DOCTORAL DISSERTATION

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JA N A H O JN IK 2 0 1 6 D O CT O R A L D IS S E RT A T IO N

JANA HOJNIK

DOCTORAL DISSERTATION

KOPER, 2016

UNIVERSITY OF PRIMORSKA

FACULTY OF MANAGEMENT

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UNIVERSITY OF PRIMORSKA FACULTY OF MANAGEMENT

MODEL EKO INOVACIJ:

DOLOČLJIVKE, GLAVNE DIMENZIJE IN POSLEDICE

ECO-INNOVATION MODEL:

ANTECEDENTS, MAIN DIMENSIONS AND CONSEQUENCES

Jana Hojnik Doctoral dissertation

Koper, 2016 Mentor: prof. dr. Mitja Ruzzier

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III POVZETEK

Doktorska disertacija raziskuje določjivke in posledice eko inovacij na ravni podjetij.

Podkrepljena s teoretično podlago ter nadgrajena z empirično kvantitativno analizo raziskava razjasnjuje povezave in učinke med eko inovacijami, določljivkami in posledicami eko inovacij na vzorcu 223 slovenskih podjetij vseh velikosti. Ugotovitve raziskave kažejo, da je konkurenčni pritisk najmočnejša gonilna sila za uvajanje eko inovacij v podjetjih, kateri sledi povpraševanje kupcev. Eko inovacije učinkovito spodbujajo tudi naslednji dejavniki:

managerjeva skrb za okolje, pričakovane koristi in instrumenti okoljske politike. Nadalje, eko inovacije vodijo do ekonomskih in konkurenčnih koristi, višje stopnje internacionalizacije ter se pozitivno povezujejo z dobičkonosnostjo podjetij. Kot zadnje, raziskava ločuje med določjivkami in posledicami različnih vrst eko inovacij (izdelčne, procesne in organizacijske).

Doktorska disertacija zaključi s predlogi za podjetja, oblikovalce politik in smernicami za nadaljne raziskovanje.

Ključne besede: eko inovacije, izdelčne eko inovacije, procesne eko inovacije, organizacijske eko inovacije, določljivke, uspešnost podjetja, konkurenčne in ekonomske koristi, internacionalizacija, modeliranje strukturnih enačb, slovenska podjetja.

SUMMARY

The aim of this doctoral dissertation is to explore determinants and outcomes of eco- innovations. The research is supported with a theoretical foundation and upgraded with an empirical quantitative analysis. The formed conceptual model clarifies relationships between eco-innovations and their drivers and outcomes and is empirically tested based on a sample consisting of 223 Slovenian companies (all sizes included). The main findings are threefold.

First, the major driving force of eco-innovations is competitive pressure, followed by customer demand. Eco-innovations also stem from managerial environmental concerns, expected benefits and environmental policy instruments. Second, being eco (i.e., implementation of eco- innovations) pays off. Moreover, implementation of eco-innovations delivers competitive and economic benefits, a higher degree of internationalization and greater profitability. However, these findings vary in relation to different eco-innovation types (i.e., product, process and organizational). In conclusion, several implications for policy makers, entrepreneurs and research are provided.

Key words: eco-innovations, product eco-innovation, process eco-innovation, organizational eco-innovation, drivers, company performance, competitive and economic benefits, internationalization, structural equation modeling, Slovenian companies.

UDK: 001.895:005:330.34 (043.3)

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V INDEX

1 Introduction ... 1

1.1 Problem definition... 1

1.2 Objectives of the study ... 6

1.3 Research questions ... 11

1.4 Structure of the study ... 12

2 Eco-innovation ... 15

2.1 Why to distinguish eco-innovation from regular innovation ... 15

2.2 Defining eco-innovation ... 19

2.2.1 Review of current eco-innovation definitions ... 20

2.3 Features of eco-innovation ... 26

2.4 Main dimensions of eco-innovation ... 30

2.4.1 Target ... 31

2.4.2 Mechanisms ... 32

2.4.3 Eco-innovation’s impact on the environment ... 32

2.5 Types of eco-innovation... 34

2.5.1 Product eco-innovation ... 36

2.5.2 Process eco-innovation ... 37

2.5.3 Organizational eco-innovation ... 39

2.5.4 Marketing eco-innovation ... 40

2.5.5 Social eco-innovation ... 41

2.5.6 System eco-innovation ... 41

2.6 Measuring eco-innovation... 41

2.7 Toward a new definition of eco-innovation ... 48

3 Drivers of eco-innovation ... 49

3.1 Theoretical backgrounds that underpin exploration of eco-innovation drivers ... 49

3.2 Drivers of eco-innovation – in the light of eco-innovation peculiarity... 53

3.3 Driving forces of different eco-innovation types: Is there really one driver for all eco-innovations? ... 57

3.4 Drivers of eco-innovation ... 70

3.4.1 Environmental policy instruments ... 70

3.4.2 Demand side ... 79

3.4.3 Competition ... 82

3.4.4 Society ... 83

3.4.5 Expected benefits from eco-innovation ... 84

3.4.6 Sources of information ... 86

3.4.7 Organizational capabilities ... 87

3.4.8 Managerial environmental concern ... 88

3.4.9 Company’s general characteristics (firm size and firm age) ... 91

4 Consequences of eco-innovation’s adoption ... 96

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4.1 Firm performance ... 98

4.2 Internationalization ... 108

4.3 Competitive advantage ... 109

5 Research design... 112

5.1 Hypotheses concerning antecedents of eco-innovations ... 112

5.1.1 Environmental policy instruments and eco-innovation ... 112

5.1.2 Customer demand and eco-innovation ... 114

5.1.3 Managerial environmental concern and eco-innovation ... 115

5.1.4 Expected benefits and eco-innovation ... 115

5.1.5 Competition and eco-innovation ... 117

5.2 Hypotheses concerning consequences of eco-innovation ... 118

5.2.1 Eco-innovation and firm performance ... 119

5.2.2 Eco-innovation and economic performance ... 120

5.2.3 Eco-innovation and competitive benefits ... 120

5.2.4 Eco-innovation and internationalization ... 121

6 Methodology ... 124

6.1 Preliminary testing of questionnaire ... 124

6.2 Research instrument and operationalization of variables and measures ... 124

6.2.1 Measures for eco-innovation antecedents ... 125

6.2.2 Measures for eco-innovation dimensions ... 128

6.2.3 Measures for consequences/outcomes of eco-innovation ... 130

6.2.4 Control variables ... 132

6.3 Sampling and data collection ... 133

6.4 Common method variance assessment ... 135

6.5 Data analyses... 135

6.6 Evaluation of the results ... 138

7 Results ... 143

7.1 Sample characteristics ... 143

7.2 Eco-innovation determinants ... 149

7.2.1 Managerial environmental concern ... 149

7.2.2 Expected benefits ... 152

7.2.3 Environmental policy instruments ... 156

7.2.4 Customer demand ... 163

7.2.5 Competition (Competitive intensity and Competitive pressure) ... 166

7.3 Eco-innovation types... 170

7.3.1 Product eco-innovation ... 171

7.3.2 Process eco-innovation ... 175

7.3.3 Organizational eco-innovation ... 178

7.3.4 Eco-innovation construct ... 181

7.4 Eco-innovation outcomes ... 194

7.4.1 Competitive benefits ... 194

7.4.2 Economic benefits ... 202

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7.4.3 Company performance ... 206

