Marcus Wagner Presentation - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
The Porter Hypothesis at 20: How Can Environmental Regulation Enhance Innovation and Competitiveness? Montreal, 28 June 2010 Regulation & Innovation: The Perspective of Innovation Economics Prof. Dr. Marcus Wagner w Chair in Entrepreneurship and Corporate GrowthgU University of W U i it f Wuerzburg & BETA Strasbourg b St b
w Implications of Stylized Facts in Innovation Economics gU Stylized facts: – Product versus process innovation (role of dominant design) – I Incremental vs. radical i t l di l innov. ( (young/small vs. l / ll large fi firms) ) – Integrated vs. end-of-pipe environmental innovation (How) does the effect of regulation on these types of innov. differ? H diff ? How traceable when trend i i t t bl h t d is integrated i t d innov.?? Empirically, environmental reg. has stronger positive effects on environmental technology (trade) than technology overall (comp. more strongly improved for env. than other sectors) Env. Reg. Env Reg Env. Inno. Env Inno Need for an entrepreneurship lens Other reg. Other Inno.Prof. Dr. Marcus Wagner, University of Wuerzburg
w Technical Aspects to Analysing the Porter Hypothesis gU Taxes subsidies trading systems are environmental policy Taxes, subsidies, instruments, but some difference to command/control, e.g.: where is the stringency aspect? See German feed in law: feed-in P li Parliamentary i iti ti ( t initiative (rare), significantly f t d diff i ) i ifi tl fostered diffusion of renewable energy, but mainly indirect innovation effects (experience curve/learning, price d li d competitiveness) ( i /l i i declined, ii ) Reg. less linked to innov./patents; stronger effect of reg. on diffusion: R&D often before reg. is enforced (co-evolution?) How to measure innov.? Env. patents difficult to define (IPC p ( classes, keywords): more so with integrated technologyProf. Dr. Marcus Wagner, University of Wuerzburg
w Innovation Restrictions under Regulation: A Model gU Competitiveness Competitiveness weak strict Legal minimum level of performance required by Optimum environmental or social regulation ( g (weak or strong) g) with weak Optimum p regulation with strict Optimum with weak or strong regulation regulation non-linear relationship linear relationship Environmental/ Environmental/ Social Regulation/ Social Regulation/ Legal minimum of performance Performance Performance Traditional relationship between environmental/social Revised relationship between environmental/social regulation/performance and competitiveness regulation/performance and competitiveness Level of regulation is … “Traditional”-type link (left) “Revised”-type link (right) … strict Optimal choice: be compliant Optimal choice: be compliant … weak Optimal choice: be compliant p p Optimal choice: be over- p compliantProf. Dr. Marcus Wagner, University of Wuerzburg
w gU Future Empirical Research: A Mixed Method Proposal Survey of 342/169 firms and exploratory interviews Panel study: 2001 (env inno ) 2006 (regulation) 2011 (financials panel methods) (env. inno.), (regulation), (financials, Sample Innovation Regulation Competitiveness: 4 Firm data (Wagner, 2008, - Types/drivers - REACH dimensions: pro- - Size, strategy Ecological Economics) - Open? User? - EU-ETS ductivity, markets, - Industry, age - Level of inno. - .. 4 more .. stakeholders, risk -… Augmented n=56, n=56 patent data 1998 2005 1998-2005 n=54, in-depth n=54 in depth case studies subsamples (Method: Wagner, 2007, Research Policy) (detailed innovation-specific data) derived Data added green/total patents Type of innovation offset, … Preliminary - stable strategy focus 98-05 results of but for cost leadership: quality analysis (incl. env. perf.) increas. relev. (incl env perf ) increas relev - patents not assoc. with main driver (technol., markets, reg.) - occurence and l d level of i l f innov. depend on specific regulation (sig. effect of reg. on inno. for REACH, EU Noise Directive; for latter less radical innov.)Prof. Dr. Marcus Wagner, University of Wuerzburg
w Some Conclusions and Alleys for Future Research gU Explore more links – to supply/value chain perspectives (extended version of PH), – t i t to integrated policy f t d li frameworks (D t h t k (Dutch transition management) and iti t) d – to literature bodies in innov. economics (national innovation systems) Arrow‘s distinction of rate and direction of technical change: does reg. affect b th (?) similarly (?) i same way (?) d ff t both i il l in Identify mechanisms that bring about inno. offsets, e.g. incentive systems, information systems, product/corporate strategies, esp. those implying beyond compliance/voluntary action: when does innovation enable competitiveness from regulation and when other mechanisms and which ones?Prof. Dr. Marcus Wagner, University of Wuerzburg
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