Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

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Technological Forecasting & Social Change

journal homepage: www.elsevier.com/locate/techfore

Drivers of eco-innovation in the manufacturing sector of Nigeria

Maruf Sanni
National Centre for Technology Management, (Federal Ministry of Science and Technology), P M B 012, Obafemi Awolowo University, Ile Ife, Osun State, Nigeria

A R T I C L E I N F O A B S T R A C T

Keywords: This paper contributes to the empirical literature on the drivers of eco-innovation within the context of a de-
Eco-innovation veloping country. It explores the dynamics of the determinants of eco-innovation in the manufacturing sector of
Drivers Nigeria. Virtually all the major manufacturing firms in Nigeria generate electricity through diesel-powered
Manufacturing sector plants with implications for cost of production and greenhouse gas emissions. Meanwhile, eco-innovative
Firm-level
manufacturing firms have the potentials to decouple economic growth from excessive resource use and en-
Innovation
Nigeria
vironmental pressure. The paper investigates the determinants of eco-innovation in the manufacturing sector of
Developing countries Nigeria based on empirical data from the Nigerian innovation survey. The econometric estimations find strong
support for innovative organizational strategies, the need to meet regulatory standards and access to formal
sources of knowledge as drivers of eco-innovation. While eco-innovative manufacturing firms are usually more
technical and highly innovative, determinants of both products and process eco-innovations are heterogeneous.
The paper highlights policy recommendations for enhancing firm's green competitive advantage in a latecomer
economy.

1. Introduction
Innovative pathways to economic growth and understanding
country-specific challenges in terms of technological capabilities are
crucial to an environmentally sustainable economic development.
Innovation process ingrained in sustainable development has been
touted to play an important role in this context. Outcomes of such in-
novation process are termed eco-innovation, defined as “the produc-
tion, assimilation or exploitation of a product, production process,
service or management or business methods that are novel to the firm
[or organization] and which results, throughout its life cycle, in a re-
duction of environmental risk, pollution and other negative impacts of
resource use (including energy use) compared to relevant alternatives”
(Kemp and Pearson, 2008:10). Such innovation helps in decoupling
environmental pressure and economic growth whether or not that effect
is intended (OECD, 2009). This category of innovation is not necessarily
new to the world but it should be new to the firm or organization im-
plementing or adopting it (OECD, 2005). In recent years, eco-innova-
tion has gained prominence in the literature not only because of its
“double externality” nature (Rennings, 2000), but also for the fact that
it adds value to firm competitiveness and transition to sustainable so-
cieties (Carrillo-Hermosilla et al., 2010; Machiba, 2010).
Based on the specificity of double externalities, eco-innovation has
been designated as a special type of innovation because it reduces the
negative environmental externalities and it is also subjected to knowl-
edge spillover both of which could reduce firm's investment in eco-
innovation (Ghisetti and Pontoni, 2015; Ghisetti and Rennings, 2014;
Rexhäuser and Löschel, 2014; Rennings, 2000). Based on this fact, eco-
innovation is conceptualized as being strongly policy-driven as well as
influenced by “policy push/pull effect” (Cleff and Rennings, 1999;
Rennings and Rammer, 2009). Other distinguishing characteristics of
eco-innovation is that it is also affected by organizational, social and
institutional settings (Horbach, 2008; Rennings, 2000).
In view of the above, drivers of eco-innovation have been receiving
increasing attention in the mainstream literature in the past few years.
Meanwhile, understanding the drivers of eco-innovation could assist
policy makers in developing economic instruments that would en-
courage its development and adoption in the industrial sector of the
economy. Some scholars have traced these trends and carried out a
thorough review of the determinants of eco-innovation at international,
national, industrial, sectoral and firm levels (for e.g. see del Río et al.,
2016; Ghisetti and Pontoni, 2015; Díaz-García et al., 2015). Theoretical
bases for many of these studies have come mainly from innovation
economics (Rennings, 2000), environmental economics (Jacob et al.,
2002), evolutionary economics (Unruh, 2000; Foxon et al., 2005, etc.)
and resource-based view (Kammerer, 2009).
Emerging literature has shown that eco-innovation is driven by both
“market-pull” and “technology-push” dynamics. However, as a result of
the double externality issue, policy (regulatory) push/pull effect has
been identified as crucial to its implementation and adoption by firms
(Horbach et al., 2012). In recent times, drivers of eco-innovation have
been grouped into: “market-pull”, “technology-push”, “firm-specific

E-mail address: maruf.sanni@nacetem.gov.ng.

https://doi.org/10.1016/j.techfore.2017.11.007
Received 31 October 2016; Received in revised form 20 October 2017; Accepted 8 November 2017
0040-1625/ © 2017 Elsevier Inc. All rights reserved.

