The determinants of eco innovative performance according to firms' strategic profiles : The case of French Industrial Firms

Transcription

1 Paper to be presented at the DRUID Academy 2012 on January at Unversty of Cambrdge /The Moeller Centre The determnants of eco nnovatve performance accordng to frms' strategc profles : The case of French Industral Frms Smon Nadel Unversté Toulouse 1 Lereps smon.nadel@unv-tlse1.fr Abstract The am of ths artcle s to analyse the factors that nfluence French ndustral frms n ther eco-nnovaton behavour and, usng a general model as a bass, to buld three models of adopton of eco nnovatons accordng to whether the motves for eco nnovaton are related to demand, costs or regulaton. An econometrc model for analysng the characterstcs that are conducve to the adopton of eco nnovatons, on the one hand, and those that postvely nfluence the ntensty of frms' envronmental nnovaton performance s tested usng ndvdual data on nnovaton that s representatve of the French ndustral sector (CIS8). The results hghlght the structurng role of frms' nternal characterstcs, the co-evoluton wth other forms of nnovaton and the nfluence of frms' external envronment on ther eco-nnovaton performance. They show that these factors have dfferent effects dependng on frms' strategc profles. Jelcodes:O33,O

2 The determnants of eco nnovatve performance accordng to frms' strategc profles: The case of French Industral Frms PAPER IN PROGRESS Danelle GALLIANO 1* and Smon NADEL 2 1 Insttut Natonal de la Recherche Agronomque (INRA-AGIR), BP 52627, Castanet Tolosan cedex, France. Tél : +33 (0) ; Fax : +33 (0) ; gallano@toulouse.nra.fr 2 Unversté de Toulouse, UT1, LEREPS, 21, allée de Brenne, 31042, Toulouse cedex, France. Tél : +33 (0) ; Fax : +33 (0) ; smon.nadel@unv-tlse1.fr Abstract : The am of ths artcle s to analyse the factors that nfluence French ndustral frms n ther eco-nnovaton behavour and, usng a general model as a bass, to buld three models of adopton of eco nnovatons accordng to whether the motves for eco nnovaton are related to demand, costs or regulaton. An econometrc model for analysng the characterstcs that are conducve to the adopton of eco nnovatons, on the one hand, and those that postvely nfluence the ntensty of frms' envronmental nnovaton performance s tested usng ndvdual data on nnovaton that s representatve of the French ndustral sector (CIS8). The results hghlght the structurng role of frms' nternal characterstcs, the co-evoluton wth other forms of nnovaton and the nfluence of frms' external envronment on ther eco-nnovaton performance. They show that these factors have dfferent effects dependng on frms' strategc profles. Key words: Envronmental nnovaton, frm strategy, demand pull, regulaton, cost savngs, French ndustry 1

3 1.Introducton Accordng to the lterature, and n a very large sense, envronmental nnovaton conssts of new or modfed processes, technques, systems and products to avod or reduce envronment damage and whch contrbute to envronmental sustanablty (Arundel et al, 2005, Horbach 2008). Drven by strong nsttutonal and regulaton related constrants (Rennngs, 2000) and by ncreasng market pressure (Bese and Rennngs 2005), envronmental nnovatons are above all processes that develop and co-evolve wth frms' overall strateges and more specfcally wth ther nnovaton strategy. Followng Porter's footsteps, the lterature hghlghts three large categores of determnants of eco-nnovaton adopton: a regulatory push/pull effect consdered n the lterature on Envronmental nnovaton as largely domnant and precursory; and the Market pull or technology Push effects (Rennngs 2000), two more tradtonal determnants dentfed n nnovaton economcs lterature. In ths context, though many studes have sought to reveal the role of these three key determnants n frms' eco nnovaton behavour, few have analysed the mcro economc foundatons of these strategc profles. Ths dmenson s all the more mportant as t can help to gan a better understandng of the structural and strategc foundatons of econnovatve behavours and, as a result, to better gude publc polces. The purpose of ths artcle s to analyse the factors that nfluence French ndustral frms' behavour n terms of envronmental nnovaton adopton and, on the bass of a general model, to buld three models of adopton so as to test the exstence of dfferent determnants accordng to the motve for nnovatng,.e. respond to a cost related need, a demand from one's clents or an exstng or even future regulaton. Our goal s to better understand the foundatons of the three strategc profles of envronmental nnovators descrbed n the lterature. In ths context, we wll seek to hghlght the role of frms' organzatonal structure, n ts dfferent nternal and external dmensons, for each of these profles. At the nternal level, beyond the structural characterstcs that are supposed to condton frms' technologcal bases and nformatonal structure, we shall focus on revealng the role of the processes of co evoluton of eco nnovaton and other forms of nnovatons: product or process nnovatons, but also organzatonal changes (changes n the organzaton of labour and n frms' relatonshps wth external partners). Furthermore, the decson to eco-nnovate results from the nteracton between these nternal factors and the dfferent dmensons of the frm's envronment. The sectoral dmenson, as well as the market and geographc envronment are determnants that have a structural role n a frm's behavour both n terms of adopton and n terms of the ntensty of ther eco nnovatve performance. An econometrc model enablng us to analyse the characterstcs that postvely nfluence nnovatve behavour, on the one hand, and those that condton the ntensty of the frm's envronmental performance on the other, s tested usng ndvdual data on nnovaton, representatve of the French ndustral sector. The results hghlght the structurng role of frms' nternal characterstcs and of those of ts external envronment n ts envronmental performance. We ntend to buld - on the bass of a general model - dfferent models of adopton of envronmental nnovatons dependng on the motves for adopton: respond to a demand from one's clents, to a cost ssue or regulaton related need. To test our hypotheses, we use the case of French ndustral frms and ndvdual data from the «2008 Communty Innovaton Survey» conducted by the INSEE n 2008, combned wth the data from the Annual Survey of Frms conducted n The CIS 2008 survey enables us to test the determnants of eco nnovaton adopton and of nnovaton ntensty for all the frms of the French manufacturng sector and all types of eco nnovators. 2

