Page 85 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.72, # 2, 2015, pp. 73-86

custom energy sources in the following time period (year).
Another reason can be governments‟ role. When oil prices increase,
governments and policy makers start to stimulate renewable sector through subsidies,
university-company cooperation, etc. But this becomes more influential in policy
makers actions and plans in high energy price periods, and when prices go down ease
and distraction starts again.
As noted this study represents the whole renewable energy sector, and it should
again be noted that, there are many other factors that influence renewable energy
companies‟ innovation. We analyzed oil prices‟ effect in general companies who can
use both custom and renewable energy sources and the results showed that,
companies innovativeness in alternate energy sector is related with oil prices, the
reason of which might be inclination to shift back to oil based energy when prices go
down. So it is possible they mainly behave tactically rather than strategically.
Regarding, how it affects companies‟ renewable energy policies in investments
to innovation in 2 years‟ period, the relationship exists and is positive too. In long
term, companies don‟t that seriously react to oil prices, and here the reason can be
they want to insure themselves, and therefore dependence on oil prices decreases, so
they try to keep innovation balance or to invest in more radical type of innovation.
Although, low energy prices de-stimulate innovation somehow, it is not significant
and companies understand the importance of alternate energy sector. Further research
can be done using patent citations as indicator of innovation, which can shed light to
more radical type innovation.
So, according to the results, when oil prices increase,companies are motivated
to invest in renewable energy sector innovation, but tend to shift back to oil based
energy when prices go down and their innovation level decreases in short term.
However simultaneously, in the long term it is possible that, deeper (radical)
innovation is achieved through years to decrease dependence from the oil price and
its fluctuations, therefore relationship between prices and innovation levels decreases.
Conclusion
This paper analyzed relationship between oil prices and innovation in
alternative energy sources – renewable energy.
The study showed that, oil prices influence innovation in renewable energy
sector, and companies‟ reaction and response to changes of oil prices can be
considered substantial.
Both in one year and two years periods companies react to oil prices on their

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