7.4.4 Internationalization ... 212

8 Eco-innovation models ... 219

8.1 Product eco-innovation model ... 219

8.1.1 Construct validity of product eco-innovation model ... 219

8.1.2 Statistical analysis and results (path analysis) ... 224

8.2 Process eco-innovation model ... 227

8.2.1 Construct validity of process eco-innovation model ... 227

8.3 Organizational eco-innovation ... 234

8.3.1 Construct validity of organizational eco-innovation model ... 234

8.4 The expanded construct-level model of eco-innovation ... 242

8.4.1 Construct validity for the expanded construct-level model of eco- innovation ... 242

8.4.2 The expanded construct-level model of eco-innovation (path analysis) ... 248

8.5 Testing the impact of control variables ... 252

8.5.1 Testing the impact of control variables with regression analyses ... 252

8.5.2 Testing the impact of control variables with path analysis ... 281

9 Summary of findings and discussion ... 301

10Conclusion ... 317

10.1Contributions ... 317

10.2Implications ... 322

10.2.1Implications for theory and research ... 322

10.2.2Implications for policy makers ... 324

10.2.3Implications for entrepreneurs ... 328

10.3Limitations ... 329

10.4Future research directions and opportunities ... 332

References and sources ... 337

Summary in Slovenian language ... 361

Appendices ... 379

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LIST OF FIGURES

Figure 1: Structure of the study ... 14

Figure 2: Eco-innovation scoreboard ranking and eco-innovation index composites for Slovenia (year 2012) ... 20

Figure 3: Eco-innovation scoreboard ranking and eco-innovation index composites for Slovenia (year 2013) ... 20

Figure 4: Product lifecycle stages ... 28

Figure 5: Conceptual relationships between sustainable manufacturing and eco-innovation.. 33

Figure 6: Dimensions of eco-innovation features ... 34

Figure 7: Business case for eco-innovation ... 97

Figure 8: The eco-innovation conceptual model (for the construct-level model) ... 123

Figure 9: Diagram of construct Managerial environmental concern with the standardized solution ... 152

Figure 10: Diagram of construct Expected benefits with the standardized solution ... 156

Figure 11: Diagram of construct Command-and-control instrument with the standardized solution ... 160

Figure 12: Diagram of construct Economic incentive instrument with the standardized solution ... 163

Figure 13: Diagram of construct Customer demand with the standardized solution ... 165

Figure 14: Diagram of construct Competitive intensity with the standardized solution ... 169

Figure 15: Diagram of construct Competitive pressure with the standardized solution ... 170

Figure 16: Diagram of eco-innovation dimension of Product eco-innovation with the standardized solution ... 175

Figure 17: Diagram of eco-innovation dimension of Process eco-innovation with the standardized solution ... 178

Figure 18: Diagram of eco-innovation dimension of Organizational eco-innovation with the standardized solution ... 181

Figure 20: Diagram of construct Competitive benefits with the standardized solution ... 199

Figure 21: Diagram of construct Competitive benefits with the standardized solution ... 201

Figure 22: Diagram of construct Economic benefits with the standardized solution ... 204

Figure 23: Diagram of construct Economic benefits with the standardized solution ... 206

Figure 24: Diagram of company performance dimension – construct Company profitability with the standardized solution ... 211

Figure 25: Frequency and percentage of use of operation modes (types) by the analyzed companies ... 213

Figure 26: Frequency and percentage of use of operation modes (number) by the analyzed companies ... 214

Figure 27: Frequency and percentage of the total number of countries where analyzed companies sell their products/services ... 215

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Figure 28: Diagram of construct Internationalization with the standardized solution ... 218

Figure 29: Product eco-innovation model (standardized solution) ... 225

Figure 30: Process eco-innovation model (standardized solution) ... 232

Figure 31: Organizational eco-innovation model (standardized solution) ... 240

Figure 32: The expanded construct-level model of eco-innovation (standardized solution) . 250 LIST OF TABLES Table 1: Main peculiarities of environmental innovations as compared to other types of innovations ... 16

Table 2: Selected definitions of eco-innovation ... 23

Table 3: Example of GOM (The Green Option Matrix) ... 30

Table 4: Types of eco-innovation used in previous studies examining more than one eco- innovation type ... 43

Table 5: Classifying the literature on eco-innovation drivers (based on type of eco-innovation) ... 60

Table 6: Factors relating to the objectives and effects of innovation ... 69

Table 7: Summary of drivers of eco-innovation found in previous research works (focusing on factors explored in our study) ... 93

Table 8: Summary of the past findings and measures used to test the relationship between eco- innovation and firm performance ... 103

Table 9: Summary of research hypotheses ... 122

Table 10: Items for three latent variables (managerial environmental concern, expected benefits, customer demand) ... 126

Table 11: Items for two latent variables (Command-and-control instrument, Economic incentive instrument) ... 127

Table 12: Items for two latent variables (competitive intensity and competitive pressure)... 128

Table 13: Items for the latent variable of product eco-innovation ... 129

Table 14: Items for the latent variable of process eco-innovation ... 129

Table 15: Items for the latent variable of organizational eco-innovation ... 130

Table 16: Items for latent variable of firm performance (company growth and profitability) ... 131

Table 17: Items for latent variable of economic performance ... 131

Table 18: Items for latent variable of competitive benefits... 132

Table 19: Sample characteristics ... 145

Table 20: Main industry types in which analyzed companies operate ... 146

Table 21: Environmental certificates/prizes that have obtained the included companies ... 147

Table 22: The level of innovativeness of included companies in the past three years (2011- 2013) ... 148

Table 23: The sample in comparison with the population ... 149

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Table 24: Descriptive statistics for determinant Managerial environmental concern ... 150

Table 25: KMO and Bartlett’s test of sphericity (Managerial environmental concern) ... 151

Table 26: Standardized coefficients and their squares (Managerial environmental concern) 151 Table 27: Descriptive statistics for determinant Expected benefits ... 153

Table 28: KMO and Bartlett’s test of sphericity (Expected benefits) ... 154

Table 29: Standardized coefficients and their squares (Expected benefits) ... 154

Table 30: Standardized coefficients and their squares (Expected benefits) ... 155

Table 31: Descriptive statistics for determinant Environmental policy instruments ... 158

Table 32: KMO and Bartlett’s test of sphericity (Command-and-control instrument) ... 159

Table 33: Standardized coefficients and their squares (Command-and-control instrument) . 160 Table 34: KMO and Bartlett’s test of sphericity (Economic incentive instrument) ... 162