Please cite this article as: Sanni, M., Technological Forecasting & Social Change (2017), https://doi.org/10.1016/j.techfore.2017.11.007
M. Sanni
factors”, and “policy” determinants (Horbach et al., 2012). Factors
under “market-pull” include cost savings (Rennings, 2000), market
share (Triguero et al., 2013), economic performance (Adelegan et al.,
2010; Wagner, 2007), market demand for green products (Rehfeld
et al., 2007; Triguero et al., 2013) and customer benefits (Kammerer,
2009). With regard to the “technology-push”, some of the factors are
firms' technological and management capabilities (e.g. engagement in
R&D, staff training, in-house software acquisition, etc.) (Horbach, 2008;
Horbach et al., 2012); collaboration with research institutes, access to
external knowledge (Triguero et al., 2013); organizational innovation
and management strategies (Rehfeld et al., 2007; Wagner, 2008). For
the policy (regulatory) driver, the factors include the existing regula-
tions, expected future regulations, access to existing subsidies and fiscal
incentives (Horbach, 2008; Triguero et al., 2013).
Despite the relatively large empirical evidence on the drivers of eco-
innovation, some other critical issues are still largely unexplored. For
instance, there has been an increasing trend in the role played by the
changing local consumption patterns in many African countries most
especially the emerging economies such as Nigeria. This new con-
sumption pattern could have a lot of implications for eco-innovation. In
the past, environmental awareness about the impact of consumption
was common among the well-educated and rich consumers in the de-
veloped countries. In recent time however, many of the consumers in
the emerging economies are becoming aware of the level of impact of
the goods and services they consume (Guarin and Knorringa, 2012).
Therefore, it goes to show that firms in the developing countries must
necessarily tap into this new market so as to be able to satisfy customer
demands while reducing the environmental impact of such goods and
services.
In the same light, majority of the firms in the developing countries
have always had to compete with imported goods from developed
countries and emerging markets in Asia. Eco-innovative products are no
exception. Therefore, there is the need for eco-innovative firms in the
developing countries to be creative in order to be able to compete fa-
vourably with these imported goods. These issues are of paramount
importance for many firms in the developing countries such as Nigeria
where incremental innovation predominates because of inadequate
technological capabilities. In the meantime, the empirical evidence to
corroborate these assumptions are extremely limited.
Another area of importance that is yet to be thoroughly explored in
eco-innovation studies is that of the regional dynamics of eco-innova-
tion. Majority of empirical evidence on eco-innovation come from
Western and Southern Europe and USA (Cainelli et al., 2012; De
Marchi, 2012; del Río et al., 2013; del Río et al., 2016; Díaz-García
et al., 2015; Gee and McMeekin, 2011) with studies conducted in newly
industrializing and developing countries largely missing. Very few
studies from newly industrializing countries such as China are slowly
emerging (Cai and Zhou, 2014; Yang and Yang, 2015). Meanwhile, it is
critically important to explore the regional dynamics of eco-innovation
since it is usually difficult, if not impossible, to generalize studies from
one country to other regions given the great disparities in national in-
novation systems, willingness-to-pay for green products by buyers and
the environmental readiness of firms (del Río et al., 2016). Kemp and
Oltra (2011, p. 252) have also substantiated this fact by stating that
“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
embedded”.
Capability of firms to produce eco-innovative products is a function
of their competence to combine product and process innovations with
environmental goals (Oltra and Saint Jean, 2005). Very few empirical
evidence exist for comparative analysis of the drivers of product and
process eco-innovations. Meanwhile, some of the few evidence on the
determinants of product eco-innovation suggest that technological and
managerial capabilities are very crucial to the development of product
eco-innovation (Horbach, 2008) as well as networking with the
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Technological Forecasting & Social Change xxx (xxxx) xxx–xxx
research agencies. In terms of process eco-innovation, it has been re-
iterated that they are internally stimulated at the firm-level. As a result
of this, technological capabilities within the firm are therefore im-
portant determinants of process eco-innovations. Some scholars have
shown that process eco-innovations that are connected to material and
energy use are positively affected by networking with knowledge in-
stitutions such as universities and research institutes (Horbach et al.,
2012). Study on the drivers of product and process eco-innovations
such as this could provide insight into the understanding of policies that
could be used to promote either product or process eco-innovation
among the manufacturing firms (Pujari, 2006; Pujari et al., 2003).
It is within these existing knowledge gaps that this paper intends to
contribute. The article is structured as follows. The second section
discusses relevant literature on the drivers of eco-innovation in the
manufacturing sector. Section 3 specifies the methodology adopted for
the study. Section 4 reports the analysis of data and discussion of re-
sults. Section 5 concludes and suggests policy recommendations.
2. Drivers of eco-innovation in the manufacturing sector
Many inventions have failed to make it to the market because of
complexities surrounding drivers and barriers of innovation
(Bleischwitz, 2007). Eco-innovation as a special type of innovation is
not an exception. Within the context of eco-innovation, drivers are
generally understood as specific factors leading to increase or reduction
of pressure on the environment (Bleischwitz et al., 2009). In broad
term, these factors can be viewed either from the demand or supply side
of eco-innovation. Empirical analyses on the determinants of eco-in-
novations only started coming out around late 1990s. In the 1990s,
some scholars clamoured for research activities to explore the re-
lationship between environmental management and production
strategy (Gupta, 1995; Sarkis and Rasheed, 1995), and the impact of
firms' activities on the environment (Kitazawa and Sarkis, 2000). At the
same time, many firms have engaged in eco-innovation activities for
many other reasons. One of the critical factors has been an improve-
ment in business performance (Adelegan et al., 2010; Bansal and Gao,
2006; González-Benito and González-Benito, 2005). One of the few
articles on eco-innovation in the manufacturing sector of Nigeria also
found out that the pulp and paper industry in Nigeria showed a strong
relationship between green technology use and financial performance
(Adelegan et al., 2010). In the studies of Darnall et al. (2008) and
Ahmad and Schroeder (2003), they found out that engagements in
environmental management practices or eco-innovation activities were
positively related to the financial result and greater operational effi-
ciency. Some authors have also opined that when firms adopt eco-in-
novative management strategies, they tend to be more competitive
through cost reduction, quality improvement and implementation of
new processes and products (Bresciani and Oliveira, 2007; Parnell,
2008; Shrivastava, 2008; Yang et al., 2010). In addition to these factors,
adoption of environmental management systems like ISO 14001 is also
said to influence market share, firm's image, risk portfolios, firm's ef-
ficiency and international sales growth (Jacobs et al., 2010; Zeng et al.,
2008; Wagner, 2007).
Both the fields of innovation and environmental economics have
made a lot of contributions to the determinants of eco-innovation both
at the micro and macro levels. For instance, in the field of innovation,
studies have shown that demand factors in general (Horbach, 2008;
Horbach et al., 2012) and collaboration with environmentally con-
cerned stakeholders in particular (Wagner, 2007) are crucial in the
production of eco-innovations. Meanwhile, management literature on
corporate social responsibility strategy had indicated that societal
pressure and demand for environmentally-friendly products and pro-
cesses may not necessarily be prerequisites to increase investments in
eco-innovation. Most of the scholars in this field are of the opinion that
more often than not, firms respond to the societal pressure and demand
for environmentally-friendly products by putting in minimum
M. Sanni
investment in eco-innovation (Darnall, 2006; Bansal and Hunter, 2003;
Potoski and Prakash, 2003; Suchman, 1995). The importance of tech-
nological and organizational capabilities as motivating factors for
promoting eco-innovations in manufacturing firms have also been
suggested (Horbach, 2008).
Some literature in the field of environmental economics have
highlighted the significance of environmental regulation and standards
and policies as important drivers of eco-innovation among manu-
facturing firms (Brunnermeier and Cohen, 2003; Milliman and Prince,
1989). Many firms now perceive regulation not as a factor that in-
creases cost of production but rather as a stimulator of firms' innova-
tiveness that might make them competitive in eco-innovation markets
(Porter and Van Der Linde, 1995). However, within the context of
impact of regulation on eco-innovation, the importance of firms' in-
novation capabilities and their respective strategies for eco-innovation
have been stressed. For instance, low innovative firms may adopt eco-
innovation as a means to reduce production costs and comply with the
minimum environmental standards, while high innovative firms may
adopt eco-innovation in order to enter new markets (Grubb and Ulph,
2002). This fact has a lot of policy implications for the effectiveness of
regulations on a firm's capability to eco-innovate. For example, policy
on regulation with the aim of stimulating eco-innovation could poten-
tially differ depending on whether or not firms are already ahead of
their competitors in eco-innovation investments and activities (Kesidou
and Demirel, 2012).
2.1. Regulatory framework as a driver of eco-innovation
Interestingly, there is no consensus on a specific definition of
“regulation”. Meanwhile, regulation has been popularly defined as
sustained and focused control exercised by a public agency over ac-
tivities that are valued by a community (Selznick, 1985). This study will
adopt this definition not because of its popularity but for its appro-
priateness within the context of the discussions on eco-innovation.
Many scholars are with the views that environmental policy and reg-
ulations are crucial to eco-innovation as they may force firms to create
innovative products or adopt practices that are less harmful to the en-
vironment. For instance, in a study carried out in the United States,
Japan and Germany using patent data, it was found out that innovation
decisions of companies were mainly driven by national regulation, not
by regulation abroad (Popp, 2006). In the same light, in the case of the
Spanish pulp and paper industry, studies showed that it was regulation
pressure and corporate image that drove firms to adopt cleaner tech-
nology (Del Rio Gonzalez, 2005). Also in Nigeria, the paper and pulp
industry has reported that national regulations such as guidelines and
standards for the mitigation and control of pollution and environmental
impact assessment, audit, monitoring and compliance, effluent treat-
ment plants for liquid waste are very crucial for adoption of eco-in-
novation in the production process (Adelegan et al., 2010). In the
meantime, there are opposing views regarding the role of environ-
mental regulation on eco-innovation. There are scholars with opinions
that the costs incurred by a firm as a result of strict environmental
regulation reduce its competitiveness and productivity (Palmer et al.,
1995). This is based on the fact that in a bid to meet up with the re-
quirement of the new environmental regulations, firms redistribute the
exiting labour and capital resources. Consequently, resources may be
diverted away from productive investments (Doran and Ryan, 2012). As
a result of this, the capability of firms to be competitive at the national
and international levels may be hampered. The authors of the sup-
porting propositions firmly believe that appropriately designed en-
vironmental regulations have the ability to promote environmental
friendly innovation and in the process create “win-win” opportunities
which result in increased productivity and a greener environment
