On the Drivers of Eco-Innovations: Empirical Evidence from the UK

23 Pages Posted: 19 Feb 2010

See all articles by Effie Kesidou

Effie Kesidou

University of Leeds - Leeds University Business School (LUBS); Economics Division

Pelin Demirel

Nottingham University Business School

Date Written: February 19, 2010

Abstract

The environmental economics literature emphasises the key role that environmental regulations play in stimulating eco-innovations. Innovation literature, on the other hand, underlines other important determinants of eco-innovations, mainly the supply-side factors such as firms’ organisational capabilities and demand-side mechanisms, such as customer requirements and societal requirements on corporate social responsibility (CSR). This paper brings together the views of these different disciplines and provides empirical insights on the drivers of eco-innovations based on a novel dataset of 1566 UK firms that responded to the Government Survey of Environmental Protection Expenditure by Industry in 2006. By applying the Heckman selection model, our findings indicate that demand factors affect the decision of the firm to undertake eco-innovations while these factors exhibit no impact upon the level of investments in eco-innovations. Hence, we suggest that firms initiate eco-innovations in order to satisfy the minimum customer and societal requirements, yet, increased investments in eco-innovations are stimulated by other factors such as cost savings, firms’ organisational capabilities, and stricter regulations. Finally, the paper offers interesting insights for policy makers by showing that the stringency of environmental regulations affects eco-innovations of the less innovative firms differently from those of the more innovative firms.

Keywords: Eco-innovations, Environmental Regulations, Organisational Capabilities

JEL Classification: Q5, O3

Suggested Citation

Kesidou, Effie and Demirel, Pelin, On the Drivers of Eco-Innovations: Empirical Evidence from the UK (February 19, 2010). Nottingham University Business School Research Paper No. 2010-03. Available at SSRN: https://ssrn.com/abstract=1555733 or http://dx.doi.org/10.2139/ssrn.1555733

Effie Kesidou (Contact Author)

University of Leeds - Leeds University Business School (LUBS) ( email )

Leeds LS2 9JT
United Kingdom

HOME PAGE: http://business.leeds.ac.uk/about-us/our-people/staff-directory/profile/effie-kesidou/

Economics Division ( email )

Leeds LS2 9JT
United Kingdom

HOME PAGE: http://business.leeds.ac.uk/about-us/our-people/staff-directory/profile/effie-kesidou/

Pelin Demirel

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

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