| Our goal has been to develop an understanding of the sources of innovation in the residential appliance industries during and after the so-called "energy decade," which began with the oil embargo of 1973. We find that market concentration and the commitment of management to finance R&D are the dominant factors. Our method involved a detailed survey of executives in the residential appliance industries. We disaggregate the appliance industries into five subindustries (central air conditioners, heat pumps, furnaces, refrigerator/freezers, and water heaters) and examine them individually. Our data suggests that there are substantial differences among these industries.;Understanding of innovation requires two kinds of information: documentation of the fact of innovation; and understanding of the drivers which led to that innovation. The drivers are determined through interviews, case studies, and archival data analysis. Our focus is on energy efficiency innovation. This focus is relevant given present industry circumstances, and it presents a wide array of intriguing measurement issues. We determine innovation from a technical index of efficiency.;We conclude that manufacturers pursue innovation cautiously in these industries; incremental, evolutionary changes are the rule. The product change that does occur is driven by four central factors: marketing, competition, government and utility programs, and management approaches. Distinct markets appear to elicit different types of innovative behavior. Actual commitment to finance innovation R&D appears to be more important than the expressed attitude of management toward product change. Manufacturers consistently down-play the influence of utility and government conservation programs, but we find these programs are effective in price-competitive market settings.;Our research suggests some approaches for government and utilities who wish to work with these industries. The most important approach is to identify market segment role-players and to discuss issues carefully with them, so as to understand industry problems and motivations. Approaches which will lead to expanded marketing opportunities are likely to be met with the greatest receptivity. |