(Porter and van der Linde, 1995). It is unclear however how these si-
tuations will play out within the context of developing countries such as
Nigeria with different low levels of technological capabilities and
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Technological Forecasting & Social Change xxx (xxxx) xxx–xxx
complex political structures.
2.2. Demand-pull factors as drivers of eco-innovation
Demand-pull elements in eco-innovation have usually been over-
looked (Kesidou and Demirel, 2012) as it is commonly assumed that
market forces alone are sufficient to provide innovation incentives.
Meanwhile, many consumers are usually not willing to pay for en-
vironmental innovations (Rennings, 2000) because many of the eco-
innovative products are still very costly (Rehfeld et al., 2007). Also,
Taylor et al. (2006) have asserted that demand-pull factors are likely to
be more applicable within the context of adoption and the diffusion of
eco-innovations. In the end, demand-pull factors appear to be more
about the adoption and diffusion stages of eco-innovation activities.
Along this line of discussion, emphases are placed on the role of gov-
ernment in regulating the production of environmental innovations so
as to increase the customer awareness and subsequently promote
adoption and usage of eco-innovative products.
Meanwhile, new studies are now revealing that demand-pull factors
are important in promoting eco-innovations (Horbach, 2008; Kesidou
and Demirel, 2012; Wagner, 2007). There are scholars who have shown
that demand side factors are important drivers of eco-innovations most
especially in the area of environmental product innovations (Cleff and
Rennings, 1999). Green et al. (1994) have also found that firms launch
green products as a strategy to increase market share. Some authors
have also tried to identify and investigate the effects of incentives at-
tributable to environmental pressure from customers and the public
(Horbach, 2008; Popp, 2006; Florida, 1996). It has also been high-
lighted that demand-pull factors are usually motivated or reinforced by
environmental regulations and standards such as taxes and subsidies
which might affect the intrinsic and external motivations of customers
(Belin et al., 2011). There are also studies which have shown that
willingness to pay for environmentally-benign products spurs firms to
promote eco-innovations. For instance, Guagnano (2001) highlighted in
a study that over 80% of customers were willing to pay more for green
household products and this singular act could stimulate eco-innova-
tion among manufacturing firms. The result of this study has also been
validated in Canada, France, Germany, Italy, Japan, Spain, the United
Kingdom and the United State where customers are willing to pay 5 to
10% more for green products (Manget et al., 2009). Studies have also
shown that market-demand factors are responsible for reasons to start
eco-innovation, although results on the level of association of invest-
ment committed and eco-innovation are mixed (Kesidou and Demirel,
2012). There are also instances where stiff competition within home
markets as a result of emergence of international competitors pushes
local firms to look for opportunities in the international markets (Zahra
and George, 2002).
2.3. Technology-push factors as drivers of eco-innovation
Empirical evidence has shown that the level of technological cap-
abilities, which are the accumulation of human capital (e.g. trained
managers and employees) and knowledge stocks acquired through re-
search and development (R&D) activities are essential for the devel-
opment and diffusion of eco-innovation (Johnstone et al., 2012;
Löschel, 2002; Popp et al., 2011). Other capabilities that could further
induce eco-innovation include managerial and relational capabilities
(Sáez-Martínez et al., 2014). Scholars from the field of resource-based
perspectives, hold the view that “green capabilities” are important in-
ternal factors (Hart, 1995; Kammerer, 2009). Triguero et al. (2013)
have also found out that technological and managerial capabilities
enhance the ability to develop eco-innovative products as well as im-
prove the technical knowledge obtained from external sources (sup-
pliers, independent users, universities, joint-ventures and affiliate
firms). According to them, firms' assets such as skills, knowledge, and
links with other firms are crucial in the development of process eco-
M. Sanni
innovation.
Many authors have also talked about the interaction of R&D efforts
and external networking as important factors that could enhance pro-
pensity of firms to innovate (Cohen and Levinthal, 1989). They based
this on the assumption that when a firm engages in R&D, its level of
absorptive capacity increases giving the firm the capacity to recognize
and assimilate appropriate external knowledge to introduce new pro-
ducts or processes. In other words, existence of an in-house R&D ca-
pacity is required by firms so as to be able to internalize external
knowledge. Therefore, a necessary condition for eco-innovation could
be networking with external agents such as customers, suppliers,
competitors and public research bodies (De Marchi, 2012). However,
there are other studies which claim that R&D is less important to eco-
innovation adoption when compared with foreign-ownership and col-
laboration strategies (Cainelli et al., 2011). In the same light, Cuerva
et al. (2014) suggested that even though R&D and human resources
promote mainstream innovation, the case is not the same for eco-in-
novation. It will be interesting therefore to see if networking with ex-
ternal actors in a slowly industrializing nation with fragmented national
innovation system like Nigeria would engender eco-innovation in the
manufacturing sector.
2.3.1. Knowledge dynamics and sources of eco-innovation
Knowledge is one of the basic ingredients for innovative activities
which are often specific to sectors and firms (Malerba and Orsenigo,
1996, 1997). Subjects of discussion around sources of information and
knowledge bases used in eco-innovative activities are not examined in
detail in the literature (Ghisetti et al., 2014; Horbach et al., 2013;
Rennings and Rammer, 2009) with one exception by De Marchi and
Grandinetti (2013). Meanwhile, Rennings and Rammer (2009) in a
study of German firms have found out that knowledge inputs for in-
novation activities in the areas of energy and resource efficiency come
from varied sources. They highlighted that German firms interacted
with actors such as the suppliers, competitors as well as universities and
public research institutes with more emphasis on the external sources of
information. The implication of their study suggests that eco-innovation
may draw from external knowledge and capabilities outside the core
competencies of the firms (Teece et al., 1997). In a study conducted by
Ghisetti et al. (2014), the analysis revealed that knowledge sourcing has
varied impacts on the firm's propensity to introduce eco-innovation and
on different portfolios of eco-innovation. For instance, while extensive
interactions many be useful to the firm, comprehensive externally ac-
quired knowledge can become difficult to internalize. Meanwhile, ac-
cording to the results of Horbach et al. (2013) eco-innovative activities
require more external sources of knowledge and information than
mainstream innovations. In addition to this, they asserted that an eco-
innovative firm has propensity to search and use more knowledge and
information than the mainstream innovation. They also concluded that
internal R&D is not the most important source of innovation (Horbach
et al., 2013). For some of the reasons raised above, this study will in-
vestigate the effects of formal (public research institutes, higher edu-
cational institutions, journal articles etc.) and informal (clients, custo-
mers, equipment suppliers, competitors) knowledge sources on eco-
innovation.
2.4. Firm-specific factors and eco-innovation
There are indications that globalisation and the integration of
manufacturing firms from developing countries into global value chains
have the potentials to motivate demand for eco-innovations. This is
based on the assumption that many of the firms in the developing
countries today do not operate alone. They are ingrained in networks
and long term business collaborations with many lead firms in the de-
veloped countries (Brandi, 2012). This often leads firms to structure
their production value chain so as to respond to consumer demand or to
increase their market share by a way of capturing ‘green’ niche in the
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Technological Forecasting & Social Change xxx (xxxx) xxx–xxx
developed or emerging markets (organic food, herbal medicine, energy
saving electronics). As a result of these business interests, many firms
from developing countries comply with basic standards on issues such
as food security, carbon footprint, food safety etc. on the international
market. Issues relating to global value chains such as these are known to
promote environmental protection that can in turn stimulate eco-in-
novation within the production systems in developing countries
(Brandi, 2012). Considering the fact that many of the firms at the local
markets are small, they tend to cooperate with international partners so
as to increase their chances of surviving in the highly competitive
markets (Brouthers, 2002). Empirical evidence has also suggested that
firms with higher level of internationalisation have propensity to adopt
eco-innovation more intensively (Cainelli et al., 2010).
2.4.1. Innovativeness and eco-innovation
Studies have shown that many firms that have introduced one or
more categories of innovation in the past are not only probably going to
show more propensity to innovate more in the future but also likely to
engage in more innovation activities (Frenz and Ietto-Gillies, 2007).
This concept is also closely related to the idea of Nelson and Winter
(1982) where they asserted that “success breeds success”. The same
concept has also been echoed by Baumol (2002) which highlighted that
firms with substantial appropriate technological capabilities have
higher propensity to innovate. This process has been referred to as
“innovation breeds innovation”. The author is of the opinion that the
technological capabilities possessed by firms to innovate in several
categories of mainstream innovation could be an indication of absorp-
tive capacity to eco-innovate. This idea could also be traced back to
Rosenberg (1976) where the author opined that the innovative cap-
abilities developed by firms as a result of their investments in R&D do
not necessarily depreciate rapidly over time. Rather this formal or in-
formal knowledge may be used consistently to develop several other
innovations. In essence, these empirical results show that firms that
have been innovative in the past have higher probability of being in-
novative in the present or future (Horbach, 2008). This proposition is
working on the assumption that innovation leaders are those with dy-
namic capability to develop and implement eco-innovation. Such firms
have high level of absorptive capacities which allows them to recognize
innovation opportunity as a result of their proactive investment policy
and enhanced innovativeness (Chassagnon and Haned, 2015; Horbach,
2008.
3. Methods
Based on empirical evidence (Horbach, 2008; Horbach et al., 2012;
Rennings, 2000), the study develops a framework that considers four
groups of factors that could drive eco-innovation at firm level: tech-
nology-push, demand-pull, regulatory policy and firm-specific factors.
This framework is shown in Fig. 1. Variables under each category are
stated in Table 1. This categorization of factors set the background for
analytical discussions. Under the regulatory policy factor, we have
‘meeting regulatory requirements by the government’ (Borghesi et al.,
2015; Demirel and Kesidou, 2011; Porter and Linde, 1995; Porter and
van der Linde, 1995; Rennings, 2000). Those categorized as demand-
pull factors are ‘satisfying customer demand’, ‘enter new market’, ‘ex-
tend product range’ and ‘home competition’ (Belin et al., 2011; del Río
et al., 2013; Demirel and Kesidou, 2011; Horbach, 2008; Kesidou and
Demirel, 2012). We classified factors such as ‘soft and hardware ac-
quisition’, ‘formal and informal sources of knowledge’ ‘public research
institutes’ and ‘training of personnel’ as technology-push factors
(Borghesi et al., 2012; Horbach et al., 2012, De Marchi, 2012;
Mondéjar-Jiménez et al., 2013; Triguero et al., 2013; Horbach, 2014,
2008; Belin et al., 2011; del Rio Gonzalez, 2005). Some of the firm-
specific factors are ‘organizational innovation’, and ‘marketing in-
novation’ (Rehfeld et al., 2007; Wagner, 2008).
M. Sanni Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

