Innovation as a driver of eco‐innovation in the firm: An approach from the dynamic capabilities theory

The aim of this study is to investigate how innovative capabilities of the firm affect eco‐innovation from a dynamic capability lens. We build on OECD research to conceptualise eco‐innovation as the capacity with which firms modify, redesign, and create products, processes, procedures, and organisations in order to reduce environmental impact. We propose and test the temporal and relational properties of eco‐innovation as a capability. We demonstrate that eco‐innovation possesses two properties of innovative capabilities, namely, persistence over time and interrelation with other innovations. We thus shed new light on the mechanism through which firms engage in eco‐innovation. We also provide empirical evidence to the debate on the relationship between the “normal” innovation (technological or nontechnological) and eco‐innovation. We show that eco‐innovation and innovation are interrelated both simultaneously and sequentially. Moreover, we show that innovation capabilities and eco‐innovation are not only related, but they also have a complementary nature, which facilitates the development of future eco‐innovation.     

Corporate sustainability and innovation in SMEs: Evidence of themes and activities in practice

Recently, innovation processes towards sustainable development have received increasing attention in academic literature. This research introduces the combination of insights from innovation theory, sustainable development practice and small business characteristics to unlock new knowledge on factors that influence the translation of sustainable innovation within small and medium‐sized enterprises (SMEs) into practice. The sustainability themes and activities as described for large companies (i.e. in the sustainability reporting and management literature) were used as starting point in this study. It presents empiric results of the PRIMA Project conducted within the rubber and plastics industry (RPI) on sustainable innovation activities. It will show that many sustainable innovations are directed at the improvement of technological processes (eco‐efficiency) and to lower costs of production. These innovations can be seen as incremental. Companies with sustainability integrated in their orientation and innovation processes show value creation: the development of products new to the market (radical innovations) and cooperation with stakeholders. The PRIMA project shows that more insight in SME innovative characteristics and (e)valuation of sustainable innovation efforts provides opportunities to improve the sustainability performance of SMEs. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.     

Supply chain collaboration and eco‐innovations: An institutional perspective from China

This study explores the impact of supply chain collaboration on eco‐innovations in the context of 220 Chinese manufacturing supplier firms involved in global supply chain networks. It investigates how supplier and customer collaborations help firms to enhance product eco‐innovations, and/or process eco‐innovations, and how the institutional context (i.e., regulatory, market, and community pressures) influences these relationships. The structural equation modeling approach is used to analyze the data captured from medium and large manufacturing enterprises in three major sectors: automotive, electronics, and textiles. The results show that community pressure has a positive effect on supplier collaboration, which further leads to enhanced process eco‐innovation. On the other hand, the findings indicate that while market pressure enhances customer collaboration, this does not reinforce product eco‐innovation. Contrary to our expectation, regulatory pressures do not impact supplier or customer collaboration for innovation. Overall, different institutional factors indicate divergent effects on supply chain collaboration and product/process eco‐innovation. The importance of normative pressures, such as those applied through the local community and interest groups, for eco‐innovations in production processes is further discussed as a typical feature of the institutional environment of Chinese supplier firms.     

Sustainability Strategy and Eco‐Innovation: A Moderation Model

This study develops a moderation model to examine the role of a proactive environmental strategy on eco‐innovation. Drawing upon the perspectives of contingency theory, this study argues that the impacts of sustainability strategy on eco‐innovation depend on market demand, innovation intensity and government subsidy. The sample used to test the hypotheses is obtained from the Community Innovation Survey in Taiwan. A total of 2955 manufacturing firms are included in the final sample. A logit moderating regression is adopted to analyze the models. The results reveal that market demand and government subsidy positively moderate the relationship between environmental strategy and eco‐innovation. Specifically, firms are more likely to adopt a proactive environmental strategy to improve eco‐innovation under high levels of market demand and government subsidy. Furthermore, the results indicate that innovation intensity affects the effect of environmental strategy on eco‐innovation, but the direction of the influence varies with different categories of eco‐innovation. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

