Innovation performance of the US American and European electricity supply industry

Using a production function approach based on Cobb–Douglas, this analysis relates R&D efforts of 32 electric utilities on both sides of the Atlantic to their performance in terms of labour productivity. We find that higher R&D levels generally have a positive impact on revenues. However, only in the sub-sample of 16 electricity suppliers in Europe this effect is significant. Knowledge spill-over effects can be estimated for the US American sub-sample, since US utilities have bundled their R&D efforts in a centralized research institution and have to report that data. Our analysis reveals, though, that collaborative research efforts do not lead to positive spill-overs at the assumption of a time delay of one year. - Highlights: • R&D expenditures and their impact on performance of 32 electric utilities are analyzed. • Extended Cobb–Douglas production function approach. • Positive and significant effect of R&D expenditures on revenues. • Effect is less pronounced in the USA than in Europe. • External knowledge spillovers of 16 US American utilities turn out to be negative.