patents indicate the output of R&D colla-
tronic components) and assigned the relevant IPC classes to each of the boration. In this research, if firms have co-assigned patents, they are
domains. Wu and Mathews (2012) identified 11 IPC codes pertaining to considered to have implemented a R&D collaboration strategy. We
PV technologies using keyword analysis and professional group ver- measure the number of firms’ co-assigned patents (CNit) among the
ification. Similarly, in this study, the technology development strategies total number of patents as a proxy for the level of R&D collaboration
and technological turbulence are examined based on the analysis of the (Collit).
IPC classes (Appendix 1 for further information).
Patent analysis in solar PV industry has been used to investigate the Collit = (CNit / Nit ) (2)
overall innovation trends at the industry and country levels. There are
limited studies to apply patent information to analysing corporate
technological strategies. Furthermore, given that the solar PV industry
3.2.4. Technological turbulence
is under the dilemma of mismatch between innovation performance
In previous research, there are mainly three methods of measuring
and financial performance (Jang et al., 2013), it is worth analysing the
technological turbulence. The first one is a survey method which asks
relationships between technological strategies and firm performance
managers how they recognise technological turbulence (Song et al.,
based on patent information. Therefore, this study will use patent in-
2005). The measure is often the perceived rate of technological change
formation not only to grasp the overall technological trends at the in-
and technological uncertainty. However, the survey responses are only
dustry and country levels, but also analyse technological strategies at
an estimation of personal perception and not an objective measure-
the firm level. In addition, patent information is linked to financial
ment. The second method uses industrial data, such as the change in
information in this study to consider both the technological and eco-
industrial R&D intensity (Moon, 1998). Despite its value as a proxy for
nomic perspectives.
uncertainty, it is doubtful whether the measurement of R&D investment
can completely reflect technological turbulence. Finally, some scholars
3.2. Measures
employ patent data, such as “the percentage change in patenting ac-
tivity by an average industry’s patent activity” (Luque, 2002; Goerzen,
3.2.1. Firm performance
2007). Chen and Chang (2010) argue that the change in patenting ac-
Return on Assets (ROA), which reflects a firm’s profitability, is an
tivity should be measured by technological fields rather than the
important performance indicator (Roberts and Amit, 2003; Artz et al.,
number of patents, because an industry can be heavily influenced by
2010). ROA is useful to measure short-term performance, indicating the
patent activities of a firm dominant in the industry. Likewise, the var-
firm’s profitability relative to its total assets (Lin et al., 2006; Kim et al.,
iance of technological fields is a more appropriate measure for tech-
2009). Cost would be important to consider since a higher technological
nological changes.
turbulence might be related to the higher research and development
Hence, this study proposes a novel approach to measuring the level
expenses required to cover a wide technological field. Leten et al.
of technological turbulence using patent data. Patent information is
(2007a) insists that technological coherence and diversification lead to
among the most commonly used data to analyse patterns of innovation
firm performance increasing with a time lag of two to three years. In the
and industry dynamics from a technology perspective (Lee and Lee,
same vein, this research also assumes that firms show financial per-
2013). More specifically, this study employs, as a component of tech-
formance after one year of implementing technology strategy. How-
nological turbulence measure, the change in variance of the number of
ever, it should be noted that we set the time lag to one year rather than
patents in technological fields, that is, the degree of technological change
two or three years because we used patent-based indexes as a proxy for
in technological fields. When the variation of the number of patents in a
technology strategy and industry structure. It takes time (1–2 years) to
technological field is high, it indicates rapid technological change.
have patents published. Thus, the technological characteristics ob-
Euclidean distance calculates the ordinary straight-line distance be-
served by patents can be those of 1–2 years ago. Accordingly, we as-
tween two points, which was applied to technological fields here. In
sumed only one year of time lag in this study.
addition, technological turbulence implies a dynamic, unpredictable
industrial circumstance. Within a specific industry, when the dominant
3.2.2. Technological diversification
entities for technological capabilities do not exist, firms face a more
To measure technological diversification, we use the Herfindahl-
technologically turbulent environment. For instance, if no technologi-
Hirschman index (HHI), which is one of the most commonly use ap-
cally dominant firms exist in the industry, each firm can create its own
proaches to evaluate industry or technology diversity (or concentra-
technology standard. Accordingly, the degree of technological unpredict-
tion). That is, if the HHI can be measured for concentration in a specific
ability for R&D entities was considered as another component of tech-
field, the diversification value can be obtained subtracted by sub-
nological turbulence measure. As such, a composite measurement is
tracting concentration value from 1. In this study, the subclass classi-
proposed, as shown in Eq. (3).
fication is used for dividing technological fields (e.g., H01L). Nift de-
notes the number of patents that the firm i holds in a technological field TTt = TCt × TUt (3)
f in year t. Nit indicates the number of patents that the firm i holds
within total technological fields in year t (See Eq. [1]). The where,

