Rethinking Innovation Capability in Energy Utilities

Abstract

The energy sector is currently undergoing a transformation driven by decarbonization, electrification, decentralization and geopolitical tensions. As a result, incumbent energy utilities face increasing pressure to renew their innovation capabilities and develop new ways of working with innovation. While much research has been devoted to examining different determinants of innovation capability, the concept has largely been treated as homogeneous across an organization, overlooking that significant variations may exist within the same organization. Through a case study of the Swedish energy utility Vattenfall, this thesis explores how innovation capability varies across organizational units and how cross-unit collaboration and learning can contribute to strengthening firm-level innovation capability. The findings show that innovation capability is unevenly distributed across Vattenfall and that knowledge, resources and innovation experiences often remain localized within individual units. Furthermore, the results show that large established firms such as Vattenfall can improve their firm-wide innovation capability through cross-unit collaboration and by creating conditions for knowledge sharing. However, this requires coordination mechanisms, formal responsibilities and incentives, as cross-unit collaboration needs to be supported by clear structures. Overall, the thesis contributes to research by emphasizing firm-internal variations in innovation capability and by highlighting the importance of incumbent organizations’ ability to identify, interpret and adapt knowledge across unit boundaries.