1. Introduction
Currently, issues about energetic efficiency, decrease of emissions of greenhouse gases (GHGs) and recycling are seen as critical elements to be addressed in the process of organizational innovation. The challenge of climate change mitigation demands organizational capabilities for the development of sustainable products, cleaner production and processes of technological innovation.
According to Hobsbawn (1979), the Industrial Revolution constituted the most radical transformation in the human life due to introduction of machines in productive operations. However, this development resulted in negative consequences for the environment.
According to the latest report of the Intergovernmental Panel on Climate Change (IPCC, 2007), since pre-industrial times there was a sharp increase in emissions of greenhouse gases (GHGs), mainly carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O). The predominant sources of increase of greenhouse gases are come from burning fossil fuels.
The United Nations Environmental Program (UNEP, 2011) estimated that it will take about US$ 1,3 trillion per year to transform the worldwide economy into a green economy. The main objective will be to result in low levels of environmental pollution and consumption of natural resources. And this amount should be intended for sectors such as energy, transport, construction and agriculture.
The Intergovernmental Panel on Climate Change (IPCC, 2007) reported that policies of energy efficiency should be encouraged to a global applicability, in order to result in mitigation of emissions of greenhouse gases (GHGs).
According to Gritsevskyi and Nakicenovic (2002), the R&D technologies have great authority to change the trends of emission of greenhouse gases (GHGs). In the absence of measures which encourage the development of sustainable technologies and in the lack of incentives for its implementation, the R&D direction will have influence in global emissions of greenhouse gases (GHGs). The diffusion of sustainable technologies will establish the long-term development of the global energy system, as well the rates of emissions in the atmosphere.
The lack of environmental sustainability of global economy has caused not only financial losses but also some negative consequences to human health. The World Health Organization (WHO, 2011) estimates that 25% of deaths and worldwide diseases are connected to environmental risks such as contaminated water, poor sanitation, waste disposal, urban air pollution and climate change.
1.1. Environmental impacts of the electricity in brazil
According to the latest report of the National Program of Energy Conservation (PROCEL, 2007), the demand for electricity in Brazil increases the environmental impacts seeing that it depends on option of energy generation chosen by the country:
a) Hydroelectric Energy: hydroelectric plant cover large areas and therefore it often change the biodiversity of ecosystems and quality of water. The dams at an early stage emit significant quantities of carbon dioxide (CO2) and methane (CH4), due to rotting of submerged vegetation, a factor which causes the greenhouse effect and climate change;
b) Coal Energy: thermal plants have used fossil fuels and have contributed to global warming, since they emit greenhouse gases (GHGs) in the atmosphere;
c) Nuclear Energy: although nuclear plants are safer, they represent high risks of environmental radiation and, consequently, risks for human health.
The Electric Energy National Agency (ANEEL, 2009) reported that Brazil has 2.379 hydroelectric plants in operation which generate 113.986.520 KW. It is planned addition of 47.326.402 KW in capacity of energy generation in the country for years, which it will come from the 124 hydroelectric plants under construction and more than 492 hydroelectric plants granted.
The Environmental Company of Sao Paulo State (CETESB, 2005) reported that the demand of hydroelectric energy produces environmental impacts, especially during the construction of hydroelectric plants, since affect the local flora and fauna. The damming of water contributes to destruction of ecosystems, so that several species may be submerged and disappeared. With respect aquatic species, a damming generates excess of nutrients in the water, increasing the proliferation of microorganisms which causes water pollution and brings risks for the human health. In addition, the construction of hydroelectric plants also contributes to the greenhouse effect, since the hydroelectric plants emit carbon dioxide (CO2) and methane (CH4) which are responsible for global warming.
According to the National Program of Energy Conservation (PROCEL, 2007), it is known that about 50% of the consumed electricity in the commercial sector is due to the equipments of air conditioning. The motor for driving the compressor consumes about 90% of energy of equipment. The hydrochlorofluorocarbons (HCFCs) and the chlorofluorocarbon (CFCs) are used in systems of refrigeration and equipments of air conditioning and they are considered harmful gases for the ozone layer, which can also cause global warming. Therefore, the ozone hole is an area where the ozone is greatly reduced due to the presence of hydrochlorofluorocarbons (HCFCs), chlorofluorocarbons (CFCs) and other pollutants.