Table 35: Standardized coefficients and their squares (Economic incentive instrument) ... 162

Table 36: Descriptive statistics for determinant Customer demand ... 164

Table 37: KMO and Bartlett’s test of sphericity (Customer demand) ... 164

Table 38: Standardized coefficients and their squares (Customer demand) ... 165

Table 39: Descriptive statistics for determinant Competition (Competitive intensity and Competitive pressure) ... 167

Table 40: KMO and Bartlett’s test of sphericity (Competitive intensity) ... 168

Table 41: KMO and Bartlett’s test of sphericity (Competitive pressure) ... 168

Table 42: Standardized coefficients and their squares (Competitive intensity) ... 169

Table 43: Standardized coefficients and their squares (Competitive pressure) ... 170

Table 44: Descriptive statistics for Product eco-innovation ... 172

Table 45: KMO and Bartlett’s test of sphericity (Product eco-innovation) ... 174

Table 46: Standardized coefficients and their squares (Product eco-innovation) ... 174

Table 47: Descriptive statistics for Process eco-innovation ... 176

Table 48: KMO and Bartlett’s test of sphericity (Process eco-innovation) ... 177

Table 49: Standardized coefficients and their squares (Process eco-innovation) ... 177

Table 50: Descriptive statistics for Organizational eco-innovation ... 179

Table 51: KMO and Bartlett’s test of sphericity (Organizational eco-innovation) ... 180

Table 52: Standardized coefficients and their squares (Organizational eco-innovation) ... 180

Table 53: The eco-innovation dimensions’ (product and process eco-innovation factor and organizational eco-innovation factor) items factor loadings ... 183

Table 54: The eco-innovation dimension’s item factor loadings (three eco-innovation factors) ... 185

Table 55: The eco-innovation dimension’s item factor loadings ... 187

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Table 56: Eco-innovation dimension’s scale convergence – summary for all three eco-

innovation dimensions and eco-innovation construct ... 189

Table 57: Standardized coefficients and their squares (eco-innovation construct) ... 192

Table 58: Eco-innovation construct convergent and discriminant validity ... 193

Table 59: The dimensions-only vs. the one common factor model ... 193

Table 60: Descriptive statistics for Competitive benefits ... 195

Table 61: KMO and Bartlett’s test of sphericity (Competitive benefits) ... 196

Table 62: Competitive benefits dimension’s item factor loadings ... 196

Table 63: Model good-fit and reliability indexes for 1-factor and 2-factor solution of construct Competitive benefits ... 197

Table 64: Standardized coefficients and their squares (Competitive benefits) ... 198

Table 65: KMO and Bartlett’s test of sphericity (Competitive benefits) ... 200

Table 66: Standardized coefficients and their squares (Competitive benefits) ... 201

Table 67: Descriptive statistics for Economic benefits ... 202

Table 68: KMO and Bartlett’s test of sphericity (Economic benefits)... 203

Table 69: Standardized coefficients and their squares (Economic benefits)... 203

Table 70: KMO and Bartlett’s test of sphericity (Economic benefits)... 205

Table 71: Standardized coefficients and their squares (Economic benefits)... 205

Table 72: Descriptive statistics for Company performance ... 207

Table 73: Company performance – frequency and percentage of different financial and non- financial indicators ... 208

Table 74: KMO and Bartlett’s test of sphericity (Company performance) ... 209

Table 75: Company performance dimension’s item factor loadings ... 210

Table 76: Standardized coefficients and their squares (Company profitability) ... 211

Table 77: Descriptive statistics for internationalization variable – operation modes ... 213

Table 78: Share of sales in foreign market in 2013 ... 216

Table 79: Descriptive statistics for internationalization ... 216

Table 80: KMO and Bartlett’s test of sphericity (Internationalization) ... 217

Table 81: Standardized coefficients and their squares (Internationalization) ... 217

Table 82: Measurement model of latent variables and Cronbach’s alpha for latent variables ... 221

Table 83: Results of correlations between latent variables ... 224

Table 85: Results of Correlations between latent variables ... 231

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Table 87: Results of correlations between latent variables ... 239

Table 88: Measurement items and Cronbach’s alpha for latent variables ... 243

Table 89: Measurement model of latent variables ... 245

Table 90: Results of Correlations between latent variables ... 248

Table 91: Coefficients regarding results of the linear regression analysis for the dependent variable product eco-innovation ... 254

Table 92: Coefficients regarding results of the linear regression analysis for the dependent variable process eco-innovation ... 256

Table 93: Coefficients regarding results of the linear regression analysis for the dependent variable organizational eco-innovation ... 258

Table 94: Coefficients regarding results of the linear regression analysis for the dependent variable eco-innovation construct ... 260

Table 95: Coefficients regarding results of the linear regression analysis for the dependent variable company growth ... 262

Table 99: Coefficients regarding results of the linear regression analysis for the dependent variable company profitability ... 266

Table 103: Coefficients regarding results of the linear regression analysis for the dependent variable economic benefits ... 270

Table 107: Coefficients regarding results of the linear regression analysis for the dependent variable competitive benefits ... 274

Table 108: Coefficients regarding results of the linear regression analysis for the dependent variable competitive benefits ... 275

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Table 109: Coefficients regarding results of the linear regression analysis for the dependent variable competitive benefits ... 276 Table 110: Coefficients regarding results of the linear regression analysis for the dependent

variable competitive benefits ... 277 Table 111: Coefficients regarding results of the linear regression analysis for the dependent

variable internationalization ... 278 Table 112: Coefficients regarding results of the linear regression analysis for the dependent

variable internationalization ... 281 Table 115: Testing path model for different subsamples based on control variables for product

eco-innovation ... 286 Table 116: Testing path model for different subsamples based on control variables for process eco-innovation ... 291 Table 117: Testing path model for different subsamples based on control variables for

organizational eco-innovation ... 296 Table 118: Testing path model for different subsamples based on control variables for

construct-level model of eco-innovation ... 300 Table 119: Summary of hypotheses-related findings (structural equation modeling) ... 305 Table 120: Summary of hypotheses-related findings when relationships were controlled for

control variables (with linear regression analysis) ... 313

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ABBREVIATIONS CfSD Centre for Sustainable Design

CIS Community Innovation Survey CMV Common Method Variance EIO Eco-Innovation Observatory

EMAS ECO - Management and Audit Scheme EMS Environmental Management Systems

ENGO Environmental Non-Governmental Organization EQS Structural Equation Modeling Software

EU European Union

IMPRESS Impact of Clean Production on Employment in Europe ISO International Organization for Standardization

MEI Measuring Eco-Innovation research project NGO Non-Governmental Organization

OECD Organization for Economic Co-operation and Development QMS Quality Management Systems

R&D Research and Development ROA Return on assets

ROE Return on equity ROS Return on sales

SEM Structural Equation Modeling

SME Small and Medium-sized Enterprises

SPSS Statistical Package for the Social Sciences TQEM Total Quality Environmental Management

VDI German Association of Engineers (Verein Deutscher Ingenieure)

ZEW The Centre for European Economic Research in Mannheim (Zentrum für Europäische Wirtschaftsforschung)

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1

1 INTRODUCTION

In this section, we will present the problem definition of our doctoral dissertation research (1.1), followed by objectives of the study (1.2), research questions (1.3) and a conclusion outlining the structure of this study (1.4).

