Determinants of Eco-innovations by Type of Environmental Impact: The Role of Regulatory Push/Pull, Technology Push and Market Pull

Abstract

Empirical analyses of the determinants of environmental innovations were rarely able to distinguish between different areas of environmental impacts. The paper tries to close this gap by employing a new and unique dataset based on the German Community Innovation Survey conducted in 2009. The main purpose of the paper is to test whether different types of eco-innovations (according to their environmental impacts) are driven by different factors. Besides a complex set of different supply, firm specific and demand factors, the literature on the determinants of environmental innovations accentuates the important role of regulation, cost savings and customer benefits. We find that current and expected government regulation is particularly important for pushing firms to reduce air (e.g. CO2, SO2 or NOx) as well as water or noise emissions, avoid hazardous substances and increase recyclability of products. Cost savings are an important motivation for reducing energy and material use, pointing to the role of energy and raw materials prices as well as taxation as drivers for eco-innovation. Customer requirements are another important source for eco-innovations, particularly with regard to products with improved environmental performance and process innovations that increase material efficiency, reduce energy consumption and waste and the use of dangerous substances. Firms confirm a high importance of expected future regulations for all environmental product innovations.