1.2. Innovation towards the environmental sustainability
For Schumpeter (1942), technological advances are the main determinants of economical development due to the process of creative destruction. The innovation revolutionizes the economical structure from within.
According to Porter (1989), the industry demands profitability which is determined by their degree of attractiveness and competitive advantage. These factors come mainly from the value that a company can create for its buyers in order to establishing returns which outweigh their costs of production. Thus, a crucial determinant of competitiveness is organizational innovation.
In fact, researches indicate that is not a desirable degree for a company to have a R&D department, which just ensures high performance in innovation. This performance depends on the capacity of innovation of the company as a whole. Thus, Arrow (1962) accepts professional practices as an important source of innovation. Similarly, Rosenberg (1982) argues that to learning by doing can also stimulate organizational innovation.
Higgins (1995) considers that the long-term competitiveness depends on the corporate competence, when the company can consolidate innovative capacity to carry out strategical actions to improve its skills for generating of innovations.
Papaconstantinou (1997) verifies that the capacity for organizational innovation is related to the efforts of creating of new products and improvement of processes, the skills of labor force, the ability of corporate learning and the business environment.
Technological innovation is also defined such as environmental processes, techniques and new or modified products systems which help reducing environmental damage. Moreover, this goal of reducing environmental damage can be achieved by different innovation categories: technical innovations and organizational innovations, changes in organizational structure or introduction of new procedures and business practices (Kemp and Arundel, 1998).
The innovations towards environmental sustainability may result in the following categories (Kemp and Arundel, 1998): technologies of end-of-line, waste management, clean technologies in the productive process, recycling, clean products or products with low environmental impact over its cycle life, and clean technology in order to application of corrective action after the occurrence of environmental damage. The environmental innovation may also be characterized based on the following categories of innovation: radical innovation, incremental innovation and innovation in large-scale, which replace large processes.
For Laszlo (2008), many global companies are effectively in an environmental journey, with practical and sustainable actions, not as simple environmental initiative, nevertheless such as a business strategy which leads economic value and competitive advantage for the company. This factor transforms global companies in innovative and most relevant companies to its stakeholders. Then, these companies can succeed by environmental results.
According to Triebswetter and Wackerbauer (2008), environmental innovation is driven by the mixture of external and internal factors: not only by the pressure of regulamentation, nevertheless also by the pressure of cost, and competitive advantage, and advance in technology, and by the pressure of customers.
Within this context, this paper examines innovation management in the development of products which were launched in the Brazilian market with the ECOBRISA brand. These products have energy efficient consumption and can be considered such as an effective proposal to replacement equipments of air conditioning.
1.3. Innovation networks
For Rothwell (1994), the network model emphasizes that companies should have innovative capacity to manage relationships in the internal and external environments. And the studies on successful technological innovation have highlighted the importance of interface between marketing and R&D.
According to Amato Neto (2000), the inter-enterprise cooperation aims achieving several goals, including the combined skills, sharing expertise, sharing costs of technological research and sharing risks to carry out experiments together and exploring new opportunities. The determining factors in the networks composition are listed following: differentiation, interdependence and flexibility. Differentiation drives innovation within the network without generating significant cost increases; the interdependence is the factor which creates the motivation for the formation of network and determines the organizational unit; and the productive, organizational and innovative flexibilities are attributes generators of competitive advantage for the network, which confer the extent of change and the contingencies of the business environment.
According to Motta and Vasconcelos (2004), the perspective of study of organizational network is related to the environment, assuming that the business environment is a socially reality constructed through the establishment of agreements and links between organizational groups. A structure of network is constructed by the organizational groups which coordinate actions together, not through formal and hierarchical structures, but through agreements and relationships. The structure of network aims to achieve economies of costs and increase of flexibility in the interconnected organizations network. These attributes provide operational advantages in uncertain and complex environments.
