Innovation: Management, Policy & Practice, 2015

Vol. 17, No. 1, 6–23, http://dx.doi.org/10.1080/14479338.2015.1011060

Eco-innovation: insights from a literature review

Cristina Díaz-García*, Ángela González-Moreno and Francisco J. Sáez-Martínez

Facultad de Ciencias Económicas y Empresariales, Universidad de Castilla La Mancha, Plaza de

la Universidad 1, 02071 Albacete, Spain
(Received 19 February 2014; accepted 16 August 2014)

Eco-innovation is still a young area of research; however it has been an area of

increasing concern for policy makers, academics and practitioners. The aim of this
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paper is to provide an overview of the existing body of literature on eco-innovations,

and identify the most relevant publications in the field and the topics of interest. We
have carried out a review of previous literature based on a Scopus search and
selecting the discipline “Social Sciences and Humanities”. The search offers us 384
articles. From their analysis, it can be observed that there is a clear increase in the
relevance of this issue within academia and several thematic trends arise in eco-
innovation research, with drivers of eco-innovation being the most popular. Our main
theoretical contribution is the development of a multilevel framework of eco-innova-
tion drivers, with our literature review having a specific focus on systematizing the
findings of the studies within this theme.
Keywords: eco-innovation; environmental innovation; green innovation; literature
review; drivers

1. Introduction
Nowadays there is an increasing social and political awareness of the importance of the
development of sustainable innovations. In December 2011, for example, the European
Commission launched the Eco-Innovation Action Plan (EcoAP), moving the EU beyond
green technologies and fostering a comprehensive range of eco-innovative processes, prod-
ucts and services. Environmental concerns for innovation are becoming more and more com-
mon as firms are more aware of the consequences of their activities and attempt to be
socially responsible. Companies are currently more environmentally oriented and are
increasing their investments in environmental issues (Vargas-Vargas, Meseguer-Santamaría,
Mondéjar-Jiménez, & Mondéjar-Jiménez, 2010). Eco-innovation can be defined as

the production, assimilation or exploitation of a product, production process, service or

management or business method that is novel to the organisation (developing or adopting
it) and which results, throughout its life cycle, in a reduction of environmental risk, pollu-
tion and other negative impacts of resources use (including energy use) compared to rele-
vant alternatives (Kemp & Pearson, 2007, p. 8).

These environmental concerns for innovation are driven either by external pressures
such as stricter governmental regulation and stakeholders or by the recognition that it
can lead to a competitive advantage and increased performance through cost reduction

*Corresponding author. Email: Cristina.Diaz@uclm.es

© 2015 Taylor & Francis

 Innovation: Management, Policy & Practice 7

and/or improved reputation. Furthermore, there is evidence that environmental

innovations do not undermine economic performance, neither in the short run nor in the
context of the global financial crisis (Cainelli, Mazzanti, & Zoboli, 2011).
Therefore, there is a growing importance of eco-innovation for research and policy in
order to make better use of natural resources and reduce the ecological footprint. In the
past 10 years, several studies have been undertaken to analyze the drivers, characteristics
and effects of eco-innovation, improving our understanding. Despite this, research on the
field is still in its infancy and it is considered a young field of research (Klewitz &
Hansen, 2013). Is has been recently argued that “the studies related to eco-innovation are
still preliminary and that the subject lacks specific research with empirical data from
survey and in-depth case studies” (Maçaneiro, da Cunha, & Balbinot, 2013, p. 179).
To our knowledge, there are few recent literature reviews in this field of research
(Berkhout, 2011; Kemp, 2010; Kemp & Oltra, 2011; Klewitz & Hansen, 2013;
Schiederig, Tietzer, & Herstatt, 2012). Therefore, the aim of this paper is to provide an
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overview of the existing body of literature on eco-innovations, and identify the most
relevant publications in the field and the topics of interest.
The paper is structured as follows. The second section is dedicated to defining eco-
innovation in relation to three other terminologies used to describe innovations with a
reduced negative environmental impact: green, sustainable and environmental. The third
section describes the approach used to carry out our literature review and presents the
findings. In the fourth section those findings are discussed, and the fifth section con-
cludes the paper providing some recommendations for future research.

2. Different notions and terminology

There are four different notions/terms used in the literature to describe innovations that
have a reduced negative impact on the environment: “green”, “eco”, “environmental”
and “sustainable”.
The Brundtland report, commissioned by the United Nations, was the one which
coined the term “sustainable innovation”, defining it as meeting

the needs of the present without compromising the ability of future generations to meet
their own needs. The concept of sustainable development does imply limits – not absolute
limits but limitations imposed by the present state of technology and social organization on
environmental resources and by the ability of the biosphere to absorb the effects of human
activities (Brundtland, 1987, p. 24).

