Does convergence in firms’ innovation capability accumulation paths drive industrial convergence and energy transition? An empirical exploration

Although extensive research has been conducted on the external drivers of industrial convergence, relatively less attention has been given to internal drivers, such as firm-level innovation capability accumulation paths, particularly from the perspective of natural resource- and process-intensive industries in emerging economies. Despite numerous studies on the outcomes of innovation capability accumulation by firms in emerging markets, there is a lack of research exploring its implications for industrial convergence and energy transition. This paper combines insights and frameworks from both bodies of literature to investigate the extent to which convergence in firm-level innovation capability accumulation paths drives industrial convergence and energy transition. Based on evidence gathered primarily from fieldwork, these relationships are empirically explored in four leading firms from Brazil's forestry for pulp and paper and sugarcane bioethanol industries. The paper suggests that these four firms' innovation capability accumulation paths have converged towards similar levels involving comparable underpinning technological activities. Although full industrial convergence has not been achieved, these converging innovation capability accumulation processes have driven an ongoing build-up towards a semi-convergence or overlap between these two industries, potentially leading to a distinct ecosystem or niche in Brazil’s natural resource- and process-intensive industries. This ongoing process contributes to the country's energy transition and the achievement of the UN Sustainable Development Goals. This paper's interdisciplinary and nuanced approaches contribute to a deeper understanding of the link between firm-level innovation capability accumulation, industrial convergence, and sustainable industrial development. • Firm-level innovation capability convergence facilitates industrial convergence build-up. • Industrial convergence build-up aids Brazil's energy transition and SDG goals. • Industrial convergence build-up creates pathways for niche ecosystem development. • The study examines Brazil's forestry and sugarcane bioethanol industries as key cases.