For Ojasalo (2008), the identified aspects in the management of innovation networks are listed following: extension of network; rewards; significance of network, nature of network; planning, control and confidence; hierarchy; authority and coordination. These aspects are powerful in the mapping of networks, and they may determine the main features of management of innovation networks.
Carvalho and Talamo (2010) report that structure of networks may bring actual outcomes to the companies. The forms of network provide flexibility and competitiveness to the companies and also require maturity of the involved entrepreneurs and maturity of network of cooperation in general. These aspects aim overcoming the cultural difficulties, avoiding barriers to the learning and synergetic profile of the company.
Zeng, Xie e Tam (2010) analyze that the process of innovation is extremely complex and this complexity influences the growth of networks, generating relationships of interorganizational cooperation, relationships with research organizations, and others cooperation relationships which result in the contribution to organizational innovations.
According to Bommel (2011), many of factors which determine the power of innovation of the focus company are based on outward orientation and transparency, cooperation between departments, learning and adaptation, leadership, autonomy and the possibility of experimentation. The collaborative networks are based on trust, reputation, joint programs and exchange of information.
2. Methodology
This paper supports a descriptive survey to identify the structure of relationship of innovation network, which generated the diffusion of environmentally friendlier technology in the Brazilian market. The data collected were in qualitative nature through a case study.
The methodology presents a descriptive nature. The study describes the phenomenon of institutional arrangements or relationships of networks, which projected the company such as a leader in the sales market.
The focus of research is based on the directive body of the Viva Equipamentos Company (Zsolt Makray and Paulo Gabarra), limiting itself on the institutional level since it is responsible for strategical decisions and R&D.
The primary data were collected through the usage of questionnaire for a survey study. An interview in depth was realized with the directive body of the company, the entrepreneurs Zsolt Makray and Paulo Gabarra. The Viva Equipamentos Company reformulated its business model, ensuring the initial capacity for innovation through interorganizational networks.
According to Yin (2010), protocols of research are responsible for definition of standard procedures, ensuring the reproducibility with the same outcomes in a case study when different researchers follow the same procedures. The procedures in this case study delimit the investigative question, well as they analyze the innovation network in the phase of diffusion of environmentally friendlier technology.
- Theoretical approach and analysis unit: the focus of theoretical research is the interorganizational relationship of Viva Equipamentos Company seen as innovation network to ensure know-how flows and information, while the analysis unit is its business model in the phase of diffusion of environmentally friendlier technology.
- Investigative question: how the innovation network favored the know-how flows and information to the diffusion of environmentally friendlier technology in the Brazilian market?
- Information source: the data of case study were collected through interview in depth with the entrepreneurs of Viva Equipamentos Company and also by searching the internet sites of the various partners involved in the innovation network.
2.1. The case study
2.1.1. The innovation network of Viva Equipamentos Company
In 1994, the Viva Equipamentos Company was founded in Campinas, Sao Paulo State, by two engineers of the Energy Group at the State University of Campinas (UNICAMP), Zsolt Makray and Paulo Gabarra. The focus of business was the importing of heat pumps for usage in swimming pools. As the market was seasonal in Brazil, the engineers decided to change this business focus, and they created an opportunity to launch in the Brazilian market a product with cooling technology due to hot and tropical weather in the country.
For this purpose, in 1996, the engineer Makray had researched technologies of cooling system in the global market and discovered the evaporative cooler such as an effective alternative to replacing the equipments of air conditioning. The evaporative coolers were used in the United States until the decade 30, but became a forgotten technology after the worldwide invention of technology of equipments of air conditioning, except for hot and dry countries such as Australia, Mexico and Israel.
The entrepreneurs visited suppliers in the Unites States in 1997; after this period of time, they reshaped the business model of the Viva Equipamentos Company. The proposal of business came being the importation of evaporative coolers and its commercialization in Brazilian market.