This can explain why little research was conducted on this issue prior to 1990. Schiederig
et al. (2012) concluded that when comparing the definition of sustainable innovation
coined by the Brundtland report with the notions of eco-innovation, green and environ-
mental innovation, the difference is that the first one implements economical, ecological
and social aspects, whereas the rest include only the economic and ecological aspects.
Focusing on “green”, “eco” and “environmental innovation”, Schiederig et al.
(2012) observed that despite “environmental” innovation being the currently predomi-
nant term; since 2005, the notions “green” and “eco-innovation” became increasingly
used in scientific publications. Besides this, Schiederig et al. (2012, p. 182) identified

six important aspects in the different definitions: (1) Innovation object: Product, process,
service, method; (2) Market orientation: Satisfy needs/be competitive on the market; (3)
Environmental aspect: Reduce negative impact (optimum = zero impact); (4) Phase: Full
 8 C. Díaz-García et al.

life cycle must be considered (for material flow reduction); (5) Impulse: Intention for
reduction may be economical or ecological; and (6) Level: Setting a new innovation/green
standard to the firm.

These aspects enable them to analyze the different notions, concluding that almost all
aspects apply to nearly all innovation definitions, except the fourth one. They state that
this aspect appears only in the “eco-innovation” definitions by Kemp and Pearson
(2007) and Reid and Miedzinski (2008), who call explicitly for a full life cycle analysis
and a thorough analysis of all input and output factors, with the aim being to reduce
resource consumption. Therefore, Schiederig et al. (2012, p. 183) argued that “on this
particular point, there may well be some differentiation between the notions as scholars
using the term eco-innovation tend to call for precise impact analysis, whereas scholars
using the term green innovation remain at a shallow level”. However, most researchers
use the terms “environmental”, “green” and eco-innovation” interchangeably. Hence, for
the purpose of this paper we will analyze the literature on these three terms that define
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an innovation as one that aims to reduce the harm of the economic activities in the envi-
ronment. We will consider the three terms as interchangeable and identical. However,
throughout the paper we might distinguish between the different notions if it can
improve the understanding of the topic.
Therefore, focusing on eco-innovation, in general, researchers define it in two ways:
by its effect on the environment and/or by the intention of the innovator. It is more
difficult to verify an environmental motivation than an environmental result, although
the latter may also prove challenging (Carrillo-Hermosilla, Del Río, & Könnölä, 2010).
Table 1 presents several definitions of eco-innovation employed in key studies.

3. Literature review and findings

For the literature review, data were collected from the Scopus database in November
2013. Publications were collected using the search strings “eco-innovation”, “green
innovation” or “environmental innovation”, in abstract, keywords and/or titles, including
“all” published articles in this field within the “Social Sciences and Humanities” disci-
pline. Our total data-set, once we eliminated duplicities, includes 384 publications. We
decided to use the Scopus database because it has broader data coverage than the ISI
database, which has stricter methodological criteria for database coverage.
From a numerical analysis of this data-set, it can be observed that there is a clear
increase in the relevance of this issue within academia. We can state that it is a young
field of research, with articles starting to be published in the last decade of the past cen-
tury and with an upsurge in publications since 2009 (see Figure 1). We found that the
term “environmental innovation” is the predominant term. However, it is currently being
substituted by “eco-innovation”, since this one is the most commonly used in the last
three years.
Focusing on the journals, we found that research on these topics is widely spread
across different journals and many of them national journals with no diffusion within
the global academic community. The 384 papers were published in 177 different jour-
nals. Only a small group of journals seem to have a certain degree of specialization on
the topic, as it can be seen in Figure 2.
Regarding the present journal, to our knowledge, Innovation: Management, Policy
and Practice (IMPP) has only published one paper on the topic so far. The first pub-
lished article in the field in IMPP was published in 2011. Petruzzelli, Dangelico, Rotolo,
 Innovation: Management, Policy & Practice 9

Table 1. Definitions of Eco-innovation.

Author Focus Definition
Fussler and James Effect The process of developing new products, processes or
(1996) services which provide customer and business value but
significantly decrease environmental impact
Hemmelskamp Effect Innovation which serves to prevent or reduce anthropogenic
(2000) burdens on the environment, clean up damage already
caused or diagnose and monitor environmental problems
Rennings (2000) Motivation Innovation processes toward sustainable development
Charter and Clark Motivation A process where sustainability considerations are integrated
(2007) into company systems from idea generation through to R&D
and commercialization
Kemp and Pearson Effect The production, assimilation or exploitation of a product,
(2007) production process, service or management or business
method that is novel to the organisation (developing or
adopting it) and which results, throughout its life cycle, in a
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reduction of environmental risk, pollution and other negative

impacts of resources use (including energy use) compared to
relevant alternatives
European Both Any form of innovation aiming at significant and
Commission demonstrable progress towards the goal of sustainable
(2007) development, through reducing impacts on the environment
or achieving a more efficient and responsible use of natural
resources, including energy
Oltra and Saint Jean Effect Innovations that consists of new or modified processes,
(2009) practices, systems and products which benefit the
environment and so contribute to environmental
sustainability
Carrillo-Hermosilla Effect Innovation that improves environmental performance
et al. (2010)
Eco-innovation Effect The introduction of any new or significantly improved
Observatory (2013) product (good or service), process, organisational change or
marketing solution that reduces the use of natural resources
(including materials, energy, water and land) and decreases
the release of harmful substances across the whole life-cycle
Source: Adapted from Gonzalez-Moreno. et al.(2013).