Fig. 1. Conceptual framework for the determinants of eco-innovation.

Table 1
Variables used in the study.

Variable name Variable description N MIN MAX MEDIAN MEAN SD

Dependent variable
Eco-innovation 1 Develop more environmental-friendly products/processes, 0 otherwise(1 very 521 0 1 1 0.51 0.50
important and moderately important; 0 not important)
Innovativeness Organizational innovation 521 0 1 1 0.63 0.48
Marketing innovation 521 0 1 1 0.54 0.50

Regulatory policy determinant

Regulatory framework 1 Meet regulatory requirements, 0 otherwise (1 highly relevant and medium, 0 other) 521 0 1 0.00 0.50 0.50

Demand-pull factors
Satisfy customer demand 1 Satisfy customer demand, 0 otherwise (1 highly relevant and medium, 0 other) 372 0 1 1 0.84 0.37
Enter new market 1 Enter new market or increase market share, 0 otherwise (1 highly relevant and 344 0 1 1 0.68 0.47
medium, 0 other)
Extend product range 1 Extend product range, 0 otherwise (1 highly relevant and medium, 0 other) 361 0 1 1 0.62 0.47
Home competitor Market position threatened by entry of new competitors (1 highly relevant, 0 other) 365 0 1 1 0.53 0.50

Technology-push factors
Informal sources of knowledge 1 During 2005‐2007 enterprise acquired information for innovation from informal 521 0 1 0 0.46 0.50
sources, 0 otherwise
Formal sources of knowledge 1 During 2005‐2007 enterprise acquired information for innovation from formal sources, 521 0 1 0 0.26 0.44
0 otherwise
Training 1 During 2005‐2007 enterprise engaged in training of personnel, 0 otherwise 521 0 1 1 0.54 0.50
Software or hardware acquisition 1 During 2005‐2007 enterprise acquired with software or hardware, 0 otherwise 521 0 1 0 0.33 0.47
Public research institutes as sources of 1 During 2005‐2007 enterprise acquired information for innovation from public research 521 0 1 0 0.23 0.41
knowledge institutes (1 highly relevant and medium, 0 other)

Control variables
Firm size Log of firm's size in 2007 521 2.30 8.15 4.20 4.36 1.27
Sector Manufacturing sector classified by the 2-digit ISIC

