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The research study reported here analyses the link between sustainability-related and similar regulation and environmental and sustainability-related innovation in firms and ultimately the effect on economic performance and competitive advantage. Our study of these effects uses case study data and survey data for German manufacturing firms. Emphasis is placed on the interaction of different kinds of regulations differentiated between standard/limit-based, market-based or voluntary agreements and types of innovation, specifically product versus process innovation. Circumstances such as stringency and range of regulations and their corresponding impact are also considered since their effect on firms’ innovation processes matters in terms of acceleration, framework building or indirect effects. We find that innovations triggered by regulation can improve the environmental performance of the affected product itself and/or related processes and that this leads to innovation offsets which exceed the costs of compliance and enhance competitiveness. Furthermore, setting effects of environmental regulation as well as interactions between markets and first-mover advantages could be identified amongst others as key variables that affect the potential for innovation offsets.
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- The Role and Effectiveness of Environmental and Social Regulations in Creating Innovation Offsets and Enhancing Firm Competitiveness
- Springer Netherlands
- Chapter 5
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