Quantifying organizational routines: A multidimensional analysis of innovation in the photovoltaic industry

Abstract

In this study, organizational routines were measured, identified, and classified into individual firm units as indicators of heterogeneity. Organizational routine, an abstract and complex concept inherent to a firm, is quantified by a firm’s behavior using a multidimensional approach. Specifically, we adopt a two-dimensional approach to a firm’s R&D and production to identify its innovation routine. For each behavior, a firm’s degree of innovation was measured using the concepts of exploration and exploitation. We derive the innovation routine for each year of the analysis period for each firm. By comparing the average value of each firm within a sectoral regime under the same selection pressure in the same environment, innovation routines in the sector can be classified into four types: active Pioneers, efficient optimizers, passive observers, and active adventurers. An empirical analysis was conducted on photovoltaic firms. From 2000 to 2022, the granted patents in the USPTO database and photovoltaic module data in PVsyst were used as proxies for R&D and production, respectively. The method proposed in this study is a novel approach for directly and specifically quantifying organizational routines. It has academic significance in that it empirically analyzes routine, which is a crucial concept in evolutionary economics but has limitations in empirical research. In addition, as a practical implication for the photovoltaic industry, it provides the cornerstone for efficient and effective policy and strategy design by clearly presenting the heterogeneity of photovoltaic firms.