The drivers of environmental innovation in local manufacturing systems

Technological innovation is a key factor for achieving a better environmental performance of firms and the economy as a whole, to the extent that tend to increase the material/energy efficiency of production processes and to reduce emission/effluents associated to outputs. Environmental innovation may spur from exogenous driving forces, like policy intervention, and/or from endogenous factors associated to firm market and management strategies. Despite the crucial importance of research in this field, empirical evidence at firm microeconomic level, for various reasons, is scarce. The paper exploits information deriving from two surveys conducted on manufacturing firms in a local industrial system. New evidence on the driving forces of environmental-related innovation is provided. The applied investigation shows that usual structural characteristics of the firm and past performances appear to matter less than R&D, induced costs, organisational flatness and innovative oriented industrial relations. Environmental Policies and environmental voluntary auditing schemes exert some relevant direct and indirect effects on innovation, although evidence is mixed and further research is needed. While not the only driver, policy actions emerge very relevant, with a possible multi-faceted scope of intervention: to stimulate and monitor auditing schemes, to incentive environmental R&D and (associated) cooperative networks, and to increase the costs of managing environmental resources to induce innovation adoptions.