Demand‐oriented innovation strategy in the European energy production sector

Abstract

Purpose

This paper aims to use a lead market approach for each of 25 European Union member states (EU‐25) to assess the likelihood that locally preferred innovation designs in the Energy Production Sector will become successful in other countries. Based on the lead market analysis, it aims to outline implications for innovation management.

Design/methodology/approach

The paper identifies and operationalises indicators to measure and compare the lead market properties of the energy production sector at international level. The indicators used are taken from the Community Innovation Surveys, the Eurostat/OECD PPP and Expenditure Database, the UNCTAD FDI‐Database, the EU Business Demography Statistics, and the Eurostat Foreign Trade Database (Comext).

Findings

French energy production companies proved the most effective at orienting their product innovations towards the needs of customers in international markets. The companies in other countries within the EU trade on home markets that exhibit barriers to innovation in at least two of the lead market factors. Therefore, the lead market, France, should be the focal point for the development of global innovation designs. By focusing on innovation designs which respond to the preferences within the French lead market, the innovation management of a company can leverage the success experienced in the lead market for the product's global market launch.

Research limitations/implications

Indicator values were not always available for lead market properties of the energy production sector in every member state. This was particularly true when it came to measuring market structure advantage and transfer advantage.

Practical implications

Market research on the lead market takes centre stage when product innovations are in the development phase. Companies in countries that do not have sufficient above‐average lead market attributes must target product innovations to fit the preferences of users in the lead market – in this case, the French clients of the energy production sector. The observation of the lead market can take on varying degrees of intensity. These range from simply making use of listening posts in the lead market to testing and/or launching new products there.

Originality/value

This paper is the first to apply the lead market approach to systematically investigate demand‐specific innovation drivers in the energy production sector. Its consideration of the demand side of innovation is of the utmost interest for the more recent strains of innovation research as well as for innovation management in the energy production sector itself.

Citation

Cleff, T., Grimpe, C. and Rammer, C. (2009), "Demand‐oriented innovation strategy in the European energy production sector", International Journal of Energy Sector Management, Vol. 3 No. 2, pp. 108-130. https://doi.org/10.1108/17506220910970542