Oposición o incumplimiento a las instrucciones de los responsables 47

Key findings

 Lead markets can bring substantial benefits to the innovating company, such as high export potentials and a high pool of knowledge.

 The creation of demand is a crucial element for a lead market, complementing the supply of innovations. Missing demand is often claimed to be a factor hampering innovation in the transport sector.

 EU Member States are highly diverse in terms of their lead market potentials for automotive innovations. In general, countries with important automotive industries have a technology leadership role.

 The EU-27 as a total shows a high and stable leadership in innovation in the manufacturing of vehicles but also aviation at a global level.

 While EU-based car manufacturers seem to have a stable technology leadership in conventional engine technologies, there is some indication that they may lie behind with regard to alternative technologies, in particular battery and hybrid electric vehicles. The latter areas are dominated by Japanese car manufacturers, even though Chinese, South Korean and US-based companies gain momentum.

Policy conclusions

 Demand-side innovation policies are important. Demand can be stimulated through a variety of tools, including public procurement and/or legislation that foster certain technologies.

 In particular with regard to alternative engine technologies, there may be some need for EU-based car manufacturers to not miss an opportunity. Public research and scale-up programmes for electric vehicles are pointing in the right direction.

2.2.1 Theory of lead-markets

Lead-markets are countries that first adopt a globally dominant innovation design (Beise and Rennings, 2005). Companies within the lead-market have a first mover advantage. They are at the forefront of diffusion of the innovative technology/product once market demand takes off, following the traditional representation of innovation as an S-shaped diffusion curve (slow take-up; fast diffusion; saturation). They are therefore first to experience the benefits of 'technology learning' and can also register patents and form the market so as to prevent competitors to enter. This has been the case e.g. for Toyota in hybrid electric technologies.

Lead market countries are attractive locations for multinational companies that have to become insiders in this market. Furthermore, a research intensive economy creates a pool of knowledge that would benefit not only the industries active in the 'lead area' but also industries from other fields⁷. In general, policy has realised the advantages that a lead market can bring to its industry (see European Commission, 2007a, 2007b for a general assessment of the potential of lead markets for Europe; Jacob et al., 2005 for examples). For example, the 'Lead Markets Initiative for Europe' aims at supporting the creation of lead markets in six important fields (European Commission, 2007a). Also the 'European strategy on clean and energy efficient vehicles' (European Commission, 2010b) eventually aims at keeping and expanding the EU's lead market position on clean vehicles. Other initiatives, like the commitment of cities to reduce GHG emissions beyond EU targets by 2020 through the Covenant of Mayors, can also contribute to foster lead markets, leveraging on the dynamic nature of urban agglomerations with respect to innovations.

However, for the competitive advantages to be exploited, some pre-conditions for lead-markets need to be fulfilled (see e.g. Walz, 2006). Firstly, a demand for the innovative product needs to be created in other markets as a lead market is not only characterised by the supply side, but also by the demand side (Porter, 1990). Particularly in the transport sector, market demand is a key factor that has the potential to either drive or hamper innovations (ITF, 2010b; Sofka et al., 2008⁸). The results of the Community Innovation Survey strongly point to the importance of the current and expected consumer demand as a driver for (environmental) innovations (see Figure 9).

Secondly, within a lead market competition should be driven not only by prices, but also by quality and performance. This is given for some transport sub-sectors and modes, especially the manufacturers of transport equipments for which innovation constitutes one selling factor, but less so for other transport services as explained in more detail in section 2.4. Finally, high potential learning effects also underline the potential lead market advantages. These would need to be assessed on the basis of individual transport technologies, which falls outside of the scope of the present study.

Policy can (and has) support(ed) the creation of lead markets through various means. It can create a market demand for innovative technologies either through dedicated subsidies or a favourable legislation⁹. The way in which this is tackled by some EU Member States is illustrated for electric vehicles in section 3.4. Another way of creating a niche market demand may be through public procurement, which is discussed in more detail in section 3.4.