Eco-innovation Green-Innov Environmental-Innov

NUMBER OF PAPERS

35
30
25
20
15
10
5
0
<2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
YEARS

Figure 1. Articles per year.

and Albino (2011) studied whether and to what extent, green innovations significantly
differ from non-green ones. With respect to other journals, more focused on environ-
mental issues, the Journal of Cleaner Production stands out above the rest with 28
 10 C. Díaz-García et al.

publications, followed by Business Strategy and the Environment with 22, and
Ecological Economics with 21. The fourth journal in this particular ranking is Research
Policy, a journal with a wider scope and traditionally more focused on innovation than
on eco-related issues.
From a thematic point of view, the topics of the articles were checked in order to
analyze trends in research. The review of all papers consisted firstly on dissecting our
sample in order to identify general research trends. All papers were read and classified
by the three authors to ensure reliability of the classification. In case of divergent
classifications, we discussed the articles in question, after which we were able to agree
on categories. It is a demanding task to develop an appropriate analytical frame in order
to derive a classification framework that permitted us to place all identified papers. We
used an iterative process to arrive at the final classification. Based on our classification,
we have identified several recurring themes across all reviewed papers (see Figure 3).
Although the initial themes were narrower, we group them in the following categories:
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 Performance: This category groups those studies that focus on the results and out-
comes of eco-innovation, either in financial performance, competitiveness, market
value, etc.
 Drivers: This category encompasses all the articles which aim to find the antecedents
of eco-innovation at different levels. These articles are mainly focused on the motiva-
tions behind the adoption, development or implementation of these innovations.
 Process: This category includes articles that focus on the process of development of
this type of innovations. For example on models for piloting eco-innovation, research
and development (R&D) management, processes for marketing eco-innovation, etc.

Journal of Industrial Ecology

European Journal of Innovation Management

International Journal of Innovation and Sustainable

Development

Industry and Innovation

Technological Forecasting and Social Change

Research Policy

Ecological Economics

Business Strategy and the Environment

Journal of Cleaner Production

0 5 10 15 20 25 30

Figure 2. Main Journals with publication on eco-innovation.

 Innovation: Management, Policy & Practice 11

Performance
40%

30%
Others Drivers
20%

10%

0%
Policy Process

Types Context

Eco-Innovation Green-Innov Environmental-Innov

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Figure 3. Thematic analysis of papers.

Macro-level
Policy instruments dedicated to specific eco-innovations
Other policies:innovation, industrial-sectoral
Technological innovation systems

Meso-level
Role of market dynamics (ie. New
customers needs,market segments)
Pressure groups

Micro-level
Values of owner/manager
Firms’ performances and competences
linked to ecoinnovation
Firms’ reputation and talent attraction
Cost-efficiency

Figure 4. Multilevel framework of eco-innovation drivers.

 Context: The articles in this category are those whose main interest is showing the spe-
cial issues occurring in the context of a study such as a specific country or region,
transition economies, etc. They are normally cross-country comparisons or compare
the results with those of other latitudes.
 12 C. Díaz-García et al.

 Types: The articles are included in this category when the aim of the study is either
classifying the different types of innovations or highlighting the specificities of a type
of eco-innovation: services, product design, process, urban eco-innovation.
 Policy: This category is formed by articles that focus on policy evaluation, transition
management and how policies can help in the diffusion of eco-innovations.
 Others: This category groups those articles whose main focus is neither any of the
above mentioned, normally theoretical papers.

We found that “drivers of eco-innovation” is a recurrent theme in the literature. More-

over, it is the largest category in the three terms analyzed. The analysis of the drivers of
eco-innovation is the main topic of research, with more than 30% of the total papers
focusing on this issue. Comparing the different terms employed in the literature, we
found that papers that use the term “eco-innovation” are also focused on the identifica-
tion of different types of eco-innovations (21%) as well as on the process (20%),
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besides the drivers (29%). Authors that use the term “green” do not have a clear second
“topic” and the identification and analysis of the drivers account for 38% of their objec-
tives. Finally, those researchers that use the term “environmental innovation” are
focused on the drivers (34%), followed by the process (16%) and policy issues (15%).
Therefore, in the following section we develop a multilevel framework of eco-
innovations’ drivers (see Figure 4), having our literature review a specific focus on sys-
tematizing the findings of the studies within this theme.