1.1 Problem definition

In recent years, eco-innovations have gained importance and generated vast interest in both the academic and business worlds. Due to the salient issues, among which are primarily scarce resources and increasing population, the conservation of environmental quality has become essential (Govindan et al. 2014). Moreover, resource management, pollution control and climate change phenomena are all issues that, by their nature, reach beyond geographic borders (i.e., economic trends that occur in one country and/or internationalization of production and international trade all affect also other national economies) and thus make the challenges of sustainability a priority shared by countries and communities worldwide (Strange and Bayley 2014). The equilibrium in the environment has been distorted; therefore, the key challenge that must be undertaken is to reestablish that equilibrium.

The interest in eco-innovation in research and practice has increased, particularly because of companies’ adverse impacts on the environment, which have resulted in serious global environmental problems and rising global concern for the environment. Related to those, the data (OECD 2009) demonstrate that manufacturing companies account for a significant part of the world’s consumption of resources and generation of waste and were estimated to account for nearly a third of global energy usage. Therefore, the manufacturing industries carry the potential to become a driving force for the creation of sustainable society, through the development and implementation of products, services and other integrated sustainable practices in order to improve the environmental performance (OECD 2009). On the other hand, as aforementioned, the practice of green activities and conservation of the environment has become mandatory due to the scarce resources and increasing population (Govindan et al.

2014).

The subject of our study is eco-innovation, which is a subset of all innovations in an economy (Wagner 2008). According to the Measuring eco-innovation project (MEI project),¹ eco- innovation is defined as: “production, application or exploitation of a good, service, production

1 MEI is a project for DG Research of the European Commission (Call FP6-2005-SSP-5A, Area B, 1.6, Task 1). The project has been carried out in collaboration with Eurostat, the European Environment Agency (EEA) and the Joint Research Center (JRC) of the European Commission. MEI offers a conceptual clarification of eco-innovation (developing a typology) and discusses possible indicators, leading to proposals for eco-innovation measurement (Kemp and Pearson 2007).

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process, organizational structure, or management or business method that is novel to the firm or user and which results, throughout its lifecycle, in a reduction of environmental risk, pollution and the negative impacts of resources use (including energy use) compared to relevant alternatives” (Kemp and Pearson 2007, 7). Likewise, Eco-Innovation Observatory (2013) defined eco-innovation as any innovation that reduces the use of natural resources and decreases the release of harmful substances across the whole lifecycle, which reflects its environmental component. Eco-innovation therefore is only type of innovation and is identified by the feature of providing solutions that are more environmentally benign than relevant alternatives, even if the environmental component is not planned. It is increasingly apparent and widely accepted that eco-innovations are environmentally benign; additionally, some types of eco-innovations may be beneficial for the environment and the end-user (e.g., providing energy and material savings). Moreover, eco-innovations are considered a path to new business opportunities, encompassing growth and competitive advantage (Aschhoff and Sofka 2009; Laperche and Uzunidis 2012). In eco-innovation lies the potential to create and provide a win-win situation, pertaining to both the environment and the company (Horbach 2008).

Researchers (starting with Rennings 2000) have emphasized that eco-innovation cannot be directly compared to general innovation, nor can its drivers be explored in the same way. The main peculiarity of eco-innovation, the so-called double externality problem, relates to the necessity of a regulatory framework when exploring drivers of eco-innovation. This problem is one of the most important peculiarities of environmental innovations and regards production of the common knowledge spillovers of innovations and environmental spillovers (Ziegler and Rennings 2004; Rennings et al. 2006). Several researchers (Porter and van der Linde 1995b;

Rennings 2000; Beise and Rennings 2005; Horbach 2008; Wagner 2008; Schmidt et al. 2010;

De Marchi 2012) have argued that eco-innovations provide two types of positive externalities.

The first involves innovation and R&D activities, explaining that companies cannot fully appropriate the value created because other companies and the economy benefit from knowledge spillovers, and thus the incentive for companies to invest in them lessens. This can be solved with public funding and subsidies. The second externality is environmental positive externality, which claims that companies create value for society, which is also appropriated by society in the reduction of negative environmental impacts. Hence, society benefits, while the company by itself bears the costs. Thus, we should be aware of the fact that companies that invest in eco-innovations consequently suffer higher expenses than their polluting competitors, which works as a disincentive for companies to invest in products or processes that lead to reduction of the environmental impact. In this case, environmental taxes have the ability to solve this problem, at least partially. The second peculiarity of eco-innovation regards market failure; it stems from an interaction of these two externalities and emphasizes the importance of policy measures and regulatory framework. General innovations are induced by technology push factors and market pull factors, while in order to spur eco-innovations regulatory push/pull effects should also be considered (Porter and van der Linde 1995b; Rennings 2000; Beise and Rennings 2005; Horbach 2008; Wagner 2008; Schmidt et al. 2010; De Marchi 2012).

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Additionally, van den Bergh (2013) stressed that environmental innovations cover a broader set of drivers than regular innovations do. Eco-innovations stem not only from market inspirations but also from health, environmental and ethical concerns (van den Bergh 2013). Because of the aforementioned specific peculiarities related to eco-innovation, we should focus more attention on detecting the suitable drivers of eco-innovation. The (push and pull) motives to adopt

“green” innovation may be legal, moral, financial, public relations and human resources-related motives (Johnson 2009). Companies may also introduce eco-innovations as a response to regulations (Madsen and Ulhøi 2001; Horbach et al. 2012), market demand (Horbach 2008; Lin et al. 2013a) or social pressures (Qi et al. 2010). To the drivers that induce general innovation (technology push factors and market/demand pull factors), researchers (Rennings 2000;

Horbach 2008) have added regulatory push/pull factors, which are especially relevant for triggering eco-innovation. When discussing eco-innovation drivers, we can roughly divide them into factors that are internal or external to the company. Del Río (2009, 863) pointed out that factors internal to the company overwhelmingly refer to the existence of internal preconditions and features of the companies, which facilitate the involvement in environmental technological change. In this regard, environmental management systems (hereinafter EMS) have the potential to represent important internal company capabilities that facilitate the continuous generation/adoption of eco-innovation (Wagner 2007), while factors external to the company include interaction with other institutional, market and social actors and thus stem from the incentives and stimulus deriving from a wide range of actors and factors, which exert pressure to which companies respond (del Río 2009).

Differences among countries can also be an important issue when exploring the drivers of eco- innovation. For example, the drivers of eco-innovation in China might differ from those in Slovenia, because of the intense pollution present in China compared to the European countries.

