The shaping effects of innovation and technology: from micro business model evolution to macro environment sustainability

Innovation is a prerequisite guarantee for the development of a country in this new era. It is an important driver not just for corporate growth but also for national social and economic transformation. Considering the strategic supporting role of innovation in the modern economic system, this thesis approaches the shaping effects of innovation and technology mainly from two important micro and macro perspectives, business model evolution and national sustainable development. The first essay takes business model innovation (BMI) in China as an entry point to investigate how novel elements can shape business models. There is a widespread perception that Chinese companies, compared to their Western counterparts, are not good at creating novel products and services. But in the arenas of e-commerce and other digital businesses, Chinese companies have become highly successful. This has led some observers to hypothesize that while Chinese firms may not excel at developing new-to-the-world products and services, they may be good in inventing new-to-the-world business models. To explore this phenomenon, I analyzed 137 suggested innovative business models in detail to investigate new-to-the-world features, yielding an overview of BMI in China. Based on these cases, a theoretical framework was proposed to investigate how innovative features can prompt successful BMI. I summarize the reasons behind BMI in China. The second essay explores the support from open innovation (OI) for BMI based on literature review and some inspiration from the first essay. Theoretical underpinnings are often cited as a necessity to advance the research of BMI. The study proposes that the development of OI and BMI keeps pace within a dynamic innovation process. To develop a consistent body of knowledge about BMI and OI, this conceptual paper sheds light on the relationships between OI and BMI by providing a framework and discussing its implications. The main investigations are as follows: 1) Why OI has strong impacts on BM development; 2) How OI can shape BMs; 3) What support OI can provide for BMI. The third essay analyzes the shaping effects of technology on environmental issues by carrying out an empirical study of tracing the imbalance of carbon emissions embodied in trade. The technological differences among developing and developed nations are tremendous, which have kept having strong impacts not only on economic and societal development but also on environmental sustainability. Thus, this study provides a new and critical perspective to reconsider the imbalance of carbon emissions regionally and globally, revealing essential policy implications for region-specific sustainable development strategies. The thesis makes several important contributions. For micro business model evolution, the thesis develops a theoretical framework to show how the values are delivered in a business model system and how innovative features can further prompt successful business model innovations, as well as a comprehensive analysis of the theoretical underpinning from open innovation for business model advance. For macro environmental sustainability, the thesis presents a comprehensive spatio-temporal analysis of carbon emissions embodied in trades of nations within and beyond BRI, contributing to methodological advances of measuring the impacts of technological differences on carbon footprints and emissions leakage, which is largely underexplored in current studies.

Scrutinizing the Circular Economy concept applied at the urban level:A contribution based on the analysis of urban circularity indicators, the categorization ofCircular Economy interventions, and the identification of factors fostering the adoption ofcircular innovation.

Valeria Superti

Problem. Our current economic systems are deemed unsustainable. Although a global issue, the objective of living in a sustainable society is increasingly an urban challenge, as a rising 50% of the world's population currently dwell in cities. To secure a better urban future, integrated and actionable urban knowledge focused on what urban sustainability entails and how to achieve it is needed. In this context, the Circular Economy (CE) concept fosters efficient resource use through value-retention processes and waste minimization. Despite the wide attention on the CE, its interconnectedness with, and contribution to, sustainability, and whether these concepts might support or hinder each other, have not yet been clarified. Besides, knowledge is needed to guide cities towards a CE, for example, by identifying the types of interventions needed to achieve circularity, and the factors affecting the adoption of innovation that can foster it.Aim. This dissertation aims to scrutinize the CE concept applied in urban settings. It is based on a) the analysis of indicators used to assess circular cities, b) the categorization of interventions aimed at achieving a CE, and c) the identification of factors that affect the adoption of recycled products, as one measure towards CE.Approach. Indicators used to assess circularity and sustainability in urban settings were analyzed and compared. Semi-structured expert interviews were performed to iterate a framework that categorizes interventions that foster the achievement of a CE. A behavioral framework was developed that combines insights from the theory of adoption of innovation and behavioral theories, to identify and analyze the factors that can affect architects' decisions to recommend recycled concrete. A survey was used to gather quantitative insights from architects on their beliefs about the selected product.Insights. The results show that the concept of an urban CE is embedded in the broader concept of urban sustainability; however, the use of CE indicator sets entail a more detailed focus on certain thematic groups (e.g., waste production and management), for which more indicators are available in comparison with what offered by urban sustainability indicator sets. To categorize CE interventions, the proposed framework (RISE: Research & Realize, Implement, Support, Enable) offers a tool to guide the achievement of CE targets. In current circularity assessments, specifically in the construction sector, most attention is paid to implementation interventions (e.g., the quantity of material recycled). However, some of them (e.g., recycling strategies) still face barriers. Focusing on one recycling strategy (i.e., recycling concrete aggregates for recycled concrete) we inquired about the factors that affect this product's adoption. A senior position, a high level of knowledge of the material and a specific label, beliefs about the material's lower environmental impact, and prescriptive social norms affect the selected innovation's adoption. Finally, we suggest leveraging specific predictors of behavior to increase the recommendation of recycled concrete.Conclusions. This work contributed to shed light on the CE concept. This research challenged the added value of focusing on a CE rather than sustainability. Furthermore, it put forward a) an integrative perspective on achieving a CE focusing on a systemic approach, and b) a holistic behavioral framework for analyzing innovation adoption.

