Do entrants increase incumbents' innovation activity? Escaping the lock-in, stimulating technological change and the transition towards environmentally friendly vehicles

In the context of technological transitions, the influence of innovative entrants on incumbents is a major driving force. Using worldwide patent data, the present study analyzes this influence for the case of the transition from combustion engine vehicles towards electrically powered alternative technology vehicles (ATVs). Lateral entrants and start-ups play a key role in developing ATV-related patents, whereas automotive incumbents are considered as being less motivated in pursuing this new technology. The empirical results indicate that innovative entrants have an influence on incumbents? innovation activities, and also underline the importance of cross-country entry. The findings further suggest that entrants stimulate ATV-related innovations in those incumbents that show low ATV-related patent productivity whereas incumbents with high ATV-related patent productivity react with a decrease in ATV-related patenting, which is assumed to be a sign of outsourcing research and development activities. JEL Codes: Q550, O3, Q520, R490, L910, L260, O310