4 Ths artcle s structured nto four sectons. The followng secton presents our theoretcal framework, based on the adopton models and the specfcatons of the emprcal model. Secton 3 descrbes the data, varables and econometrc model. Fnally, secton 4 presents the results of the general model of the French ndustral sector, and then the three profles of nnovators. 2. The determnants of envronmental nnovaton : Theoretcal framework and hypotheses 2.1 The models of adoptons The lterature on envronmental nnovatons has developed around two man contrbutons : that of Porter's hypotheses (Porter, 1991, Porter and van den Lnde, 1995) and that of Rennngs' noton of «double externalty» and of «regulatory push/pull effect» stemmng from t (2000). Porter, wth a «wn wn» approach, seeks to put an end to the opposton between ecology and economy, by brngng to the fore the fact that envronmental nnovaton (followng an envronmental regulaton) has the potental to have a double postve mpact n terms of envronment and of compettveness. In parallel to ths, Rennngs, n an approach combnng neoclassc theory and evolutonsm, dscusses the mportant role of regulaton through the noton of «double externalty» : one mportant specfcty of eco nnovatons s that they produce postve spllovers n both the nnovaton and dffuson phases. The postve spllovers n the dffuson phase appear due to a smaller amount of external costs compared to competng goods and servces on the market [ ] Ths pecularty s called the double externalty problem. The double externalty problem reduces the ncentves for frms to nvest n envronmental nnovatons.» (Rennngs 2000, p. 315). In other words, t s ths weakness of the ncentve to eco-nnovate that makes the role of regulaton central to the development of envronmental nnovaton, contrary to the case of classc nnovaton. From ths specfcty stems the mportance of regulaton - «the regulatory push-pull effect» - as a determnant of adopton of eco-nnovatons. Apart from the regulatory dmenson of «regulatory push/pull», whch s specfc to envronmental nnovaton, the lterature agrees n consderng two other large categores of more tradtonal determnants n nnovaton economcs : «market pull» and «technology push», two concepts ntroduced, n partcular, by Schon (1967). On the one hand, nnovaton s «pulled» by the level and the structure of the demand the frm faces. Ths «market pull» or «demand pull» dmenson s partcularly mportant for the frms for whch satsfyng the demand s crtcal (Grlches 1957 ; Schmookler 1962, 1966). On the other hand, a frm s encouraged to nnovate, n a Schumpeteran perspectve, by dmensons related to the supply and to technologcal evolutons, and more generally as a result of ssues related to cost compettveness : t s the «technology-push» dmenson. Pavtt (1984) artculates both categores of factors by showng that the «technology push» aspect s essental n the frst stages of a product's lfe cycle, whereas the market related factors are so only n the dffuson phase. Thus, the lterature on envronmental nnovaton agrees that beyond the tradtonal factors of the «market pull» and «technology pull» types hghlghted n the lterature on the economcs of techncal nnovaton, the factors related to regulaton, of the type «regulatory push pull», are determnant (Rennngs, 2000, Beln et al, 2009). 3

5 In ths context, our goal s to test three models of nnovaton related behavours, accordng to the frms' adopton profles descrbed n the lterature : a «market pull» profle (pulled by the demand), a «technology push» profle and fnally a «regulatory push pull» profle. These strateges of envronmental nnovaton do not exclude one another but are «typcal profles» that can be tested emprcally whch has seldom been done n the lterature. Fnally, we note that the geographc factors have almost no mpact on the adopton of envronmental nnovatons: the geographc locaton of a frm's head offce s no sgnfcant, wth the excepton of a very small negatve effect - for frms that adopt nnovatons for demand related reasons - of beng located n a rural area ; ndeed, those frms are, qute logcally, more turned towards consumpton zones. The non sgnfcant effect of the locaton area tends to show the specfcty of envronmental nnovatons n relaton to other types of nnovatons. They seem to be senstve to the combned nfluence of knowledge spllovers, whch are generally more urban, and the mportance of the producton zones, whch are often located n perpheral areas. The adopton rate of frms n the same geographc area has no nfluence ether on the frms' behavour n terms of eco nnovaton adopton. The sectoral epdemc effects are the only ones that have an mpact. Fgure 1 : The determnants of eco-nnovaton behavour Strategc frm s profle -cost -demand -regulaton Determnants Internal characterstcs of the frm: sze, group, brand mage, nnovatve profle Characterstcs of the envronment: Sectoral, spatal and market envronment Eco-nnovaton 2.2. The factors explanng envronmental nnovatons In ther mcro economc dmenson, nnovaton processes are fundamentally cumulatve and nteractve and the organzatonal archtecture of a frm plays a central role. It pertans to the analyss of the nternal and structural characterstcs of frms, ther strategc behavours and nternal as well as external coordnaton systems. These characterstcs consttute, n the nnovaton dffuson models, a set of factors that condton frms' behavour n terms of nnovaton (rank effect, Karshenas and Stoneman, 1993) and ther absorpton capacty (Cohen and Levnthal, 1989). They are related to frms nternal specfc technologcal characterstcs (&2.2.1). In parallel to ths, the decson to engage n envronmental nnovaton s also shaped by many external factors related to the dfferent aspects of the frm's envronment - whether t be regulatory, sectoral, commercal or geographc nvolvng, as the geography of nnovaton has shown, relatons of proxmty and local exchanges of knowledge as determnants for econnovatons adoptons (&2.2.2). 4

