Renewable energy technologies have to overcome considerable barriers in order to break through in an established system such as the fossil fuel system. In order to analyse the development and diffusion process of renewable energies, not only the technical and economical aspects have to be studied, but also the social system that influences the development, diffusion and implementation of renewable energy technologies. We call this social system the innovation system (IS).
In order to grasp the dynamics of innovation systems and to reach a better understanding of what really takes place inside these systems, we propose to analyse the activities that take place within the innovation system, since the process of change is the resultant of many interrelated activities. Activities in innovation systems are considered relevant when they influence the goal of the innovation system. The goal of an innovation system is to develop, apply, and diffuse new technologies. The activities that contribute to the goal of innovation systems (both positive and negative), are called 'functions of innovation systems'.
Based on several empirical studies at Utrecht University, we propose the following set of functions to be applied when mapping the key activities in innovation systems, and to describe and explain shifts in technological innovation systems.
Function 1: Entrepreneurial activities (F1)
Function 2: Knowledge development (F2)
Function 3: Knowledge diffusion (F3)
Function 4: Guidance of the search (F4)
Function 5: Market formation (F5)
Function 6: Resources Mobilisation (F6)
Function 7: Counteract resistance to change (F7)
Both the individual fulfilment of each system function and the interaction dynamics between them are of importance. Positive interactions between system functions could lead to a reinforcing dynamics within the TIS, setting off virtuous cycles that lead to the diffusion of a new technology. Thus, the fulfilment of the individual functions is strengthened through interaction between them.
Vicious cycles are also possible, where a negative function fulfilment leads to reduced activities in relation to other system functions, thereby slowing down or even stopping the progress.
We can learn a lot from ‘best practices', analyses of the successful implementation of certain new technologies in certain countries. This paper analyzes the successful development and implementation of PV technology (photovoltaic solar power) in Japan in the period 2000-2008. The fact that the Functions of Innovation Systems framework has not been applied to a Japanese case study before makes this research highly original. Furthermore, successful developments in non-Western countries can yield original insights.
The thorough qualitative case study research was performed by a Japanese speaking Dutch researcher in Japan. Our analysis shows that especially the functions ‘market formation' and ‘counteracting resistance to change' were fulfilled very well in Japan and acted as the starting point of self-reinforcing virtuous cycles. During the period 1993-2005, both development and diffusion of PV in Japan went very well. Several large companies, facilitated by R&D subsidies, carried out R&D activities (F2), which also lead to high knowledge dissemination (F3). Also market growth was strong (F5), due to lobby activities (F7) of the PV branch organisation that facilitated and promoted the continuation of market support mechanisms by the government (F6). The growing market in turn attracted new entrepreneurs (F1) which supported the lobby activities (F7).
Although the Japanese market is still growing, the growth rate is declining since 2005. Several Japanese actors see this as a bad sign. Several manufacturers redirected their efforts towards foreign markets and are therefore not inclined to lobby for new specific Japanese market support mechanisms (-F7). It is not clear yet whether these developments reveal a temporary dip or the start of a structural decline in annually installed PV capacity.
In Japan the entrepreneurs were very successful in their lobby activities for R&D and market support mechanisms. This set off a strong virtuous cycle between entrepreneurial activities, lobbying activities, resource mobilisation leading to both knowledge development and market formation, which in turn led to increased entrepreneurial activities.
In this paper more of these kinds of functional patterns will be identified and analysed. Based on the analysis, we formulate recommendations for western policy makers and technology developers.