209
S. Yun et al. Energy Policy 124 (2019) 206–214

F Table 1
(Wft Wft 1)2
TCt = ln
f =1
Rank of applicant country.
F 1
Rank Year

2000–2004 (n = 4512) 2005–2008 2009–2012

1 (n = 9354) (n = 24,488)
TUt = ln 50
i=1
(Nit / Nt ) 2 1 Japan 2661(58.98%) China 2321 China 8351
(24.81%) (34.10%)
The former part (technological change at year t, TCt) of the equation 2 US 815 (18.06%) Japan 2042 Korea 4965
(21.83%) (20.28%)
measures the variation of the share of patents in the technological field
3 Germany 150 (3.32%) US 1721 Japan 3452
based on Euclidian distance. Wft is defined by the ratio of the number of (18.40%) (14.10%)
patents granted in field f in year t, to the total number of patents 4 Korea 126 (2.79%) Korea 1264 US 1854
granted in year t. Nit defines the firm i’s number of patents in year t, and (13.51%) (7.57%)
5 China 125 (2.77%) Taiwan 252 Taiwan 921
Nt means the total number of patents in year t in industry. F indicates
(2.69%) (3.76%)
the number of technological fields. However, the original Euclidian Total 3877 (85.92%) 7600 (81.25%) 19.543(79.81%)
distance formula was modified to be suitable for our purpose. First, the
average distance in the number of patents published in time t-1 and
time t for technological fields across industry was calculated to consider 4. Results and discussion
the differences in the number of technological fields in different in-
dustries. The distance value is likely to increase with the number of 4.1. Technological analysis results
technological fields, and thus we decided to use an average value for
technological fields across industry to consider industry differences. First, according to the basic analysis on the solar PV patents pub-
Here, F-1 rather than F was used to obtain the average value, which is lished from 2000 to 2012, the total number of patents granted was
the degree of freedom for measuring the average of a sample from a approximately 38,000 in 2012, showing an annual growth of 26% for
population. As the number of technological fields judged by patents can the last 10 years. As the solar PV market was expanding until 2010,
be only a subset of total technological fields of the target industry, the active patenting activities were observed as well. Six countries have
data was regarded as a sample (technological fields observed by pa- been dominating the development of solar PV technologies—Japan, US,
tents) for a population (total technological fields belonging to the in- China, Germany, Korea and Taiwan (see Table 1). Japan was a leading
dustry). country in the early 2000s, while China has been the largest contributor
On the other hand, the latter part (technological unpredictability at to the development of solar PV technologies since 2005.
year t, TUt) of the equation is measured by the technological un- Among the top 30 important patenting entities, Japanese firms such
predictability of patent entities’ competitiveness. For this purpose, the as Sharp (909 patents and a total of 2013 citations), Canon (311 patents
concept of industry competitiveness was borrowed again from HHI. and 1943 citations), and Kyocera (474 patents and 927 citations) pos-
Originally, it was proposed to measure the industry concentration and sess high-quality patents, as evidenced by the citation frequency. The
ultimately to investigate the industrial dynamism or competitiveness. development of PV technologies in Korea has been led by the con-
HHI means “the sum of the squared market shares for all firms or the glomerates, such as Samsung (152 patents), LG (496 patents), and
top 50 high sales companies in an industry, and ranges between 0 and 1 Hyundai (211 patents). Government research institutions and uni-
(Haushalter et al., 2007)”. Following the definition, this study em- versities are at the centre of technological knowledge creation for solar
ployed the meaning in patents activities as like summing the squares of PV in Taiwan and China. The ratio of co-assignee patent applications
the individual top 50 high patents performance firms’ patents shares in has been limited but shows a continuous increase in case of industry-
