Innovativeness in the German Waste Water sector

With respect to waste water services in Germany technical as well as organizational innovations are often demanded in order to improve efficiency and to tackle environmental and possibly health related problems. However, it is not finally clear which factors do determine firms' innovativeness. First of all there is still a debate going on whether allowing for more private engagement and competition in this market will lead to an enhanced performance in terms of innovative activities. In order to address this question empirically, a survey among German firms providing waste water services was conducted. The information gathered was used to estimate a structural model explaining firms' "innovativeness". Estimation results suggest that the size but not the organizational form, being interpreted as proxy for openness to the market, matters. Therefore, no evidence was found that privatization would directly lead to more innovations. Nevertheless, restructuring the sector leading to larger units may foster innovative activities even without changing the legal framework.