Markets for Sustainable Technologies: The Evolution of Firms’ Global Electric Vehicle Product Portfolios
In this study we examine how firms with an established market in legacy technology products make commitments to radically different environmentally sustainable technologies. We find that diversifying firms enter country markets with the radical technology product when they are losing market share in the legacy technology in these markets, pointing to potential opportunities for growth and resource redeployment. Firms manage technological and market uncertainty by making market entry decisions based on their global capabilities in hybrid or ‘gateway’ technology products, while preferring to enter local markets that have greater acceptance for the radical version of the technology. We identify these effects for the global electric vehicle industry over the period 2009-2016, using instrumental variables based on patenting and weather shocks. Subsequent to entry, we find that firms reconfigure their product portfolios, shifting towards the radical technology products as learning occurs, but this evolution is constrained by local commitments in the legacy technology. Our study extends research on sustainability that has focused largely on non-market factors, by drawing attention to the strategic role of firm capabilities and market conditions in driving credible commitments to radical sustainable technologies.