Companies in China, therefore, are not spurred into implementation of eco-innovation for the same reasons as companies in Europe. For instance, the research undertaken by Li (2014) has revealed that Chinese companies are motivated to implement eco-innovation by overseas customer pressure, while domestic customer pressure does not spur eco-innovation.

Additionally, the command-and-control instrument dominates the economic incentive instrument, which does not work for spurring eco-innovation in Chinese companies (Li 2014).

The majority of companies in Europe invest in eco-innovation not only to diminish their environmental impact but also to seize various benefits for the company – gain of competitive advantage, increase in profitability, increase in productivity, cost efficiency due to the cost savings (reduction of energy and material use), profiling themselves as environmentally friendly, and so forth. Another motive that incites eco-innovation adoption in companies is related to the increased environmental awareness among consumers, who pay attention to the environmental aspect of products and demand eco-innovations from companies (in terms of eco-products or at least environmentally friendly production processes). Lastly, in order to enter the European market, some environmental standards are requested (such as ISO 14001); thus,

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companies are forced to adopt eco-innovation in order to operate and continue with their business (when pertaining to the compliance with regulations).

In our study, a driver is defined as a stimulus. As stressed in the literature review of Hojnik and Ruzzier (2015), a stimulus can be further divided into a motivation-based factor (e.g., regulatory pressure, various expected benefits from eco-innovation implementation, profiling of company as environmentally friendly, competitive pressure, customer demand, etc.) or a facilitating factor (e.g., EMS, financial resources and technological capabilities, etc.). Methodologically, this study adopts a quantitative approach. Roughly, analyses can be divided into qualitative and quantitative, each type having its advantages and drawbacks. When using a quantitative approach, we study the relative strength of the so-called “driver,” while the decisiveness remains a topic for further analysis (Hojnik and Ruzzier 2015).

Furthermore, successful implementation of eco-innovation creates a win-win situation (Horbach 2008). Eco-innovations are central to the promotion of sustainable and smart growth because of the benefits, which can be brought to the economy and the environment (European Commission 2012). In other words, eco-innovations on the one hand protect the environment – exert less coercive influences on the environment and are more environmentally benign than their existing alternatives – while on the other hand, with regard to the economic effects, they affect growth and employment (Arundel and Kemp 2009). However, this impact is likely to vary and depends on the innovation type and context in which it is used; thus, in the production sector, eco-innovation creates jobs and wealth (Arundel and Kemp 2009). Johnson (2009, 22) argues that, “when done properly, going green is good business”; thus, it is not necessary to choose between being green and being profitable. Therefore, the most important benefits for companies that want to go green and create a more sustainable business model are the possibility to gain a green competitive advantage on the domestic and international markets (Tien et. al 2005; Chen et al. 2006; Triebswetter and Wackerbauer 2008; Johnson 2009; European Commission 2012; Ar 2012; Hofer et al. 2012; Wong 2012; Leonidou et al. 2013a); entry on foreign markets (internationalization) (Beise and Rennings 2005; Martin-Tapia et al. 2010), improvement of firm performance (Clemens 2006; Johnson 2009; Zeng et al. 2011; European Commission 2012; Ar 2012; Doran and Ryan 2012; Lin et al. 2013a); and sustainable growth on domestic and international markets (European Commission 2012). Other benefits that companies can seize from eco-innovation’s implementation include cost efficiency and cost savings, improved corporate image and relationship with local communities, access to new green markets and superior competitive advantage (Shrivastava 1995).

Through our literature review, we have identified the lack of a more complete and integrative model encompassing drivers of eco-innovation, their main dimensions (several studies include or focus on only one type of eco-innovation) and eco-innovation’s consequences regarding firm performance. Moreover, to our knowledge, no complete and integrative studies have yet been conducted for Slovenian companies or at the worldwide level. Regarding the investigation of

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eco-innovation drivers, we argue that researchers mostly consider only one or a few drivers and then examine the relationship with eco-innovation’s performance, while a more eloquent and integrative model of eco-innovation is lacking. An important contribution of this study is that it not only explores drivers and outcomes of three different eco-innovation types (product, process and organizational) but also breaks environmental policy instruments into two groups, distinguishing between the command-and-control instrument and the economic incentive instrument. As aforementioned, some research works focus narrowly on the drivers of eco- innovation, while in our study we comprised greater number of relevant drivers to eco- innovation. Similar approach pertains to eco-innovation’s consequences, in literature and research is present strong focus of eco-innovation’s impact on environmental performance, while their influence on firm performance is underexplored, and often leads to mixed results.

Up to now, firm performance has been measured mostly with “hard” measures (such as financial measures, as used by Clemens 2006; Zeng et al. 2011; Ar 2012; Doran and Ryan 2012;

Cheng et al. 2013). In our study, we include other so-called “soft” measures regarding company performance (e.g., competitive benefits and economic benefits, as used by Sharma and Vredenburg 1998; Wagner 2011), which are self-reported and are complimentary to the hard ones, offering more insight into the outcomes of eco-innovation. This is especially important because eco-innovation generally pays off after several years, and when focusing only on the financial indicators, the results can lead to flawed conclusions in the sense that eco-innovations are only a cost for the company that implements them. While the self-reported measures are subjective (are influenced by subject’s personal feelings, perspective, experience or opinions), however; related to firm performance they offer insight regarding whether eco-innovations are worthwhile or not. The improvements in company performance can be recognized (e.g., cost savings, image improvement, better relationships with customers or other stakeholders, higher sales, etc.) before the investment returns (when looking strictly profitability indicator ratios).

Therefore, the aim of this study is to analyze the relationships between the drivers of eco- innovation and implementation of different types of eco-innovation (product, process and organizational eco-innovation and, lastly, eco-innovation construct), based on a sample of Slovenian companies. Hence, we have gathered the drivers that were identified and found to spur eco-innovation in prior research and used a qualitative analysis (interviews with environmental managers in Slovenian companies) to determine whether these are appropriate for the Slovenian companies. Drivers for implementation of eco-innovation were tested in this way by employing a qualitative study in the first stage (interviews with companies’

environmental managers about the drivers and outcomes of eco-innovation). The selection of those drivers has been made based on prior research works, which found several determinants to be important in triggering eco-innovation’s implementation. The qualitative research was followed by a quantitative study in which we empirically tested the integrative model based on Slovenian companies.

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Summarizing, companies should know more about the possible benefits to be obtained from eco-innovation’s implementation and should be encouraged to implement eco-innovation to a larger extent, which we believe is a critical point to gain a competitive advantage, expand on foreign markets and improve firm performance in the long run. The way to reach for sustainability is through implementation of eco-innovation, which by bringing benefits to the environment and companies presents a win-win situation. Therefore, we will strive to fill the gap by empirically testing an integrative model of eco-innovation. Finally, our aim is also to propose a definition of eco-innovation, with more focus on entrepreneurial orientation and its influence on company competitiveness.