EPFL2021

Socio-Economic Assessment of Fusion Energy Research, Development, Demonstration and Deployment Programme

Denis Bednyagin

Providing safe, clean and affordable energy supply is essential for meeting the basic needs of human society and for supporting economic growth. From the historical perspective, the constantly growing energy use was one of the main factors, which drove the industrialised countries to the current level of prosperity. Meanwhile, in recent decades, the issue of global energy security became a topic of increasing concern in the international policy agenda. On the one hand, the world is facing the problem of exhaustion of most convenient and cheep fuel reserves. The situation is becoming worse, because of the constantly growing demand in developing countries, and the oligopolistic behaviour of major energy exporting countries. On the other hand, the society is becoming more and more sensitive to the environmental pollution problems, caused by the excessive consumption of fossil fuels. In the face of energy security challenge, national governments ought to implement adequate strategies aimed at liberalisation of energy markets, diversification of energy supply mix, enhancement of energy efficiency, encouragement of investments in energy infrastructures, and promotion of innovation in energy sector. In a longer term perspective, the latter point becomes increasingly important, because the world is relying currently on the consumption of non-renewable fossil fuels, and the development of new safe, clean and resource unconstraint energy technologies is vitally needed. In line with this strategy, the major world economies pursue the joint R&D programme on thermonuclear Fusion technology, which represents numerous advantages due to its inherent safety, avoidance of CO2 emissions, relatively small environmental impact, abundance and world-wide uniform distribution of fuel resources. Considering the importance of the projected environmental and economic benefits of Fusion, the questions are raised whether the current level of financial support is sufficient, and what could be the optimal strategy to proceed with the demonstration of Fusion technology, given the time span and potential risks of Fusion RDDD programme. To put these questions into the context, one has to consider the current trends in energy R&D funding, which has seen a drastic decline ( ~50%) over the last three decades. The liberalisation of energy sector poses additional problem due to the fact that free markets partially failure to provide public goods, such as basic science and R&D, because of the so-called spillover effects meaning that the firms are not able to appropriate the integral results of their R&D investments. Regarding the thermonuclear Fusion technology, the decision makers responsible for national energy policies and allocation of public R&D funds may face the following specific questions: What is the expected net socio-economic payoff (social rate of return) of Fusion R&D programme, including both internal and external costs and benefits? What are the reasonable economic arguments that could justify the increase in public funding of the ongoing and future Fusion R&D activities and would stimulate greater involvement of the private sector? What additional value can be obtained through undertaking a more ambitious Fusion R&D programme (accelerated development path), which requires bigger number of experimental facilities, increased funding, and more intense overall efforts of international scientific and industrial community? In order to provide sound arguments for policymakers seeking to optimise public R&D funding, a robust socio-economic evaluation of the whole Fusion research, development, demonstration and deployment (RDDD) programme is needed. At the present stage, prospective analyses of Fusion technology have been emphasised mainly on the investigation of technological issues, estimation of the direct costs of Fusion power and analysis of its potential role in future energy systems. Meanwhile, methodological tools and practical studies aiming at a more comprehensive socio-economic assessment of global long-term energy R&D programmes, such as Fusion, are still incomplete. The primary difficulty concerns the evaluation of positive externalities that may reveal through different types of spillover effects, including but not limited to knowledge, network and market spillovers. While the presence of these effects has been identified in the economic theory and confirmed by empirical studies, their quantitative analysis in the specific case of large scale energy R&D programmes represents some methodological lacuna and deserves further investigation. Another problem relates to the methodology of cost-benefit analysis, which oftentimes ignores the hidden value of R&D projects arising due to the possible flexibility in managerial decisions. In fact, throughout the course of any R&D project, its prospective cash-flows can be significantly improved by pro-active management of different implementation stages, e.g. expanding the production, if market conditions are favourable, or abandoning, if R&D process appears to be unproductive. As a result, the strategic value of any R&D project normally exceeds its net present value (NPV) calculated with the traditional discounted cash flow (DCF) method. Although this strategic approach to capital budgeting, known as Real Options, has been propagated recently in several publications dealing with appraisal of lumpy irreversible investments, its practical application in the context of Fusion RDDD programme has not been mastered yet to the required extent. A particular challenge consists in the need for adequate treatment of different types of uncertainty in the model structure, parameters and input data. Accordingly, the main objective of this thesis consists in complementing the existing studies with an in-depth analysis of the positive externalities (spillover benefits) of Fusion RDDD programme and calculation of its strategic real options value subject to different managerial strategies throughout demonstration and deployment stages. Net social present value of Fusion RDDD programme and potential impact of Fusion R&D activities on the economic performance of the involved private companies are estimated using an integrated modelling framework, which includes the following components: (1) assessment of technological potential for deployment of Fusion power plants based on the simulation of multi-regional long term electricity supply scenarios with PLANELEC model; (2) economic evaluation of Fusion RDDD programme and analysis of different implementation strategies using Real Options model; (3) estimation of the economic value of spillover benefits from participation in Fusion R&D projects at the microeconomic level with the help of financial evaluation model; (4) strategic evaluation of Fusion RDDD programme, taking into account both spillover benefits and real options value, and policy recommendations.

