Abstract
This paper investigates the impact of eco-innovation, i.e., innovations aimed at improving firms’ environmental performances, and environmental policy stringency on firms’ growth processes, with a special focus on gazelles, i.e., firms that show higher than average growth rates. In a context shaped by more and more stringent environmental regulatory frameworks, we posit that inducement mechanisms and the regulatory push/pull effect expand the derived demand for eco-innovations suppliers. For these reasons, we expect a positive association between the generation of EIs and sales growth, which is magnified by increasing policy stringency. The empirical analysis is based on firm-level data drawn from the Bureau van Dijk Database, coupled with patent information obtained from OECD Science and Technology Indicators. The results confirm that eco-innovations are likely to augment the effects of generic innovation on firm growth, and this is particularly true for gazelles. Policy stringency is important in moderating the effects of eco-innovation on growth for gazelles, but even more so for slow-growing firms.
Similar content being viewed by others
Notes
While eco-innovation may refer to both technological and non-technological innovations, in this paper, we will focus specifically on new technologies. In the literature, the subset of “technological” eco-innovation is often referred to as environmental or green technologies.
There are several definitions of “gazelles: within the entrepreneurship literature. Henrekson and Johansson (2010) provides a survey of the literature, showing how this term is mostly used as an alternative way to refer to high-growth firms.
It should be noted that the distribution by size class revealed an important weakness of the ORBIS database; in the case of more than 18 million companies, there is no information on employment. This is due to the fact that employment is not a mandatory variable in balance sheet data. Moreover, ORBIS is based on data collected by national Chambers of Commerce, i.e., on data pertaining to companies that are registered and are liable for VAT. This implies that small firms are likely to be underrepresented. However, this problem is minimal for the purposes of this paper since patenting behavior is also biased towards larger firms.
References
Acemoglu, D., Aghion, P., Bursztyn, L., & Hemous, D. (2012). The environment and directed technical change. American Economic Review, 102(1), 131–166.
Albrizio, S., Kozluk, T., & Zipperer, V. (2017). Environmental policies and productivity growth: evidence across industries and firms. Journal of Environmental Economics and Management, 81, 209–226.
Ambec, S., Cohen, M. A., Elgie, S., & Lanoie, P. (2013). The Porter hypothesis at 20: can environmental regulation enhance innovation and competitiveness? Review of Environmental Economics and Policy, 7(1), 2–22.
Barbieri, N., Ghisetti, C., Gilli, M., Marin, G., & Nicolli, F. (2016). A survey of the literature on environmental innovation based on main path analysis. Journal of Economic Surveys, 30(3), 596–623.
Birch, D. (1979). The job generation process. Cambridge: The MIT Press.
Birch, D. (1981). Who creates jobs? The Public Interest, 65(fall), 3–14.
Bottazzi, G., & Secchi, A. (2006). Explaining the distribution of firms growth rates. The Rand Journal of Economics, 37, 234–263.
Bottazzi, G., Cefis, E., Dosi, G., & Secchi, A. (2007). Invariances and diversities in the patterns of industrial evolution: some evidence from Italian manufacturing industries. Small Business Economics, 29, 137–159.
Bottazzi, G., Coad, A., Jacoby, N., & Secchi, A. (2011). Corporate growth and industrial dynamics: evidence from French manufacturing. Applied Economics, 43, 103–116.
Botta, E., & Koźluk, T. (2014). Measuring environmental policy stringency in OECD countries.
Brunnermeier, S. B., & Cohen, M. A. (2003). Determinants of environmental innovation in US manufacturing industries. Journal of Environmental Economics and Management, 45(2), 278–293.
Cainelli, G., Evangelista, R., & Savona, M. (2006). Innovation and economic performance in services: a firm-level analysis. Cambridge Journal of Economics, 30, 435–458.
Cainelli, G., Mazzanti, M., & Montresor, S. (2012). Environmental innovations, local networks and internationalization. Industry and Innovation, 19(8), 697–734.
Carrión-Flores, C. E., & Innes, R. (2010). Environmental innovation and environmental performance. Journal of Environmental Economics and Management, 59(1), 27–42.
Cassia, L., & Colombelli, A. (2008). Do universities knowledge spillovers impact on new firm’s growth? Empirical evidence from UK. International Entrepreneurship and Management Journal, 4(4), 453–465.
Cassia, L., Colombelli, A., & Paleari, S. (2009). Firms’growth: does the innovation system matter? Structural Change and Economic Dynamics, 20, 211–220.
Castaldi, C., & Dosi, G. (2009). The patterns of output growth of firms and countries: scale invariances and scale specificities. Empirical Economics, 37, 475–495.
Coad, A. (2010). Exploring the processes of firm growth: evidence from a vector auto-regression. Industrial and Corporate Change, 19, 1677–1703.
