Incumbents' Responses to Innovative Entrants – A Multi-Country Dynamic Analysis

Abstract

The influence of innovative entrants on incumbents is considered important for technological change. We analyze this influence for the global transition towards alternative technology vehicles (ATVs). Our results indicate that entrants’ ATV-related knowledge accumulation stimulates average incumbent’s ATV-related research. Regarding global entrants, incumbents with higher ATV patent stocks increased patenting stronger; supporting previous literature on competitive reactions to entry. Responding to domestic entrants, however, incumbents with low ATV patent stocks increased whereas incumbents with high stocks decreased patenting; suggesting that advanced incumbents outsource research or overtake entrants. Further, certain characteristics and not merely the quantity of entrants drive incumbents’ responses.

Keywords: Environmental Economics, Sustainable Development, Technological Innovation, Firm Behavior: Empirical Analysis, Entrepreneurship, Industry Dynamics, Automobile Industry, Electric Vehicle

JEL Classification: Q01, Q55, D22, L26, L62, O31