EPFL2010

Methodology for the identification of promising integrated biorefineries

Ayse Dilan Celebi

Steady increase in global energy consumption, greenhouse gas emissions, and depletion of fossil energy resources, together with increased attention towards sustainable development has prompted researchers to discover economical and environmentally competitive non-petroleum alternatives and biomass is considered to be one of the most promising renewable sources of energy and carbon of this matter to address the aforementioned issues within a biorefinery platform. A biorefinery is an integrated processing facility that converts biomass into transportation fuels, value-added chemicals, heat, and electricity via biochemical and thermochemical conversion routes. Integrated biorefineries are capable of mimicking petroleum refineries via application of advanced process synthesis methods including modeling, simulation, integration and optimization techniques. This thesis presents a comprehensive synthesis methodology for the integration of bioprocessing technologies in biorefineries by addressing techno-economic and environmental sustainability analysis. The proposed systematic design approach combines advanced process modeling approaches, process integration techniques, and multi-objective optimization algorithms to assess the performance of the overall system with respect to economic, environmental, and energetic indicators. The design strategy is applied based on different case studies. Results indicate that multi-product processes can yield significant cost and environmental benefits. Additionally, the integration of biochemical and catalytic processes with thermochemical conversion pathways results in increased carbon efficiency and economic and environmental competitiveness. Synergies between biorefineries and energy system are assessed by integrating industrial plants with a cogeneration system producing biofuels and process heat. In doing so, system efficiency is increased by coupling the proposed cogeneration system with carbon capture and sequestration (CCS) and power-to-gas technologies to store the renewable intermittent electricity in the form of biofuels. The results exhibit that through system expansion, integrated biorefinery systems allow us to imitate fossil refineries with a large spectrum of bio-based products. This further increases the resource efficiency while offering a promising solution to mitigate CO2 emissions and hence reaching the longer-term decarbonization target set by the Paris Agreement.

EPFL2019