Beyond inducement in climate change: Does environmental performance spur environmental technologies? A regional analysis of cross-sectoral differences

- We analyze the relationship between environmental performance and the generation of green technologies.
- We posit that exogenous policy measures are likely to be complemented by endogenous mechanisms drawing upon firms' CSR.
- The analysis is carried out at the sectoral and regional level, focusing on the Italian evidence.
- We find that endogenous inducement mechanisms matter in contexts characterized by weak regulatory frameworks.
- Those endogenous mechanisms are affected by user-producer vertical integration.

This paper contributes to the debate on the inducement of environmental innovations by analyzing the extent to which endogenous inducement mechanisms spur the generation of greener technologies in contexts characterized by weak exogenous inducement pressures. In the presence of a fragile environmental regulatory framework, inducement can indeed be endogenous and environmental innovations may be spurred by firms' reactions to their direct or related environmental performance. Cross-sector analysis focuses on a panel of Italian regions, over the time span 2003-2007, and is conducted by implementing zero-inflated regression models for count data variables. The empirical results suggest that in a context characterized by a weak regulatory framework, such as the Italian one, environmental performance has significant and complementary within- and between-sector effects on the generation of green technologies.