The effect of regional factors in the development of eco‐innovations in the firm

This research addresses the study of the effect of regional factors in the development of eco‐innovations in the firm. We assume the hypothesis of regional heterogeneity, that is, geographical factors and the regional heterogeneity play an important role in determining the innovations in the firms. In this line, we will approach our study from the perspective of regional innovation systems (RISs). Therefore, our research question involves the evaluation of regional factors as determinants of eco‐innovation developing in the firm. To examine these questions, the PITEC database that covers the period 2011–2013 was used. Overall, 5,461 firms have been employed for the ordinal logit regression model. This research contributes to the studies of eco‐innovation, extending the investigation into drivers of eco‐innovation, and highlights the impact that RIS has on the eco‐innovative development in the firm. We find that regional interaction and regional characteristics are key elements for the development of eco‐innovation in firms. Thus, the density of companies in the region, the regional per capita income, and the existence of financing mechanisms are key elements for the eco‐innovative development in the firm.     

Responsible Innovation Toward Sustainable Development in Small and Medium‐Sized Enterprises: a Resource Perspective

What resources do small enterprises need to develop responsible innovations that enhance sustainable development? Does lack of resources prevent innovation toward sustainability in small and medium‐sized enterprises (SMEs) or can innovations be created with scarce resources? This study investigates environmentally and socially responsible innovations of SMEs from a resource perspective, based on empirical data from 13 Nordic SMEs. The findings indicate that SMEs can create responsible innovations with very different resource combinations. The most common resource combination comprises equity, research and development cooperation, networks, industry knowledge and reputation. Except for financial capital in the form of equity, which appears a necessary condition for responsible innovation from SMEs, resource needs vary between technological and business model innovations. Creating business model innovations appears to be possible with scarce resources, at the very least with equity and social capital. Environmental technology innovations call for more abundant resource combinations. In particular industry knowledge appears to be a key resource for such innovations. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment     

Environmental management capabilities for a “circular eco‐innovation”

At a micro level, eco‐innovation marks a transition towards a circular economy (CE), and standardised routines and controls are being implemented by businesses to introduce eco‐innovative processes and thus a circular business model. Eco‐innovation applied to a circular model implies changes to companies' environmental management and accounting practices used to manage natural resources. In this context, this study analyses and measures formal and informal environmental management systems, such as certification standards and other management and environmental accounting procedures used in eco‐innovation and the CE within the dynamic capabilities theoretical framework. The study also investigates the cause‐and‐effect relationship between firms' “circular eco‐innovation” and environmental capabilities using partial least squares structural equation modelling and tests it using a sample of Spanish companies. This study offers new knowledge about the interposition of business eco‐innovation and CE‐related activities introduced by firms from the dynamic capabilities perspective.     

Innovation and corporate sustainability: An investigation into the process of change in the pharmaceuticals industry

Although there has been considerable research effort directed at refining the content of corporate environmental performance, e.g. corporate environmental reporting and accounting, there has been relatively little empirical investigation to date on the process of corporate eco‐change. This research reports on the quantitative and qualitative results of a survey of German and UK pharmaceuticals firms, which evaluated the significance of the various incentives, both intra‐firm and external to the organization, that have stimulated eco‐change. We find that, although the industry is one that has been characterized by voluntary agreements and proactive behaviour in the past, regulation still remains the main driver for sustainability improvements. New technology is the second most important driver. Stakeholder dialogue and inter‐firm cooperation were both revealed to be relatively weak forces for eco‐change. The study also tested the validity of the conventional neo‐classical economic world‐view of innovation in firms versus a more radical co‐evolutionary one. The former assumes that firms respond only to profit signals and do so efficiently, whereas the latter assumes that change is path dependent; i.e., the firms’ norms and routines and past experiences are influential. We find that, although the neo‐classical perspective stands up to our empirical investigation of eco‐innovation to some degree, the co‐evolutionary approach better captures the complexity of the corporate eco‐change process. Copyright © 2001 John Wiley & Sons, Ltd. and ERP Environment     

Is environmental innovation conducive to corporate financing? The moderating role of advertising expenditures

