Smart innovation policy: How network position and project composition affect the diversity of an emerging technology

Abstract Technological diversity is important to achieve long-term technological progress as diversity fosters recombinant innovation and renders undesirable lock-ins less likely. Many government policies influence the diversity of a technology, in particular by subsidizing collaborative innovation projects. This study investigates the influence of network position and the composition of innovation projects on the creation diversity of an emerging technology at a system level. We first conceptualize technological diversity and formulate hypotheses using a combination of innovation system and social network arguments. Empirically, we study the Dutch innovation system in relation to biogas energy technology. Our results show that the more projects are related to each other through shared actors, the less likely they are to contribute to technological diversity. This supports the arguments that diffusion of knowledge and sharing knowledge bases lead to less diversity. With regard to composition, we found that including more partners in a project is negatively related to diversity, while a greater diversity of actors in a project contributes to technological diversity. Overall, we conclude that a combination of innovation system and social network arguments provides a credible micro-level explanation for how the diversity of an emerging technology is created within an innovation system. These insights can be used to design “smart” innovation policy instruments that influence the level of technological diversity.