4. Multilevel framework of eco-innovation drivers

Previous literature has supported that environmental or eco-innovations differ from other
innovations as far as externalities and drivers of their introduction are concerned, high-
lighting mainly the importance of regulation to trigger them. In this section, as stated
previously, we propose a multilevel framework to understand the impact of different dri-
vers of eco-innovation and summarize the results of previous studies, classifying them
in three levels: micro, meso and macro. Moreover, we have selected this focus since the
drivers of environmental behavior in small- and medium-sized enterprises (SMEs) are
relatively under-researched (Worthington & Patton, 2005) and, therefore, the findings of
the study can guide policy makers in the design of environmental practices and can con-
tribute to informing SME owner–managers about which factors can help them to engage
in environmental initiatives.
Before summarizing the main results within each level, we would like to make sev-
eral considerations regarding this model. First, we have to call to attention for the use
of different measures of eco-innovation, which can be related to potential inconclusive
results when comparing previous studies. We also have to highlight the complementari-
ties of these levels. For example, Klewitz, Zeyen, and Hansen (2012) observe that the
proactive approach by a public intermediary (local authority) (meso level) is an essen-
tial push factor to trigger eco-innovations in SMEs with low absorptive capacity (micro
level). Finally, we have to stress that depending on the theoretical stance of the authors
some drivers are given more relevance than others. Whereas environmental economics
literature emphasises the importance of regulation, innovation literature underlines the
key role of other determinants of eco-innovations, mainly supply-side factors (such as
firms’ organizational capabilities) and demand-side mechanisms (such as customer and
societal requirements on corporate social responsibility). Environmental innovation is
 Innovation: Management, Policy & Practice 13

usually driven by a mixture of factors of environmental regulation, cost pressure,

competitive advantages and customer pressure.

4.1. Macro level drivers

There is agreement in the literature that regulation drives eco-innovation (Doran &
Ryan, 2012; Horbach, Rammer, & Rennings, 2012) and helps its diffusion (Wagner &
Llerena, 2011). It is the so-called Porter Hypothesis, which assumes that environmental
regulation stimulates innovation and leads to “win-win” opportunities where simultane-
ously pollution is reduced and firms’ competitiveness increased. For example, Veugelers
(2012, p. 1170) argues that “the private clean innovation machine, left on its own, is
not up to this challenge [reducing Green House Gas (GHG) emissions]. It needs govern-
ment intervention to address the combination of environmental and knowledge externali-
ties and overcome path dependencies”. He argues that firms are responsive to eco-policy
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demand interventions, through which governments have to leverage the internal strength
of private firms, also motivated by demand pull from customers and voluntary codes of
conduct. Furthermore, the finding that there is no trade-off between eco-innovation and
higher profit margins suggests that policy makers can stimulate growth and create a
greener society (Doran & Ryan, 2012). Two questions remain unanswered: what should
be the policy approach to obtain efficient results, and if expected regulations affect or
do not affect eco-innovation.
With regards to policy instruments, according to Veugelers (2012) policy interven-
tions are more effective when designed in policy mix and with time consistency. Other
studies also support the need for a mix of policy instruments (Brouillat & Oltra, 2012;
Klewitz et al., 2012; Williamson & Lynch-Wood, 2012). For example, Williamson and
Lynch-Wood (2012) propose that both softer forms of regulatory governance and direct
regulation are effective at inducing eco-innovations, as firms behave differently when
confronted with particular forms of regulation. Klewitz et al. (2012) also found that
SMEs may need facilitation for eco-innovation from different types of intermediaries
(public and private) with different levels of support (from customized to more loosely
held support, such as networks). Brouillat and Oltra (2012) focus on the impact of three
types of extended producer responsibility instruments (which are recycling fees, tax-
subsidy and norms) on eco-innovation. The results show that only tax-subsidy systems
and stringent norms can lead to radical innovations and to significant changes in product
designs. It seems that the impact of each instrument depends on the level of stringency
and on the reward system. Although, according to Kesidou and Demirel (2012) the
stringency of environmental regulations affects eco-innovations of the less innovative
firms differently from those of the more innovative firms. This last finding also points
to the need for future studies to research the complementarities between different levels
of drivers: regulation and firms innovative capabilities. Furthermore, it seems to be the
case that regulation might affect some types of eco-innovation more than others, for
example reducing air, water or noise emissions, avoiding hazardous substances and
increasing recyclability of products (Horbach et al., 2012).
Regarding expected regulations, previous research has found that they have a positive
effect on the development of eco-innovation (Triguero, Moreno-Mondéjar, & Davia,
2013) (with expected regulations being those regulations which are in the stage of evalua-
tion or adoption by policy-makers). There might be expectations about their content, or
their content might even be known by those agents who are going to be affected by the
policy. Being future policy measures, they can be classified at a macro level of influence.
 14 C. Díaz-García et al.

