Determinants of environmental product and process innovation

While integrated product policy (IPP) receives increasing attention, it is still not well understood which factors and policy instruments influence the environmental performance of products. Thus this paper investigates the determinants of innovative behaviour in companies with regard to various areas of end-of-pipe and integrated environmental protection, including integrated product innovation. It pays particular attention to the influence of environmental policy instruments on product and process innovation. Its approach could be placed somewhere between environmental and industrial economics: in contrast to the up to now dominant approach of environmental economics, it integrates discoveries from the field of innovation research. The paper takes its data from the Mannheim Innovation Panel (1996), complemented by a subsequent telephone survey of environmental innovators. In a multivariate analysis, significant influence from strategic market goals on environment-related product innovation becomes evident. This differs from environment-related process innovation, which is mainly determined by regulation. With respect to individual environmental policy instruments, a significant influence of so-called 'soft' regulation (e.g. labels, eco-audits) on product-integrated environmental innovation can be discerned. Copyright © 1999 John Wiley & Sons, Ltd and ERP Environment.