Firms’ growth, green gazelles and eco-innovation: evidence from a sample of European firms

This paper investigates the impact of eco-innovation, i.e., innovations aimed at improving firms’ environmental performances, and environmental policy stringency on firms’ growth processes, with a special focus on gazelles, i.e., firms that show higher than average growth rates. In a context shaped by more and more stringent environmental regulatory frameworks, we posit that inducement mechanisms and the regulatory push/pull effect expand the derived demand for eco-innovations suppliers. For these reasons, we expect a positive association between the generation of EIs and sales growth, which is magnified by increasing policy stringency. The empirical analysis is based on firm-level data drawn from the Bureau van Dijk Database, coupled with patent information obtained from OECD Science and Technology Indicators. The results confirm that eco-innovations are likely to augment the effects of generic innovation on firm growth, and this is particularly true for gazelles. Policy stringency is important in moderating the effects of eco-innovation on growth for gazelles, but even more so for slow-growing firms.