Pelin Demirel

Innovation and Firm Growth: Is R&D Worth It?

The paper contributes to an emerging literature that critically questions the degree to which R&D, at the centre of national and transnational innovation policies, results in firm growth. The differences in how innovation affects firm growth is explored for small and large publicly quoted US pharmaceutical firms between 1950 and 2008. We observe that the positive impact of R&D on firm growth is highly conditional upon a combination of firm-specific characteristics such as firm size, patenting and persistence in patenting. For small firms, R&D boosts growth for only a subset of firms: namely, those that patent persistently for a minimum of five years. For large pharmaceutical firms, on the other hand, R&D may have a negative impact on growth; potentially resulting from the low R&D productivity these firms have suffered from since the mid-1990s. These results raise important issues around the R&D and firm growth relationship for small and large firms as well the role of persistence in innovation for boosting firm performance.

Access to finance for innovators in the UK's environmental sector

Technological innovations are seen as one of the best solutions to mitigate the environmental impacts of economic activity. Yet, the innovative success of firms, especially small- and medium-sized enterprises (SMEs), in the environmental sector is dependent on the presence of appropriate external financing to support their innovative activity. In an attempt to understand the circumstances surrounding the financing of 330 UK SMEs from the environmental sector between 2007 and 2010, we investigate the relationship between different types of innovation activity and sources of external finance. We observe a clear division of labour between the three external sources of finance, namely, banks, venture capital and government in terms of the types of innovations they finance. We also identify that finance gap affects environmental SMEs with early-stage and less applied research projects. We discuss the challenges for UK environmental SMEs to engage in innovative activity and call for an increased government action in order to support innovative SMEs with early-stage projects and to instil confidence in the private investors by signalling long-term commitment.

Motivations for Organisational Eco-Innovations: Adoption of Environmental Management Systems by UK Companies

The aim of this paper is to identify the key drivers of organizational eco-innovations by looking at the motivations of UK companies for adopting Environmental Management Systems (EMS). Besides competitive, ethical, and institutional motives, this study considers the importance of the capabilities and internal resources that firms hold in stimulating EMS. The empirical analysis is based on unique firm-level data of 2853 UK manufacturing companies from the DEFRA survey “Environmental Protection Expenditure by Industry” in years 2005 and 2006. This new information allows us to examine the motives behind the environmental commitment of UK firms that include both externally certified EMS and in-house EMS. In our probit model estimations, the findings suggest that both in-house and externally certified EMS are driven by ethical/strategic (i.e. CSR) and institutional (e.g. environmental regulations) motivations. Also, enhanced environmental technological capabilities (e.g. environmental R&D) are prerequisites for both types of organizational eco-innovation. The results underline an important difference between externally certified and in-house EMS in that, the first is driven by competitive motivations (i.e. cost savings) whereas the latter is not affected by these factors.

Regulatory Complexity and Organisational Environmental Innovations

Environmental Management Systems (EMS) are organisational environmental innovations with a remarkable potential for environmental sustainability transformations in firms. Research on EMS treats regulatory compliance pressures as key, yet, one-dimensional determinants of EMS adoption and certification. However, insights from the policy-oriented innovation literature reveal that the impact of regulations on innovation is rather complex and highly dependent on the context in which they are applied. This paper delves into the complexity of regulatory pressures, and examines the impact of different dimensions of regulation– ‘direct’ regulatory instruments, ‘market-based’ instruments, and stringency of regulation– on organisational environmental innovations such as EMS. It uses a unique and comprehensive DEFRA dataset on the environmental expenditures of 2,080 firms, and introduces a methodological novelty by treating the EMS adoption and certification as nested decisions modelled by a Bivariate Probit with Sam...

The impact of environmental regulation frameworks and firm-level factors on eco-innovations: evidence from DEFRA survey of UK manufacturing firms: Theory and Evidence from Firms and Nations

This book aims to disentangle the complex relationship between innovation and its potential determinants, paying special attention to the roles of governance and regulatory frameworks, and the ways in which the latter interact with other drivers of innovation such as competition and the innovator’s closeness to the technology frontier.