The Impact of Environmentally Friendly Innovations on Value Added

Abstract

While recent literature has focused on explaining the determinants of green innovations, it is not well understood how such innovations affect performance. To analyse the relationship between green innovation and performance, new industry-level panel data were exploited: these include 12 OECD countries, the whole manufacturing sector and a period of 30 years. The results show that green inventions are U-shape related to performance. However, the turning point is quite high and hence only relevant for a few industries. This indicates that—given the current level of green promotion—market incentives alone are not sufficient to allow the green invention activities of industries to rise considerably. To verify these results and to get a better understanding of the mechanisms in the green market, we finally made several interviews with multinational firms that have a good understanding of what happens on the global market of green innovation.