Can Direct Regulations Spur Innovations in Environmental Technologies? A Study on Firm‐Level Patenting

Abstract

Using a rich Norwegian panel dataset that includes information about the type and number of patent applications, direct environmental regulations, and a large number of control variables, we analyze the effects of direct regulations on environmental patenting. We use inspection violation status as a measure of regulatory stringency, while controlling for risk class. Violation status captures the probability that a firm might be sanctioned for violating its emission permit. Controlling for risk class captures firm heterogeneity related to dirtiness and inspection frequency. We empirically identify strong and significant effects on innovations resulting from the implicit regulatory costs of direct regulations.

Environmental Regulation and Enterprise Innovation: A Review

“…Amores‐Salvadó, Castro, and Navas‐López () also showed that an environmental regulation system could positively affect the relationship between the environmental product innovation and market performance of a company. Both Kanda, Tomohiko, and Hjelm () and Klemetsen, Bye, and Raknerud () argued that a poor enterprise system could lead to a short‐term profit‐oriented business mode to hinder the innovation and dissemination of environmental technologies, and that a good enterprise system could foster a long‐term strategy for the business, thereby promoting technological innovation and product innovation. Although the above literatures focus on the impact of institutional factors on enterprises' environmental innovation and environmental performance, these studies do not consider the impact of environmental regulation on the enterprise system itself.…”

“…Wackerbauer (2008) Castro, and Navas-López (2015) also showed that an environmental regulation system could positively affect the relationship between the environmental product innovation and market performance of a company. Both Kanda, Tomohiko, and Hjelm (2016) and Klemetsen, Bye, and Raknerud (2016) argued that a poor enterprise system could lead to a short-term profit-oriented business mode to hinder the innovation and dissemination of environmental technologies, and that a good enterprise system could foster a long-term strategy for the business, thereby promoting technological innovation and product innovation.…”

How R&D Financial Subsidies, Regional R&D Input, and Intellectual Property Protection Affect the Sustainable Patent Output of SMEs: Evidence from China

“…This expectation can stimulate external investors and SMES to increase their R&D investment further, which is more conducive to the improvement of sustainable patent output [1,4]. From the perspective of the whole region, the increase of regional overall financial subsidies, especially for universities and research institutes, can effectively improve the quality of regional human capital and improve the regional innovation environment, which will also be conducive to increasing the R&D input and improving the patent output of SMEs [20]. Hewitt Dundas et al [21] found that government financial subsidies can accelerate the R&D activities of enterprises and promote the development of major new products; Guo et al [4] also analyzed the relationship between financial subsidies and patent output of enterprises from an empirical perspective, and found that financial subsidies can effectively improve the patent output of enterprises.…”

Innovation, Diffusion, Growth and the Environment: Taking Stock and Charting New Directions

“…Accessing and searching patent databases has become easier over the years, as new methodologies now cover the entire population of patents and researchers have become familiar with the limits and advantages of working with patent data (Hascic and Migotto 2015). Most recent and promising work in the area of environmental patents exploits the possibility to link the innovation activities of firms to other types of microdata, such as firms' financial data or firms' inspection status (Dechezlepretre and Calel 2016;Noailly and Smeets 2015;Klemetsen et al 2016). Beside patents, another approach to measure innovation output looks at bibliometric data.…”