Environmental innovation is an important way for firms to achieve sustainable development and acquire resources. Based on the stakeholder, resource dependence, and signal transmission theories, this study divided environmental innovation into substantive and strategic eco‐innovation and constructed a relationship model among environmental innovation, advertising expenditures, and corporate financing. Selecting 162 Chinese manufacturing listed companies from 2012 to 2017 as the research sample and adopting the multiple regression analysis method, the study found that substantive eco‐innovation had a positive effect on corporate financing, but strategic eco‐innovation had a significant negative effect on corporate financing. Further, advertising expenditures played a positive moderating role between substantive eco‐innovation, strategic eco‐innovation, and corporate financing. The robustness test further confirmed these results.     

Green Product Innovation in Manufacturing Firms: A Sustainability‐Oriented Dynamic Capability Perspective

Despite environmental sustainability being identified as one of the key drivers of innovation, extant literature lacks a theoretically sound and empirically testable framework that can provide specific insights into green product innovation from a capability perspective. This study develops a theoretical framework from a sustainability‐oriented dynamic capability (SODC) perspective. We conceive SODCs as consisting of three underlying processes (external resource integration, internal resource integration, and resource building and reconfiguration) that influence the change/renewal of sustainability‐oriented ordinary capabilities (SOOCs) (green innovation capability and eco‐design capability). This study answers two key questions: which SODCs are needed to develop green innovation and eco‐design capabilities? Which of these capabilities lead to better market performance of green products? We test a structural model linking SODCs to market performance in 189 Italian manufacturing firms. First, we find that the nature of the SODC–performance link (direct or indirect) depends on the SODC type. Specifically, resource building and reconfiguration is the only SODC with a direct effect on market performance. Second, all three types of SODC affect the eco‐design capability, which mediates the link between SODCs and market performance. Third, we find that external resource integration is the only SODC affecting the green innovation capability, which mediates the link between external resource integration and market performance. Resource building and reconfiguration is the SODC with the overall (direct and indirect) highest impact on market performance. This study, among the first to consider capabilities for green product innovation under a dynamic capability perspective, provides implications for scholars, managers and policy makers. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

Energy eco‐innovations for sustainable development: Exploring organizational strategic capabilities through an energy cultures framework

This article reports on research on energy eco‐innovation using case studies of firms. Positioning energy efficiency changes in an organization as “eco‐innovations,” the paper examines the firm‐level resources involved for these to be successful. To identify these resources, the energy cultures (EC) framework, an organizing tool to understand energy behaviour, is drawn on. From an analysis of 142 case studies of successful business and energy change, three models are developed. It is found that the EC framework (consisting of norms, material culture, and practices) makes explicit key resources involved in developing energy eco‐innovations. The findings show that for an eco‐innovation capability, there is a need to align the physical resources with intangible resources to lead to learning and knowledge that, in turn, needs to be aligned with the firm strategies. This research has implications for developing company strategy and practice to drive energy eco‐innovations.     

The Importance of the Diverse Drivers and Types of Environmental Innovation for Firm Performance

Today, firms are faced with a number of environmental challenges, such as global warming, pollution control and declining natural resources. While there is increasing pressure to deliver environmentally friendly products and services, little is known about what drives the many different types of environmental innovation, or how such pursuits' impact firm performance. Using a sample of 2181 firms, this paper examines the factors that drive nine different types of eco‐innovation in Ireland, and assesses how such innovations impact firm performance. We find that, while demand‐side, supply‐side and regulatory drivers impact on the likelihood of a firm engaging in eco‐innovation, the relative magnitudes of these impacts vary across the types of eco‐innovation considered. Moreover, we find that only two of the nine types of eco‐innovation positively impact firm performance. The results point to regulation and customer pressure as viable mechanisms through which firms can be encouraged to eco‐innovate. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Environmental Policy in the Nordic Wood Product Industry: Insights Into Firms’ Strategies and Communication

