Drivers of environmental innovation - Vinnova

Variation between sectors may simply be the result of varying external
demands. A Swedish study compared drivers between industrial sectors.
Industry sectors where customers were more important than authorities as
drivers were construction and real estate. The opposite was true for petroleum
products and metal manufacturing. These conclusions are however based on a
somewhat meagre statistical basis. The result may illustrate the relatively
strong regulatory pressure on petroleum products and metal manufacturing,
and shows that industrial sectors differ with regard to what demands are
placed on them and what drives their environmental work (IVA, 1995).
But it may also be the case that sectors react differently to the same external
pressures. Kemp describes a number of factors affecting the innovative
behaviour of industry in relation to environmental regulations. The results
show that although high volume, mature sectors were resistant to change, they
were very amenable to environmental monitoring and process controls that
improved efficiency. Two suggested explanations for this are presented: firstly
that rigidity may come with maturity in a sector and, secondly, those powerful
sectors are better at fighting off regulations and imposed change. Smaller firms
and potential new entrants tended to develop more innovative responses. The
environmental goods and services industry provided compliance strategies that
were at best incrementally innovative, but which diffused fast, due to their lack
of disruption and to their acceptability to regulators (Kemp, Forthcoming).
Plant age may be another determining factor. Sanchez and McKinley indicate
that product innovation response to environmental regulation increases with
plant age. Young plants appear to be inhibited in generating new products in
response to high environmental regulatory impact. A proposed explanation is
that an experienced workforce may respond more flexibly to regulatory
pressure. Another explanation may be more routinised procedures to change
the manufacturing process (Sanchez and McKinley, 1998). Interestingly, this
result seems to contradict Kemp’s argument about mature sectors being
resistant to change.
Firm size is also an important factor in determining firm response. In general
large firms are more prone to environmental innovations than small firms. A
study of Welsh firms shows that large firms were nearly 50 percent more
motivated to make environmental improvements than SMEs. Frequent
responses by SMEs to the questions asked were “we are to small to have any
significant effects”. Nearly 70 per cent of firms considered themselves as
harmless to the environment. Large firms were likely to be stimulated by both
external and internal motivators, whereas in general small firms were more
likely to be prompted by just external factors (such as legislation) (Connell and
Flynn, 1999).
A Swedish study categorised the environmental work of the studied firms into
five categories ranging from environmentally passive to environmentally
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