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Determinants of Environmental Innovation – New Evidence from German Panel Data Sources

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  • Jens Horbach

    (University of Applied Sciences Anhalt)

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    Abstract

    In most cases, empirical analyses of environmental innovations based on firm-level data relied on survey data for one point in time. These surveys, especially designed for the analysis of environmental innovations, are useful because they allow for the inclusion of many explanatory variables such as different policy instruments or the influence of stake-holders and pressure groups. On the other hand, it is not possible to address the dynamic character of the environmental innovation process. This paper uses two German panel data bases, the establishment panel of the Institute for Employment Research (IAB) and the Mannheim Innovation Panel (MIP) of the Centre for European Economic Research (ZEW), to explore the determinants of environmental innovations. These data bases were not specifically collected to analyze environmental issues, but they contain questions that allow the identification of environmental innovations. We use discrete choice models for each of the data bases to analyze hypotheses derived from the theoretical (environmental) innovation literature. The econometric estimations show that the improvement of the technological capabilities (“knowledge capital”) by R&D or further education measures triggers environmental innovations – this result is confirmed by both data bases and both methods to measure environmental innovation. The hypothesis that “Innovation breeds innovation” is confirmed by the analysis of the MIP data. General and environmental innovative firms in the past are more likely to innovate in the present. Environmental regulation, environmental management tools and general organizational changes and improvements trigger environmental innovation, a result that has also been postulated by the famous Porter-hypothesis. Environmental management tools especially help to detect cost-savings (specifically material and energy savings). Following our econometric results, cost-savings are an important driving force of environmental innovation.

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    Bibliographic Info

    Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2006.13.

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    Date of creation: Jan 2006
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    Handle: RePEc:fem:femwpa:2006.13

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    Keywords: Environmental innovation; Panel data analysis; Discrete choice models;

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    1. Adam Jaffe & Richard Newell & Robert Stavins, 2002. "Environmental Policy and Technological Change," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 22(1), pages 41-70, June.
    2. Montero, Juan-Pablo, 2002. "Permits, Standards, and Technology Innovation," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 23-44, July.
    3. Rosenberg, Nathan, 1974. "Science, Invention and Economic Growth," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 84(333), pages 90-108, March.
    4. Flaig, Gebhard & Stadler, Manfred, 1994. "Success breeds success. The dynamics of the innovation process," Munich Reprints in Economics, University of Munich, Department of Economics 20366, University of Munich, Department of Economics.
    5. Hoffmann, Esther & Ankele, Kathrin & Ziegler, Andreas & Rennings, Klaus & Nill, Jan, 2003. "The Influence of the EU Environmental Management and Auditing Scheme on Environmental Innovations and Competitiveness in Germany: An Analysis on the Basis of Case Studies and a Large-Scale Survey," ZEW Discussion Papers 03-14, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Frondel, Manuel & Horbach, Jens & Rennings, Klaus, 2004. "End-of-Pipe or Cleaner Production? An Empirical Comparison of Environmental Innovation Decisions Across OECD Countries," ZEW Discussion Papers 04-82, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. Rehfeld, Katharina-Maria & Rennings, Klaus & Ziegler, Andreas, 2004. "Integrated Product Policy and Environmental Product Innovations: An Empirical Analysis," ZEW Discussion Papers 04-71, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. Frondel, Manuel & Horbach, Jens & Rennings, Klaus, 2008. "What triggers environmental management and innovation? Empirical evidence for Germany," Ecological Economics, Elsevier, Elsevier, vol. 66(1), pages 153-160, May.
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    11. Dario Bonato & Armin Schmutzler, 2000. "When do Finns Benefit from Environmental Regulations? A Simple Microeconomic Approach to the Porter Controversy," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), Swiss Society of Economics and Statistics (SSES), vol. 136(IV), pages 513-530, December.
    12. Geroski, P A & Walters, C F, 1995. "Innovative Activity over the Business Cycle," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 105(431), pages 916-28, July.
    13. Downing, Paul B. & White, Lawrence J., 1986. "Innovation in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 13(1), pages 18-29, March.
    14. Werner Smolny, 2003. "Determinants of innovation behaviour and investment estimates for west-german manufacturing firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(5), pages 449-463.
    15. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, Elsevier, vol. 13(6), pages 343-373, December.
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