Entrepreneurial Opportunity and the Formation of Photovoltaic Clusters in Eastern Germany

Abstract

Research on the spatial distribution of economic activity has mainly focussed on identifying conditions that sustain industrial clusters, as they are perceived to be the locus of regional economic growth. Taking this static perspective, today only little is known about the factors that facilitate the emergence of spatial structures in new industries. To achieve deeper insights in these formation processes 'theory must explain how information and resources for entrepreneurial activities come to be disproportionally massed in some places and some times'. Within this context, recent developments in institutional economic geography underline the role of social movements contributing to institutional change and government action, thus affecting entrepreneurship and entrepreneurial opportunity. As these institutions and government actions have a spatial dimension, they can induce Windows of Locational Opportunity (WLO) supporting the evolution of spatial patterns of new industries. Yet, little research has examined the role of institutional change and government action in the evolution of new industries or entrepreneurial opportunity. Regarding the energy sector, the importance of institutional change seems to hold for effects of environmental movements, as they were able to give an increased awareness of pre-existing technological solutions (esp. alternative sources of energy). Changes within this field - in earlier days as reaction to oil crises - can nowadays be seen as reactions in answer to climate change caused by emissions of CO2. This calls for a rapid rate of diffusion of CO2 neutral energy technologies so that the shift towards renewable energies results in a series of technological discontinuities in the energy field. The objective of this paper is to explain the evolution of spatial structures of one special type of renewable energies in Germany, the photovoltaic industry (PV). In a first step we demonstrate how environmental movements contributed to institutional change and government action leading to changes in the legal and regulative structure in Germany. We describe how these changes opened up a Window of Locational Opportunity and therefore combine the approach of the WLO concept with that of entrepreneurial opportunity.