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Regulation and Firm Perception, Eco-Innovation and Firm Performance

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  • Doran, Justin
  • Ryan, Geraldine

Abstract

Abstract Purpose - Recent OECD (2010, 2011) reports argue that eco-innovation is the key to realising growth. The purpose of this paper is to analyse the drivers of eco-innovation and to compare the impact of eco-innovation and non-eco-innovation on firm performance. The paper provides insights into the role government regulation can play in directing and stimulating eco-innovation. Design/methodology/approach - The approach utilised by this paper is empirical in nature. A modified innovation production function is used to assess the impact of regulation, consumer expectations and voluntary agreements on the performance of eco-innovation while a knowledge augmented production function is used to assess the impact of eco-innovation on firm performance. Findings - The findings suggest that regulation and customer perception can explain a firm‟s decision to engage in eco-innovation. Eco-innovation is also found to be more important than non-eco-innovation in determining firm performance. Research limitations/implications - Due to the limited availability of accounting data this paper uses turnover per worker as the measure of firm performance. As a result it is not possible to assess the impact of eco-innovation on firm costs. Social implications - The finding that regulation drives eco-innovation and that there is no trade-off between the optimal outcomes of lower levels of pollution for society and higher profit margins for businesses suggests that regulators and policy makers can stimulate growth and create a greener society. Originality/value - This paper provides an empirical analysis of the Porter and van der Linde‟s (1995) theory of environmental regulation and firm performance using novel real world data from over 2,000 Irish businesses.

Suggested Citation

  • Doran, Justin & Ryan, Geraldine, 2012. "Regulation and Firm Perception, Eco-Innovation and Firm Performance," MPRA Paper 44578, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:44578
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    File URL: https://mpra.ub.uni-muenchen.de/44578/1/Doran_and_Ryan_%282011%29.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Justin Doran & Geraldine Ryan, 2014. "Eco-Innovation – does additional engagement lead to additional rewards?," International Journal of Social Economics, Emerald Group Publishing, vol. 41(11), pages 1110-1130, November.
    2. repec:gam:jsusta:v:7:y:2015:i:12:p:16820-16835:d:60957 is not listed on IDEAS
    3. Ghisetti, Claudia & Pontoni, Federico, 2015. "Investigating policy and R&D effects on environmental innovation: A meta-analysis," Ecological Economics, Elsevier, vol. 118(C), pages 57-66.
    4. Arora, Sanjay K. & Foley, Rider W. & Youtie, Jan & Shapira, Philip & Wiek, Arnim, 2014. "Drivers of technology adoption — the case of nanomaterials in building construction," Technological Forecasting and Social Change, Elsevier, vol. 87(C), pages 232-244.
    5. Alexandra Rese & Anke Kutschke & Daniel Baier, 2016. "Analyzing The Relative Influence Of Supply Side, Demand Side And Regulatory Factors On The Success Of Collaborative Energy Innovation Projects," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(02), pages 1-43, February.
    6. Yu, Wantao & Ramanathan, Ramakrishnan & Nath, Prithwiraj, 2017. "Environmental pressures and performance: An analysis of the roles of environmental innovation strategy and marketing capability," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 160-169.
    7. repec:prp:uppmos:978-961-7023-53-4 is not listed on IDEAS
    8. repec:kap:jbuset:v:147:y:2018:i:2:d:10.1007_s10551-015-2927-3 is not listed on IDEAS
    9. repec:gam:jsusta:v:9:y:2017:i:5:p:721-:d:97632 is not listed on IDEAS
    10. Jang-Hwan Jo & Tae Woo Roh & Seonghoon Kim & Yeo-Chang Youn & Mi Sun Park & Ki Joo Han & Eun Kyung Jang, 2015. "Eco-Innovation for Sustainability: Evidence from 49 Countries in Asia and Europe," Sustainability, MDPI, Open Access Journal, vol. 7(12), pages 1-16, December.
    11. Eun Kyung Jang & Mi Sun Park & Tae Woo Roh & Ki Joo Han, 2015. "Policy Instruments for Eco-Innovation in Asian Countries," Sustainability, MDPI, Open Access Journal, vol. 7(9), pages 1-29, September.
    12. repec:gam:jsusta:v:9:y:2017:i:11:p:1980-:d:117012 is not listed on IDEAS
    13. Amandine Pinget & Rachel Bocquet, 2017. "Spécificités des sources de connaissances pour l'innovation environnementale des PME," Post-Print hal-01699651, HAL.
    14. Yudi Fernando & Muhammad Shabir Shaharudin & Nabsiah Abdul Wahid, 2016. "Eco-innovation practices: a case study of green furniture manufacturers in Indonesia," International Journal of Services and Operations Management, Inderscience Enterprises Ltd, vol. 23(1), pages 43-58.
    15. Lewandowska Małgorzata Stefania, 2016. "Do Government Policies Foster Environmental Performance of Enterprises from CEE Region?," Comparative Economic Research, De Gruyter Open, vol. 19(3), pages 45-67, September.
    16. repec:eee:tefoso:v:131:y:2018:i:c:p:303-314 is not listed on IDEAS
    17. repec:gam:jsusta:v:10:y:2018:i:1:p:281-:d:128104 is not listed on IDEAS

    More about this item

    Keywords

    Eco-innovation; Firm; Innovation; Ireland; Performance; Performance management; Technology;

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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