1.2 Objectives of the study

In the following study, we focus on eco-innovation (also called green, ecological or environmental innovation in the literature), which seems to be an increasingly relevant topic for companies and for the environment. “Nowadays, to become ‘green’ is both a need and an opportunity for companies” (Dangelico and Pontrandolfo 2010, 1608). Furthermore, the topic of eco-innovation is relevant for companies for many reasons. One of these pertains to several environmental regulations imposed by government that force companies to adopt eco- innovation. Operation/tradable permits and taxes are related to these as well. Generally, governments try to incite eco-innovation with the command-and-control instrument (regulations) and with the economic incentive instrument (subsidies related to eco-innovation, projects related to eco-innovation, green public procurement and funding regarding eco- innovation adoption for companies). While companies also foster voluntary approaches with their own incentives in order to express their environmental awareness and proactive care for the environment. Slovenian companies adopt ISO 14001 certification (420 companies accredited by 2012) and EMAS certification (three companies accredited by 2010) (Eco- Innovation Observatory 2012c). In more detail, ISO 14001 is developed by the International Organization for Standardization (ISO), while the Eco-Management and Audit Scheme (hereinafter EMAS) is developed by the European Commission (OECD 2009). Eco-innovation adoption is also motivated by the level of pollution, which is increasing with companies’

operations, resulting in greater global concern for the environment (more relevant for China, where non-governmental organizations (hereinafter NGOs) are much more active than in the Slovenian environment). Finally, companies have to face the increasing pressure from their stakeholders (consumers/purchasers, investors, bankers, NGOs, etc.) to become more green and reduce their negative impact on the environment (Ambec and Lanoie 2008).

In more detail, our study encompasses drivers of eco-innovation and, in the first part, offers a literature review of prior research works. The positive effects of several drivers on eco- innovation’s implementation have already been found. Initially, we describe drivers with regard to the environmental policy instruments. Regulation (which can be counted in the command- and-control instrument group) has been found to be the most important and the main

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determinant of eco-innovation implementation (Blum-Kusterer and Hussain 2001; Green 2005, in Triebswetter and Wackerbauer 2008; Belin et al. 2009; Qi et al. 2010; Weng and Lin 2011), accompanied by taxation (Desmarshelier et al. 2012; Murovec et al. 2012) and subsidies (Horbach 2008; Murovec et al. 2012). All previously mentioned environmental policy instruments stimulate implementation of eco-innovation in companies.

Another important driver for triggering eco-innovations is customer demand (Van Hemel and Cramer 2002; Horbach 2008; Kammerer 2009; Zeng et al. 2011; Weng and Lin 2011; Doran and Ryan 2012; Kesidou and Demirel 2012), which also influences companies to adopt eco- innovations because customers demand eco-innovation products or services. Concerns about the environment are increasing among the customers, who feel responsible for the environment and thereby they can affect it by their choice to use environmentally friendly products and be more environmentally aware in their purchasing decisions. This kind of behavior results in seeking green brands and environmentally friendly products. Furthermore, customers want to take an active part in protecting of the environment and demand green innovations from companies. Companies, which greatly value the market demand for green products, also develop more environmental product innovations (Triguero et al. 2013). In addition, the broader society, involving public pressure and media exposure (Kemp and Foxon 2007; Horbach 2008;

Qi et al. 2010; Doran and Ryan 2012) and environmental associations (Blum-Kusterer and Hussain 2001), presents an important driver of eco-innovation. If a company gets exposed in media and environmental associations are against its operating and if to those joins also market pressure, the company needs to react and implement at least the minimum of eco-innovation (Doran and Ryan 2012). The minimum investment in eco-innovation both calms down on the one side the society and on the other side brings benefits or at least less adverse effects on the environment.

Moving towards a brief description of important drivers regarding eco-innovation’s adoption, we should take into account the role of the manager, who plays an important role in eco- innovations’ adoption. Manager can decide time – when to invest in eco-innovation, amount – how much of resources will be invested in adoption of eco-innovation, and mode – how the company will respond to the environmental issues (proactive/reactive). Managerial concerns with regard to the environment are positively related to the scope and speed of a firm’s response to environmental issues (Tseng et al. 2013). Managerial concern is neglected in many studies, while those that have included it in exploring eco-innovation drivers found it to be an important driver of eco-innovation’s adoption (Kuckertz and Wagner 2010; Qi et al. 2010; Ar 2012;

Papagiannakis and Lioukas 2012; Tseng 2013; Triguero et al. 2013; Yen and Yen 2012).

Managers who feel responsibility for the health of employees, final consumers and their environmental burden aim to adopt eco-innovation in their companies. Other important drivers of eco-innovation found in prior work include expected firm reputation (Kemp and Foxon 2007;

Doran and Ryan 2012; Holtbrügge and Dögl 2012) and expected cost savings (Porter and van der Linde 1995b; Horbach 2008; Belin et al. 2011; Pereira and Vence 2012).

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The importance of the topic of eco-innovation is also related to the question of how companies can successfully compete in changing markets and environments while contributing to sustainable development (Klewitz and Hansen 2013). Eco-innovations provide or create the so- called win-win situation, meaning that they are more environmentally benign than relevant alternatives (some of them create benefits pertaining to the environment), while companies can capture several benefits deriving from successful implementation of eco-innovation (Horbach 2008). On the one hand, the focus of eco-innovations is oriented towards a whole lifecycle of products, processes, and so on, in order to reduce the environmental impact (Fraj-Andrés et al.

2009; Angelo et al. 2012; Horbach, Rammer and Rennings 2012; EIO 2010 in EIO 2013a). On the other hand, eco-innovations’ implementation strengthens the competitive advantage of companies (Shrivastava 1995; Tien et. al 2005; Chen et al. 2006; Triebswetter and Wackerbauer 2008; Fraj-Andrés et al. 2009; Ar 2012; Hofer et al. 2012; Mourad and Ahmed 2012; Wong 2012; Leonidou et al. 2013a; Robinson and Stubberud 2013). Hence, we conclude that eco- innovation creates benefits for both the environment and the company.

Regarding the consequences of eco-innovation’s implementation, in our study we focus on firm performance (company growth and profitability as objective measures and economic benefits as self-reported measure), competitive benefits and internationalization. With regard to the relationship between eco-innovation performance and firm performance, we would like to encourage companies that it is “worth it to go green”. We aimed to explore whether companies (specifically Slovenian companies) that invest in eco-innovation’s implementation consequently suffer losses in their profitability because of initial investments, or if over time they become more competitive on markets, enjoying the gained competitive benefits of eco- innovation, by introducing novelties or significantly improving existing products/services, which can also result in better efficiency and consequently in cost savings. As consequences of eco-innovation performance, we included the following: firm performance (company growth and profitability, economic benefits), competitive benefits and internationalization. Based on prior research, we posit that implementation of eco-innovations positively affects firm performance (Clemens 2006; Molina-Azorin et al. 2009; Zeng et al. 2011; Doran and Ryan 2012; Ar 2012; Lin et al. 2013a; De-Burgos-Jiménez et al. 2013). Furthermore, companies that implement eco-innovations on markets where they operate enjoy a competitive advantage (Peattie 1992; Tien et al. 2005; Chen et al. 2006; Triebswetter and Wackerbauer 2008; Chiou et al. 2011; Ar 2012; Hofer et al. 2012; Wong 2012; Leonidou et al. 2013a). Finally, companies that successfully implement eco-innovations expand their operations on foreign markets (Martin-Tapia et al. 2008).