6 2.2.1The nternal, structural and strategc characterstcs of the frm : the technology push effects The hypothess s that frms possess ther own specfc characterstcs - ther sze, the fact that they belong to a group or not, the fact that they nvest n R&D whch consttute resources and pre condtons of ther engagement n an nnovaton process. The relatons between a frm's sze and envronment nnovaton have been the object of many research studes, many of whch have emphaszed a postve relaton between both factors (Rehfeld et al. 2007, Rave et al., 2011). Some studes show the absence of effects (Horbach, 2008, for product eco nnovatons) or the exstence of a U-shaped relatonshp between frm sze and envronmental nnovatons (Hemmelskamp, 2000). Small frms are generally organzatons wth a lower endowment of fnancal, human or technologcal resources than large frms and they may lack the nternal expertse to develop econnovatons. In the same ven, belongng to a group can foster nnovaton and help frms overcome the dffcultes they experence durng the nnovaton process (Lhullery 2008). Hypothess 1 : the sze of a frm and ts belongng to a group should have a postve effect on ts propensty to engage n eco-nnovaton. Research has extensvely shown the mportance of consumers' behavours, and partcularly ther need to be reassured about the qualty and safety of the products they purchase and to be assured that the latter have no harmful mpact on the envronment (for a survey, refer to Srvastava, 2007). In ths context, frms ntroducng new products can ncur hgh marketng and advertsng expenses to nform consumers (Verbeke, 2005). A frm's advertzng rate can provde nformaton about the ntensty of ts nvestment n ts dentfy (promoton of ts brand mage, nformaton about qualty, etc), and therefore about ts role n the process of adopton of eco-nnovatons. Ths ssue has been lttle researched. In ths context, our goal s to test the relaton between advertsng and econnovaton and to determne whether frms that nvest a large proporton of ther sales n advertsng have a lower (substtute) or hgher (complementary) probablty of engagng n econnovaton. Hypothess 2 : The promoton of the brand mage s postvely related to the adopton of eco nnovatons and to ther ntensty. The eco-nnovatve behavour of a frm strongly depends upon the frms' other nternal resources, keepng n mnd the dea of complementary wth other types of nnovaton, whether they be product, process or organzatonal nnovatons. In keepng wth Mlgrom and Roberts (1990, 1995), Rennngs (2000) stresses the co-evoluton of the dfferent forms of envronmental nnovatons. Thus for Mazzant et al. (2007), Wagner (2007) or Beln et al. (2009), organzatonal nnovatons are postvely related to adopton or to the producton of envronmental nnovaton. We observe n partcular that the generalzaton wthn frms of Envronmental Management Systems (EMS), through the ntroducton of ISO standards for example, s frequently ntegrated n the econometrc models that seek to better understand frms' behavour n terms of eco nnovaton. Thus, t s consdered, n many studes (Frondel et al. (2004); Mazzant et al. (2006) ; Rehfeld et al. (2007); Wagner, 2008), as a postve factor of envronmental nnovaton. Horbach, et al. (2011) show that EMS sgnfcantly trgger envronmental nnovaton as well as general organzatonal changes as new forms of organzatonal labour. For more about ths queston, see Ramrez, Khanna et al (2008) who lnk the adopton of EMS to the Total Qualty management systems. 5

7 Hypothess 3 : The adopton of envronmental nnovatons s postvely nfluenced by the frm's nnovaton profle and ts nnovaton ntensty. Envronmental nnovaton and organzatonal changes, partcularly, co-evolve The factors related to the frm's external envronment : Regulatory, Market and Geographc effects A frm's nteracton wth ts envronment s a key factor of nnovaton and of ts dynamcs. Thus, dfferent dmensons of the envronment can be examned n order to gan a better understandng of frms' decson to eco-nnovate and of the ntensty of ther eco-nnovatve performances. The sectoral and commercal envronment n whch a frm's actvty s conducted s a varable that s often put forward n the lterature to characterze the technologcal bases of the frm. As noted by Carllo et al. «Technologcal alternatves and eco-nnovaton opportuntes are lkely to dffer per sector» (2009). These technologcal opportuntes are also more or less approprable and can foster the development of more or less radcal or ncremental nnovatons. The sector also provdes an envronment for the development of specfc regulatory frameworks. In terms of envronment, qualty standards, taxes and effectve oblgatons at sectoral level are many. For example, frms that belong to sectors subjected to the communty emsson quota exchange system, such as chemstry, are fnancally sanctoned f ther carbon doxde emsson exceeds the allowed volume (Drectve 2033/87/CE). The evolutonst lterature talks of an «envronmental regme», whch helps n understandng the mportance of the sectoral dmenson of the econnovatve behavour. For Beln, Oltra and Horbach (2009) : «the envronmental regme captures the level and the source of envronmental pressure n a gven ndustry. [...]» For these authors, an envronmental regme s charactezed by ndcators such as emsson ntensty but also by the polcy context : the type, number and strngency the ndustry s subject to. The emprcal lterature often takes account of the sector to hghlght the technologcal envronment n whch the frm operates (Malerba 2005). Its nfluence as a varable explanng frms' behavour n terms of eco-nnovaton s emphaszed by Mazzant et al (2006) and Wagner (2007). It s a tradtonal control varable n the lterature on the determnants of envronmental nnovaton (Frondel et al, 2007, Horbach, 2008 ; Horbach et al., 2011). Hypothess 4 : The sectoral envronment, through ts regulaton framework, ts technologcal opportuntes and condtons of approprablty, plays an mportant role n frms' behavour n terms of eco-nnovaton. On the ssue of market structures, there s lttle consensus n the lterature concernng the queston of the mpact of the degree of market concentraton on frms' eco-nnovatve performances and there s ambguty wth respect to whch type of market structure leads to hgher probabltes of nnovatng (Smolny 2003). As clamed by Horbach, on the one hand, an ncreasng demand n the past and hgh capacty utlzaton ndcate growng markets n the future (Horbach 2008), on the other hand, n perods of slack demand non producton actvtes such as the reorganzaton of producton processes, R&D and tranng exhbt less opportunty costs n case of excess capactes (Smolny 2003). Furthermore, several studes show the nfluence of the geographcal dmenson of the market and partcularly on the postve effect of nternatonal exchanges on eco-nnovaton (Beln et al, 2009). Whereas for Rhefeld et al. (2007, p.98) exportng has no nfluence on the adopton of product eco nnovaton. For Horbach (2008) as well as for Concecao et al (2006), n the case of Portuguese frms, hgh export shares have an mpact: frms that are hghly exposed to nternatonal competton are more lkely to nnovate. 6