The evaporative coolers are equipments where the water is evaporated directly in the air which is circulated in the space to be cooled. This mechanism reduces the temperature and increases the humidity of air. On the other hand, the equipment of air conditioning reduces the humidity and its function is exchanging hot air through cold air, and its power (in BTUs) depends on the square footage of environment, number of people in circulation and amount of electronics. The equipments of air conditioning may still emit harmful refrigerant gases called hydrochlorofluorocarbons (HCFCs), which damage the ozone layer in case of maintenance without due care, and in case of leakage or improper disposal of the equipments of air conditioning.
The advantage of the evaporative cooler is the respect for environment, only just working with water. It does not use or release refrigerant gases which contributing to the greenhouse effect, and does not harm the ozone layer. In addition, the evaporative coolers save up 90% energy whether being compared to the equipments of air conditioning.
This equipment also keeps the quality of human health, since it renews 100% ambient air. The equipment has an external fan which draws the air through an evaporative panel. In this evaporative panel, the water is continuously circulated by a pump. The water evaporates and is replaced immediately by the float which maintains a constant water level in the reservoir. The mechanism produces unsaturated and clean air, which may be cooled temperature of 12°C.
Since 1998, Viva Equipamentos Company has specialized in technology of evaporative cooling, concentrating its organizational capabilities in development, manufacturing and commercialization of the equipments with ECOBRISA brand. When the first model was launched in Brazilian market its environmental appeal was focused on substance-free ozone and consumption of efficient electric energy.
The company has accumulated expertise in technology of applied engineering and set up its business goal: remain such as a reference company in technology of evaporative cooling, focused on meeting customer needs. The company should constantly improve its technological capabilities in order to ensure the development of energy efficient products and processes focused on respect for the environment.
The company manufactures and sells various lines of products. It has introduced various models focused on small and large environments. These equipments in general are produced to different utilities such as industrial, commercial and services, and residential applications.
The company currently has 85 employees and about 80% of the revenue of brand ECOBRISA is originated by the industrial market, through the models for large environments and custom production. About 20% of the revenue of brand ECOBRISA revenue is originated by the models focused on smaller environments.
The smaller revenue is not considered an expressive outcome due to the problem of production scale. The product for smaller environments is not competitive in terms of price of purchasing. This product is more expensive, and this way it becomes a not attractive product for the final customers.
The sales were R$ 1.16 million in 2000, reaching R$ 6.19 million in 2005 and R$ 15.50 million in 2009. In this way, the sales reached R$ 20 million in 2010, and the company maintained profitability by up 25%.
In opinion both entrepreneurs, the main organizational capabilities which contributed to the development of evaporative coolers were:
- Know-how of importation: in Brazil the process of importation is considered bureaucratic, so many companies often spend considerable time to learn how importing and implementing a reliably process of importation.
- Improvement of product engineering: even when both entrepreneurs had imported the finished product, they contributed with suggestions and ideas which really improved the performance of product.
- Engineering of application: the entrepreneurs have developed models of equipments for several market segments, since only just the evaporative panels are imported from the United States. The company continues to assemble the finished product with local components.
In opinion of both entrepreneurs, the main barriers for the development of Brazilian market still faced by Viva Equipamentos Company are the followings:
- Insufficient governmental support: unlike solar energy which has tax benefits, the evaporative cooler does not have tax incentives for producers and consumers. Thus, the high rates (about 40%) have represented a major obstacle to developing this market.
- Paradigm of consumer: in Brazil, the consumers generally believe that the equipment of air conditioning is the unique way to obtain thermal comfort. The Brazilian consumer in general does not consider the evaporative cooler more effective and attractive than equipment of air conditioning. Thus, there is not a conscious consumption in Brazil.
- Price: although the evaporative coolers save up to 90% of consumption of electric energy in relation to the equipment of air conditioning, the price of evaporative cooler is more expensive whether being compared to the equipments of air conditioning. Therefore, it would be necessary for the company achieving the increase of scale of production. In this way, the evaporative coolers could compete in the market with the Brazilian and Chinese producers of air conditioning.
