Resource scarcity and eco-innovation

The effects of (over-) use of materials result in problematic environmental issues and require a change in our present detrimental way of living, doing business and managing society. Eco-innovation may help address these issues by increasing resource efficiency and several other factors along the triple bottom line of people, planet and profit. This paper analyses the eco-innovative behaviour of European small and medium firms in relation to material costs, in the form of the implementation of product, process and organisational eco-innovations. Logistic regression analyses are conducted on data from the Flash Eurobarometer survey 315 (FL315), “Attitudes of European entrepreneurs towards eco-innovation” (European Commission, 2011). The analysis contributes in finding determinants of eco-innovation related to material costs of a firm. Material intensive firms, firms with a high share of material cost of a company’s total cost, are found to be more likely to invest in eco-innovation. Furthermore, no evidence is found that the past material costs of a firm are related to the eco-innovation investment strategy of a firm. Expected price increases were expected to motivate firms to eco-innovate, however, surprisingly the findings oppose the hypothesis. Additionally, no significant evidence is found that the positive associations between an increase in past or expected material costs and the introduction of an eco-innovation gets stronger as the material intensity of a firm increases. Finally, firm characteristics as firm size, turnover growth, sector of activity and country of origin are found to be significant determinants of eco-innovative behaviour.