Coad, A., & Hoelzl, W. (2011). Firm growth: empirical analysis. In M. Dietrich & J. Krafft (Eds.), Handbook on the economics and theory of the firm. Cheltenham: Edward Elgar.
Coad, A., & Rao, R. (2008). Innovation and firm growth in high- tech sectors: a quantile regression approach. Research Policy, 37, 633–648.
Coad, A., & Rao, R. (2010). Firm growth and R&D expenditure. Economics of Innovation and New Technology, 19, 127–1453.
Colombelli, A., & Quatraro, F. (2014). The persistence of firms’ knowledge base: a quantile approach to Italian data. Economics of Innovation and New Technology, 23, 585–610.
Colombelli, A., Haned, N., & Le Bas, C. (2013). On firm growth and innovation: Some new empirical perspectives using French CIS (1992–2004). Structural Change and Economic Dynamics, 26, 14–26.
Colombelli, A., Krafft, J., & Quatraro, F. (2014). High-growth firms and technological knowledge: do gazelles follow exploration or exploitation strategies? Industrial and Corporate Change, 23, 261–291.
Costantini, V., Mazzanti, M., & Montini, A. (2013). Environmental performance and regional innovation spillovers. Evidence from a regional NAMEA. Ecological Economics, 89, 101–114.
Costantini, V., Crespi, F., Martini, C., & Pennacchio, L. (2015). Demand-pull and technology-push public support for eco-innovation: the case of the biofuels sector. Research Policy, 44, 577–595.
Crespi, F., & Quatraro, F. (2013). Systemic technology policies: issues and instruments. Technological Forecasting and Social Change, 80, 1447–1449.
Crespi, F., & Quatraro, F. (2015). The economics of knowledge, innovation and systemic technology policy. London and New York: Routledge.
Crespi, F., Ghisetti, C., & Quatraro, F. (2015). Environmental and innovation policies for the evolution of green technologies: a survey and a test. Eurasian Business Review, 5(2), 343–370.
Del Río, P. (2009). The empirical analysis of the determinants for environmental technological change: a research agenda. Ecological Economics, 68(3), 861–878.
EEA, 2005. Agriculture and environment in EU-15—the IRENA indicator report. EEA Report, no. 6/2005, Copenhagen.
Ekins, P. (2010). Eco-innovation for environmental sustainability: Concepts, progress and policies. International Economics and Economic Policy, 7(2–3), 267–290.
Fischer, C., & Newell, R. G. (2008). Environmental and technology policies for climate mitigation. Journal of Environmental Economics and Management, 55(2), 142–162.
Frondel, M., Horbach, J., & Rennings, K. (2008). What triggers environmental management and innovation? Empirical evidence for Germany. Ecological Economics, 66(1), 153–160.
Gagliardi, L., Marin, G., & Miriello, C. (2016). The greener the better? Job creation effects of environmentally-friendly technological change. Industrial and Corporate Change, 25(5), 779–807.
Galvao, A. F. (2011). Quantile regression for dynamic panel data with fixed effects. Journal of Econometrics, 164(1), 142–157.
Ghisetti, C., & Quatraro, F. (2013). Beyond the inducement in climate change: do environmental performances spur environmental technologies? A regional analysis of cross-sectoral differences. Ecological Economics, 96, 99–113.
Ghisetti, C., & Rennings, K. (2014). Environmental innovations and profitability: how does it pay to be green? An empirical analysis on the German innovation survey. Journal of Cleaner Production, 75, 106–117.
Ghisetti, C., & Quatraro, F. (2017). Green technologies and environmental productivity: A cross-sectoral analysis of direct and indirect effects in Italian regions. Ecological Economics, 132, 1–13.
Gibrat, R. (1931). Les inégalités économiques. Paris: Librairie du Recueil Sirey.
Gilli, M., Mancinelli, S., & Mazzanti, M. (2014). Innovation complementarity and environmental productivity effects: reality or delusion? Evidence from the EU. Ecological Economics, 103, 56–67.
Henrekson, M., & Johansson, D. (2010). Gazelles as job creators—a survey and interpretation of the evidence. Small Business Economics, 35, 227–244.
Hölzl, W. (2009). Is the R&D behaviour of fast-growing SMEs different? Evidence from CIS III data for 16 countries. Small Business Economics, 33, 59–75.
Hoppmann, J., Peters, M., Schneider, M., & Hoffmann, V. H. (2013). The two faces of market support—how deployment policies affect technological exploration and exploitation in the solar photovoltaic industry. Research Policy, 42(4), 989–1003.
Horbach, J. (2008). Determinants of environmental innovation—New evidence from German panel data sources. Research Policy, 37(1), 163–173.
Horbach, J., Rammer, C., & Rennings, C. (2012). Determinants of eco-innovations by type of environmental impact—the role of regulatory push/pull, technology push and market pull. Ecological Economics, 78, 112–122.
