Does eco-innovation improve business competitiveness? A dynamic panel data analysis
(2016) Jena Summer Academy — Location: Friedrich Schiller University Jena, Germany (24.July.2016)
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- Abstract
- The Porter Hypothesis claims that there is a positive relationship between environmental regulation, environmental innovation and business competitiveness. However, the empirical results in the literature remain inconclusive. In this paper, we limit the investigation to the relationship between environmental innovation and business competitiveness. This relationship is tested using a firm-based German panel data and a dynamic limited dependent variable model. We estimate the impact on return on sales of a combination of time varying and time invariant regressors, namely R&D intensity, the size and the market share on the one hand, and the sector and the region of the business on the other hand. The results show that there is indeed an overall positive relationship between environmental innovation and business competitiveness. However, when controlling for marketing intensity or limiting the data to specific sectors the relationship becomes insignificant due to omitted-variable bias. These results help explain why some researchers have come to find a positive effect of eco-innovation on business competitiveness while other have not.
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Bitat, A. (2016). Does eco-innovation improve business competitiveness? A dynamic panel data analysis. Jena Summer Academy, Friedrich Schiller University Jena, Germany. https://hdl.handle.net/2078.5/182753