A new insight into environmental innovation: Does the maturity of environmental management systems matter?

a r t i c l e i n f o Technological innovation has recently become more essential than ever. To examine the factors that might induce environmental technological innovation, we focus on ISO 14001, a voluntary approach to environmental management, and scrutinise how the proficiency or maturity level of ISO 14001 in facilities influences environment-related research and development (R&D) expenditures that promote environmental technological innovation. We measure the maturity level based on the length of time since a given facility adopted ISO 14001. Using Japanese facility-level data from " Environmental Policy Tools and Firm-Level Management and Practices: An International Survey " (OECD Survey), we estimate two Tobit models by addressing an endogeneity issue in ISO 14001. The estimation results provide empirical evidence that as the ISO 14001 is improved in facilities, those facilities are likely to spend more on environmental R&D. The facility age and market concentration also positively affect environmental R&D. These findings suggest that the maturity level of ISO 14001 is an important factor influencing the investment in environmental R&D. Technological innovation has recently become increasingly essential to address long-term environmental problems, such as climate change. Many simulations (see the IPCC Fourth Assessment Report (2007) and Stern Review (2006)) show that significant reductions of emissions are inevitable , but the percentages of reduction that are discussed in the international arena seem to be impracticable without sacrificing, e.g., further economic growth. In this context, technological innovation, especially environmental innovation, is now expected to become one of the important factors required to change and overcome this difficult situation. What may induce environmental innovation? Environmental regulations have been targeted as one of the factors that may encourage environment-related research and development (henceforth R&D) and induce innovation. Numerous previous studies have focused on environmental regulations, which are exogenous to corporations, but have not addressed corporations' voluntary environmental management. When considering the factors influencing environmental innovation in firms, however, it is necessary to examine not only external factors, such as environmental regulations and stakeholder pressure, but also internal factors, such as the firms' characteristics and voluntary approaches toward environmental issues. To examine the mechanism of environmental technological innovation , some recent studies, such as Rennings et al. (2006) and Demirel and Kesidou (2011), have focused on voluntary actions, especially on the adoption of environmental management systems (henceforth EMSs). Rennings et al. (2006) investigated the influences of the EU Eco-Management and Audit Scheme …