The purpose of our study is to explore how companies operating in the Nordic wood products value chains currently use environmental performance measures in their environmental policy and communication with stakeholders. Apart from the regularly‐used environmental management certificates, the ability of wood material to store carbon and the use of sustainable forest management certificates open up interesting strategic options for firms in the implementation of their environmental policy. The primary was collected through thematic managerial interviews in 2011 from 37 companies in Finland, Sweden and Norway, of varying size, roles in the value chain, conditions for green business practices and exports. Forest certification and environmental management systems were frequently used, but managers did not always perceive them to be useful, particularly for raising environmental awareness at the final consumer level. Nevertheless, the general attitude towards using environmental performance measures was seen as positive. Companies with a business‐to‐business orientation were the most proactive in terms of environmental communication, whereas companies in consumer markets were more reactive. The key stakeholders targeted for environmental communication were value chain partners and the authorities, and only to a lesser degree employees and environmental non‐governmental organisations. The key strategic role of environmental management and communication appeared to be securing the firms against negative environmental claims. The Nordic wood industry could improve their communication if the strategic orientation is shifted from the forest certification to the use of generic eco‐labels, and most of all, to the adoption of quantitative measures like carbon footprints and environmental product declarations. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment.     

Sustainability‐oriented capabilities for eco‐innovation: Meeting the regulatory,technology, and market demands

Despite consensus in the literature that regulation, technology push, and market pull drive eco‐innovation (EI), evidence remains limited on the diverse firm capabilities needed to boost EI. Building on the natural‐resource‐based view of the firm and the EI literature, this paper posits that firms need to renew and realign their capabilities, and ultimately develop distinctive sustainability‐oriented capabilities, in order to meet the rapidly changing regulatory, technology, and market demands. Results of the analysis, based on a survey of U.K. firms, reveal that EIs are more likely to arise when firms (a) build capabilities on voluntary self‐regulation (i.e., executive driven environmental management system and corporate social responsibility) because such organizational capabilities allow them to address increasing regulatory pressures; (b) invest in environmental research and development (i.e., eco‐R&D)—instead of generic research and development—because it provides them with the relevant and specific technological capabilities to tackle technology shifts towards sustainability; and (c) develop capabilities in green market sensing as such capabilities allow them to address green consumption needs.     

Evaluating environmental and social performance of large Portuguese companies: a balanced scorecard approach

A thematic balanced scorecard format was used to address environmental and social performance evaluation of 13 large companies operating in Portugal. Financial aspects of environmental and social company activities are also included. Companies were categorized as to their actual performance status using a predefined performance framework. Three categories were found: compliance with the law while emphasizing pollution control, pollution prevention and eco‐efficiency. Management tools and procedural matters were found to be most relevant for categorization. Often, reported information did not allow for quantitative evaluation of environmental burden reduction. Use of the thematic balanced scorecard format was useful to better understand the strengths and weaknesses of links between objectives and measurements, initiatives and achievements. Improvement as to environmental performance was found to be paralleled by increased social performance, suggesting that a multi‐level ‘sustainability’ performance categorization of these Portuguese companies is feasible. Driving forces for environmental management initiatives were found to differ by category of performance. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.     

Successful eco‐innovators: Exploring the association between open inbound knowledge strategies and the performance of eco‐innovative firms

The main purpose of this paper is to analyse the association between open inbound knowledge strategies and the performance of eco‐innovative firms in the food and beverage industry. We propose a mixed framework based on the eco‐innovation literature and the open innovation approach. We consider the characteristics in a traditional sector based upon a resource‐based perspective. Three types of firms are distinguished in terms of their sales growth in the Spanish food industry from the least to the most successful eco‐innovators. Using multinomial logistic regression models, it is shown that the diversity of collaborators (breadth of external sources of knowledge) and joint adoption of product and process eco‐innovations are positively associated with the probability of achieving high sales growth. Moreover, we find an inverted U‐shaped relationship between the breadth of the external search and firm performance, but only for the group of the most successful firms. Moreover, operational flexibility, knowledge‐based capabilities and company size are also positively related to the group of successful eco‐innovators.     

