Complementarity and substitutability between antecedent conditions of eco-innovation: the case of German companies

Despite extant literature on the drivers of eco-innovation, understanding the complementarity and substitutability between them is an open question. This study takes a configurational approach and examines whether antecedent conditions of eco-innovation complement each other or are interchangeable. Using data from 2049 German companies, multiple regression analysis and fuzzy-set qualitative comparative analysis are employed to identify relations between eco-innovation and its antecedents, as well as configurations that consistently lead to eco-innovation. The results show that several combinations of conditions can lead to eco-innovation, allowing the identification of complementarities among the antecedent conditions and also some conditions that can be considered substitutes. However, some form of market pull is likely to be present when companies engage in eco-innovation, namely, the willingness to improve the reputation of the company or to reduce the cost of energy, water or materials. The present study's insights provide guidance for future policy design. The results show that mandatory regulations are possibly more effective in large companies and suggest that regulations could provide a better policy instrument than taxes for promoting eco-innovation. Policy-makers should be aware of specific configurations that are associated to eco-innovation and government policies may emphasise the strategic importance of building companies' engagement in eco-innovation for their reputation.