Environmental knowledge spillovers and productivity: A patent analysis for large international firms in the energy, water and land resources fields

Ensuring sustainable transition from more to less polluting technologies has become an area of increasing interest to academics and policymakers alike over the recent years. Environmental innovations play a key role in this transition. Still, to date relatively little empirical research has been undertaken on the topic. This applies particularly to the potential impact of knowledge spillovers stemming from environmental innovation, termed here as environmental knowledge spillovers (ES), on firms' productivity; a research gap explored in this paper. The focus is laid on three economic areas (Europe, Japan and USA), over the period 2002–2017. Additionally, firms' technological diversity, institutional quality, corporate taxes and the stringency of environmental policy are taken into account to estimate their role in facilitating firms' technical efficiency. The findings indicate that ES affect firms' productivity significantly and positively in all the investigated economic areas, whereas technological diversity increases technical efficiency for Japanese and European, but decreases it for American firms. The findings also show how the stringency of environmental policy (positively), institutional quality (positively) and corporate taxes (negatively) affect firms’ technical efficiency.