Friends or Foes: Can green and non-green knowledge be both crucial for environmental innovation?
The transition to a low-carbon economy requires the development of environmental innovation, which is usually deemed complex and treated as a black box, with no one knowing its content. Most of the research is directed at the study of patents. Based on patent classifications (such as the IPC classification), research assumes that developing green innovation takes different technological domains. A simple example would be offshore wind. This type of renewable depends on knowledge generated in other sectors for other technological applications and purposes. More interestingly, offshore wind technology has benefited from the knowledge and experience gained in offshore gas drilling. There are several similarities between offshore wind and gas drilling, including using similar offshore infrastructure and vessels, such as drilling rigs and support vessels. Nevertheless, this approach does not tell us much about the input needed to eco-innovate as sometimes IPC codes are added by workers in the patent offices or matched through algorithms.
Additionally, policymakers and organisations such as OECD, WIPO and others argue that green innovation can mobilise knowledge from general-purpose technologies (GTPs) such as ICT, nanotechnology, biotechnology and advanced materials. These claims are further supported by the rise of concepts such as bioeconomy, where biotechnology is used to solve many environmental challenges using biobased solutions and twin transitions, where digital transformation is supposed to go hand in hand with green solutions. However, we are still unsure what role these GTPs play and how useful they are to eco-innovate. Moreover, it is unclear how firms internally manage their resources and allocate them between the different functions for the production of green innovation.
We attempt to unravel green innovation ingredients in new research conducted by Martina Ayoub and Stephane Lhuillery by exploring the necessary knowledge components that could potentially impact eco-innovation development. In this research, we rely on French data to analyse the role of green R&D, biotech R&D and ICT R&D in eco-innovation.
It takes green to go green.
The findings of this research show that firms’ investment in green R&D is essential for developing eco-innovation. It might seem like a straightforward result, but previous research overlooked green R&D in their study of eco-innovation, using it as a proximate measure of the general R&D activity of the firms, which can be misleading as it mixes both green and non-green R&D activities. Moreover, this endeavour of using general R&D instead of green is justified by serendipity, considering green as a windfall of non-green efforts. This logic can be problematic as it assumes that firms do not strategically and intentionally choose to invest in specific R&D domains. Therefore, having proven that firms invest in green R&D and this investment is consequently translated into green innovation is a vital thesis to highlight firms’ strategic decisions.
Is Green knowledge enough?
Interestingly, the research shows that R&D activities in biotech and ICT are drivers of eco-innovation, especially biotech for green processes and ICT for green products. These findings are important for many reasons. First, it clearly shows that firms invest in many R&D fields and bundling them in one general measure of R&D is indeed misleading of firms’ strategic decisions related to resource allocation. Second, the findings prove that knowledge accumulated outside the green realm can be effectively mobilised for green innovation. Third, it provides empirical evidence for a rather abstract and theoretical concept, such as bioeconomy- biotechnology, indicating that firms actively use biotechnology research to derive green production processes. Finally, it shows that digitalisation and using ICTs can drive eco-innovation.
A step further
The research pushed the boundary of knowledge a little further by exploring the existence of complementarities between the different R&D fields. Complementarities in knowledge fields entail the firm’s ability to derive synergies between different fields of science or domains of knowledge and use these synergies to innovate. The findings show that firms successfully combine biotech R&D and green R&D to eco-innovate. Therefore, firms not only use biotech R&D to develop eco-innovation but also manage to find synergies between biotech R&D and green R&D, enabling them to eco-innovate, deriving more value from investment in those two distinct R&D fields. This introduces the importance of investing in a diversified knowledge base. However, the finding also showed that knowledge diversification has limitations. As firms might struggle to find synergies between a highly diversified knowledge base, as well as highly diversified knowledge can be hard to manage because of costs related to communication and integration.
Policies promoting innovation should not solely focus on narrow categorisations of research but should also support broader knowledge applications across various technological fields, including ICT and biotech. The importance of these broader research fields in green innovation development has been demonstrated in this research. Therefore, investing in complementary knowledge fields is just as crucial, if not more important, than investing in only green R&D.
Both policy and managerial actions should prioritise supporting firms in developing complementarity between knowledge fields. Green R&D leads to greater benefits due to its complementarity with other resources. By identifying these complementarities, firms can effectively allocate their investments to achieve the best combination of internal and external knowledge search, maximise innovation output, and enhance competitiveness. Additionally, multidisciplinary approaches are essential to achieving a sustainable transition. To support these combinatory technologies, private and public R&D spending should be increased, and greater efforts should be made to encourage the development of complementary technologies.