2 Literature review of the academic background
2.1 Introduction
In the following section the key concepts for a thorough
understanding of the subject of the present thesis will be exposed. It will
start with a relatively short definition of ecoinnovation from three different
perspectives, followed by a discussion of the drivers of innovation in general
and eco-innovation in particular. Right after, the Porter Hypothesis (PH) will
be introduced. In order to have a better focus on the object of the thesis, the
PH will be dismantled, according to a common methodology in the literature,
into two main hypotheses: The `weak' PH and the `strong' PH. The former is
often, in its turn, decomposed into two hypotheses including a `narrow' one.
Since the main problematic is about the strong PH, a particular attention will
be given to this part with arguments for and against as well as an objective
critic of the PH as a whole.
2.2 Eco-innovation
2.2.1 Definition
Klemmer (1999) defined eco-innovations as all the
«techno-economic, organisational, social and institutional changes leading
to an improved quality of the environment». He made a clear distinction in
his article between end-of-pipe and integrated production techniques which may
concern either product or process innovation (Rennings, 2000). The conventional
comprehension of product innovations is, as articulated in the Manual of Oslo
(OECD/EUROSTAT, 2005), the innovation that may lead to novel products or
enhanced ones. Nevertheless, the scope of product eco-innovation includes the
application of known technologies for new utilisations or the investment in new
technologies in order to enhance current products with improved environmental
impact, for example products that need fewer inputs. Thus, the main difference
between environmental and conventional product innovation is that the former
abates the environmental problems. It is important to note that sometimes
businesses achieve product eco-innovations even without a clear purpose of
preventing environmental externalities. Consequently, product eco-innovation
is, before anything else, a wise business decision that associates cost cutting
strategy with environmental benefits (Triebswetter & Wackerbauer, 2008).
Kemp and Pearson (2008) suggested a more exhaustive definition
of eco-innovation with three main characteristics, namely the novelty, the aim
and the state of art compared to alternatives:
«Eco-innovation is the production, application or
exploitation of a good, service, production process, organizational structure,
or management or business method that is novel to the firm or user and which
results, throughout its life cycle, in a reduction of environmental risk,
pollution and the negative impacts of resources use (including energy use)
compared to relevant alternatives».
2.2.2 Determinant for eco-innovation
Determinants of innovation in general and eco-innovation in
particular are usually divided in the literature in two distinct components:
the supply side and demand side drivers. In case of the supply side, the
crucial importance of innovation for businesses is supposed to push mangers to
seize the opportunity to develop new technologies, and this is known as the
`technology push'. On the other hand, the demand for new products will force
the businesses to adapt themselves and innovate, this is known as the `demand
pull'. Likewise, the supply push and the demand pull are considered by the
evolutionary theory of innovation as the main drivers for innovation (Nelson
and Winter, 1977; Pavitt, 1984), as pointed out by Triebswetter &
Wackerbauer (2008):
«Already Schumpeter (1942) further differentiates the
innovation process according to market power. He assumes a positive
relationship between market power and innovation, suggesting that large firms
are more innovative than small ones. According to Schumpeter, monopolists are
more innovative because they enjoy superior access to capital, have better
possibilities to pool risks and can exploit economies of scale in maintaining
costly R&D structures.»
Other authors consider `technological opportunities' as a main
driver of innovation, meaning that if there is room to develop technologies not
yet discovered, businesses will immediately invest in innovation in order to
grasp this opportunity (Cohen and Levinthal, 1989) but only under minimum
conditions of intellectual protection as patents, privacy rights, etc.
Likewise, the first mover advantage, `learning curve effects', and economies of
scale (Dosi, 1988) or via regulation by created new demand for instance
constitute other important drivers for innovation.
Consequently, ER constitutes a relevant eco-innovation driver,
as suggested above; together with the push-pull effects of both market sides'
factors that encourage ecoinnovation (Kemp, 1993). Admittedly,
«profit-maximising firms will seek ways to reduce their production costs
for a given level and quality of output, including environmental aspects.»
(Triebswetter & Wackerbauer, 2008)
In fact, according to Türpitz (2004) ER has played a
great role in the development of eco-innovation and thusly reducing the
environmental externalities. Another research found that for proactive
innovative companies, the «anticipation of upcoming legislation is a
decisive factor for environmental innovations» (Rehfeld et al., 2004).
Krozer, (2002) argues that «none of the other drivers
(e.g. new technology, incentives, information or knowledge transfer) have been
found to be as significant as the legislative push for eco-innovations.»
Since, ER offers a «clear time lines and certainty of regulation»
which is much valued by managers. Clayton et al. (1999) came to the same
conclusion about the positive effect of ER on eco-innovation; however they
added that it should be adapted to the specific features of each industry.
Finally, Ashford (2002) pointed out the critical importance of the design of ER
(whether it is market-based or Command & Control) in order to limit the
trade-off between environmental protection and competitiveness.
| 
