Innovation Strategies and Implementation of Various Circular Economy Practices: Findings from an Empirical Study in France

Abstract

We go beyond the literature that argues for environmental innovation as an essential driver of the transition to a Circular Economy (CE), examining whether firms deploying specific innovation strategies are better placed to adopt this transition. Distinguishing four basic Schumpeterian innovation strategies (product, process, single, complex innovation strategy) and three others (frugal, organizational, business model innovation), we measure the transition to the CE by examining the adoption by firms of five categories of circular practices proposed in the Flash Eurobarometer survey, used extensively in the literature. Estimations of multivariate probit models show that product innovator strategy has a minor influence on the adoption of CE practices, while a process innovation strategy has a slightly stronger impact. Most influential strategies are complex and frugal innovations. Business model innovation influences the implementation of only two CE practices. Our study reveals specific innovation strategies which are more impactful regarding the transition to the CE.JEL Codes: L1, O31, O33, Q2