Determinants of environmental innovation—New evidence from German panel data sources

In most cases, empirical analyses of environmental innovations based on firm-level data relied on surveys for one point in time. These surveys allow for the inclusion of many explanatory variables such as different policy instruments or the influence of pressure groups but it is not possible to address the dynamic character of environmental innovations. This paper uses two German panel databases, the establishment panel of the Institute for Employment Research (IAB) and the Mannheim innovation panel (MIP) of the Centre for European Economic Research (ZEW), to explore the determinants of environmental innovations. The econometric estimations show that the improvement of the technological capabilities (“knowledge capital”) by R&D triggers environmental innovations. Environmental regulation, environmental management tools and general organizational changes also encourage environmental innovation, a result that has also been postulated by the famous Porter-hypothesis.