the industry. The high HHI value means the low competitiveness of industry and industry-university collaboration (see Table 2).
patent activities; conversely, the low HHI value means firms face Second, the trend of overall technological turbulence was in-
competitive and unpredictable circumstances (Leten et al., 2007b). As vestigated considering technological change variance and unpredict-
the HHI value moves opposite the turbulence value, a reciprocal ability owing to industry competitiveness during the target periods (see
number of HHI was taken to construct the technological unpredict- Fig. 2). Overall technology development of solar PV is still in the
ability index. growth stage of technological life cycle (Lie et al., 2011), which is ex-
Finally, the two indexes were multiplied after being log-transformed pected to produce relatively high technology turbulence. However,
to make their distribution normal in shape. according to our analysis results, technology turbulence was reduced in
2008, possibly due to the global economic crisis. The number of firms
was reduced, along with the level of technology development, which
3.2.5. Control variables coincided with a relatively stable period of technological turbulence. In
To test the effectiveness of the technology strategy on firm perfor- 2009, China began to spur technology development. As a result, the
mance under technological turbulence, we control the following several value of technological change variance and competition environment
firm-level variables, which may affect firm performance: firm size, R&D seems to be at a relatively higher level than previous years. The large
intensity, and the firm’s country of origin. The first two variables—firm amount of state-backed investment meant that Chinese firms could
size and R&D intensity—are among the most commonly used variables quickly clam a sizeable share of the global market. On the other hand,
to control firm-specific characteristics that may influence organisa- the film solar cells reached a market share of 20%, rising as a strong
tional technology strategy, while the firm’s country of origin was in- competitor of wafer-based silicon solar cells in the market during that
troduced in this study to control for the differences in national in- period (Moro et al., 2018). Subsequently, the solar PV industry is again
novation systems, which is particularly important for energy firms to experiencing higher technological turbulence. Yet, again the market
establish their technology strategies. The control of country is also share of film solar cells has decreased with a lack of investments in
significant considering different policies towards solar PV technologies start-up companies, leading to limited advances in the relevant tech-
across countries. Since the demand and supply of solar PV cells and nologies (Moro et al., 2018). Then, in 2011, owing to the bankruptcy of
modules are likely to be affected by such policies, the use of country as many firms, technological unpredictability seemed to be increasing; so,
a control variable is justified. Both variables were operationalised by the value of technological turbulence was higher than previous periods,
log-transformation to reduce the influence of extreme values.

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S. Yun et al. Energy Policy 124 (2019) 206–214

Table 2
Mean, standard deviations, and correlations.
Categories Year

2000–2004 (n = 4512) 2005–2008 (n = 9354) 2009–2012 (n = 24,488)

Applicant type University 81 536 1676

Industry 3187 5255 13,698
Government Research Institute (GRI) 89 332 875
Personal Inventor 813 1885 3687
Total patent number (Single-applicant) 4170 (92.4%) 8008 (85.6%) 19,936 (81.4%)
Co-applicant type University – University 2 10 11
Industry – Industry 94 140 406
GRI – GRI 0 6 4
Personal Inventor – Personal Inventor 77 499 268
University – Industry 8 80 139
University – GRI 3 31 36
Industry – GRI 16 27 84
University – Personal Inventor 1 56 320
GRI – Personal Inventor 8 41 123
Industry – Personal Inventor 148 398 3111
Total patent number (Co-applicant) 342 (7.6%) 1346 (14.4%) 4552 (18.6%)

