Managing ‘green’ product innovation in small firms

Abstract

The growing social and regulatory concern for the environment is leading an increasing number of companies to considering ‘green’ issues as a major source of strategic change. In particular, this trend has major and complex implications on the technological strategy of a company and on its product innovations. Indeed, most authors acknowledge that eco‐efficiency will be one of the major challenges for R&D practice and theory in the next decade. Unfortunately, studies usually focus on large corporations. There is a debate as to whether this factor will affect R&D practices and product innovation in small and medium enterprises (SMEs). A superficial glimpse at the problem could lead one to think that SMEs will not be major green innovators, especially as far as product technologies are concerned, and that they will simply try to comply with environmental regulations (mainly on production processes). This paper shows that ‘green’ product innovation may occur and may also have strategic implications in SMEs. Starting from the analysis of four selected case studies and using a Precursors Events methodology, this paper illustrates why ‘green’ product innovation cannot be considered a marginal issue for most SMEs, even for those that are not directly affected by environmental regulations. Hence, the paper suggests a contingent framework to support SMEs in the analysis of the drivers of ‘green’ product innovation and in the choice of a proper R&D strategy that explicitly accounts for the eco‐efficiency of product technologies.

A Burden on Business? Reviewing the Evidence Base on Regulation and Small-Business Performance

“…Environmental regulation can stimulate business owners to search for innovative product and process solutions (Noci and Verganti 1999;Vickers and Cordey-Hayes 1999). Even requirements for information provision can improve management systems in terms of record-keeping.…”

The Role of an SME’s Green Strategy in Public-Private Eco-innovation Initiatives: The Case of Ecoprofit

“…The main contribution of this paper lies in demonstrating the relationship between three independent but related constructs, namely, green strategies (Noci and Verganti 1999), absorptive capacity (Cohen and Levinthal 1990;1994), and handholding processes provided within PPPs (Friedman and Miles 2002). We provide an integrated framework with implications for policy makers.…”

“…For eco-innovation and broader sustainability issues in SMEs, extant research shows a range of advantageous and disadvantageous characteristics (Bos-Brouwers 2010;Del Brío and Junquera 2003;Jenkins 2009;Perrini 2006;Russo and Tencati 2009;Spence 1999). For instance, resource constraints (lack of time, personnel, financial capital, or knowledge) may result in a reluctance to invest in and implement ecoinnovations (Noci and Verganti 1999). On the other hand, lean and flexible organizational structures may allow for fast responses to customer and market demands for eco-innovations (Bos-Brouwers 2010;Jenkins 2009).…”

“…Specific decisions on environmental innovations are, therefore, subject to strategic interpretation and assessment of the effects on future business opportunities." (p.39) The literature suggests that an SME's eco-innovation strategies can range from reactive, to anticipatory, to innovation-based strategies (Aragón-Correa et al 2008;Noci and Verganti 1999;Tilley 1999). Why an SME may choose to follow a certain strategy type depends on internal (competencies and strategic attitude) and external factors (competitive environment) (Noci and Verganti 1999).…”

“…Second, they are equipped with characteristics that are both advantageous for ecoinnovation (flexibility to market demands) and disadvantageous (lack of financial capital) (Bos-Brouwers 2010;Del Brío and Junquera 2003). Overall, eco-innovation in SMEs occurs to varying degrees as a result of different green strategies, ranging from reactive to more proactive strategies (Noci and Verganti 1999).…”