The structure of relationships in innovation network, which originated the technology and organizational capacity, was started through relationships between the Engineering Department at State University of Campinas (UNICAMP) and two engineers (Zsolt Makray and Paulo Gabarra), who has worked together for more than three decades.
In his master course in nuclear energy in Berkeley, United States, Makray was worried about the potential negative impacts of nuclear technology and thus became interested in alternative energy. His interest in environmental sustainability has been enhanced, so that today, along with his wife, is responsible for an area of environmental conservation in the Sousas district, in Campinas city, Sao Paulo State.
Back in Brazil in the decade 70, Makray joined in a PhD program focused on biomass and alternative energy at State University of Campinas (UNICAMP). Along with others engineers researchers, the Termoquip Company was founded in order to start building of plants with wood gasification.
At the time, Gabarra joined in the trainee program, as a young engineering undergraduate student, invited by Makray. Gabarra was already interested in issues of sustainability, since had created sustainable experiences at university. And so, Gabarra attracted the attention of the researcher Makray, since had used barbecue charcoal as fuel in his Opal old car.
In 1978, the oil was more expensive on the market through the oil crisis. In this way, the proposal of Termoquip Company had become a promising idea in the Brazilian market.
In 1990, the Brazilian market had undergone structural changes. Before that, the government had protected local producers against foreign competition through barriers of importing. After this year, the barriers faced by foreign suppliers had diminished in general. Thus, the market of wood gasification had lost competitive advantage in relation to raw materials and foreign technologies.
For this reason, in 1993, Makray and Gabarra left the operational responsibilities of Termoquip Company and, without capital, the Viva Equipamentos Company was founded by the engineers, initiating its activities in the garage of Gabarra residence.
The initial idea of the business model was the commercialization of product with efficient consumption of energy. The objective was the reducing of electrical demand, avoiding negative impacts to the environment through constructions of hydroelectric plants or nuclear plants. However, the general perception of the Brazilian market was that imported products were noisy, expensive and unsightly. For this reason, the Viva Equipamentos Company generated an innovation process to develop silent, attractive and low cost products. The company, at this stage of business model, had imported from the United States a component (evaporative panel) of final product in order to finishing its production process in the Brazilian market.
These evaporative panels are composed of Kraft paper and virgin resin. These factors are responsible to obtaining surface area which ensures flow of the water continuously. Moreover, these evaporative panels have a specific design which allows flow of continuous air.
The others components to assembling the final product, at that time, came from Brazilian suppliers. Currently, the Viva Equipamentos Company has a competitive strategy of procurement for all components, where it may obtain these components through national suppliers. The company is not dependent on only one supplier for any of these components of final product.
2.1.1.1. Network innovation towards diffusion of evaporative coolers in the Brazilian market
In 2000, Makray noted that the Greenpeace could give permission to usage of its green brand in the products with environmental performance. The process of licensing for the model-EB20 ECOBRISA took about a year and consisted in a performance audit of product through the evaluation of a Greenpeace specialist in issues of ecological impact and project of improvement to replacing the PVC component by substances with less environmental impact. From 2001 to 2010, the model-EB20 ECOBRISA had a license of usage of green brand, when the Greenpeace made choice to cancel all of its agreements of licensing.
In this period, the entrepreneurs demanded a utilitarian patent for the model-EB20 ECOBRISA in the Brazilian market. The requirement of the patent involved a remote control and a water repository. Makray and Gabarra are convinced that the license of Greenpeace brought visibility for ECOBRISA brand in the Brazilian market, adding value to sustainable product and competitive advantage for the company.
On one hand, Makray and Gabarra believe that the license of Greenpeace was a facilitating factor for sales of the model EB-20 ECOBRISA in Brazilian market in the last decade, especially for industries with high environmental consciousness such as companies which had met standards of certificates - ISO 14000 and subsidiaries of European companies.
However, the interviewed entrepreneurs Makray and Gabarra do not consider that Brazilian consumers have used environmental criteria in their decisions of purchase. They believe that the high cost factor is an unfavorable condition for the acquisition of evaporative coolers. Thus, the profile of Brazilian consumer does not represent a conscious consumption, which it justifies low percentages of revenues in case of the smaller environments line.
