Environmental innovation drivers and economic performance in industrial systems

The issue of environmental innovation and its effects on overall firm performance and competitiveness in district-oriented local productive systems is particularly important in industrial areas with high density of firms, where clusters of firms may generate critical emissions and waste hot spots. It is possible that these negative environmental features may be counterbalanced by the high propensity for innovation in district firms, where physical proximity enables them to exploit networking relationships and knowledge spillovers that dynamically increase the environmental efficiency of the productive area. Environmental innovative capacity is a current key issue. Environmental innovations are particularly crucial in local industrial frameworks since they often give rise to externalities with dual benefits: on the one hand, they provide the typical R&D (Research and Development) spillovers; on the other hand, they reduce environmental externalities (Rennings 2000; Jaffe et al. 1995). They contribute simultaneously to the Lisbon Objectives on growth and innovation and the Gothenburg priorities on sustainable development (IPTS 2004). In relation specifically to manufacturing, the pollutants emitted by this sector are the main determinants of the pollution affecting the environment generally. Manufacturing industries account for the major part of total emissions. Evidence for Emilia Romagna, the northern Italian region considered in this chapter, suggests the importance of local industry concentration for local environmental pressure (Montini and Zoboli 2004). The high potential impact of this concentration depends on either the specific features of the production sector technologies or the spatial concentration of the industrial activity. Also, industrial districts (ID) (Brusco 1982; Brusco et al. 1996) are frequently in the top rankings for the most polluted local production systems.