There still exists some confusion regarding the definition of eco-innovation. The definition proposed by the European Commission in 2012 suggests that eco-innovation can be found in all forms of new or significantly improved products, goods, services, processes, marketing methods, organizational structures, institutional arrangements and lifestyle and social behaviors, which lead to environmental improvements compared to relevant alternatives. Here

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we add that eco-innovation is not “only” about the environment but also about a constructive, fruitful and effective relationship that tends to cause less harm to the environment while at the same time bringing greater benefits to the company (in terms of new business opportunity, entering new markets, image improvement, cost savings, etc.). In other words, the relevance/importance of eco-innovation pertains not only to less consumption of energy and less water, emissions and waste released into the environment, but also to bringing benefits to the environment and to the company. Moreover, in the sense of implementing or being the first to use eco-innovations and therefore, enjoying the “first mover advantages” on the markets (Porter and van der Linde 1995a). We would like to encourage companies to acknowledge the

“win-win situation” brought by eco-innovation’s implementation, which implies economic and environmental benefits (Horbach 2008).

Additionally, prior research works focused on large companies and their adoption of eco- innovations (Rennings 2000; Hansen and Klewitz 2012). On the one hand, small and medium- sized enterprises (hereinafter SMEs) represent “a key vector to introduce and diffuse eco- innovation in the market, because of their relevance to both the environment and the European gross domestic product” (Buttol et al. 2012, 211). On the other hand, SMEs also require help to overcome the existing barriers such as lack of experience and cost of information, data and tools (Buttol et al. 2012). Hansen and Klewitz (2012) summarize four important peculiarities of SMEs that distinguish them from large enterprises. First, SMEs represent between 96% and 99% of the total number of enterprises. Second, they contribute to a large share of overall pollution, which in the EU is gauged to be about 64%. Third, they are not just a smaller version of large companies (Welsh and White 1981 in Hansen and Klewitz 2012). Fourth, “SME peculiarities” imply that their innovation for sustainability will differ from others.

Eurobarometer (2011) indicates that medium-sized companies with annual turnover between 10€ and 50€ million and those with growth in their turnover in the past two years were more likely to introduce eco-innovations. SMEs are also more flexible to market demands, while they suffer a lack of financial capital (del Brío and Junquera 2003; Bos-Brouwers 2010 in Hansen and Klewitz 2012). Moreover, Bianchi and Noci (1998) have found that only large companies adopt a proactive environmental strategy, while SMEs adopt a reactive environmental strategy as a response to external pressures. The external pressures that push and/or pull SMEs to adopt green innovations derive from the environment (external origins) and encompass environmentalism of clients and investors as well as environmental regulations, which can generate or motivate reactive green innovations, while internal origins (such as environmental leadership, environmental culture, and environmental capability) spur both reactive and proactive green innovations (Chen et al. 2012). In our study, we will encompass all sizes of companies (with the exception of micro companies with fewer than five employees). Company size will be used also as control variable to test whether the differences between drivers and outcomes of eco-innovation’s implementation regarding the company’s size exist and, if so, what the differences are.

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We will focus on drivers and consequences of eco-innovation. Regarding the drivers of eco- innovation, which push and/or pull the adoption of eco-innovations, we have noticed in our literature review that researchers have either taken one or more than one driver and then tested the relationship with eco-innovation’s performance or have used a previously proposed structure. A similar approach pertains to eco-innovation’s consequences, where there is a strong focus on eco-innovation’s impact on environmental performance. In this study, we will emphasize the fact that firms should learn about the possible benefits obtained by eco- innovation’s adoption and should be encouraged to adopt eco-innovation. In our study, we will present and test four different models. First, we will examine the effects of different determinants of product eco-innovation and their impact on eco-innovation outcomes (firm performance, such as company growth and profitability, internationalization, economic and competitive benefits). Second, the determinants and outcomes of process eco-innovation will be investigated. Third, we will explore the determinants and outcomes of organizational eco- innovation. Lastly, determinants and outcomes of eco-innovation as a second-order latent factor will be tested.

The study’s main objective is development of an eco-innovation model and its empirical testing on Slovenian companies, encompassing eco-innovation’s drivers, main dimensions (product, process and organizational eco-innovation) and consequences regarding firm performance, competitive benefits and internationalization. The main contribution of this study lies in testing determinants and outcomes separately for different eco-innovation types – product, process, organizational eco-innovation and construct-level model of eco-innovation.

The main goals of this doctoral dissertation research include identification and development (adaptation to the Slovenian environment) of appropriate measures of the concepts that will be based on prior research works, their incorporation into a nomological network, and testing of the hypotheses with methods of quantitative analyses. We thus endeavor to delineate and refine the main drivers and dimensions of eco-innovation, and after testing the conceptual model of eco-innovation, to suggest several implications regarding drivers and consequences of eco- innovation’s implementation pertaining to firm performance. Our first aim is to identify which drivers affect eco-innovation’s adoption, their relative strengths, and the gaps where companies need additional assistance concerning their current strategic orientations and operations.

Different proposals for further research as well as practical implications for managers/owners and policy makers will be presented.

Our main research questions are as follows:

- How should we define eco-innovation, and what are the main dimensions of eco-innovation?

- What are the main drivers of eco-innovation’ implementation (drivers that trigger companies in implementation of eco-innovations)?

- How does eco-innovation affect company performance in terms of company growth and company profitability?

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- How does eco-innovation affect a company’s competitive benefits?

- How does eco-innovation affect a company’s economic benefits?

- How does eco-innovation affect a company’s internationalization?

The main goal and purpose of this doctoral dissertation is therefore to provide an integrative framework of eco-innovation theoretically developed and empirically tested with the aim of exploring the relationship between eco-innovation’s drivers and consequences concerning firm performance (company growth and profitability as objective measures and economic benefits as self-reported measure), competitive benefits and internationalization. With empirical testing of the model in Slovenian companies, several contributions are derived. The first contribution extends to the policy makers, where the results indicate which drivers are the most effective to induce eco-innovation activities (product, process and organizational eco-innovation) and how the government could encourage eco-innovation’s implementation. An important contribution also extends to companies, where the results indicate which consequences follow the successful implementation of eco-innovation – in more details, what are the outcomes of different eco- innovation types (which one pays off). This study reveals the drivers and the outcomes of product, process and organizational eco-innovation.

