Abstract
Policymakers have an important role in enabling eco-innovation. To assess the effectivity of these interventions, it is necessary to characterize policies, namely the level of policy stringency. The present study contributes to extant empirical literature by performing a cross-country assessment of the impact of policy stringency on the outcomes (rather than the inputs) of the eco-innovation process. Contrasting with extant evidence, results fail to evidence the relevance of policy stringency for eco-innovation performance. Notwithstanding, policy stringency emerged indirectly as a potential critical determinant. Indeed, the possibility to save costs is often driven by policy instruments that punish pollution intensive firms.
Highlights
The rising urgency and accumulation of environmental related problems is inducing policymakers to strive towards sustainable development (Millennium Ecosystem Assessment, 2005)
Policymakers play an important role to make eco-innovation possible because unlike in traditional innovation economics, policy intervention is required to overcome externality problems related to eco-innovation (Rennings, 2000)
The accumulated damages are to a great extent irreversible, and will prevent future generations from deriving the same benefits as current generations (Millennium Ecosystem Assessment, 2005)
Summary
The rising urgency and accumulation of environmental related problems is inducing policymakers to strive towards sustainable development (Millennium Ecosystem Assessment, 2005). The concept of sustainable development was first introduced in 1972 at the United Nations Conference on the Human Environment. The United Nations World Commission on Environment and Development (WCED) defines sustainable development in its 1987 report ‘Our Common Future’ (WCED, 1987: 41) as: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. The European Commission has identified eco-innovation as one of the key tools to achieve this sustainable development and has developed the Eco-Innovation Action Plan (EC, 2011). Policymakers play an important role to make eco-innovation possible because unlike in traditional innovation economics, policy intervention is required to overcome externality problems related to eco-innovation (Rennings, 2000). Environmental policies are needed to create incentives and reduce costs involved in technological, social and institutional innovation to stimulate eco-innovation (Khanna et al, 2009)
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