5
M. Sanni
3.1. Instrument and data
For the purpose of this study, the Nigerian innovation survey for
2005–2007 data was obtained. The survey implementation and proce-
dures were based on the “Guidelines for Collecting and Interpreting
Innovation Data” jointly developed by the OECD, and the Eurostat
popularly referred to as Oslo Manual (OECD, 2005). The innovation
survey used a structured questionnaire to obtain information from the
manufacturing firms in the country. The survey took place between
November 2009 and July 2010. The questionnaire that was later de-
veloped had 13 sections. The sampling of data used a multistage sys-
tematic random sampling technique. Sectoral classification of economic
activities was based on the Industrial Classification of all Economic
Activities (ISIC revision 3.1). The enterprise with activities falling be-
tween divisions 15–37 were classified as manufacturing firms. Based on
the Memorandum of Understanding between National Centre for
Technology Management (an agency of the government with the
mandate to carry out the survey) and the National Bureau of Statistics
(NBS), the database for the firms was obtained from the NBS business
directory while the remaining samples were gathered from the Nigerian
Stock Exchange Market trade database. The NBS Business Directory
had > 10,000 firms while the Stock Exchange Market trade list had
close to 200 firms. Based on their sheer contributions and impacts on
the economy, a census of all enterprises on the Stock Exchange Market
trade list belonging to the manufacturing sector was carried out. In the
case of the NBS Business Directory, a proportional probability sampling
(PPS) technique with a threshold of a minimum of 10 employees was
used to select firms. Stratification of the firms was based on sector and
employee size. The PPS approach was also used for the selection of
firms from each sub-sector of interest. For instance, where there are
fewer firms in a particular sector, a higher proportion of such firms was
selected. A case in point is that of the cement manufacturing industry
which had only 8 firms. In this particular case, all the firms were se-
lected in the sample for the survey. The samples selected from the NBS
Business Directory and that of the Stock Exchange Market trade list
were combined to obtain a total of 1000 manufacturing firms after
extensive cleaning of the database had taken place.
In order to increase the response rate, the physical addresses of the
firms were confirmed and the CEO/MDs in each of the 1000 firms were
chosen as the contact persons. All the firms with no traceable addresses
or that are insolvent were removed from the sampled database and
replaced with closely matched firms in terms of sector of operation and
location. This exercise was carried out so as to maintain the sample size
of 1000 firms. Other actions taken included telephone calls, re-visits
etc. The questionnaire was administered by field officers using face-to-
face approach. At the end of the survey administration, a total number
of 574 completed questionnaires were retrieved from the manu-
facturing sector. But the number reduced to 521 firms after final data
cleaning. The operationalization of the variables and descriptive ana-
lysis of the variables are shown in Table 1.
3.2. Estimation techniques
Descriptive analysis was used to discuss the firms' profile with re-
gard to cluster of factors such as the regulatory policy, demand-pull
factor, technology-push factors, firm-specific factors and other variables
such as firm size and sector of the firms. The dependent variable,
“develop more environmental-friendly products/processes” used in this
study is derived from a section on motivation for innovation in the
questionnaire. Firms are allowed to choose from three options, re-
porting if the variable is ‘very’ or ‘moderately’ important or ‘not’ im-
portant to the innovation strategy. The dependent variable, Eco-in-
novation, takes the value 1 if, during the period 2005 and 2007, the
enterprise reported high or moderate importance and 0 otherwise. The
drivers of eco-innovation was analysed using binary logistic regression.
It examines the relationship between multiple explanatory variables
6
Technological Forecasting & Social Change xxx (xxxx) xxx–xxx
and a dichotomous dependent variable, and estimates the probability of
occurrence of an event by fitting data to a logistic curve (Park, 2013).
The study performed the estimation in two stages. This takes care of
selection bias that may arise from excluding those firms that did not
eco-innovate. In the first stage, a logit equation was estimated for the
probability to eco-innovate. The second stage equation models the
probability of implementing product or process eco-innovation. This
equation excludes non-innovators and includes the predicted prob-
ability from the first stage estimation.
3.2.1. Independent variables
Many studies have emphasized the effect of regulation on pro-
pensity of firms to eco-innovate (Horbach, 2008; Mazzanti and Zoboli,
2006; Porter and Linde, 1995). Based on this assumption, a variable
recognizing the importance of environmental regulation to stimulate
eco-innovation was constructed. This variable reflected on the role of
federal government or public support to eco-innovation. Such roles
usually come in form of regulatory policy instruments and fiscal ben-
efits that have the capability to promote or discourage particular eco-
innovations (Jaffe et al., 2002). Government may use regulatory policy
or market-based instruments to spur the development and diffusion of
environmental technologies. Nigerian Innovation Survey dataset allows
for the measurement of the effect of some public interventions as well
as regulatory measures on innovation as illustrated by the dummy
variable ‘regulatory framework’. This dummy variable is based on the
question asking if the firm met regulatory requirements 1, 0 otherwise
(1 highly relevant and medium, 0 other).
Many scholars have shown that demand side factors are important
drivers of eco-innovations most especially in the area of environmental
product innovations (Cleff and Rennings, 1999). Green et al. (1994)
found that firms launch green products as a strategy to increase market
share. Some authors have also tried to identify and investigate the ef-
fects of incentives attributable to environmental pressure from custo-
mers and the public (Florida, 1996; Horbach, 2008; Popp et al., 2007).
Kammerer (2009) has claimed that customer benefits are crucial for
eco-innovation most especially if the products deliver added value to
the customer. The extent of market demand and the level of prices are
also considered important incentives for eco-innovation (Johnstone
et al., 2010; Newell et al., 2006; Beise and Rennings, 2005; Popp,
2003). Halme et al. (2006) and Houe and Grabot (2009) suggested that
when customers noticed appreciable increase in quality of life as a re-
sult of consumption of certain green product, they have the tendency of
buying such product irrespective of their demographics. In the mean-
time, to be more eco-innovative, firms have been advised to put priority
on processes and strategies such as life cycle assessments, material re-
duction and improvement in the quality of goods and services so as to
meet real needs of the consumers (Fussler and James, 1996). In other
words, for firms to be competitive using eco-innovation as a business
strategy, such firms should imbibe the culture of eco-efficiency and the
drive for high quality goods and services while reducing material and
energy consumption. In this study, the impact of demand-pull factors as
it is related to eco-innovation was measured by variables such as the
need to satisfy customer demand, entering new market, extend product
range and dealing with competition at home. The variables were re-
presented by binary variables; 1 if firm innovates so as to satisfy cus-
tomer demand, 0 otherwise; 1 if firm innovates so as to enter new
market, 0 otherwise; 1 if firm innovates by extending product range, 0
otherwise; 1 if firm innovates by creating innovative strategy to deal
with competitors at home, 0 otherwise.
Technological and managerial capabilities are known to enhance
the ability of firms to improve the technical knowledge obtained from
external knowledge sources and implement eco-innovative products
(Triguero et al., 2013). In other words, technological capabilities ac-
quired over the years by firms are essential components of successful
implementation and diffusion of eco-innovation (Johnstone et al., 2012;
Popp et al., 2011). Some scholars hold the view that “green
M. Sanni Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

