Authors: Aoife Hanley, Finn Ole Semrau (Industry and Innovation, 2022, Vol. 29(5): 672–700)

We investigate the ability of exports to trigger the adoption of environmental innovation (EI) in firms, shedding light on the determinants of convergence in environmental standards for Europe’s catch-up economies. To analyse this question empirically, we measure the latter as the 1) probability a firm adopts EI and the 2) breadth of EI adoption in firms. Applying Logit and Poisson pseudo-maximum likelihood estimations to firm-level data for 14 European countries, we find that particularly Eastern European exporters report higher EI adoption propensities, an effect exclusively driven by process-based EI and not observable for product-based EI. Additionally, we reveal that regardless of a firm’s origin, exposure to importing countries with high market-related environmental policy stringency, is linked to the adoption of EI. We conclude that learning-by-exporting, regulation-push and demand-pull mechanisms may help to explain these findings, with foreign markets being characterised by a wider diversity of stakeholder preferences.

Keywords: Green-/eco-/environmental innovation, circular economy, environment and trade, export activity, green deal

JEL: F18, O31, Q52, Q56

DOI: https://doi.org/10.1080/13662716.2021.2021865