Do eco-innovations need specific regional characteristics? An econometric analysis for Germany

The theoretical and empirical innovation literature stresses the importance of regional factors and location conditions for location choice of firms and their innovation success. Innovation activities are not equally distributed in space because agglomeration effects and specific regional infrastructures may promote innovation activities. Concerning environmentally oriented innovations, the so-called eco-innovations, there is a widespread empirical literature analyzing their determinants but—because of the lack of adequate data—the inclusion of regional and location factors has been neglected. This paper tries to close this gap by using the establishment panel of the German Institute for Employment Research in Nuremberg combined with data at the regional level. To explore specific regional determinants of eco-innovations compared to other innovations including variables at the firm and the regional level, a two-level mixed effects logistic regression has been applied. The econometric results show that external knowledge sources such as the regional proximity to research centers and universities are more important for eco-innovations compared to other innovations. Eco-innovations seem to be a chance for under-developed regions looking for new business activities because they are more likely in regions characterized by high poverty rates. Furthermore, they are less dependent on urbanization advantages. The econometric results also show that eco-innovations need a high qualification of the personnel connected with further education measures within the firms.