capabilities” are critical internal factors in eco-innovative strategies Table 2

(Hart, 1995; Kammerer, 2009). Other capabilities such as managerial Comparative analysis of eco-innovative and non-eco-innovative firms.
and relational capabilities (Sáez-Martínez et al., 2014) have also been a b
Variable EIF NEIF
found out to be equally important. The study used different types of n (%) n (%)
variables in order to understand the role of technology-push factors.
These variables include, acquisition of the soft and hardware pro- Innovativeness Organizational innovation 206 (77.7) 121 (47.3)
Marketing innovation 178 (67.2) 102 (39.8)
gramme, access to formal (universities, private laboratories, academic
Regulatory policy Regulatory framework 193 (72.8) 66 (25.8)
journals) and informal sources of knowledge (suppliers, customers or determinant
clients etc.), public research institutes and training of personnel. These Demand-pull factors Satisfy customer demand 234 (90.3) 78 (69.0)
variables were operationalised as follows: 1 if an enterprise acquired Enter new market 160 (67.2) 74 (69.8)
any soft or hardware programme and 0 otherwise; 1 if an enterprise Extend product range 164 (65.1) 60 (55.0)
Home competitor 147 (57.9) 44 (39.6)
used any of the formal sources of knowledge and 0 otherwise; 1 if an
Technology-push Staff training 182 (68.7) 99 (38.7)
enterprise used any of the informal sources of knowledge and 0 factors Acquisition of hardware or 104 (39.2) 68 (26.6)
otherwise; 1 if an enterprise engaged with a public research institute software
and 0 otherwise and 1 if an enterprise trained any of its personnel and 0 Informal sources of 164 (61.9) 73 (28.5)
knowledge
otherwise. Description of the independent variables are shown in
Former sources of 99 (37.4) 38 (14.8)
Table 1. In order to find empirical evidence to the theoretical propo- knowledge
sitions on the determinants of eco-innovations, the study estimates Public research institutes 76 (28.7) 36 (14.1)
three models: first, a discrete choice model detecting the specificities of Sector Furniture 16 (6.1) 21 (8.3)
eco-innovations in relation to the independent variables is estimated. Machinery, equipment and 19 (7.2) 12 (4.7)
vehicles
Second, the study attempts to differentiate between different impact
Rubber and plastics products 16 (6.1) 7 (2.8)
areas for both product and process related eco-innovations (Triguero Publishing, reproduction of 21 (8.0) 21 (8.3)
et al., 2013). This is carried out by continuing from the two-stage logit recorded media
regression and giving a constraint for firms with only product innova- Leather tanning and dressing 9 (3.4) 7 (2.8)
etc.
tion. The same procedure is used to analyse process eco-innovation. In
Textiles and wearing apparel 11 (4.2) 19 (7.5)
the survey instrument, firms are allowed to specify the types of in- Food and beverages 59 (22.3) 60 (23.6)
novation they engage in, whether product, process, organizational or Wood and paper products 10 (3.8) 24 (9.4)
marketing innovation. The study therefore categorizes firms into either etc.
product or process innovators based on their engagements in any of Chemicals and chemical 47 (17.8) 25 (9.8)
products
these types of innovations.
Fabricated metal etc. 22 (8.3) 16 (6.3)
Non-metallic mineral 22 (8.3) 27 (10.6)
3.3. Control variables products
Basic metals and recycling 11 (4.2) 14 (5.5)
In order to ascertain the main determinants of the technological a
Eco-innovative firms.
environment that may influence innovation activities of eco-innovative b
Non eco-innovative firms.
firms, I control the study for firm size. This is based on the fact that
some literature on eco-innovation have revealed that many small and
categories of firms shows that they are heterogeneous. The issue of
medium-sized enterprises find it difficult to eco-innovate as a result of
disparities between eco-innovative and non-eco-innovative firms had
the complexity of environmental innovation as well as the extent of
earlier been noted by De Marchi and Grandinetti (2013), Brunnermeier
investment required to transit to low‑carbon technologies (Borghesi
and Cohen (2003) and Horbach (2008). For instance, with regards to
et al., 2012; Borghesi et al., 2015; Hemmelskamp, 1999; Kesidou and
firms' innovation leadership status, measured in terms of number of
Demirel, 2012; King and Lenox, 2000; Noci and Verganti, 1999; Russo
innovations introduced (organizational and marketing) during
and Fouts, 1997). The control variable Firm_size was constructed as the
2005‐2007, the results showed that eco-innovative firms implemented
log of employee size in 2007. At another level of analysis, I also control
more organizational innovation than non-eco-innovative firms (77.7%
for sectoral differences so as to take into consideration the context of
vs 43.7%). The same pattern was also noticed in the case of marketing
specific industry within the manufacturing sector. This becomes im-
innovation (67.2% vs 69.8%). This may not come as a surprise because
portant because understanding inter-industry differences brings into the
the ability of firms to think beyond mainstream innovation and engage
open the specific characteristics of the knowledge sources and learning
in eco-innovative activities could in itself be innovative. A critical look
processes (Dosi, 1982; Oltra and Saint Jean, 2008; Rennings et al.,
at the result reveals that eco-innovative firms are more engaging than
2006; Wagner, 2008). More importantly, Ashford et al. (1985) sub-
non-eco-innovative firms across both demand-pull and technology-push
mitted that even though stringency of regulation is very important in
factors with the exception of the need to enter into new market (67.2%
stimulating eco-innovative behaviour, disparity in the level of regula-
vs 69.8%). Also, eco-innovative firms engaged more in satisfying cus-
tion levied on different sectors and different time period with which to
tomer demand (90.3% vs 69.0%), extension of product range (65.1% vs
comply with the directives are equally crucial.
55.0%), personnel training (68.7% vs 38.7%), acquisition of soft or
hardware programmes (39.2% vs 26.6%), access to formal sources of
4. Analysis of data and discussion of results
knowledge (37.4% vs 14.8%), etc. These activities are crucial to the
development of eco-innovation (Horbach, 2008; del Río González,
4.1. Descriptive analysis
2009; Horbach et al., 2012; Horbach et al., 2013). In the final analysis
of the comparison between eco-innovative and non-eco-innovative
The analysis in Table 2 shows the background information on both
firms, results suggest that both the eco-innovative and non-eco-in-
the eco-innovative and non-eco-innovative firms. It was interesting to
novative firms are heterogeneous in their internal and external char-
find out that many of the eco-innovative firms (72.8%) are likely to
acteristics.
comply with government regulations when compared with the non-eco-
innovators (25.8%). Studies carried out by del Rio Gonzalez (2005,
2009) have also found similar trends among eco-innovative firms.
Further comparative analysis of the internal characteristics of the two

