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

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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.

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  1. 1.

    According to the assumptions on the effect of regulation, the Porter hypothesis can be split into “narrow,” “weak,” and “strong” versions (Jaffe and Palmer 1997). The Porter hypothesis remains controversial in empirical investigations (see, for instance, Lanoie et al. 2011).

  2. 2.

    While eco-innovation may refer to both technological and non-technological innovations, in this paper, we will focus specifically on new technologies. In the literature, the subset of “technological” eco-innovation is often referred to as environmental or green technologies.

  3. 3.

    There are several definitions of “gazelles: within the entrepreneurship literature. Henrekson and Johansson (2010) provides a survey of the literature, showing how this term is mostly used as an alternative way to refer to high-growth firms.

  4. 4.

    It should be noted that the distribution by size class revealed an important weakness of the ORBIS database; in the case of more than 18 million companies, there is no information on employment. This is due to the fact that employment is not a mandatory variable in balance sheet data. Moreover, ORBIS is based on data collected by national Chambers of Commerce, i.e., on data pertaining to companies that are registered and are liable for VAT. This implies that small firms are likely to be underrepresented. However, this problem is minimal for the purposes of this paper since patenting behavior is also biased towards larger firms.


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Correspondence to Francesco Quatraro.

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Colombelli, A., Krafft, J. & Quatraro, F. Firms’ growth, green gazelles and eco-innovation: evidence from a sample of European firms. Small Bus Econ (2019).

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  • Gazelles
  • Eco-innovation
  • Firms’ growth
  • Inducement mechanisms
  • Regulatory push/pull

JEL classifications

  • L10
  • L20
  • O32
  • O33
  • Q53
  • Q55
  • L26