Jaffe, K., & Palmer, K. (1997). Environmental regulation and innovation: a panel study. The Review of Economics and Statistics, 79, 610–619.
Johnstone, N., Haščič, I., Poirier, J., Hemar, M., & Michel, C. (2012). Environmental policy stringency and technological innovation: evidence from survey data and patent counts. Applied Economics, 44, 2157–2170.
Kemp, R. (2010). Eco-innovation: definition, measurement and open research issues. Economia Politica, 3, 397–420.
Lanjouw, J. O., & Mody, A. (1996). Innovation and the international diffusion of environmentally responsive technology. Research Policy, 25(4), 549–571.
Lanoie, P., Lucchetti, J., Johnstone, N., & Ambec, S. (2011). Environmental policy, innovation and performance: new insights on the Porter hypothesis. Journal of Economics and Management Strategy, 20(3), 803–842.
Leoncini, R., Marzucchi, A., Montresor, S., Rentocchini, F., & Rizzo, U. (2017). ‘Better late than never’: the interplay between green technology and age for firm growth. Small Business Economics, 1–14.
Leoncini, R., Marzucchi, A., Montresor, S., Rentocchini, F., & Rizzo, U. (2019). ‘Better late than never’: The interplay between green technology and age for firm growth. Small Business Economics, 52(4), 891–904.
Mansfield, E. (1962). Entry, Gibrat’s law, innovation and the growth of firms. American Economic Review, 52, 1023–1051.
Marin, G. (2014). Do eco-innovations harm productivity growth through crowding out? Results of an extended CDM model for Italy. Research Policy, 43, 301–317.
Mazzanti, M., & Zoboli, R. (2009). Municipal waste Kuznets curves: Evidence on socio-economic drivers and policy effectiveness from the EU. Environmental and Resource Economics, 44(2), 203.
Mowery, D. (1983). Industrial research and firm size, survival, and growth in American manufacturing, 1921–1946: an assessment. Journal of Economic History, 43(4), 953–980.
Nelson, R. R., & Winter, S. (1982). An evolutionary theory of economic change. Cambridge and London: The Belknap Press.
Nemet, G. (2009). Demand-pull, technology-push, and government-led incentives for non-incremental technical change. Research Policy, 38, 700–709.
Nesta, L., Vona, F., & Nicolli, F. (2014). Environmental policies, competition and innovation in renewable energy. Journal of Environmental Economics and Management, 67(3), 396–411.
Nightingale, P., & Coad, A. (2014). Muppets and gazelles: political and methodological biases in entrepreneurship research. Industrial and Corporate Change, 23, 113–143.
Popp, D. (2002). Induced innovation and energy prices. American Economic Review, 92(1), 160–180.
Popp, D. (2006). Exploring links between innovation and diffusion: adoption of NOx control technologies at US coal-fired power plants. National Bureau of Economic Research w12119.
Popp, D. (2010). Innovation and climate policy. Annual Review of Resource Economics, 2(1), 275–298.
Porter, M. E., & Van der Linde, C. (1995). Toward a new conception of the environment-competitiveness relationship. The Journal of Economic Perspectives, 9(4), 97–118.
Rennings, K. (2000). Redefining innovation—Eco-innovation research and the contribution from ecological economics. Ecological Economics, 32(2), 319–332.
Rennings, K., & Rammer, C. (2011). The impact of regulation-driven environmental innovation on innovation success and firm performance. Industry and Innovation, 18(03), 255–283.
Requate, T. (2005). Dynamic incentives by environmental policy instruments—A survey. Ecological Economics, 54(2–3), 175–195.
Rexhäuser, S., & Rammer, C. (2014). Environmental innovations and firm profitability: unmasking the Porter hypothesis. Environmental and Resource Economics, 57(1), 145–167.
Santarelli, E., Klomp, L., & Thurik, A. R. (2006). Gibrat’s law: An overview of the empirical literature. In Entrepreneurship, growth, and innovation (pp. 41–73). Boston: Springer.
Scherer, F. M. (1965). Corporate inventive output, profits, and growth. Journal of Political Economy, 73(3), 290–297.
Teece, D. J. (1986). Profiting from technological innovation: implications for integration, collaboration, licensing and public policy. Research Policy, 22, 112–113.
Van den Bergh, J. C., & Kallis, G. (2012). Growth, a-growth or degrowth to stay within planetary boundaries? Journal of Economic Issues, 46(4), 909–920.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
The authors declare that they have no conflict of interest.
Additional information
Publisher’s note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Electronic supplementary material
ESM 1
(DOCX 43 kb)
Rights and permissions
About this article
Cite this article
Colombelli, A., Krafft, J. & Quatraro, F. Firms’ growth, green gazelles and eco-innovation: evidence from a sample of European firms. Small Bus Econ 56, 1721–1738 (2021). https://doi.org/10.1007/s11187-019-00236-8
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11187-019-00236-8