8 Hypothess 5 : Market concentraton and nternatonal openness can favor eco nnovatons Wth regard to frms' spatal envronments, many studes that make use of the geography of nnovaton emphasze the role of agglomeraton externaltes and of proxmty n the dffuson of nnovatons and knowledge (Feldman and Audresht 1996). It hghlghts dfferent types of spatal externaltes followng the dea that dversfed ctes offer dfferent benefts as compared wth specalzed areas (Jacobs' urban agglomeraton effects, 1969 versus Marshall's locaton effects, 1890). Rural areas whch, on the contrary, have a dsadvantage related to the weakness of nterfrm relatons, to the lack of dversty of human captal and of knowledge externaltes (Massard et al. 2006, Gallano and Roux, 2006). On the other hand, the studes analyzng the determnants of eco nnovaton are stll few and very recent. Costantn, Mazzant and Montn (2011) ntegrate a regonal varable to compare the envronmental performances of the dfferent Italan regons. A possble «ndustral dstrct» effect s mentoned by Mrat and Emterah, who suggest that «ndustral symboss networks» play a role n the dffuson of eco nnovaton. Ths dmenson s therefore lttle explored n the lterature and presents varous potental effects. The queston s, among others, to test whether t s the tradtonal agglomeraton economes that play n favor of eco nnovaton. Or can we on the contrary assume that the correlaton between eco nnovatons and productve actvtes s senstve to the geographc dvson of labour whereby productve actvtes are mostly located n perpheral areas (Ota and Fujta) and promotes the opportuntes of realzaton of envronmental nnovatons n these areas. Hypothess 6 : Envronmental nnovaton vares accordng to the frm's geographc locaton The queston of externaltes pertans more generally to that of the effects of networks and of frms' processes of adopton and of absorpton of technologes developed by other frms located n ther envronment. Epdemc models assume, among other thngs, that a potental user can become a user by beng n contact wth an actor who has adopted the nnovaton. Thus, the larger the number of «adopters», the hgher the probablty for a «non-adopter» of beng n contact wth one adopter, and the hgher of the former of gettng «contamnated» (Hollensten, 2004). These epdemc effects of neghborhood can be sector related n nature when a large part of the sector's frms use the technology n queston, but they can also be spatal and relatve to geographc neghborhood. Ths dmenson has been lttle tested, wth the notable exceptons of Mohr (2002) and later of Mads Greaker (2006), who take nto account the role of spllovers n the dffuson of the effects of envronmental regulaton among the frms of the same sectors. Hypothess 7 : The adopton of envronmental nnovatons by a frm s postvely nfluenced by the level of eco-nnovaton adopton by the frms of the same sector or located n the same geographc area. Fnally, the ntensty of envronmental nnovaton s related to the frm's strategy. Beyond the generc factors mentoned, we can propose the hypothess that the mpact of the ndependent varables vares accordng to the frms' strateges. Thus, f the frm decdes to eco-nnovate for motves related to demand, cost or regulaton ssues, the factors nfluencng the frm's eco nnovaton behavour wll not be the same. The frms that produce or adopt envronmental nnovatons n order to respond to demand related questons wll tend to be senstve to varables such as the brand mage and the locaton of the man market. On the other hand, these factors do not seem to be sgnfcant n the adopton of nnovatons by frms whose goal s to reduce ther expenses or to comply wth regulatons. A contraro, the frms that eco-nnovate n order to comply to exstng regulatons or to antcpate future regulatons wll have a hgher propensty to develop ncremental nnovatons («end of ppe») than to make radcal ones («cleaner producton»). As for the attempt to reduce costs, t wll postvely nfluence radcal nnovatons. Thus, for Frondel et al. (2007) : «cost savngs tend to favor clean producton and ( ) regulatory 7

9 measures and the strngency of envronmental polcy are postvely correlated to end-of-ppe technologes». Smlarly, n the case of the frms of one sector subjected to specfc sectoral regulatons, we can make the hypothess that the eco nnovaton performance of frms that adopt nnovatons for motves related to regulaton wll be hghly correlated to sector related varables. Hypothess 8 : The determnants of nnovaton, and partcularly the nternal and envronmental characterstcs, vary accordng to the frm's strategy (demand, cost and regulaton) 3. Data and methodologcal 3.1 Data Ths study rests on data from two mandatory publc surveys conducted by the French Natonal Insttute of Statstcs (INSEE). The Communty Innovaton Survey (CIS8), s a declaratve survey whose purpose was to understand the nnovatons performed by frms durng the last three years ( ). It makes t possble to characterze the dfferent nnovaton processes that take place wthn frms, whle takng nto account the nfluence of the envronment. Thus, we have a database of 4583 frms of 20 employees or more, representatve of the French ndustral manufacturng populaton. Table 1 : Descrptve statstcs Total Frm Eco-nnovatve frms Internal characterstcs of the frm Sze 20 to 49 employees % % 50 to 249 employees % % 250 to 500 employees % % More than 500 employees % % Group 61.94% % Innovatve profle Radcal Innovaton 11.97% % Incremental Innovaton 12.63% % Incrémental/radcal % % Process nnovaton % % Change n labour organsaton % % Change n nter-frm relatons % % EMS before % 28.55% EMS durng the perod % % Characterstcs of the envronment Man market locaton Regonal market 24.98% % Natonal market 53.50% % Foregn Market 21.52% % Sector Agrofood C % % Consumer related actvtes C % % Equpement C % % Transport C % 5.43 % Intermedates actvtes C % % Head offce locaton : 8