Within this level, we have also taken into account the country context and regional
factors. For example, in transition economies there are several factors that constitute sig-
nificant obstacles to adopting competitive environmental strategies. These factors are:
predominance of competitive advantages based on low labor costs, high potential of
increasing labor productivity, deficient environmental and industrial policies, and lack of
awareness in both business and policy environment as to the beneficial role of eco-
innovation in resource productivity. However, in these contexts there are sub-national
territories, usually with some degree of decentralized governance in the fields of innova-
tion, economic development and energy that act as regional “lighthouses” for eco-
innovation both to other regions and countries. These are the so called “transition
regions” (Cooke, 2011). The system and regional governance of these particular territo-
ries are related to the nature and role of the national eco-innovation regime, making the
top-down governmental influence visible. According to Gee and McMeekin (2011) eco-
innovation systems emerge and evolve to solve ecological problems, having the State
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with a core actor role in the mobilization of innovation systems through the imple-
mentation of specific institutional arrangements.
Horbach (2014) also emphasises that, within the empirical literature analyzing eco-
innovation determinants, the inclusion of regional and location factors has been
neglected due to a lack of adequate data. He observes that external knowledge sources
– such as the regional proximity to research centers and universities – are more impor-
tant for eco-innovations compared to other innovations. Differing from the previous line
of research of “transition regions”, he finds that eco-innovations are more likely in
regions characterized by high poverty rates and are less dependent on urbanization
advantages, therefore, there seems to be a chance for under-developed regions looking
for new business activities. Also Martin, McNeill, and Warren-Smith (2013) find that
rurality is described as very important for eco-innovation due to their closeness to the
impacts of climate change and firms’ visibility within their local communities.
Finally, technological innovation is a key factor for achieving successful eco-innova-
tions. The role of this factor is even more relevant in local productions systems, such as
“industrial districts” where innovation density, knowledge spillovers and externalities
are concentrated in a circumscribed territory (Mazzanti & Zoboli, 2009). Therefore,
being located in an industrial district is also considered a driving force fostering eco-
innovations.

4.2. Meso level drivers

At the meso level, most literature on the topic has tried to identify factors affecting
environmental orientation adopted by firms such as: financing availability (Johnson &
Lybecker, 2012); market demand (Horbach et al., 2012), pressure groups (Yalabik
& Fairchild, 2011) or industry characteristics (Peiró-Signes, Segarra-Oña, Miret-Pastor,
& Verma, 2011).
Changes in market trends are usually related to opportunities for eco-innovation.
Suppliers and customers enhance the development of this type of innovation (Wu,
2013). Several studies observe that customer perception or requirements can explain a
firm’s decision to engage in eco-innovation (Doran & Ryan, 2012; Grunwald, 2011;
Horbach et al., 2012; Wagner & Llerena, 2011). As an example in this line, Tsai,
Chuand, Chao, and Chang (2012) study the new economic trend of buying green toys
for childhood education. Customers are environmentally conscious and care about pro-
tecting the environment, especially if they think that implies an enhancement on new
 Innovation: Management, Policy & Practice 15

product development to toy manufacturers, and their willingness to buy green toys
increases if most people in society buy green toys. Further, manufacturers are willing to
adopt customers’ perceived value on green toys if they are able to manage both the
difficulties of cooperation within the supply chain and of production.
A common policy recommendation is to reduce the financial constraints for SMEs
in order to incentivize eco-innovation (Cuerva, Triguero-Cano, & Córcoles, 2014).
Johnson and Lybecker (2012) explore both public and private forms of funding attempt-
ing to evaluate their effectiveness and to provide policy suggestions for the support of
appropriate financing for eco-innovation. Within the private firms, eco-innovators have
greater difficulty than other innovators in attracting venture capital for development
(Halila & Rundquist, 2011). Therefore, financing availability is considered a key driver
of eco-innovations (Johnson & Lybecker, 2012).
Pressure groups or stakeholders have been pointed out as another force influencing
firms’ engagement in eco-innovation practices. Guoyou, Saixing, Chiming, Haitao, and
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Hailiang (2013) observe that foreign customers play a significant role in driving compa-
nies to adopt a strategy of green process and green product innovation, although having
foreign investors only affect the adoption of process eco-innovation.
Networking with other firms and institutions –authorities, research institutes – is also
important for eco-innovation adoption (Cainelli et al., 2011; Klewitz & Hansen, 2013;
Petruzzelli et al., 2011) and it has been found that knowledge sharing has a positive
impact on firms’ achieving green requirements (Wong, 2013). Halila and Rundquist
(2011) also observe that a network with diverse competences supports successful innova-
tors; but whereas eco-innovators use the network more for solving technological prob-
lems, other innovators use the network to a greater extent for assistance with financing
and marketing. Also Triguero et al. (2013) find that entrepreneurs who give importance
to collaboration with research institutes, agencies and universities are more active in all
types of eco-innovations. Even when comparing eco-innovation determinants across
countries, eco-innovative activities seem to require more external sources of knowledge
and information, and R&D cooperation seems to be key (De Marchi, 2012).
At the meso level, another important factor is the industry in which the firms operate
(Peiró-Signes et al., 2011). The chemical industry, for example, is usually considered
one of the most polluting industries. Ensuring safe production, transport and handling of
its products, with care for the environment and in full accordance with regulations, is of
key importance for the image and reputation of today’s chemical industry. Most chemi-
cal companies have been developing and introducing eco-innovations in an attempt to
change this negative image (González-Moreno, Sáez-Martínez, & Díaz-García, 2013). In
this sense, the chemical industry is often highlighted as one sector which has “the
potential to become a driving force to introduce efficient production practices for reduc-
ing the negative impact on the environment” (Negny, Belaud, Cortes Robles, Roldan
Reyes, & Ferrer, 2012 p. 101). Also the automobile industry is frequently analyzed for
its potential regarding product-design and eco-innovation (Sierzchula, Bakker, Maat, &
Van Wee, 2012; Segarra-Oña, Carrascosa-López, Segura-García-del-Río, & Peiró-Signes,
2011). However, services have received little attention with regards to eco-innovation in
previous literature (Cainelli & Mazzanti, 2013).