Complementing this, the diffusion of innovation also relies on the absorptive capacities of the players acting on the demand side, and the easy access to information on novel products (Suriñach et al., 2009). Moreover, an innovation-friendly regulation that reduces market failures such as innovation spillovers through e.g. Intellectual Property Rights (Walz, 2006) is another important condition for a lead-market.

7 See European Commission (2006b) for a list of the potential competitive advantages of a lead market.

8 Henderson and Newell (2010) demonstrate the importance of market demand for innovations in a number of other sectors.

9 Note, however, that in some cases, regulations have produced extra costs but no extra sales; moreover, a domestic market demand may be created, but export remains limited (see Sofka et al., 2008 with reference to Heneric et al., 2005).

2.2.2 Lead-market and technology specialization assessment: the case of the automotive sector

Sofka et al. (2008) have undertaken a systematic lead market analysis for the European automotive sector, assessing the advantages of different Member States in terms of demand, price, export, transfer and market structure. Even though data did not allow to construct some indicators for a number of countries, the analysis suggest that only some Member States have a very high lead market potential in the automotive industry. These include France and Germany, and with ranking positive for at least three of the five criteria, also the Czech Republic, Italy, Luxembourg, Sweden and the UK. As said, data problems impede a reliable assessment for some Member States, suggesting that the above list may not be comprehensive.

Already today, these are the countries that have accumulated high knowledge in the manufacturing of motor vehicles and other transport equipment. This accumulation of technological knowledge (or specialisation) can be approximated through the Revealed Technological Advantage Index (RTA) developed by Soete (1987). For either a company or a country, the RTA is calculated as the ratio of the number of patents in technology k in the total patents of country l over the same share for all countries:



 



kl kl

l kl

k kl

kl

Patents Patents

Patents Patents

RTA ( / )

) /

(

In the present work, the share of patents related to the NACE R1 sector DM34 'Manufacture of motor vehicles, trailers and semi-trailers' to the patents in total manufacturing has been compared at a global level. In order to avoid a regional bias when using either the EPO database or the USPTO database, the analysis has been undertaken for both. We find that results are broadly in line between the two databases, and therefore restrict the presentation to the EPO-based results. Following the approach of Sofka et al. (2008), the RTA has been calculated for two different time periods of eight years in order to also show the dynamics. By displaying them on a 2-dimensional chart with the RTA in 1992-1999 along the x-axis and the RTA of 2000-2007 on the y-axis, the chart indicates which countries are keeping the leadership, lag behind, loose or increase momentum.

The strong specialisation role of EU becomes obvious, in particular when compared to the USA. At the same time, the high diversity across EU Member States is evident. Not surprisingly, those Member States with an important automotive industry, many of which also have an elevated public R&D spending on automotive research (see chapter 6), are those that have kept their leadership in car manufacturing: France, Germany, Austria, Luxembourg, Spain, Sweden, Italy, Poland and the Czech Republic. In most of the cases these countries correspond to the candidates for lead-markets found by Sofka et al. (2008) and mentioned above.

PL

RTA of accumulated patent applications (1992-1999)

RTA of accumulated patent applications (2000-2007)

Losing momentum Lagging behind

Gaining leadership Keeping leadership

Figure 6: The dynamics of the Revealed Technological Advantage Index in the manufacturing of motor vehicles by country

Source: JRC-IPTS based on Eurostat EPO-data using the NACE R1 classification DM34 'Manufacture of motor vehicles, trailers and semi-trailers'; updating Figure 3.3.1 of Sofka et al. (2008). Note that the number of patent counts in DM34 is too limited for a number of countries to produce representative results (e.g. BG, CY, EE, LT, LV, MT).

Unfortunately, a comprehensive assessment of the RTA for individual technologies, which would have required a search of the EPO worldwide statistical database PATSTAT by selected IPC classes, could not be undertaken in the scope of this analysis. Instead, a simplified keyword-based research has been performed, using the EPO-esp@cenet database. This search strategy follows published articles, in particular Oltra and Saint Jean (2009a); nevertheless, it has a number of methodological limitations, which are described further in chapter 7.3 and the refereed literature.