10 Urban % 60.50% Per-urban % % Rural % % Sources : 2008 CIS and 2007 EAE surveys 3.2 The method The model of adopton To dentfy the factors of choce and ntensty of eco-nnovaton, we wll proceed n two steps. Frst, we apply a probt model, whch can hghlght the factors relatng to the choce of adoptng eco-nnovaton. Then n a second step, we make an ordered probt model that wll allow to dentfy the elements relatve only to the eco-nnovatve frms, thus enablng the hghlghtng factors on the ntensty of eco-nnovaton. The realzaton of a probt model allows to hghlght the determnants of the choce of adoptng eco-nnovaton by frms, dfferentatng adopters of non adopters. The probt-type models are used to explan a dchotomous dependent varable wth the latent model s: Y *= X + Where X s a vector of ndependent varables s the vector of parameters to be estmated the resdual error, whch follows a normal dstrbuton If Y *> 0 then the frm has developed an eco-nnovaton: Y the s observed varable ndcatng f s the frm s eco-nnovatve; Y s equal to 1 f the frm has adopted or produced at least one envronmental nnovaton. Y = 1 s Y * >0 Y = 0 s Y * 0 The probablty that the frm s eco-nnovatve s : P (Y =1) = P (Y *>0) = P ( ) = ) wth ö the dstrbuton functon of the normal dstrbuton. Ths probablty can be estmated by a probt model that allows us to assess the weght of the varous determnants contaned n X that nfluence the propensty of frms to econnovate The ntensty model Ordered probt models are used n the case of ordered and exclusve multnomal qualtatve varables [59]. The outcome of our dependent varable are 0, 1,, 9, for whch a lnear regresson would treat the dfference between a 3 and a 2 n the same as that between a 2 and a 1, whereas n fact they are only a rankng. The dependent varable measurng the ntensty of envronmental x nnovaton s explaned by the measurable factors and certan unobservable factors. The model s bult around a latent regresson n the same manner as a bnomal probt: * y y * = x β + ε Then, s unobserved. What we observe s y, whch provdes ncomplete nformaton about * y accordng to: 9

11 y = 0 f y * 0 = 1 f 0 < y * μ 1 = 2 f μ 1 < y * μ 2 = J f μ J-1 y * where j 0, 1,, J represent the dfferent modaltes of the endogenous varable. The are unknown parameters (cut ponts between scores) to be estmated along wth the parameter vector. As n bnomal probt models, the term s normally dstrbuted across observatons, the followng probabltes are obtaned: Prob(y = j x ) = Φ(μ j x β) Φ(μ j-1 x β) where s the cumulatve dstrbuton functon of the standard normal dstrbuton. As n probt models, ordered probts are estmated usng a maxmum lkelhood procedure, and coeffcents cannot be drectly nterpreted, only ther sgn ndcate n whch drecton the probablty change. 3.3 The varables Ths secton present, frst of all, the dependent varables, whch wll be dvded accordng to the type of eco-nnovator ; and then the ndependent varables, whch wll be dvded nto dfferent groups accordng to whether they are related to the frm's nternal management or pertan to the latter's external envronment The dependent varables. Ths work nvolves three dependent varables : ) the probablty of adopton, ) the ntensty of adopton (va a score varable) and ) the three envronmental nnovaton profles. ) To begn wth, we estmate the probablty that a frm s engaged or not n eco-nnovaton, usng the dchotomous varable «AdopteIE». The latter was created usng the data from the CIS 2008 survey and takes value 1 f to at least one of the nne questons related to the frm's eco-nnovatng performance, the answer s «Yes» ; t takes value 0 otherwse (See table 1). ) Secondly, a SCORE varable s bult to evaluate the ntensty of eco nnovaton wthn frms. Ths nvolves usng a qualtatve ordered polytomous varable characterzng the ntensty of the eco nnovaton adopton. The INSEE defnes envronmental nnovaton, usng 9 modaltes : 6 concernng nnovaton durng the producton process and 3 concernng nnovaton n the consumpton process (See table 2). Wthn the producton process, one can dstngush two types of envronmental nnovatons : those assocated to questons of productvty of the resources (assocated to the decrease n the nput/output rato and to the reducton of the energy consumpton per output unt) and those relatve to the reducton of envronmental externaltes. Ths has to do wth the reducton of carbon doxde emsson by the frm, wth the elmnaton of «pollutng» or «dangerous» nput, the reducton of ground, ar and water polluton and the recyclng of waste, water and raw materals. Furthermore, the INSEE consders that a frm eco nnovates f the nnovaton generates an envronmental beneft durng the consumpton process ; a beneft that can take three forms : A reducton of the product's consumpton of energy when t s beng used ; a 10

12 reducton the ground, ar or water polluton and, fnally, better recyclng of the products once they have been used. The endogenous IE score varable has the followng form : Y = 0 f there s no envronmental nnovaton Y = 1 f there s one envronmental nnovaton = 2 f there are two envronmental nnovatons.. Y = 9 f the frm has undertaken all 9 types of envronmental nnovaton Table 2 : Descrptve statstcs on the dfferent types of envronmental nnovaton Total frms Eco-nnovatve frms Envronmental benefts from the producton of goods wthn the frm Reduced materal use per unt of output 28,43% 56,72% Reduced energy use per unt of output 26,41% 52,69% Reduced CO footprnt (total CO producton) by the frm 17,86 % 35,64% Replaced materals wth less pollutng or hazardous substtutes 29,43% 58,72% Reduced sol, water, nose, or ar polluton 26,71% 53,29% Recycled waste, water, or materals 35,76% 71,36% Envronmental benefts from the after sales use of a good by the end user Reduced energy use 20,56 % 41,03 % Reduced ar, water, sol or nose polluton 16,67 % 33,26 % Improved recyclng of product after use 18,16 % 36,23 % Sources : 2008 CIS and 2007 EAE surveys ) Fnally, we create three dependent varables, n order to characterze the sub-categores whose motvatons for nnovatng dffer ; we do ths on the bass of questons 11.2 of the CIS2008 survey (see table 3) : - «Adopt-cost» whch takes value 1 f the frm reports havng eco-nnovated wth «the goal of reducng costs», 0 otherwse. - «Adopt-demand» whch takes value 1 f the frm has eco-nnovated «n response to a demand by clents to make envronmental nnovatons», 0 otherwse. - «Adopt- regulaton», whch takes value 1 f the frm reports to have eco-nnovated n response to «exstng envronmental regulatons or taxes on polluton» ; «envronmental regulatons or taxes whch you expect wll be appled n the future» or «the exstence of governmental ads, subsdes or other fnancal ncentves to engage n envronmental nnovatons», 0 otherwse. These three types of motves for eco-nnovaton are not exclusve from one another and the frm can be engaged n nnovaton for several reasons. Nevertheless, these three strateges do not overlap and most frms have one domnant strategy wth regard to ther eco nnovaton actvtes (see table 3). 11

