Environmental Regulation, Eco-innovation and Business Competitiveness

Bitat, Abdelfeteh
(2016) Centre de Recerca en Economia Industrial i Economia Pública Seminar — Location: Universitat Rovira i Virgili, Reus, Spain (12.July.2016)

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  • Bitat, AbdelfetehUSL-B
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Abstract
The relationship between environmental regulation and environmental innovation and business competitiveness is studied using a pluralist research strategy and a multi-level analysis based on size, sectoral and regional dimensions. Three theoretical approaches are used: neoclassical, evolutionary and induced innovation. The relationship is tested using a German firm-based panel and a count data model estimating the propensity of firms to innovate in response to five initiating factors. The relevance of the interactions between policy instruments as well as the influence of internal factors and path dependency is also tested. While the results do not allow to confirm the Porter hypothesis, they offer a refined version, emphasizing the nuances that apply to the conception of "regulation". In addition to the fact that not all types of regulation trigger eco-innovation, the results show that although necessary, environmental regulation is certainly not a sufficient condition for eco-innovation. On the other hand, the so-called "Strong" Porter Hypothesis linking eco-innovation to business competitiveness is tested using a firm-based German panel data and a dynamic limited dependent variable model. While the lack of dynamics has been one of the recurrent shortcomings in testing the Porter Hypothesis, excluding some time-invariant factors could also lead to omitted-variable bias. The results show that if businesses are to expect improved economic performance when engaging in eco-innovation, they need to signal their activities to the various stakeholders.
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Bitat, A. (2016). Environmental Regulation, Eco-innovation and Business Competitiveness. Centre de Recerca en Economia Industrial i Economia Pública Seminar, Universitat Rovira i Virgili, Reus, Spain. https://hdl.handle.net/2078.5/185564