The Porter Hypothesis. Diffusion of innovations theory. Regulation & Innovation. Environmental Innovation. Hypotheses. Methodology. Empirical model. Results.
Environmental regulation & Eco-innovation: Insights from the diffusion of innovations theory
Who?
Abdel. BITAT
From?
18th EBES conference American University of Sharjah, U.A.E
When?
January 8-10, 2016
Outline Introduction Literature review The Porter Hypothesis Diffusion of innovations theory Regulation & Innovation Environmental Innovation Hypotheses Methodology Empirical model Results Discussion Command & Control regulation Market-based regulation No regulation
Ph.D. Thesis
Central question Subquestions:
Does environmental regulation improve business competitiveness while reducing environmental harm?
Does environmental regulation trigger eco-innovation at the firms level? Does eco-innovation improve business competitiveness and outweigh the cost of regulatory compliance?
Ph.D. Thesis
Central question Subquestions:
Does environmental regulation improve business competitiveness while reducing environmental harm?
Does environmental regulation trigger eco-innovation at the firms level? Does eco-innovation improve business competitiveness and outweigh the cost of regulatory compliance?
The Porter Hypothesis
Environmental regulation and competitiveness trough innovation
Figure: The Porter Hypothesis
Diffusion of innovations
Figure: Diffusion of innovations
[Rogers, 2010]
Diffusion of innovations theory Diffusion of innovations
[Stoneman and Battisti, 2010]
Regulation & Innovation Ecological modernization
[Murphy and Gouldson, 2000]
Environmental Innovation
[Huber, 2008] "Stringent environmental regulation paves the way of environmental innovation." [Murphy and Gouldson, 2000] "Innovative policy instruments need to replace traditional regulation." [Johnstone, 2005] "Performance-based regulation rather than standardbased regulation."
Environmental Innovation
[Huber, 2008] "Stringent environmental regulation paves the way of environmental innovation." [Murphy and Gouldson, 2000] "Innovative policy instruments need to replace traditional regulation." [Johnstone, 2005] "Performance-based regulation rather than standardbased regulation."
Environmental Innovation
[Huber, 2008] "Stringent environmental regulation paves the way of environmental innovation." [Murphy and Gouldson, 2000] "Innovative policy instruments need to replace traditional regulation." [Johnstone, 2005] "Performance-based regulation rather than standardbased regulation."
Hypotheses
If environmental regulation is, indeed, necessary for environmental innovation, How should it be designed? H1 Standards-based regulation does not foster innovation. H2 Performance-based regulation does foster innovation. H3 Financial policy instruments do foster innovation. H4 Market-based incentives do foster innovation. H5 Regulation is necessary to foster innovation.
Theoretical model
Empirical model
Dynamic Negative Binomial Model 0
0
yit = ρyit−1 + xit β + wi γ + νit Where: yit−1 xit wi νit
Lagged values of the dependent Time-varying variables Time-invariant variables Time-varying error term
Data
Mannheim Innovation Panel (MIP) Part of the Community Innovation Survey. (European Commission) Gross sample of around 30 000 with a response rate of 26%. Net panel data sample (2006-2011) close to 2000. Stratified sample by sector (23), size (3) and region (2).
Variables
Results
Command & Control regulation Standardbased instruments
- Less effective. - Imposed technology (End-of-pipe). - No beyond-compliance incentive.
Performancebased instruments
- More Effective. - Freedom of technology (More efficient/effective). - Long-term incentive.
Command & Control regulation Standardbased instruments
- Less effective. - Imposed technology (End-of-pipe). - No beyond-compliance incentive.
Performancebased instruments
- More Effective. - Freedom of technology (More efficient/effective). - Long-term incentive.
Command & Control regulation Standardbased instruments
- Less effective. - Imposed technology (End-of-pipe). - No beyond-compliance incentive. - Convergence.
Performancebased instruments
- More Effective. - Freedom of technology (More efficient/effective). - Long-term incentive. - Long implementation.
Market-based regulation
Financial instruments
- Correct market-failures. - Lack of a rewards and incentives system.
Market incentives
- Improved information flows. - Market for both green products and green innovation.
Market-based regulation
Financial instruments
- Correct market-failures. - Lack of a rewards and incentives system. - Quantitative.
Market incentives
- Improved information flows. - Market for both green products and green innovation. - Less certain results.
No regulation
Selfcommitment
- Negative externalities. - Spillover effect. - Financial attractiveness
Thank you for your attention !
Some sources Huber, J. (2008). Pioneer countries and the global diffusion of environmental innovations: Theses from the viewpoint of ecological modernisation theory. Global Environmental Change, 18(3):360–367. Johnstone, N. (2005). The innovation effects of environmental policy instruments. In Indicator systems for sustainable innovation, pages 21–41. Springer. Murphy, J. and Gouldson, A. (2000). Environmental policy and industrial innovation: integrating environment and economy through ecological modernisation. Geoforum, 31(1):33–44. Rogers, E. M. (2010). Diffusion of innovations. Simon and Schuster. Stoneman, P. and Battisti, G. (2010). The diffusion of new technology. Handbook of the Economics of Innovation, 2:733–760.