4.3. Micro level drivers

Regarding micro level drivers of eco-innovation, Pereira and Vence (2012) try to
identify the different factors that act as determinants of its development and adoption
 16 C. Díaz-García et al.

referring to the structural characteristics of firms (e.g. size, age), their strategy and busi-
ness logic (e.g. cost savings, market expansion) or to their technological competences
(e.g. R&D, path dependencies, qualification of staff and management, cooperation and
participation in networks). We follow this framework in our literature review.
As a structural factor, the effects of size on eco-innovation are non-conclusive. Size
is usually considered as a proxy for complementary assets and the internal capacity to
undertake eco-innovations (Segarra-Oña, Peiró-Signes, Albors-Garrigós, & Miret-Pastor,
2011). Conversely, Wagner (2008) finds that firm size is not found to have any effect
on the probability of a firm carrying out environmental product or process innovations.
Even other researchers posit that SMEs are still rather reluctant to include environmental
considerations in their practice (Revell & Rutherfoord, 2003); maybe because they have
had difficulties converting green practices into competitive advantage and bottom line
enhancements in financial performance (Simpson, Taylor, & Barker, 2004). Others, on
the contrary, provide evidence that green initiatives among SMEs have proliferated
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(Revell, Stokes, & Chen, 2010) and that they have eco-innovation propensity (Aragón-
Correa, Hurtado-Torres, Sharma, & García-Morales, 2008; Bos-Brouwers, 2010). This
debate leads to the fact that the effect of the firm’s size on its eco-innovation activities
is undetermined from a theoretical perspective (Horbach, 2008), since most literature on
eco-innovation is focused on large mature firms, practically neglecting SMEs
(Schiederig et al., 2012). Therefore, this is an avenue of fruitful research due to many
reasons: they will innovate differently (e.g. Bos-Brouwers, 2010; Hansen & Klewitz,
2012) and they are a critical mass – alarge group internationally contributing to a large
share of overall pollution (ECEI, 2010).
With respect to the effect of age, conventional wisdom and traditional literature on
SMEs suggest that young and new firms have advantages in innovation (Acs &
Audretsch, 1990) and as such, they are potential candidates for offering solutions to
new challenges. Therefore, they should be better able to respond to environmental chal-
lenges. However, very few studies address the innovation process of new ventures dri-
ven by environmental orientation (see Keskin, Diehl, & Molenaar, 2012 for an
exception).
With regards to firm’s strategy and its business logic, Paraschiv, Nemoianu, Langa,
and Szabó (2012) emphasize the importance of visionary management in adopting and
implementing environmental orientation. Managerial concern is found to be one of the
most important drivers for the adoption of green practices in several industries (Qi,
Shen, Zeng, & Jorge, 2010). Although normally the development of eco-innovation is
often an activity originated at the operational level it requires simultaneous integration
of environmental aspects with the overall corporate strategy (Wagner & Llerena, 2011).
And, although firms undergoing eco-innovation projects combine environmental and
techno-economic objectives, unfortunately the former are not always a priority
(Bélis-Bergouignan, Levy, Oltra, & Saint-Jean, 2012). Firms are more aware of the
consequences of their activities and try to be socially responsible through their Corpo-
rate Social Responsibility Programs, although results are inconclusive with regards to
them being a driver of eco-innovation, as some studies find a positive relation (Cainelli
et al., 2011) and others find no impact (Demirel & Kesidou, 2011).
Regarding the basis for a competitive strategy, eco-innovation is found in the
literature in the roots of both cost-leadership and differentiation competitive strategies.
Several studies have observed that cost savings are an important motivation for eco-
innovation (Pereira & Vence, 2012) in order to reduce energy and raw material use as
well as avoiding higher taxation (Horbach et al., 2012) and especially for eco-process
 Innovation: Management, Policy & Practice 17