Figure 1
Graphical representation and symbolism of the actors involved in internal and external environment of the focal company – Adapted by the authors based on the networks model of Conway and Steward (1998), in 2011.
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Figure 2
Innovation network of the Viva Equipamentos Company in the New Ventures Program and in the process of FINEP certification – Prepared by the authors based on the networks model of Conway and Steward (1998), in 2011.
The Viva Equipamentos Company, in 2006, commissioned a study to Cacau Design - marketing agency - and the company invested R$ 15.000 (Fifteen Thousand Real) for a study of redesigning of products which resulted in a line of twelve evaporative coolers focused on domestic using and public spaces. Thus, the product lines acquired harmonious features and eight different sizes with different variations of colors. Since 2006, the sales quadrupled and the production achieved an average of one thousand units per month, which it contributed to the sum of sales by approximately R$ 15,50 million in 2009 and R$ 20 million in 2010.
In 2008, the ECOBRISA Brazilian brand won the Forum of Investors on Sustainable Business at New Ventures Program, in action of recognizing of excellent business model and contribution to sustainable development in Brazil.
In 2009, the ECOBRISA Brazilian brand was invited by FINEP to participate to 17th FINEP Venture Forum, having the opportunity to review it business plan, with support and guidance from FINEP analysts and managers of investment funds.
3. Conclusions
This case study provides the learning about how two innovation networks favored the business models for the development of evaporative cooler and the diffusion of product and technology in the Brazilian market. It confirms Amato Neto (2000) who says that the cooperation between businesses aims to share know-how and skills. It also confirms Rothwell (1994) who says that the network model emphasizes the innovative capacity of organizations to manage relationships in internal and external environment with multiple stakeholders.
The first innovation network indicates a process of structuring of R&D, represented by the directive body, due to recasting of technology created by an international supplier. It confirms Gritsevskyi and Nakicenovic (2002) who believe that the direction of the R&D departments will influence global emissions of greenhouse gases (GHGs), with the diffusion of sustainable technologies and will determine the long-term development of the global energy system. In addition, this fact confirms Bommel (2011), who says that since the used factors to determine the power of innovation of the company focus is based on outward orientation and transparency, cooperation between departments, learning and adaptation, leadership, autonomy and possibility of experimentation. Therefore, the inter-organizational networks of cooperation are based on trust, reputation, joint programs and exchange of information. At this stage, the business focus of the company was to develop the product in the national market, from its manufacturing process, making itself more competitive in accordance with perception of consumer.
The second innovation network indicates a process of restructuring of business through a strategical relationship with FINEP, a public company under the Ministry of Science and Technology, where the Viva Equipamentos Company had the opportunity to review its business plan. At this stage, the focus of company was to gain visibility in the market for the diffusion of usage of technology of evaporative coolers in Brazil. The company participated in the New Ventures Program. This fact confirms Higgins (1995) who says that the long-term competitiveness depends on the competence of company to consolidate its innovation capacity and carry out strategical actions to improve its skills for generation of innovations.
It can be argued that firstly the innovation network has enabled the attainment of know-how of applied technology to manufacture products in the Brazilian market. Then, the arrangement of institutional network adopted by the company promoted a possible opening to external financial resources, since the Viva Equipamentos Company gained visibility in the business environment due to the support and guidance from FINEP analysts and managers of investment funds. These facts prove Ojasalo (2008) who says that duration of network, fundamental meaning of network and rewards of network are powerful aspects in the mapping of networks. And Zeng, Xie and Tam (2010) who argue that the complexity of the process of innovation leads to growths of networks through inter-organizational relationships that have meaning on impact of organizational innovations. And these facts confirm Carvalho and Talamo (2010) who conclude that the structure in the form of networks brings actual results to the companies, providing them with flexibility and competitiveness in the face of market challenges, and also require maturity of the entrepreneurs and maturity of cooperation network.
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