Technology turbulence of solar PV industry
-20
2008 2009 2010 2011
-30
-40
-50
Fig. 2. Technology turbulence of solar PV industry.
even though the change variance of technology does not seem to have
been higher, as proven by the previous analysis of the technology do-
main. After the restructuring of the solar PV industry in 2012, the value
of technological turbulence was relatively high and reflected techno-
logical turbulence by domains; mineral products could affect the
technological turbulence in the solar PV industry.
4.2. Regression analysis results
Before running a panel regression, a correlation test was conducted.
Table 3 shows a matrix of the means, standard deviations, and corre-
lations of all the variables used in the hypotheses testing. The results of
the correlation analysis show some multicollinearity between variables,
such as firm size, R&D intensity (log-transformed), and firm perfor-
2012 mance, as well as between technological diversification and R&D col-
laboration, among other pairs. However, variance inflation factors
(VIFs) were less than 5.00, which show that the variables do not exhibit
multicollinearity (Marquart, 1970). The descriptive statistics indicate
that the firms in our sample had a negative ROA on average (−0.06).
The average R&D intensity was 0.22 (−1.5 in the log form), which is
relatively high compared to that in other industries. The average
technology diversity value corresponded to 0.51 (equal to 0.49 of the
HHI value). When an industry has an HHI above 0.25, it is regarded as
highly concentrated in terms of its market structure. Applying the same
criteria on technologies, the solar PV industry is characterised as highly
concentrated technologies with relatively low diversity. The average R
&D collaboration is 0.29, meaning that the firms in our sample colla-
borate with others for their technology development. Finally, the
average technology turbulence value was −40.71.
Table 4 shows the results of testing the hypotheses using random-
effect models. Model 1 includes the control variables. The R&D in-
tensity (log transformed) has a negative correlation with a firm’s ROA
at a statistically significant level (β = -0.054, p = 0.08). While the re-
lationship between R&D intensity and profitability has been con-
troversial, this study’s results on solar PV firms support Quo et al.’s
(2004) findings that R&D intensity has a negative impact on firms’
profitability. The solar PV market is gradually opening up, so current R
&D investments could be related more to the accumulation of the firms’
knowledge than revenues. Thus, considering the time lag between R&D
investment and performance, we can expect a long-term positive

Table 3
Mean, standard deviations, and correlations.
Variables Mean S.D. 1 2 3 4 5 6 7 8 9 10 11 VIF

1. ROA −0.06 0.37 1 2.11

2. RDI (log) −1.50 1.63 −0.49** 1 1.73
3. Assets (log) 6.48 1.58 0.33** −0.64** 1
4. C_dummy1 −0.42** 0.41** −0.20** 1
5. C_dummy2 0.10 −0.20** 0.43** −0.30** 1
6. C_dummy3 0.05 −0.20* −0.05 −0.10 −0.16* 1
7. C_dummy4 0.19** −0.20* 0.18* −0.18* −0.29** −0.10 1
8. C_dummy5 0.05 0.25** −0.32** −0.23** −0.49** −0.13* −0.26** 1
9. TD 0.51 0.38 0.21** −0.24** 0.16 −0.09 0.18* 0.15* 0.06 −0.21* 1 1.09
10. Coll 0.29 0.84 0.28** 0.38** −0.14 0.24** 0.05 −0.01 −0.04 −0.16 0.03 1 1.28
11. TT −40.71 7.34 −0.14 −0.06 0.05 −0.02 0.09 −0.01 −0.01 −0.07 −0.10 0.17 1 1.05

Note) RDI: R&D Intensity, C_dummy: Country dummy, TD: Technological diversification, Coll: R&D collaboration, TT: Technological turbulence.
* p < 0.05.
** p < 0.01.