7
M. Sanni Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

Table 3 innovation. Effects of competition on eco-innovation can also be illu-

Binary logistic regression of the drivers of eco-innovation among the manufacturing strated with the study carried out by Li and Ye (2011) on Siemens, the
firms.
German industrial giant that manufactures energy-efficient products
Variable B S.E. Exp(B) and solutions as well as renewable energy. The paper shows that as a
result of competition, many other firms in the same sector often imitate
Innovativeness Organizational innovation 0.982⁎⁎ 0.377 2.67 the eco-innovation practices of Siemens to rebrand themselves and in-
Marketing innovation ‐0.141 0.345 8.69
crease their market share (Li and Ye, 2011). Effects of competition is
Regulatory policy Regulatory framework 0.971⁎⁎ 0.3331 2.64
Demand-pull factors Satisfy customer demand 1.639⁎⁎ 0.383 5.15 also evident in a study carried out by Cainelli et al. (2011) where they
Enter new market ‐0.454 0.311 0.635 asserted that competition between firms drives eco-innovation. The
Extend product range ‐0.029 0.289 0.972 result of this analysis may imply that many firms in the developing
Home competitor 0.650⁎ 0.290 1.915 countries might have had to eco-innovate so as to be able to deal with
Technology-push Soft and hardware ‐0.653⁎ 0.318 0.520
competition in the local market.
factors acquisition
Staff training ‐1.046⁎⁎ 0.402 0.351
Informal sources of ‐0.348 0.322 0.706 4.2.3. Technology-push factors
knowledge Interestingly, many of the technology-push factors like training of
⁎
Formal sources of 0.855 0.412 2.351
personnel, acquisition of soft and hardware programmes, access to
knowledge
Public research institutes ‐0.768⁎ 0.385 0.464 formal sources of external knowledge and engagement with the public
Control variable Firm size ‐0.021 0.110 0.979 research institutes are significant factors affecting eco-innovation
Sector ‐0.004 0.034 0.996 among manufacturing firms (see Table 3). These results are not sur-
prising given the fact that majority of manufacturing firms in the de-
Nagelkerke (Pseudo) R2 = 0.24; Goodness of fit = χ2 = 59.44**; ‐2 Log like-
veloping countries such as Nigeria do not engage in intensive R&D. As
lihood = 335.58; No. of Obs = 321.
S.E. = Standard error.
such, many eco-innovative firms do compensate for low R&D intensity
⁎⁎
p < 0.01. with external sources of knowledge (Hemmelskamp, 1999). In general,
⁎
p < 0.05. innovation studies have indicated that access to external knowledge is
crucial to the development of innovation as they increase the effec-
4.2. Econometric analysis of the drivers of eco-innovation tiveness of available information and knowledge. They also increase
absorptive capacity of firms as they help to generate new knowledge
4.2.1. Regulatory policy which could help engender innovations (Cohen and Levinthal, 1989).
Results emerging from the econometric analysis in Table 3 give a Based on the result coming from this study, one might argue that with
very strong credence to the influence of regulatory environment to eco- regard to the introduction of eco-innovation, substitution effect is what
innovation. The result shows a positive effect of regulatory policy on is at play among the manufacturing firms in Nigeria. Majority of the
eco-innovation. The result implies that firms that meet regulatory firms simply compensate for the low level of R&D by engaging with
standard are 3 times more likely to be eco-innovative than firms that do external sources of knowledge. To buttress this point, it is interesting to
not meet regulatory standards (see Table 3). This finding is in affir- note that consultation with former sources of knowledge are more
mation with other similar studies (Borghesi et al., 2015; Brunnermeier important than that of informal sources as shown in Table 3. This fact
and Cohen, 2003; Demirel and Kesidou, 2011; Frondel et al., 2007; again reinforces substitution effect as eco-innovation strategies em-
Horbach, 2008, 2010; Porter and Linde, 1995). In other words, this ployed by the firms. Another way of looking at this result is that firms
finding has shown that meeting regulatory requirements or standards is engage in cooperation with knowledge institutions so as to capture a
significantly important for eco-innovations. new market and develop highly technical innovation (Tether and Tajar,
2008). This finding is also in line with De Marchi (2012) as well as
Cainelli et al. (2011) where they asserted that presence of knowledge
4.2.2. Demand-pull factors transfer mechanism from knowledge institutions is an important factor
Under the demand-pull factors, satisfying customer demands and in the introduction of eco-innovation. Critical analysis of the results
dealing with competitors at the home market are the significant factors showed that firms that consult formal sources of knowledge for eco-
affecting eco-innovation in the manufacturing sector. These results innovation are likely to be 2 times more likely eco-innovate than those
could be an indication of increasing demands for environmental goods who did not use these sources of information for eco-innovation. Fur-
and services as many consumers are becoming more aware of their thermore, findings such as these are characteristic of a young market
carbon footprints (Guarin and Knorringa, 2012). As expected, firms are typical of a sub-sector like eco-innovative firms in the developing
tapping into these new opportunities so as to make profit while also countries such as Nigeria where majority of the innovations are usually
ensuring that their production processes become more efficient. Some incremental with little or no R&D component.
scholars have also asserted that globalisation has increased the influx of
international brands and this might be influencing the culture of the 4.2.4. Innovativeness and propensity to eco-innovate
consumers including responsible green consumption thereby promoting The result of the level of innovativeness and propensity of eco-in-
eco-innovation consumption in the local market (Guarin and Knorringa, novation shown in Table 3 extends the debates on the impact of in-
2012). At the same time, many firms are known to eco-innovate as a novativeness or innovation leadership on eco-innovation, an area which
response to environmental pressure from both the customers and the has been largely neglected in the mainstream literature on environ-
general public to reduce their carbon footprints (Florida, 1996; mental innovation. Innovation leadership as captured in this study has
Horbach, 2008; Popp et al., 2007). been defined as the ‘dynamic capability of an innovative firm to seize
Another significant demand-pull factor for eco-innovation is com- new innovation opportunities as a result of a proactive investment
petition. Issues relating to global value chains such as carbon footprint policy and enhanced innovativeness’ (Chassagnon and Haned, 2015; pg.
and food safety are known to promote environmental protection that 196). The paper captures this phenomenon by examining firms who
can in turn stimulate eco-innovation within firms in developing coun- have the capability to innovate across many categories of innovation
tries (Brandi, 2012). The result of the analysis shows that dealing with (organizational and marketing innovation). Result of the analysis re-
competition at home affects eco-innovative firms in the local market. veals that beyond product and process innovation, capability to carry
This result agrees with the findings of Zahra and George (2002) where out organizational innovation also has positive impacts on eco-in-
they concluded that stiff competition in home markets enhances eco- novation. As a matter of fact, the result in Table 3 shows that firms that

8
M. Sanni Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

engage in organizational innovation are 3 times more likely to in-
troduce eco-innovation than firms that do not carry out organizational
innovation. Chassagnon and Haned (2015) and Horbach (2008) have
attempted to explain this by stating that innovation leaders have the
capability to positively react to the dynamics of competitive environ-
ment by absorbing and utilizing new opportunities. This capability ul-
timately allows them to strike a balance between economic and en-
vironmental performance in a strong selective environment such as that
of the green innovation (Carrillo-Hermosilla et al., 2010; Van der Panne
et al., 2003). Innovation leaders are also known to have capability to
reorganize knowledge that had been used to produce past innovations
to create new ones. It is not surprising for eco-innovation to be sig-
nificantly associated with innovation leadership considering the fact
that eco-innovation is highly technical (Porter and van der Linde, 1995)
and usually more costly than the mainstream innovation (Triguero
et al., 2013). As such eco-innovation often requires certain compe-
tencies that are usually embedded in innovation leaders. At the same
time, some studies have shown that success of a particular innovation
serves as motivation for others as a result of accumulation of compe-
tencies and monopoly power (Baumol, 2002; Nelson and Winter, 1982;
Peters, 2008; Raymond et al., 2010).
the competitions in Nigerian market. The result of the analysis in
Table 4 shows that firms that are experiencing stiff competition in the
home market are more likely to generate either product or process eco-
innovation when compared with those without any competition.
Empirical evidence for these two categories of eco-innovations is
scarce. However, some of the few evidence on the determinants of
product eco-innovation suggest that technological and managerial
capabilities are very crucial to the development of product eco-in-
novation (Horbach, 2008) as well as networking with the research
agencies. In terms of process innovation, it has been reiterated that they
are internally stimulated at the firm-level. As a result of this, techno-
logical capabilities within the firm are important determinations of eco-
process innovations. Some scholars have shown that eco-process in-
novations that are connected to material and energy use are positively
affected by networking with knowledge institutions such as universities
and research institutes (Horbach et al., 2012). Study on the dis-
aggregation of product and process innovation developments such as
this could provide insight into the understanding of policies that could
be used to promote either product or process eco-innovation among the
manufacturing firms (Pujari, 2006; Pujari et al., 2003).

