Multinational Corporations Investing in the Marine Energy Industry: The process of MNC's investing in the wave and tidal energy industries

Abstract

This master thesis explores the process of MNCs investing the wave and tidal stream energy industries, hereafter referred to as the marine energy industry. Wave and tidal stream energy are renewable sources of energy that are not yet commercially exploitable. However, the focus on developing technologies to extract this renewable energy has led to the emergence of the marine energy industry. Small technology firms characterized by limited access to resources currently dominate this industry. Their lack of resources makes technology development a challenge and makes them reliant on investors contributing with capital. In recent years, several large corporations have entered the industry and are assisting the industry development by contributing with resources, knowledge and capital. These are considered critical to ensure the success of the marine energy industry.An industry review is conducted to introduce the marine energy industry. This review is primarily based on scientific articles and industry reports from credible sources. In order to understand the process MNCs go through when investing in new industries, a literature review has also been conducted. An extensive literature search has resulted in a theoretical framework for technology management. By identifying shortcomings of this theory, the framework is further adapted to elucidate the investment process of MNCs into emerging industries. Six MNCs involved in the marine energy industry in the UK were selected as case companies, and interviews with these and four technology companies they have invested in provide the empirical data. In combination, these chapters create the basis for a thorough understanding of the process MNCs go through when investing in the marine energy industry. The findings establish that the MNCs follow a systematic process, although some activities may vary, when investing in the marine energy industry. They start by identifying new business opportunities through systematic scanning. An interesting industry is then further evaluated by assessing the industry s potential, and the industry s relevance to the MNC. Thereafter, the MNCs must select which technology in which to invest. They generally then assess existing in-house expertise and the prevailing external technological solutions. An in-house technology development is chosen if the company believes it to become superior to the existing alternatives. If the MNC decides to invest in an external technology, the company must both decide which technology company to invest in, and which entry mode to apply. When deciding upon the technology company, the concept of the technology is the most important factor to consider. Further, the high levels of uncertainty present in this industry makes most companies enter through minority equity investment. Findings also show that MNCs standard entry mode and the time of entry also have an effect on the applied entry mode. The MNCs have a dynamic strategy and long-term perspective when entering the industry.