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S. Yun et al. Energy Policy 124 (2019) 206–214

Table 4
Relationships between technology strategies and firm performance, moderating effects of technological turbulence.
Variables Model1 Model2 Model3 Model4 Model5

Control variables
R&D Intensity (log) −0.054(0.032)*,a −0.061(0.037)* −0.071(0.031)* −0.051(0.031)* −0.073(0.031)*
Assets (Firm size) (log) 0.032 (0.039) 0.040(0.037) 0.039(0.036) 0.044(0.036) 0.037(0.038)
Country_dummy1b −0.416(0.269) −0.501(0.258)* −0.480(0.247)* −0.480(0.253) −0.437(0.261)*
Country_dummy2 −0.143(0.258) −0.262(0.249) −0.229 (0.239) −0.243(0.245) −0.114(0.250)
Country_dummy3 −0.117(0.310) −0.246(0.297) −0.237(0.283) −0.239(0.291) −0.125(0.303)
Country_dummy4 0.027 (0.266) −0.048(0.255) −0.041(0.243) −0.055(0.250) 0.037(0.259)
Country_dummy5 0.002(0.252) −0.011(0.240) 0.006(0.230) −0.026(0.235) 0.025(0.244)
Main effects
Technology diversification (TD) 0.227(0.085)*** 0.204(0.085)** 0.211(0.088)**
R&D collaboration (Coll) 0.066(0.037)* 0.077(0.037)** 0.521(0.174)***
Technological turbulence (TT) −0.008(0.003)** −0.006(0.003)* −0.013(0.004)***
Interaction terms
TD* TT −0.0.002(0.002)
Coll* TT 0.014(0.006)**
**
Constant − 0.025(0.295) −0.373(0.283) −0.0.710(0.307) −0.648(0.314)** −0.830(0.328)
R2 0.299 0.308 0.335 0.368 0.301
χ2 26.58*** 41.04*** 49.50*** 43.52*** 47.07***

* p < 0.1.
** p < 0.05.
*** p < 0.01.
a
Parentheses are standard errors.
b
Country_dummy1: U.S., _dummy2: China, _dummy3: Japan, _dummy4 =EU, Country_dummy5: Taiwan, _dummy6: Korea.

relationship and a short-term negative relationship between them.
Model 2 tests the relationship between technological diversifica-
tion/R&D collaboration strategy and firm performance. Technological
diversification is shown to have a positive effect on firm performance,
as indicated by the positive coefficient (β = 0.227, p = 0.008). This
result confirms that hypothesis 1 is supported. Solar PV firms still seek
to advance cost- and energy-efficient technologies. The firms with high
technological diversification have more opportunities to find advanced
methods, subsequently leading to market profits. R&D collaboration
strategy also has a positive coefficient at a significant level (β = 0.066,
p = 0.071), and thus, hypothesis 2 is also supported. It confirms Park
and Kang’s (2010) result that solar PV collaboration strategies having
positive impacts on innovation performance. Most solar PV technology
firms are technology-based and have insufficient development re-
sources. Thus, exploiting external knowledge and resources through
collaboration could reduce their risk and increase opportunities for
commercial applications (Teece, 2007).
Model 3 includes technological turbulence, as well as technological
strategies. The coefficient for the linear term of technological turbu-
lence is found to be negative at a significant level (β = −0.008,
p = 0.02). Thus, hypothesis 3 is supported. As in the previous literature
review, technological turbulence, coupled with an unpredictable busi-
ness environment, has negative impacts on firms’ effective and efficient
decision making about their future activities. For example, Bstieler
(2005) argued that technological uncertainty has a direct negative
impact on the time efficiency of new product development.
Subsequently, firms are expected to face difficulties in making a fi-
nancial profit owing to the technological turbulence.