Radical innovation in scaling up: Boeing’s Dreamliner and the challenge of socio-technical transitions

Radical technological innovations are needed to achieve sustainability, but such innovations confront unusually high barriers, as they often require sociotechnical transitions. Here we use the theoretical perspectives and methods of Science and Technology Studies (STS) to demonstrate ways that existing theories of innovation and sociotechnical transitions, such as the Multi-Level Perspective (MLP), can be expanded. We test the MLP by applying STS methods and concepts to analyze the history of aircraft composites (lightweight materials that can reduce fuel consumption and greenhouse gas emissions), and use this case to develop a better understanding of barriers to radical innovation. In the MLP, "radical innovation" occurs in local niches—protected spaces for experimentation—and is then selected by a sociotechnical regime. The history of composite materials demonstrates that radical innovation could not be confined to "niches," but that the process of scaling up to a wholly new product itself required radical innovation in composites. Scaling up a process innovation to make a new product itself required radical innovation. These findings suggest a need to refine sociotechnical transitions theories to account for technologies that require radical innovation in the process of scaling up from the level of sociotechnical niche to regime.     

Employment impacts of cleaner production – evidence from a German study using case studies and surveys

The study assesses net employment effects of technical progress, which can be expected by the ongoing transition from end‐of‐pipe technologies towards cleaner production. Empirical evidence is presented on the basis of case studies and firm data including a telephone survey from German industry. The main result is that the transition from end‐of‐pipe technologies to cleaner production leads to a net creation of jobs, which is however restricted to a only small number of firms and to the group of highly skilled labour. Eco‐innovations, like other innovations, are non‐neutral. The demand for skilled and highly skilled labour rises while the demand for unskilled labour decreases. Synergies between environmental, labour market and innovation policy are apparent but they are however small and specific. The exploitation of these synergies requires the design of specific policy programmes differentiating between types of eco‐innovation. The promotion of product‐integrated environmental measures should be more successful if new products complement older ones, while process‐integrated environmental measures should be more successful if consumers' demand is more price elastic. Copyright © 2001 John Wiley & Sons, Ltd. and ERP Environment     

Responsiveness of industry to eco‐efficiency improvements in the product chain: the case of Akzo Nobel11

Increasingly, arguments are being made concerning the benefits of a marriage between ecology and economy in life cycle management. This article provides insights into the business conditions under which market opportunities and eco‐efficiency improvements in the product chain can indeed go hand in hand. The study focuses on the differences in responsiveness of six different sub‐business units within the chemical company of Akzo Nobel to eco‐efficiency improvements in the product chain and how these differences can be explained. The comparative analysis shows the importance of the following three criteria: (i) the level of environmental pressure; (ii) the room for manoeuvre and (iii) the degree to which the environment can be used to obtain a competitive advantage. These criteria may also be valid for other companies. However, research needs to investigate whether additional factors (e.g. the culture of the company, its technological capabilities and market strength) also influence corporate environmental response. Copyright © 2000 John Wiley & Sons, Ltd and ERP Environment     

‘Eco’ For Whom? Envisioning Eco‐urbanism in the Sino‐Singapore Tianjin Eco‐city,China

Eco‐cities have attracted international attention from governments, corporations, academics and other actors seeking to use sustainable urban planning to reduce urban environmental impacts. China has devoted significant political will and economic resources to the development of new‐build eco‐city projects, reflecting the Chinese government's goals to build a ‘harmonious society' in which environmental sustainability and social stability are mutually reinforcing. We critically analyse the case of the Sino‐Singapore Tianjin eco‐city to demonstrate that the eco‐city's ecologically modernizing visions of eco‐urbanism construct a protective environment for its residents that constrains broader consideration of social sustainability. Through analysis of the marketing and presentation of specific domestic and other spaces of the eco‐city, we examine the application of ecologically modernizing construction and technology to the design of the city. We argue that the eco‐city is discursively constructed as ecologically beneficial for its inhabitants rather than for the broader socio‐environmental landscape. Our analysis of residential spaces in Tianjin eco‐city introduces the question of what ‘eco’ means when considering the construction of eco‐urban environments for the city's residents.