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Firms, Finance and Sustainable Transitions

The Financial Constraints of Eco-Innovation Companies

Edgardo Sica

This thought-provoking book introduces a financial economics perspective to the topic of eco-innovations and, more generally, sociotechnical transitions. It develops a model that illustrates how financial constraints can prevent the development of eco-innovations within companies and hinder the transition process towards a more sustainable regime. Edgardo Sica presents a review of the state of the art, as well as new data from original surveys aimed at testing the impact of financial constraints on eco-innovative decisions at radical and niche levels.
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Chapter 7: Conclusions

The Financial Constraints of Eco-Innovation Companies

Edgardo Sica

Extract

This book has investigated the extent to which the existence of FC in eco-innovative enterprises can hinder the transition process towards a green economy by introducing a financial economics perspective within the literature on EIs. The book has combined existing knowledge from different bodies of literature, including the evolutionary analysis of socio-technical transitions and the MLP, the literature on companies’ financial decisions and on the FC’s determinants, the VoC perspective and the neoclassical analysis of environmental externalities and asymmetric information in the capital markets. In particular, the book has firstly proposed a conceptualisation of EIs in terms of technological/non-technological and incremental/radical EIs, stressing the relevance of the environmental performance of innovations (whether they cause a net environmental improvement or not) rather than the environmental motivation of the innovators (the eventual intention of companies to implement an innovation that is beneficial to the environment). This allowed to detail the role of EIs towards more sustainable pathways of development according to the more traditional neoclassical literature on innovations versus the new evolutionary studies on the techno-paradigm shifts. The book has then described the complex set of internal-to-company and external-to-company factors that drive companies to eco-innovate, such as the type and effectiveness of environmental policy adopted, the environmental consciousness of consumers and the market characteristics. In this framework, literature does not take into account the role of financial resources as a possible driver/barrier to the companies’ eco-innovative decisions. For this reason, the book has moved to the analysis of the financial options provided...

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