1.3 Research questions

Research questions regarding doctoral dissertation research can be broken into three groups, which are presented separately below. Further details will be present later based on prior research works, followed by the development of hypotheses.

The first group of research questions is associated with the clarification of eco-innovation’s definition and its main dimensions. Among researchers, there are in use various expressions as synonyms, but some of them have different meanings or encompass a broader concept, such as sustainable innovation. Later, the description of eco-innovation, its main characteristics and main dimensions will be provided.

Question 1: What is eco-innovation, and what are the main dimensions of eco-innovation?

The second group of research questions pertains to the drivers of eco-innovation. Different theoretical backgrounds (e.g., resource-based theory, institutional theory, stakeholder theory, etc.) employed in research works include or test different drivers of eco-innovation. Drivers that trigger eco-innovation can vary among countries, types of eco-innovation, and types of industry. For instance, there is a higher level of pollution in China than in Europe, and thus the antecedents of eco-innovation implementation differ to reflect that situation. Therefore, we aim to include in our eco-innovation model as many as possible relevant drivers of eco-innovation in order to explore which ones are the most important for Slovenian companies. In other words,

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we are interested in which antecedents encourage the most Slovenian companies to adopt/implement eco-innovation. To explore them, we posit the following research questions:

Question 2: How do environmental policy instruments (the command-and-control instrument and the economic incentive instrument) influence the adoption of eco-innovation?

Question 3: How does customer demand influence the adoption of eco-innovation?

Question 4: How does managerial environmental concern influence the adoption of eco- innovation?

Question 5: How do expected benefits from eco-innovation influence the adoption of eco- innovation?

Question 6: How do competition pressure and competition intensity influence the adoption of eco-innovation?

Our last group of research questions refers to eco-innovation’s consequences. We aim to explore eco-innovation’s consequences in order to suggest what implementation of eco- innovation brings to the company that adopts it. Moreover, in our study we go into more detail by exploring the outcomes of different eco-innovation types: product, process and organizational eco-innovation at the firm level. Previous research works based on eco- innovation mainly explore environmental performance (how eco-innovation affects the environment), while focusing less on company performance, competitive benefits and internationalization as consequences of successful eco-innovation implementation. The consequences in which we are interested are related to entrepreneurship and focus on company performance (in terms of company growth, company profitability and economic benefits), competitive benefits and internationalization. Finally, we propose the following research questions to be explored:

Question 8: How does eco-innovation affect company performance (company profitability and company growth as objective measures and economic benefits as self-reported measure)?

Question 9: How does eco-innovation affect a company’s competitive benefits?

Question 10: How does eco-innovation affect a company’s internationalization?

1.4 Structure of the study

This subsection provides the structure of the study. This study is divided into ten chapters, as follows: 1) Introduction, 2) Eco-innovation (definition and its main dimensions), 3) Drivers of eco-innovation, 4) Consequences of eco-innovation, 5) Research design, 6) Methodology, 7) and 8) Results, 9) Summary of findings and discussion, and 10) Conclusion.

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The first chapter of this study (Introduction) encompasses the problem definition, objectives of the study and research questions, and concludes with the structure of the study.

The theoretical part contains three chapters. The main subject of this study is eco-innovation;

therefore, we start in Chapter 2 by discussing eco-innovation. First, we explain why eco- innovation cannot be interpreted and treated in the same way as other innovation types, such as regular innovation. Further, we distinguish eco-innovation from other innovations and discuss its peculiarities. Then we provide a literature review of eco-innovation definitions based on previous research and theoretical works. Third, the features of eco-innovation are summarized and described, followed by the main dimensions and types of eco-innovation, which are identified and explained in more detail. We then discuss how prior research works have measured eco-innovation. Finally, we conclude with our own proposal of eco-innovation, which is based on the results of this study and focuses more on the entrepreneurial component of eco- innovation. The second theoretical chapter (Chapter 3) deals with eco-innovation antecedents;

we are interested in the determinants/drivers of eco-innovation. Drivers of eco-innovation derive from and employ different theoretical backgrounds. We discuss the most frequently applied theoretical backgrounds of exploring eco-innovation drivers (e.g., resource-based theory, institutional theory and stakeholder theory), followed by a discussion of how different drivers trigger different eco-innovation types. In this chapter, a literature review related to the drivers of eco-innovation (review of previous research works and its findings) is provided, and the findings from prior research works are presented. The discussion of eco-innovation drivers is the last subsection of Chapter 3. In the last theoretical chapter (Chapter 4), the consequences pertinent to eco-innovation are discussed. Special attention is dedicated to firm performance, internationalization and competitive advantage, which are also the outcomes of eco-innovation, which we explore in our study.

Chapter 5 comprises the research design of our study. Based on the findings of previous research works and our assumptions, we have developed and proposed several research hypotheses concerning the antecedents of eco-innovation as well as hypotheses related to the impact of eco-innovation on firm performance, competitive benefits and internationalization.

We have proposed a conceptual model that involves the integration of the main research hypotheses.

In Chapter 6, we discuss the methodology, which includes a description of the preliminary testing of the measuring instrument (i.e., the questionnaire), operationalization and measurement of the selected and applied variables, sampling and data collection, and, finally, methods for conducting data analyses and criteria for their evaluation.

Chapter 7 presents the results regarding the sample characteristics, followed by exploratory and confirmatory analyses for all constructs used in this study pertaining to the antecedents of eco- innovation, eco-innovation construct (including three dimensions: product, process and organizational eco-innovation) and eco-innovation outcomes.

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Chapter 8 is the central part of the empirical study and sees the development and empirical testing of four models: a product eco-innovation model, process eco-innovation model, organizational eco-innovation model and construct-level model of eco-innovation. These models were used to test the postulated relationships (hypotheses related to the drivers and outcomes of eco-innovation). Further, in this chapter we also test the relationships for the effects of various control variables by employing linear regression analysis and structural equation modeling where the sizes of the subsamples are large enough to permit it.

Chapter 9 summarizes the findings related to testing the hypotheses and discusses the findings of all four model analyses and also the effects of the control variables.

Finally, in the last chapter (Chapter 10), we present the study’s main theoretical and methodological contributions, followed by several implications for theory, companies and policy makers, as well as the limitations of our study. The future research directions are identified and provided. Lastly, we conclude with a summary of this study in the Slovenian language.

Figure 1: Structure of the study INTRODUCTION AND THEORY

1) Introduction (problem definition, objectives of the study and research

questions)

2) Eco-innovation (definition, types and main dimensions)

3) Drivers of eco- innovation

4) Consequences of eco- innovation

RESEARCH DESIGN AND METHODOLOGY

5) Research design (hypotheses development)

6) Methodology

(measurement instrument, data collection, data analyses and their evaluation)

RESULTS AND CONCLUSION 7) Results (sample characteristics, exploratory and confirmatory analyses) 8) Eco-innovation model (testing the structural models and testing for the effects of control variables 9) Summary of findings and discussion

10) Conclusion

(contributions, implications, limitations and future research directions)