Impact of changes in regulatory performance standards on innovation: A case of energy performance standards for newly-built houses

This paper explores the impact of changes in prescribed performance standards on innovation in an industry characterised by loosely coupled systems. Using a case of energy performance standards for newly-built houses, it investigates how changes to these standards have affected the innovation of houses, combining qualitative and quantitative data from the Netherlands. The key finding is that standardisation does not only increase the amount of innovation conducted in an industry while achieving societal goals, such as improving energy efficiency. It also triggers different types of innovation. While innovators in the investigated field prefer incremental innovations which can be integrated easily into existing ways of building houses, tightened requirements require systemic innovations, meaning that processes and organisations need to be changed. Additionally, we find that ambitious performance standards can also impact the organisation of an entire sector: they can force integration, the tightening of couplings between firms, in order to achieve systemic innovation.