13 Table 3 : Relatons between the sub-categores : Populatons of nnovaton adopters accordng to the motve for adopton Adopters-cost 0 1 Adopters-demand 0 1 Sources : 2008 CIS and 2007 EAE surveys Adopters-cost Adoptersregulaton The ndependent varables In the adopton models, we use three sets of ndependent varables to analyze frms' behavours n terms eco nnovaton. Wth regards to the frms' nternal structural characterstcs, the varables are the sze of the frm (sub-category), the fact that the frm belongs or not to a group of companes, and the advertsng rate, calculated through the advertsng expenses to sales rato. The second set of varables pertans to the frm's nnovaton profle. The nformaton s mostly about the occurrence of organzatonal changes relatve to the organzaton of producton, of labour and the changes n the frm's relatons wth ts external envronment. The 2008 CIS survey data then enables us to observe the mportance of the mplementaton of the Envronmental Management System (preparaton for envronmental audts, decson on goals of envronmental performance to pursue, ISO certfcaton) accordng to whether the adopton of the EMS occurred before 2006 or durng the perod of observaton of envronmental nnovatons (.e. between 2006 and 2008). Fnally, several factors enable us to test the hypotheses proposed concernng the process of co-evoluton between the dfferent forms of nnovatons: the adopton of product nnovaton (radcal, ncremental or both) and the adopton of process nnovatons. These dfferent varables, whch help us draw frms' nnovaton profles consttute determnants that favor frms' engagement n eco nnovaton and ts ntensty. The thrd set of varables pertans to the frm's external envronment, wth frst of all, ts sector of actvty, calculated at level 17 of the 2008 French Nomenclature of Actvtes, whch classfes the varous ndustral actvtes nto sx man groups of actvtes. The sectoral or spatal epdemc effects are measured by the rato of eco-nnovaton adopters to the total number of frms belongng to the same sector or located n the same geographc area. Furthermore, wth regard to the frm's commercal envronment, class varables enable us to measure the mpact of the market's locaton (regonal, natonal, foregn) and the compettve dmenson wll be calculated through the ndex of market concentraton (C4 ndex). Fnally, n order to test the locaton effect, we use the area of locaton of the head offce wth three modaltes : locaton n urban, perpheral and rural areas. The explcatve varables of the nnovaton ntensty model are the same as those used n the adopton model ; We add to these varables the «adopte-cost», «adopte-demand» and «adopteregulaton» varables, whch n ths model become dependent varables. 4.The results 12

14 4.1Adopton behavour and ntensty of envronment nnovaton of the French ndustral sector as a whole The general econometrc model (table 4) shows us the mportance of the frm's nternal characterstcs and of ther envronment, respectvely, n the process of adopton of eco nnovaton and n the latter's ntensty. Thus, the probablty of a frm engagng n an eco nnovaton process ncreases wth the sze of the frm ; and small frms of fewer than 50 employees are at a dsadvantage n terms of choce and also n terms of ntensty ; ths latter pont s relatvely orgnal n that a small sze s often recognzed as havng a postve nfluence on nnovaton ntensty. Furthermore, the advertzng rate, whch s revealng of a strategy of brand mage promoton, s also postvely related to eco nnovaton. The results tend to show ther complementarty and the fact that advertsng nfluences the engagement n nnovaton rather than ts ntensty. Fnally, the nnovaton profle of the frm plays a major role. The results show that radcal nnovaton has a stronger mpact than ncremental nnovaton on the adopton of eco nnovatons (margnal effects of and respectvely). They reveal the postve and sgnfcant effect of the organzatonal changes undertaken n the frm's relatons wth ts external envronment, and above all of the changes conducted n the frm's labour organzaton. Wth a margnal effect of 0.063, changes n labour organzaton s more nfluent n eco nnovaton adopton than frm s relatons wth ts external envronment, wth a margnal effect of Partcularly vsble here s the co-evoluton of the eco nnovaton adopton and the mplementaton of the Envronmental Management System, that s n agreement wth Wagner (2007) results. Indeed, f the EMS was set up between 2006 and 2008 e durng the observaton perod and therefore durng whch envronment nnovatons were developed the margnal effect s hghly superor (0.24) to the margnal effect of the pre-2006 mplementaton of the EMS (0.14). On the other hand, the adopton of a EMS before the observaton perod has a more sgnfcant mpact on the ntensty of the eco nnovaton as observed between 2006 and 2008 than t does f t occured durng ths observaton perod ; Ths ponts to a path dependence and a learnng process that postvely nfluence the ntensty. As for the envronment, t also has sgnfcant effects on frms' probablty to eco-nnovate and on the ntensty of the eco nnovaton (Table 4). Wth regard to the commercal envronment, market concentraton has a stmulatng nfluence on adopton but has no effect on the ntensty, whch seems to be nfluenced, rather, by the frms' openness to nternatonal markets. Thus, focusng exclusvely on local and regonal markets s not conducve to eco nnovaton. The results also hghlght the nfluence of the frm's geographc locaton and the fact that, contrary to what lterature tradtonally reports, beng located n a perpheral area have a more sgnfcant postve mpact than agglomeraton effects on eco nnovaton. The fact that a frm's head offce s located n a perpheral or rural area s more conducve to adopton than beng located n an urban center. As far as ntensty s concerned, beng located n a perpheral area have a postve mpact, but there seems to be no dfference between urban and rural frms n terms of ther eco-nnovaton performance. As for the sectoral envronment, t has a sgnfcant mpact on adopton; n partcular a frm n the ntermedate goods sector has a hgher probablty of engagng n eco nnovaton than a frm n the agrbusness sector. Let us note that, durng our observaton perod, belongng to the transport sector has a partcularly negatve nfluence on the decson to engage n nnovaton. However, the sectors have a lesser and less dscrmnatng nfluence for the explanaton of the ntensty of eco-nnovaton. The epdemc effects are postve and sgnfcant both on the decson to nnovate and on the ntensty of nnovaton at both the levels of the sector and of the geographc envronment of the frm. Thus, the mmetc effects related to the behavor of frms located n the same envronment as a gven frm also have an nfluence on envronmental nnovaton performance. 13