4.3. Drivers of eco-innovation among the manufacturing firms producing
innovative products and processes
This study also extends the analysis to find out if the same set of
factors drive eco-innovation among the manufacturing firms producing
innovative products or processes. Analysis in Table 4 reveals that fac-
tors driving eco-innovative products or processes in the manufacturing
sector of Nigeria are basically different. Although both categories of
eco-innovations are influenced by the need to deal with competition at
the local market and satisfy customer demands; other factors affecting
the two eco-innovation types are heterogeneous. For instance, further
analysis of the results show that while product eco-innovation is af-
fected by access to formal sources of knowledge and engagement with
public research institutes, process eco-innovation is only affected by
personnel training. These findings are in line with argument put for-
ward by Pavitt (1984) where it was asserted that both demand-pull and
technology-push arguments could be used to explain end-of-pipe and
integrated technological eco-innovations. However, for product and
process eco-innovations, local manufacturers at home are threatened by
5. Conclusion
This paper examined the drivers of eco-innovation in the manu-
facturing sector of Nigeria. The study was carried out with the broad
objective of complementing the scarce knowledge base of eco-innova-
tion in developing countries. Specifically, the study explored the role of
demand-pull, technology-push and firm-specific factors in stimulating
eco-innovation. It also explored the determinants of both product and
process eco-innovations.
In the final analysis of the comparison between eco-innovative and
non-eco-innovative firms, results suggest that both eco-innovative and
non-eco-innovative firms are heterogeneous in their internal and ex-
ternal characteristics. There are also reasons to believe that most eco-
innovative firms are more technical and highly innovative. From the
result of the econometric estimations, the study found strong support
for the effect of environmental policy on eco-innovation. Findings im-
plied that by setting flexible standards, regulations could stimulate in-
troduction of eco-innovation.
On the demand-pull factors, the findings of this study suggest that
factors such as the need to satisfy customer demands and competition in

Table 4
Second stage logit regression of the drivers of eco-innovation among the manufacturing firms producing innovative products and processes.

a b
Variable Product Process

B S.E. Exp(B) B S.E. Exp(B)

Innovativeness Organizational innovation 0.28 1.10 1.33 0.54 1.22 1.71

Marketing innovation ‐0.15 0.38 0.86 0.04 0.40 1.04
Regulatory policy determinant Regulatory framework ‐0.32 0.67 0.73 0.20 1.03 1.22
Demand-pull factors Satisfy customer demand 1.61⁎⁎ 2.41 4.98 1.43⁎⁎ 1.88 4.19
Enter new market ‐0.03 0.36 0.97 ‐0.36 0.25 0.70
Extend product range 0.01 0.36 1.01 0.02 0.33 1.02
Home competitor 0.69⁎ 0.68 2.00 0.88⁎⁎ 0.77 2.41
Technology-push factors Soft and hardware acquisition ‐0.59 0.38 0.56 ‐0.51 0.35 0.60
Staff training 0.09 0.21 0.41 ‐0.31⁎ 0.17 0.34
Informal sources of knowledge 1.08 0.44 1.10 0.59 0.27 0.74
Formal sources of knowledge ‐1.05⁎⁎ 1.47 2.94 ‐0.80 0.81 1.81
Public research institutes ‐0.88⁎⁎ 0.16 0.35 ‐1.08 0.19 0.45
Control variable Firm size 0.08 0.14 1.08 0.00 0.12 1.00
Sector 0.01 0.04 1.01 0.03 0.04 1.03
Predicted probability 3.91 254.55 49.94 3.64 176.04 37.98

S.E. = Standard error.

a
Nagelkerke (Pseudo) R2 = 0.13; Goodness of fit = χ2 = 36.15**; −2 Log likelihood = 117.52; No. of Obs = 226.
b
Nagelkerke (Pseudo) R2 = 0.15; Goodness of fit = χ2 = 47.59**; −2 Log likelihood = 136.79; No. of Obs = 265.
⁎⁎
p < 0.01.
⁎
p < 0.05.

9
M. Sanni
the local market, have significant impacts on the decision of firms to
eco-innovate. With regard to technology push factors, acquisition of
soft and hardware programmes, access to formal sources of knowledge,
engagement with the public research institutes and personnel training
are the critical factors to consider when trying to eco-innovate. Finding
empirical evidence that support important role of formal sources of
knowledge (such as universities, private laboratories, academic jour-
nals) to firms in introducing eco-innovation led the study to suggest
that implementing eco-innovation requires more knowledge-based
competencies than the mainstream innovations. We also noted that
capability to carry out organizational innovation is crucial for the in-
troduction of eco-innovation.
The final results of the study have a lot of implications for theory,
managers/entrepreneurs and the policy makers. The study has ex-
panded the framework for analysing the concept of eco-innovation with
specific reference to developing countries. The paper has added to our
understanding of eco-innovation dynamics in the manufacturing sector
of Nigeria using an elaborate conceptual framework incorporating de-
veloping country context. Theoretically, the study confirms and fur-
thers the interpretation of the Porter Hypothesis by affirming that
regulatory measures are effective instruments that can be used to sti-
mulate eco-innovation in the manufacturing sector of Nigeria. With
regards to regulation, empirical evidence shows that eco-innovative
firms respond positively to regulatory measures. It follows therefore
that, there may be the need for the policy makers to proffer flexible
regulations that would engender more eco-innovation among manu-
facturing firms. Some of such policies may include introduction of soft
instruments such as voluntary commitments, eco-audits and eco-labels
and renewable energy subsidies. These instruments have the potential
to positively affect eco-innovative behaviours of firms if they are
properly implemented. With respect to the implications for the man-
agers, this study has shown that collaborations among formal sources of
knowledge and manufacturing firms are crucial to the decision of firms
to engage in eco-innovation. As such, managers/entrepreneurs should
be aware of the roles of these actors in the corporate environmental
strategic goal of the firm. At the same time, the result confirmed that
innovative organizational strategies influence propensity to perform
eco-innovation. Therefore managers/entrepreneurs should pay atten-
tion to this fact by developing organizational capabilities so as to ac-
cumulate the necessary non-technical skills that enable firms to initiate
and develop eco-innovation.
This study is not oblivious of other factors that were not covered in
this study which could affect introduction of eco-innovation because of
the usual limitation of data from cross-sectional survey. Even though
some of the unobserved heterogeneity were controlled for, there could
still be some important drivers of eco-innovation such as the institu-
tional innovation intermediaries, roles of firms' strategic suppliers, fi-
nancial performance, political economy, firms' environmental strategies
and nature of the technology. Nonetheless, this study has made a sig-
nificant contribution to the drivers of eco-innovation within the context
of developing country perspective. These contributions are critical for
the creation and evolution of firms' competitive advantage in the
emerging green market in a latecomer economy.
Acknowledgements
The author acknowledges the School of Social Sciences, University
of KwaZulu-Natal, South Africa and the National Centre for Technology
Management for the help and financial support he got as a PhD student.
I appreciate Michael Francis for his support, constructive inputs and
comments. The author also thanks discussants and participants at the
AfricaLics PhD Visiting Fellowship programme, AfricaLics Academy in
Mombasa, Kenya (2015), Globelics Academy in Tampere, Finland
(2015) and Innovation and Entrepreneurship Theory workshop,
Rockslide, Denmark for valuable comments on earlier versions of this
paper. The usual disclaimer applies.
10
Technological Forecasting & Social Change xxx (xxxx) xxx–xxx
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Maruf Sanni works with the National Centre for Technology Management (NACETEM) as
a researcher in the Science, Policy and Innovation Studies department. He holds a PhD
degree in Public Policy from the University of KwaZulu-Natal, Durban, South Africa. His
research interests include low-carbon innovation development pathways and climate-
resilient development. He recently worked with the United Nations Development
Programme as home-based intern and the United Nations University Institute for Natural
Resources in Africa, Ghana as a visiting scholar. He currently heads the Technology
Management Education and Training department at NACETEM.