Model 4 tests the interaction term consisting of technological di-
versification strategy and technological turbulence. The result indicates
that even though technological turbulence increases, there is no
strengthening of the relationship between technological diversification
strategy and firm performance. The estimated result does not support
hypothesis 4 (β = −0.020, p = 0.499). Even though it is not a statis-
tically significant level, the coefficient of the interaction term between
technological diversification and technological turbulence shows a ne-
gative sign. Hence, we could presume that a highly turbulent techno-
logical environment has a negative influence on the effectiveness of the
diversification strategy, because firms are confused about the effective
boundary of diversification.
Model 5 tests the interaction term consisting of R&D collaboration
strategy and technological turbulence. Technological turbulence
strengthens the positive relationship between R&D collaboration and
firm performance at a significant level (β = 0. 014, p = 0.015). As a
result, hypothesis 5 is supported. As technological turbulence increases,
an organisation needs to invest effectively in technology for gaining a
competitive advantage. Subsequently, acquiring and exploiting knowl-
edge with R&D collaboration is beneficial in increasing the firm’s fi-
nancial performance (Kotabe and Scott Swan, 1995). Therefore, in a
highly turbulent environment, it is important for firms to expand their
technologies in a cost- and risk-effective manner, combining their own R
&D results with those of other industry sectors through collaboration
rather than investing in the various potential technologies by themselves.
4.3. Findings and policy implications
The findings of this study can be summarised as follows. Technology
turbulence tends to have a negative effect on a firm’s performance,
increasing the degree of uncertainty in business. However, during
technology turbulence, both technology diversification and R&D col-
laboration can have a positive impact on performance, reducing the
degree of technological uncertainty. Nevertheless, with the increase in
the level of technology turbulence, the positive effect of R&D colla-
boration can be strengthened, while no further effect of technology
diversification can be expected; R&D collaboration strategy is found to
be more effective than technology diversification strategy under con-
ditions of high technological turbulence.
The empirical analysis of solar PV technology development strategies
and firm performance suggests that technological diversification strate-
gies have a positive impact on firm performance. A technological di-
versification strategy pursues new technological opportunities and creates
new combinations of technology in order to achieve more advanced levels
of performance (Miller, 2006). Therefore, from a practical viewpoint,
firms in the solar PV industry should manage a diversified technology
portfolio effectively. However, when a rapid technological change, ac-
companied by great uncertainty, is expected, a firm’s efforts to expand its
own resources internally, via technological diversification strategy, may
mitigate the positive influence of diversity in internal resources, by re-
quiring excessive time and cost to respond to the change. In addition, a
technological specialisation strategy which is accumulating technological

