Page 24 - Hojnik, Jana. 2017. In Persuit of Eco-innovation. Drivers and Consequences of Eco-innovation at Firm Level. Koper: University of Primorska Press
P. 24
In Pursuit of Eco-innovation
ented towards environmental policy instruments (encompassing tradable
permits, taxes) and regulatory framework concerning innovation meth-
ods and strategies in order to valuate and internalize the negative exter-
nal costs (Rennings 2000). On the other hand, innovation economics fo-
cused on positive spillovers of basic R&D efforts in companies (Rennings
2000). Eco-innovations produce positive spillovers in the innovation and
the diffusion phase (e.g. “a smaller amount of external costs compared
to competing goods and services on the market”; Rennings 2000, 326).
This leads to the double externality problem, which results in the reduc-
tion of incentives for companies to invest in eco-innovation (Rennings
2000). With a better coordination of environmental and innovation pol-
icy, the main aim of innovation policy would be to cut the costs of tech-
nological, institutional and social innovation (especially required would
24 be in phases of invention (financial support for pilot projects) and mar-
ket introduction (improvement of performance characteristics of eco-in-
novations)) (Rennings 2000). The key role of environmental policy re-
garding the diffusion phase would comprise internalization of external
costs, which are imposed by competing, non-ecological products or ser-
vices (Rennings 2000). The markets’ non-punishment for products and
services that harm the environment leads to the distortion of competi-
tion between environmental and non-environmental innovation (Ren-
nings 2000). Therefore, the competition between environmental and
non-environmental innovation continues to be distorted, unless markets
reward environmental improvements and punish environmentally harm-
ful impacts (Beise and Rennings 2005). In conclusion, all innovations
produce common knowledge spillovers, while eco-innovations also bring
positive externalities (environmental spillovers), which result in benefits
to society, while the costs are borne by the enterprises that practice and
introduce eco-innovations (Rennings et al. 2006). Because of those two
positive externalities created by eco-innovation (usual knowledge exter-
nalities through research and innovation phases as well as environmental
externalities in the adoption and diffusion phases), eco-innovations are
socially desirable (Belin et al. 2009).
Moreover, the double externality problem (i.e., both externalities re-
sult in sub-optimal investment in eco-innovations) leads to the last pecu-
liarity of eco-innovation, which pertains to the determinants of eco-in-
novation adoption (Rennings 2000). Innovation economics should also
consider regulatory framework as an important driver of eco-innovation
adoption (Rennings 2000). Although new eco-efficient technologies can
be spurred under technology push factors, it is also well known that mar-
ented towards environmental policy instruments (encompassing tradable
permits, taxes) and regulatory framework concerning innovation meth-
ods and strategies in order to valuate and internalize the negative exter-
nal costs (Rennings 2000). On the other hand, innovation economics fo-
cused on positive spillovers of basic R&D efforts in companies (Rennings
2000). Eco-innovations produce positive spillovers in the innovation and
the diffusion phase (e.g. “a smaller amount of external costs compared
to competing goods and services on the market”; Rennings 2000, 326).
This leads to the double externality problem, which results in the reduc-
tion of incentives for companies to invest in eco-innovation (Rennings
2000). With a better coordination of environmental and innovation pol-
icy, the main aim of innovation policy would be to cut the costs of tech-
nological, institutional and social innovation (especially required would
24 be in phases of invention (financial support for pilot projects) and mar-
ket introduction (improvement of performance characteristics of eco-in-
novations)) (Rennings 2000). The key role of environmental policy re-
garding the diffusion phase would comprise internalization of external
costs, which are imposed by competing, non-ecological products or ser-
vices (Rennings 2000). The markets’ non-punishment for products and
services that harm the environment leads to the distortion of competi-
tion between environmental and non-environmental innovation (Ren-
nings 2000). Therefore, the competition between environmental and
non-environmental innovation continues to be distorted, unless markets
reward environmental improvements and punish environmentally harm-
ful impacts (Beise and Rennings 2005). In conclusion, all innovations
produce common knowledge spillovers, while eco-innovations also bring
positive externalities (environmental spillovers), which result in benefits
to society, while the costs are borne by the enterprises that practice and
introduce eco-innovations (Rennings et al. 2006). Because of those two
positive externalities created by eco-innovation (usual knowledge exter-
nalities through research and innovation phases as well as environmental
externalities in the adoption and diffusion phases), eco-innovations are
socially desirable (Belin et al. 2009).
Moreover, the double externality problem (i.e., both externalities re-
sult in sub-optimal investment in eco-innovations) leads to the last pecu-
liarity of eco-innovation, which pertains to the determinants of eco-in-
novation adoption (Rennings 2000). Innovation economics should also
consider regulatory framework as an important driver of eco-innovation
adoption (Rennings 2000). Although new eco-efficient technologies can
be spurred under technology push factors, it is also well known that mar-