innovations (Triguero et al., 2013) and environmental R&D (Demirel & Kesidou, 2011).
Also the adoption of differentiation strategies is linked to eco-innovation as differentia-
tion is considered a motivation related to the adoption of these innovation initiatives
(Cuerva et al., 2014). Additionally, obtaining a greater market share is also linked to the
development of eco-innovations, especially eco-products (Triguero et al., 2013).
A firm’s resources and capabilities are another micro level factor that has relevance
for achieving a successful eco-innovation. The implementation of environmental man-
agerial systems may enable an organization to reduce its environmental impacts and
increase its operating efficiency. Demirel and Kesidou (2011) observe that the
ISO14001 certification is effective in strengthening the positive impact of environmental
management systems on both end-of-pipeline technologies and environmental R&D.
Also the implementation of voluntary scheme certifications such Quality Management
Systems can help to explain the adoption of eco-innovations (Leenders & Chandra,
2013). Both managerial and organizational capabilities (Horbach, 2008; Kesidou &
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Demirel, 2012) and the actions of the company related to training, information and dis-
semination in order to improve the absorptive capacity of human resources (Mondéjar-
Jiménez, Vargas-Vargas, Segarra-Oña, & Peiró-Signes, 2013) are found to encourage
and stimulate the development of eco-innovations. Additionally, green organizational
identity positively affects the development of this type of innovations (Chang & Chen,
2013).
Focusing on firms’ technological competences, there is no clear consensus in the
literature. On the one hand, Blum-Kusterer and Hussain (2001) observe that new tech-
nology is an important driver for sustainability improvements and eco-change. This is in
line with Segarra-Oña et al (2011) who observe that formal innovative activity (patents)
and total expenditure on technology acquisition influence the eco-innovative orientation
of firms. In a longitudinal study, Horbach (2008) highlights that the improvement of the
technological capabilities (“knowledge capital”) by R&D triggers environmental innova-
tions. But, on the other hand, Cainelli et al. (2011) find that general R&D is less related
to eco-innovation adoption than other factors such as foreign-ownership or networking.
Also Cuerva et al. (2014) point out that, in a low tech sector, technological capabilities
such as R&D and human capital foster conventional innovation but not green innova-
tion. These inconclusive results might be explained by the findings of Petruzzelli et al.
(2011). According to these authors, technologies underling eco-innovations seem to be
characterized by a higher degree of complexity and novelty than those of other innova-
tions, and it is precisely these higher levels of novelty that seem to be detrimental to the
value of eco-innovation, at least in the short–medium term. They also find that develop-
ing these types of innovations requires establishing collaborations with external actors
to a greater extent, which are conducive to the most valuable innovations.
General innovation theory usually stresses the relevance of technology push as a
key driver of innovation. Available technological capabilities (accumulation of human
capital, knowledge stocks) induce further innovations. Technological and managerial
capabilities usually enhance environmental innovations and the importance of technical
knowledge obtained from external sources has also been considered in the economic
literature (Horbach 2008; Triguero et al., 2013). Cohen and Levinthal (1990) argue that
the firm’s “absorptive capacity” or its ability to recognize the value of new external
information, to assimilate it and apply it is critical to its innovative capacity. Therefore,
absorptive capacity will also provide firms with the necessary resources both to recog-
nize the potential of eco-innovations and to develop them (Mondéjar-Jiménez et al.,
2013).
 18 C. Díaz-García et al.

Table 2. Drivers of eco-innovation.

Level Authors (example)
Micro Structural factors Size (inconclusive results) Aragón-Correa et al. (2008)
Revell et al. (2010)
Age Keskin et al. (2012)
Strategy and Business Visionary Management Paraschiv et al. (2012)
logic Cost saving Pereira and Vence (2012)
Differentiation Cuerva et al. (2014)
Market expansion Horbach et al. (2012)
Corporate Social Cainelli and Iacobucci (2012)
Responsibility
Resources and Technological Horbach (2008)
Capabilities Managerial Leenders and Chandra (2013)
Organizational Kesidou and Demirel (2012);
Personnel Horbach (2013)
Networking Petruzzelli et al. (2011)
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Absorptive capacity Mondéjar-Jiménez et al. (2013)

Organizational Identity
Meso Market dynamics Customer requirements
Suppliers
Financing Public and private
Networks R&D Cooperation
Knowledge sharing
Pressure groups Foreign customers and
investors
Local authority
Community
Industry Chemical
Automobile
Macro Policy instruments Norms and regulations
Subsidies
Fiscal incentives
Expected regulations
Educational Policy Technology education
Technological systems Innovation system
Socio-Technical Systems
Regional factors Rural
Transition regions
Industrial districts
Chang and Chen (2013)
Grunwald (2011)
Wu (2013)
Johnson and Lybecker (2012)
De Marchi (2012)
Wong (2013)
Guoyou et al. (2013)
Klewitz et al. (2012)
Blum-Kusterer and Hussain
(2001)
González-Moreno et al. (2013)
Segarra-Oña et al. (2011)
Doran and Ryan (2012)
Johnson and Lybecker (2012)
Brouillat and Oltra (2012)
Triguero et al. (2013)
Elshof (2009)
Gee and McMeekin (2011)
Coenen and Díaz-López (2010)
Martin et al. (2013)
Cooke (2011)
Mazzanti and Zoboli (2009)

Where there seems to be more consensus is in the fact that eco-innovations require
highly qualified personnel (Pfeiffer & Rennings, 2001; Horbach, 2014). As emphasized
in the introduction of this section, there might be complementarities between different
drivers and those firms with less innovation capabilities might be able to compensate
this fact with cooperation, a meso level driver as explained in the previous section.
In Table 2 we aim to provide a summary of the different drivers within each level
of our framework and a study which can serve as an example since its main findings
relate to that specific driver.

