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Marcus Wagner Presentation - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
1. 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 Growth
gU University of W
U i it f Wuerzburg & BETA Strasbourg
b St b
2. 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
3. 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 technology
Prof. Dr. Marcus Wagner, University of Wuerzburg
4. 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
compliant
Prof. Dr. Marcus Wagner, University of Wuerzburg
5. 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
6. 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