The solar cell industry in Germany: A young industry at crossroads

Stephan Jeznita

Student thesis: Master thesis


Germany is one of the world’s major producers of photovoltaic products that convert sunlight radiation into electric energy. Within the photovoltaic value system, this thesis focuses on silicon solar cell and thin-film module manufacturers in Germany (termed the ‘solar cell industry’). The research is based on four pillars: (i) to assess how competitive the German solar cell industry is in an international comparison, (ii) to evaluate what types of locationspecific strengths and weaknesses Germany offers to the industry, (iii) to assess where these advantages reside, i.e. on the national or the regional level – the latter is founded in the agglomeration of firms in former East Germany, and (iv), to provide an outlook and recommendations to policy makers on how the industry can be strengthened. The outlook and the recommendations are based on location-specific advantages of Germany and ownershipspecific advantages of foreign and domestic firms in the industry. The analysis is based on macro- and microeconomic data. This paper follows important scholars in the field of competitiveness by assessing competitive advantage based on trade statistics. The industry study is supported by well-known and tested frameworks, including Dunning’s (1979) eclectic paradigm, an extensive diamond analysis inspired by Porter (1990), and Vernon’s (1966; 1988) product cycle. A firm study of 27 domestic and foreign firms with production capacity in Germany is utilized to assess ownership-specific advantages of firms. Key findings are as follows: first, trade statistics reveal that the industry is largely competitive taking the national account as the key measure. Second, Germany offers a variety of unique location-specific advantages that reside in almost all factors in the national diamond. Especially strong are supplier industries, knowledge resources, domestic rivalry, and domestic demand. Third, several important location-specific advantages reside in the regional level, esp. a very good local investment context, preferential labor market conditions and knowledge resources, and the presence of related industries. Firms utilize regional advantages by locating production in eastern Germany rather than former West Germany. This industry study has several major implications. First and foremost, Germany continues to be a save harbor, esp. for foreign firms investing into solar cell manufacturing and research and development. Second, Germany is a preferred location for firms trying to commercialize proprietary technology. Third, Germany lost its position as a preferred location for proven technologies, such as crystalline silicon cells – due to higher production costs, the rise of new markets, and the desire to locate closely to these new markets.

EducationsMSc in International Business, (Graduate Programme) Final Thesis
Publication date2009
Number of pages121