5. Conclusions
In this literature review we have observed that there is a clear increase in the relevance
of this issue within academia since 2007. Despite “environmental innovation” is the
 Innovation: Management, Policy & Practice 19

predominant term, the term “eco-innovation” has had an upsurge in the last years. This
study proposes, based on previous research, that the use of this term should imply a
full-life cycle analysis of input and output factors.
Another conclusion that we can draw from the analysis is that it is very difficult to
have a systematic view of this area of research since publications are spread across
many journals which many times do not have global reach. We observe six categories
of recurring themes for the three terms of innovation aimed to reduce the harm of eco-
nomic activities in the environment. In all of them, “drivers” is the main topic of
research. Therefore, our main theoretical contribution with regards to the thematic analy-
sis in search of trends of research, we have found out that “drivers of eco-innovation” is
a recurrent theme in the literature. Therefore, our main theoretical contribution is the
development of a multilevel framework of eco-innovation’s drivers, having our literature
review a specific focus on systematizing the findings of the studies within this theme.
With this focus, we aim to contribute to a relatively under-researched area summarizing
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results which can either be a guide to policy makers in the design of environmental
practices or to inform owners and managers on helpful factors to engage in environmen-
tal initiatives and increase their chances of success.
At the macro level, apart from different policy instruments, the literature highlights
the relative importance of regional factors such as the so called “transition regions” with
decentralized governance in economic development and innovation issues and “indus-
trial districts” where innovation density, knowledge spillovers and externalities are con-
centrated. These particular contexts foster the development, implementation and
diffusion of eco-innovations. These specific contexts and its integrating elements should
be observed by policy-makers and other interested agents willing to learn how success
in the development of eco-innovations can be achieved.
At the meso level, market dynamics, pressure groups and networks are key elements
in fostering innovations that aim to reduce the negative impact of the economic activity
on the environment.
Finally, at the micro level, a visionary management and managerial concern are con-
sidered two of the most important factors in the development of eco-innovations, along
with key resources and capabilities such as qualified personnel, networking and absorp-
tive capacity and green organizational identity.
Due to the selection of keywords for identification of publications, it is possible that
some articles matching the research focus have not been found, because they do not
contain required keywords in the title or abstract of the paper. Overall, our analysis pro-
vides an aggregated overview of the eco-innovation research agenda, how it has devel-
oped from 2000 until 2013 and thus allows us to identify trends in research (topics,
journals), contribute a multilevel framework of eco-innovation drivers and propose
future research avenues.
The avenues for future research are the following. First, at the micro level, the
impact on eco-innovation of internal factors such us resources, capabilities and compe-
tences have been seldom considered mostly due to the unavailability of data to include
these factors in econometric models. Comprehensive and inclusive studies are lacking.
Additionally, innovation and entrepreneurship are two streams of research with numer-
ous links and overlaps. However, there are relatively few studies that focus their atten-
tion on those that became entrepreneurs by exploiting an eco-innovation. We believe
that theoretical and empirical studies analysing the eco-preneur or eco-entrepreneur
would increase our understanding on the motivations for developing these types of
innovations as well as identify fruitful guidance for practitioners and policy makers. At
 20 C. Díaz-García et al.

the meso level, the almost unexplored realm of eco-innovation in service firms clearly
deserves the attention of future research. At the macro level, it is necessary to study the
conflicts and complementarities of different types of policy instruments aimed at foster-
ing eco-innovations. Besides this, one area in which more research should be done is
eco-innovation in newly industrialized and developing countries. The field of eco-
innovation studies is dominated by contributions from especially Europe and the USA.
According to Kemp and Oltra (2011, p. 252) “eco-innovation is context-specific which
is why we need research from those countries, by researchers from those countries who
understand the broader context and societal processes in which eco-innovation is embed-
ded”. Other research relating eco-innovation to context should include regional and
location factors or compare across countries recognizing common cross-country determi-
nants, but also country-specific characteristics of eco-innovations. This need for con-
textualization is tightly linked to methodology. Case studies – despite obtaining specific
and difficult to generalise results – are a necessary source of empirical evidence since
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they can account for the specifics of the eco-innovation context and policy interaction
effects; which are neglected in the theoretical and econometric literature. Eco-innovation
literature would benefit both from large scale surveys as well as from in-depth case
studies. From a multilevel perspective, it could also be important and necessary to
observe the complementarities between factors in different levels, for example, regula-
tions and firms’ innovative capabilities. Furthermore, it is interesting to differentiate the
impact of different drivers on different eco-innovation measures, as outlined by Kesidou
and Demirel (2012). Additionally, an interesting approach would be to take a longitudi-
nal perspective that identifies the drivers that influence not only the engagement but the
further growth and development of eco-innovative firms.

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