Publication

This paper describes that while the consumption and degradation of natural resources and the environment continue to grow worldwide, worries about declining competitiveness of European industry vis-à-vis US and Asian competitors persist. The authors detail how Porter and van der Linde popularized the win-win proposition, stating that environmental regulation could induce innovation by making industry aware of and willing to exploit otherwise missed opportunities. Porter and van der Linde claimed that such measures would result in environmental benefits and increased competitiveness. The authors discuss key problems in extant research and outline a comprehensive analytical framework for studying the effects of environmental regulation on innovation alongside firm-internal conditions and external market forces. The authors propose to improve the micro-foundations of the common understanding of environmental innovation by applying the framework outlined in the paper at the firm and innovation field level within and across firms, industries and countries.