To this end, patent applications registered in EPO-esp@cenet from 21 car manufacturers have been analysed, using the following keywords (from Oltra and Saint Jean, 2009a): ICEV: 'internal combustion engine vehicle'; DE: 'diesel engine', BEV: 'battery electric vehicle'; HEV: 'hybrid vehicle' and FCV: 'fuel cell vehicle'; hydrogen ICE has been added for Ford, Mazda and BMW under the keywords 'hydrogen engine vehicle'. The results are shown below in Figure 7. Note that they cannot directly be compared to the ones depicted in Figure 6 due to the methodological differences.

EU-based car manufacturers seem to keep the leadership in specialisation on conventional engine technologies, while Japan, driven mainly by Toyota, holds the lead in hybrid and battery electric vehicles. At the same time, there is some indication that EU-based companies lag behind in alternative drive technologies, in particular with regard to hybrid and battery electric vehicles, whereas they are more or less average for fuel cell vehicles despite loosing momentum. In particular Chinese car manufacturers, but also South Korean and Japanese as well as some US-based companies have increased their (patenting) activities on alternative powertrains.

Despite methodological constraints and the fact that suppliers are not included in the search strategy, this analysis provides an interesting indication of the positioning of EU-car manufacturers at a global level in terms of specialisation in different technologies. However, in order to (at least partially) compensate for the comparably low level in battery electric vehicles, many of the principal EU-based car manufacturers are part of strategic alliances that include battery manufacturers and electric utilities (see Figure 50 in section 9.4.1; Barthel et al., 2010). Moreover, an assessment of patent applications derived from the OECD statistics shows a significant increase in patenting activities on electric and hybrid vehicles in the EU in very recent years, which further indicates that European car

manufacturers are catching up, yet with some delay (see Figure 41 in section 7.3.2).

RTA of accumulated patent applications (1990-1999)

RTA of accumulated patent applications (2000-2009)

Battery and Hybrid Electric Vehicles

RTA of accumulated patent applications (1990-1999)

RTA of accumulated patent applications (2000-2009)

Battery and Hybrid Electric Vehicles

Figure 7: The dynamics of the Revealed Technological Advantage Index for different technologies for selected car manufacturers

Source: JRC-IPTS based on the EPO-esp@cenet database for 21 world car manufacturers using a keyword-based search strategy developed by Oltra and Saint Jean (2009).

2.2.3 Technology specialization assessment for other transport equipment manufacturers

Following the analysis undertaken for the automotive industry above, an RTA can also be calculated for the other manufacturing of non-automotive transport equipments. As shown in Figure 8, the results indicate that most of the European Members, and in particular Austria, Italy, Spain, Germany, France Poland and Sweden, and the EU as a whole have a technological leadership in this area, while countries such as the USA and Japan are lagging behind. Note that the total number of patents has been too limited for a number of countries to present a reasonable base for the assessment.

Although those data are based on the NACE R1 DM35 sector that goes well beyond the aviation manufacturing sector and also includes manufacture of railways, motorcycles, building and repairing of ships, etc., the results are well in line with the trend observed by Hollanders et al. (2008) for the aerospace sector. Unfortunately, that latter analysis covers patents from 1987-1990 and 1997-2000 only, and therefore leaves out more recent developments.

EU-27

BE

DK

DE

ES ITFR

NL

AT

FI SE UK

US JP

CN CA

KR

CZ

IE

GR

HU

0.0 1.0 2.0

0.0 1.0 2.0

RTA of accumulated patent applications (1992-1999)

RTA of accumulated patent applications (2000-2007)

Losing momentum Lagging behind

Gaining leadership Keeping leadership

PL

Figure 8: The dynamics of the Revealed Technological Advantage Index in the manufacturing of other

transport equipment by country

Source: JRC-IPTS based on Eurostat EPO-data using the NACE R1 classification DM35 'Manufacture of other transport equipment'; following the concept of Figure 3.3.1 in Sofka et al. (2008); Note that the number of patent counts in DM35 is too limited for a number of countries to produce representative results (e.g. BG, CY, EE, LT, LV, MT, SL, SK, RO).