A STUDY ON ECO-INNOVATION AND ITS DETERMINANTS

Abstract

Environmental problems and the solutions investigated within the economic theory has been high on the global agenda since 70s. Variables that encourage firms to innovate and/or use environment-friendly technologies is an important subtitle in this issue. According to the common definition in the environmental economics literature, eco-innovation consists of new or modified processes, techniques, systems and products to avoid or reduce environmental damage. Although there are a lot of variables that determine the eco-innovation level of a firm, national and international environmental policy –as one of them- worths significantly noting. Under some conditions, the stringency of environmental regulations induces firms to reduce their costs by innovating new environment-friendly technologies. Therefore, environmental regulations may lead a so-called “win-win” situation characterized by both cost reducing/profit maximizing behaviour of the firm and environmental benefits. On the other hand, international harmonization of environmental regulations may create a comperative advantage for the eco-innovationg firms in the newly innovated technologies and strengthen this “win-win” situation. Market structure, technological capabilities, awareness and pressures of the demanders for cleaner technology are the other variables which determine the eco-innovation level of a firm. This study has concentrated on the variables that determine eco-innovation level of a firm. Both endogenous and exogenous variables are analysed in detail. As a consequence, it has been found that (1) the effect of environmental regulations on eco-innovation should be emphasized diligently, (2) international harmonization of environmental regulations supports eco-innovation, and finally (3) increasing awareness of society about environmental issues may be influent on ecoinnovation.  

Keywords

• Environmental Innovation,Eco-innovation,Environmental Policy,Porter Hypothesis,European Union

References

1. Baumol, W. J., (2002); The Free Market Innovation Machine – Analyzing the Growth Miracle of Capitalism, Princeton University Press, New Jersey.
2. Beise, M. and Rennings, K., (2004); “Lead Markets and Regulation: A Framework for Analyzing the International Diffusion of Environmental Innovations”, Ecological Economics, Volume 52 (1), pp. 5-17.
3. Biglaiser, G. and Horowitz, J. K., (1995); “Pollution Regulation and Incentives for Pollution-Control Research”, Journal of Economics and Management Strategy, Volume 3 (4), pp. 663-684.
4. Brunnrmeier, S. B. and Cohen M. A. (2003); “Determinants of Environmental Innovation in US Manufacturing Industries”, Journal of Environmental Economics and Management, Volume 45, pp. 278-293.
5. De Vries, F. P. and Withagen, C., (2005); “Innovation and Environmental Stringency: The Case of Sulphur Dioxide Abatement”, University of Tilburg Discussion Paper, No: 18, pp. 1- 33.
6. Downing, P. B. and White, L. J., (1986); “Innovation in Pollution Control”, Journal of Environmental Economics and Management, Volume 8, pp. 225-271.
7. European Commission, (2011) “Attitudes of European entrepreneurs towards eco-innovation: Analytical Report” (online at http://ec.europa.eu/public_opinion/flash/fl_315_en.pdf 07/03/2016)
8. Faber, A. and Frenken, K., (2009); “Models in Evolutionary Economics and Environmental Policy: Towards an Evolutionary Environmental Economics”, Technological Forecasting and Social Change, Volume 76(4), pp. 462-470.

9. Gatersleben,B. – Steg, L. and Vlek, C., (2002); “Measurement and Determinants of Environmentally Significant Consumer Behavior”, Environment and Behavior, Volume 34 (3), pp. 335-362.
10. Geroski, P.A., (1990); “Innovation, Technological Opportunity, and Market Structure”, Oxford Economic Papers, Volume 42 (3), pp. 586602.
11. Horbach, J., (2008); “Determinants of Environmental Innovation – New Evidence from German Panel Data Sources”, Research Policy, Volume 37, pp. 163-173.
12. Jaffe, A. and Palmer, K., (1997); “Environmental Regulation and Innovation: A Panel Study”, The Review of Economics and Statistics, Volume 10, pp. 610-619.
13. Jaffe, A. – Newell, R. G. and Stavins, R. N., (2002); “Environmental Policy and Technological Change”, Environmental and Resource Economics, Volume 22 (1-2), pp. 41-69.
14. Lanoie, P., Laurent-Lucchetti, J., Johnstone, N. and Ambec, S. (2011); “Environmental Policy, Innovation and Performance: New Insights on the Porter Hypothesis”, Journal of Economics & Management Strategy, Volume 20(3), pp. 803-842
15. Mainieri, T. – Barnett, E. G. – Valdero, T. R. – Unipan, J. B. and Oskamp, S., (1997); “Green Buying: The Influence of Environmental Concern on Consumer Behavior”, The Journal of Social Psychology, Volume 137 (2), pp. 189-204.
16. Milliman, S. R. and Prince, R., (1989); “Firm Incentives to Promote Technological Change in Pollution Control”, Journal of Environmental Economics and Management, Volume 17, pp. 247-265.
17. Montenero, J. P., (2002); “Permits, Standards, and Technology Innovation”, Journal of Environmental Economics and Management, Volume 44, pp. 23-44.
18. Oates, W. E. – Palmer, K. and Portney, P. R., (1993); “Environmental Regulation and International Competitiveness: Thinking about the Porter Hypothesis”, RFF Discussion Paper, 94-02.
19. Porter, M. E. and van der Linde, C., (1995); “Toward a New Conception of the Environment-Competitiveness Relationship”, Journal of Economic Perspectives, Volume 9 (4), pp. 97-118.
20. Rennings, K., (2000); “Redefining Innovation - Eco-innovation Research and the Contribution from Ecological Economics”, Ecological Economics, Volume 32 (2), pp. 319-332.
21. Scherer, F. M., (1967); “Market Structure and the Employment of Scientists and Engineers”, American Economic Review, Volume 57, pp. 524-531.
22. Young, W. – Hwang, K. – McDonald, S. ve Oates C. J., (2010); “Sustainable Consumption: Green Consumer Behaviour When Purchasing Products”, Sustainable Development, Volume 18, pp. 20-31.