15 Table 4 : The general model : adopton and ntensty of eco-nnovaton by French ndustral frms Eco-nnovaton adopton Intensty of econnovaton Coeff Margnal effects Internal characterstcs of the frm Sze 20 to 49 employees Ref. Ref. Ref. 50 to 249 employees *** *** 250 to 500 employees *** * More than 500 employees ** *** Group Brand mage *** * Innovatve profle Radcal Innovaton *** *** Incremental Innovaton *** *** Incremental/radcal *** *** Process nnovaton *** *** Change n labour organsaton *** *** Change n nter-frm relatons *** *** EMS before *** *** EMS durng the perod *** *** Adopton goal Adopton for costs *** Adopton for the demand *** Adopton for regulaton *** Characterstcs of the envronment Market envronment Man market locaton Regonal market Ref. Ref. Ref. Natonal market *** *** Foregn Market *** *** Market concentraton *** Sector envronment Sectors : Agrofood C1 Ref. Ref. Ref. Consumer related actvtes C Equpement C * Transport C *** Intermedates actvtes C *** *** Sector adopton rate *** *** Spatal envronment Geographc area adopton rate *** *** Head offce locaton : Urban Ref. Ref. Ref. Per-urban ** ** Rural *** Constant *** Observatons Pseudo R Cut ponts cut *** cut *** cut *** cut *** cut *** cut *** cut *** cut *** cut *** Sources : 2008 CIS and 2007 EAE surveys, wth * p < 0.05, ** p < 0.01, *** p <

16 4.2The determnants of adopton of envronmental nnovaton accordng to strategc profle of the frm Beyond the general determnants of adopton and of eco nnovaton ntensty, we have dvded the populatons accordng to three types of behavour such as they are descrbed n the lterature : the adopter-cost, the adopter-demand, and the «adopters- regulaton». Our objectve s to test whether the determnants related to the frm's nternal characterstcs and those related to ther envronment have a specfc mpact. For ths purpose we buld three probt models on each sub populaton, so as to test for the exstence of dfferent determnants accordng to the motve for the eco nnovaton adopton,.e. respond to a cost related need, a demand from one's clents or an exstng or even future regulaton. (see table 5). Table 5 : The determnants of adopton of envronmental nnovaton accordng to the goal of the adopters Adopters-cost Adopters-demand Adopters-regulaton Coeff. M.E* Coeff. M.E Coeff. M.E Internal characterstcs of the frm Sze 20 to 49 employees Ref. Ref. Ref. Ref. Ref. Ref. 50 to 249 employees *** *** to 500 employees *** ** *** More than 500 employees *** *** *** Group ** Brand mage *** *** Innovatve profle Radcal Innovaton *** *** *** Incremental Innovaton *** *** *** Incrémental/radcal *** *** *** Process nnovaton *** *** *** Change n labour organsaton *** *** *** Change n external relatons *** *** *** EMS before *** *** *** EMS durng the perod *** *** *** Characterstcs of the envronment Market envronment Man market locaton Regonal market Ref. Ref. Ref. Ref. Ref. Ref. Natonal market *** Foregn Market *** *** * Market concentraton *** *** Sector envronment Sectors Agrofood C1 Ref. Ref. Ref. Ref. Ref. Ref. Consumer related actvtes C *** *** Equpement C *** Transport C *** Intermedates actvtes C *** * Sector adopton rate *** ** * Spatal envronment Geographc area adopton rate Head offce locaton : Urban Ref. Ref. Ref. Ref. Ref. Ref. Per-urban Rural * Constante *** *** *** Observatons Pseudo R Sources : 2008 CIS and 2007 EAE surveys, wth * p < 0.05, ** p < 0.01, *** p < M.E : Margnal effect 15