212
S. Yun et al.
knowledge also has positive impacts on firm performance under techno-
logical turbulence. The investment in technological knowledge seems to
be risky under technological turbulence in a short time.
On the other hand, a firm’s efforts to access external resources via R
&D collaboration seem to increase its flexibility by supporting the ex-
ploration of feasible opportunities in a time- and cost-effective way and
allowing it to quickly adopt a promising one that may positively affect
its performance. Such a positive impact increases as technological tur-
bulence intensifies. In the solar PV industry, the energy industry’s joint
development of a hybrid system based on solar PV technologies can
potentially lower costs, increase performance, and stimulate greater
demand among households and commercial facilities. To cope with the
uncertain business and technology environment, the solar PV firms
should implement a R&D collaboration strategy for successful com-
mercialisation. Firms can develop various applications of solar PV
technologies and combine them with other industry sectors’ technolo-
gies (i.e., those in other renewable/traditional energy sources). The
notion of solar PV technologies-enabled hybrid energy system devel-
opment is one that can potentially lower costs, increase performance,
and stimulate greater demand among households and commercial fa-
cilities. For instance, the state of Nevada’s still water project uses
geothermal-solar PV hybrid power in combination; further, Solar praxis
and several companies have already developed, or are planning to de-
velop, a solar PV and wind-combined hybrid power system for opera-
tions (LGERI, 2013). Drawing from these examples, solar PV firms are
encouraged to focus on ways to implement a technological diversifi-
cation strategy for successful commercialisation.
The policy support to the renewable energy sectors, most of which
are characterised by high technological turbulence, can emphasise R&D
collaboration among firms with heterogeneous technological portfolios.
In general, there are two policy approaches to support firms in the re-
newable energy sectors. The first is direct support, such as subsidies or
tax reduction, while the other is indirect support, which comprises
networking or training. Regarding the former, governments may con-
sider increasing the subsidies for collaborative R&D (Lee, 2010), and as
part of the latter support, they can help firms to maximise their possi-
bilities for working with others, by playing the role of an intermediary
or by advocating the importance of R&D collaboration through training
programs (Lee et al., 2006).
5. Conclusions
Many of the present renewable energy technologies are still in the
early stages of development and are less cost-competitive than fossil fuel
technologies. Such early-stage technology development makes it difficult
for companies to determine their technology strategies. In this research,
the effectiveness of two technology strategies (diversification and R&D
collaboration) was examined to cope better with technological
Appendix
See Table A1
Table A1
IPC codes for solar PV technology.
Technological domain
Mineral products Chemical responses (sharpening, milling,
covering, etc.) materials
Metal products Metal equipment of fastening, cutting, bridging,
etc.
Energy machinery Devices for producing mechanical power from
solar energy
Electrical motors Generators light radiation devices and convert
into electrical
Electronic components Devices consisting of a plurality of
semiconductor components
Energy Policy 124 (2019) 206–214
turbulence in the solar PV industry. Moreover, we attempted to clarify
patent-based measures of technological turbulence based on publicly
available data and applied them to analyse the moderating effects be-
tween technological strategies and firm performance. The two major
approaches to measuring technological turbulence include 1) calculating
entry rates – the share of patents from firms which patent for the first time
in Period 1 compared with Period 2 in that industry – and 2) counting
new patents – the total number of patents in the industry that were ap-
plied for and issued each year. Despite their prevalence, those two in-
dices are oversimplified to be used as a proxy for technological turbu-
lence, because the first (entry rates) considers only the input aspect of
technology (firm) while the latter (new patents) reflects only the output
aspect of technology (patent). Unlike the two approaches, the index
designed in this study considers both input and output aspects and thus
technological turbulence is measure by the degree of technological un-
predictability of R&D entities (input) and the degree of technological
change in technological fields (output). The improved measurement is
applicable to technology-oriented industries, such as solar PV firms.
This study had some limitations regarding the data about the ana-
lysed firms’ strategy and performance, because of the lack of aggregated
data for the solar PV industry as a whole. In the past few years, many
solar PV firms have either gone bankrupt or exited the industry, making
it difficult to track relative successes and failures among companies.
Future research might entail collection of a wider range of data on the
solar PV industry. Second, the findings of this study are restricted to solar
PV firms. Further studies are needed to test the generalisability of re-
search findings about the solar PV industry to other energy industries.
Third, there is room for elaborating the research model. As the focus of
this study was on two types of strategies for technology ex-
pansion—diversification as a strategy using internal capability and R&D
collaboration as a strategy using external resources—the possible effect
of technology turbulence on the relationship between R&D intensity and
ROA was not fully considered in our model. Third, the control variables
can be elaborated. For example, a country dummy was used as a control
variable assuming that different countries may have different policies
towards the solar PV industry. However, a new variable can be in-
troduced to control the policies rather than the countries because dif-
ferent countries may have similar policies. The period in which a parti-
cular type of policies was employed can also be considered, which
controls the genuine effects of policies. Finally, careful consideration of
the most appropriate time lags between variables is needed. For example,
greater time lags may be needed for R&D intensity. In this study, it was
used as a control variable for the effects of the level of R&D investment,
and thus, the analysis was conducted with the assumption of constant R&
D intensity over time. However, further analysis is required to consider
various time-lags between R&D intensity, patent application, and fi-
nancial performance, which is rarely undertaken in practice.
IPC codes
B24D, B28D, B23C, C03B, C03C, C04B, E04B, E04C, E04D, E04F
C30B, C23C, C01B, C02F
A44B, A47H, A47K, B22F, B25F, B25G, B25H, B26B, B44C, B65F, B82B, C25D, E01D, E01F, E03B,
E03C, E03D, E05B, E05C, E05D, E05F, E06B, F01K, F16B, F16P, F16S, F22B, F24J, G21H
F01B, F01D, F03B, F03D, F03G, F04B, F04D, F15B, F16C, F16D, F16F, F16H, F16K, F16M
F21S, F21L
H02K, H02N, H02P
B81B, B81C, G11C, H01C, H01F, H01G, H01J, H01L
H02J, G05F, H01M
213
S. Yun et al.
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