Environmental innovation in European transition countries

The aim of this paper is to highlight the determinants of environmental innovation of manufacturing firms in European Transition countries. Following an established literature, the analysis relies upon data drawn from the Community Innovation Survey - CIS14 . The data are cross-section covering the period between 2012 and 2014. We employ a multivariate probit model to observe the effect of several drivers on eco-innovation, captured by: (i) eco-product; (ii) eco-process; (iii) eco-organization. Findings highlight that regulation influences all measures of eco-innovation. The results are confirmed also when we perform alternative estimations. It is worth noting that – after interacting expected regulation and turnover – expected regulation has an impact on the current decision on eco-innovation if and only if the firms have a large turnover. Another interaction term between turnover and tax rates is positively associated with eco-innovation, so suggesting that when tax rate appears to be too high, firms prefer to invest in environmental innovation rather than being taxed.