17 Wth regard to the frm's nternal characterstcs, we note, frst of all that although the sze (e. the fact that a frm s large) has an overall postve role n the general model (see table 4), t has a dfferent mpact dependng on the sub-populaton (see table 5). In terms of margnal effects, the sze has a weaker mpact for frms that adopt for demand related reasons than for those that adopt for cost or regulaton related reasons. The correlaton between the sze and adopton s partcularly sgnfcant for the frms that are senstve to exstng or future regulaton. The latter are also dstngushed by the negatve effect of belongng to a group; the frms that adopt eco nnovatons for regulaton related reasons are therefore, more specfcally, ndependent frms. Furthermore, we note that the brand mage, whch has a sgnfcantly postve effect n the general model, s a varable that strongly dfferentates the sub populatons. It has no effect n the case of frms that adopt for cost related reasons ; t has a hghly negatve mpact for the «adopters-demand», and a hghly postve effect n the case of frms that adopt for regulaton related reasons (wth margnal effects of and respectvely). Ths could translate the fact that the brand mage s complementary to the eco nnovaton for the frms that eco nnovate n order to respond to a regulaton related requrement, whereas t pertans to a substtutablty relaton n the case of adopters-demand. In terms of nnovaton profle, the results show that radcal product nnovaton has a stronger mpact than ncremental nnovaton for the frms that adopt for cost or demand related reasons, whch s n keepng wth the general model. However, we observe an nverse correlaton for the «adopters-regulaton». Thus, consstent wth the exstng lterature, the results show that regulaton tends to be more conducve to end-of-ppe nnovaton than to «cleaner producton» types of nnovaton (Frondel et al., 2007). Coevoluton between organzatonal nnovatons and envronmental nnovatons, observable wth the EMS mplementaton durng the nnovaton adopton perod ( ) exsts for the three strategc profles, beng n partcular strong for the adopters-regulaton. Concernng the mpact of changes n frm s labour organzaton, t s for each strategc profle stronger than changes n frm s relatons wth external envronment, partcularly for the adopters-cost. Wth respect to the envronment, the results emphasze that the sector based behavours dffer accordng to the motve for the adopton. For the «adopters-costs», the sector to whch the frm belongs has no mpact (wth the excepton of the consumer related actvty sector ; for the «adopters-regulaton» the sector has no mpact ether (wth the excepton of the ntermedate goods sector). However, each sector has a hghly sgnfcant and postve nfluence on the adopton of eco nnovatons n relaton to the agrbusness sector, for the frms that eco nnovate n order to respond to demand related needs. As for the market area, t was postvely correlated to the mplementaton of eco nnovatons n the general model. And ths s true n partcular of the «adopters-costs» and «adopters-regulaton» sub-categores. But t s not the case for the «adopters-demand» for whch respondng to the demands of a foregn market, rather than to those of a regonal market, has a hghly sgnfcant and negatve mpact on the mplementaton of eco nnovatons, whle respondng to the needs of a natonal market has no nfluence n terms of adopton. Fnally, we note that the geographc factors have almost no mpact on the adopton of envronmental nnovatons: the geographc locaton of a frm's head offce s no sgnfcant, wth the excepton of a small negatve effect - for frms that adopt nnovatons for demand related reasons - of beng located n a rural area. Indeed, those frms are, qute logcally, more turned towards consumpton zones. The non sgnfcant effect of the locaton area tends to show the specfcty of envronmental nnovatons n relaton to other types of nnovatons. They seem to be senstve to the combned nfluence of knowledge spllovers, whch are generally more urban, and the mportance of the producton zones, whch are often located n perpheral areas. The adopton rate of frms n the same geographc area has no nfluence ether on the frms' behavour n terms of eco nnovaton adopton. The sectoral epdemc effects are the only ones that have an mpact. 16

18 4. Concluson The purpose of ths artcle has been to analyse the factors that nfluence French ndustral frms' behavour n terms of envronmental nnovaton adopton and, on the bass of a general model, to buld three models of adopton so as to test the exstence of dfferent determnants accordng to the motve for nnovatng,.e. respond to a cost related need, a demand from one's clents or an exstng or even future regulaton. Our goal s to better understand the mcro economc determnants of the three strategc profles of envronmental nnovators descrbed n the lterature. An econometrc model enablng us to analyse the characterstcs that postvely nfluence nnovatve behavour, on the one hand, and those of the ntensty of the frm's envronmental performance on the other, s tested usng ndvdual data on nnovaton, representatve of the French ndustral sector (CIS8). The results of the general model hghlght the structurng role of frms' nternal characterstcs and of those of ts external envronment n ts envronmental performance and the dfferent processes at play n frms' engagement nto eco-nnovaton actvtes and ther ntensty. They show that the factors of adopton strongly dffer accordng to the domnant strategy mplemented, the most marked dfference beng between the strategc profles of frms that nnovate for demand related reasons and those that do so for regulaton related reasons. Thus, the frms that nnovate for demand related motves are, for the most part, large frms, turned towards local, mostly urban markets. Ther adopton behavour s negatvely nfluenced by ther beng turned to foregn markets. Implementng strateges for promotng ther brand mage through advertsng also has hghly sgnfcant and negatve effect on frms' decson to engage n econnovaton actvtes. They are lttle affected by the market concentraton but are nfluenced by sectoral dynamcs ; we note, n partcular, that belongng to the agrbusness sector has a hghly negatve mpact. Ths profle s therefore relatvely dfferent from the ntutons on the bass of whch t was created (Market pull). The adopton of eco-nnovatons by frms that nnovate for motves pertanng to regulaton s, on the contrary, postvely nfluenced by ther openness to foregn markets and by the market concentraton, but s lttle affected by the frms' sector adopton rate and geographc envronment. They are generally large or medum szed frms, rely on strateges desgned to promote ther brand mage, are charactersed by a strong development of EMS practces durng the observaton perod and the changes and nnovatons they mplement tend to be process nnovatons. Ths profle reveals not only the complance to regulaton but also the mportance of the frms' pro-actvely antcpatng t and usng t as a part of a strategy of communcaton and of promoton of the brand mage. Fnally the frms that nnovate for cost related reasons have an ntermedate profle. For these frms, beng small, focusng exclusvely on local and regonal markets, and belongng to the consumer goods sector decreases the probablty of eco nnovatng. The non sgnfcant effect of belongng to a group and of relyng on a brand mage promoton strategy dstngushes them other types of nnovators and enhances the hghly postve mpact of ther nnovatve actvty at all levels (the role of radcal nnovaton, of process or organzatonal nnovatons, of the past adopton of EMS. In keepng wth Mlgrom and Roberts (1990, 1995) ths profle s characterzed by the mportance of the learnng processes and of the co evoluton of the dfferent forms of nnovaton. These results show that each profle presents specfc factors, nternal and external characterstcs, whch make each of them unque and carry ther nnovatve behavour. Ths mcroeconomc dmenson allows us to better understand the structural bases and strategc behavours of dfferent profles of eco-nnovators, all confronted to the double externalty problem. Ths way, we can 17