A STUDY ON ECO-INNOVATION AND ITS DETERMINANTS

Year 2016, Volume: 5 Issue: 1, 148 - 155, 30.03.2016

Billur Engin Balin , H. Dilara Mumcu Akan

https://doi.org/10.17261/Pressacademia.2016116658

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

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