From Environmental Protection towards Sustainable Innovation Management – Incentives and Governance Structures

Paper presented at The International R&D Management Conference on Innovation and Sustainability, Norrkoping, Sweden, June 28-30, 2011. The financial support from Adlerbertska Research Fund and Vinnova is gratefully acknowledged.


Justification of the paper

Various governance mechanisms, be they management or market oriented, for production and environmental protection exist, like joint ventures, vertical integration and other forms of industrial organization restructuring for internalizing external effects, environmental taxes, liability approaches, public procurement, regulations, quotas and emission rights issuance. Too often these mechanisms are designed for adjusting production and/or consumption using more or less existing technologies rather than for incentivizing R&D in new technologies for sustainable innovation.


The purpose of this paper is first to review production and innovation governance mechanisms in a theoretical framework and then to describe and analyze an empirical case of sustainable innovation in the truck engine industry in a methodological framework, with focus on various issues related to governance of innovation and production.

Theoretical framework

The theoretical framework consists of theories of production and innovation governance mechanisms, as well as a framework for techno-economic analysis of innovations, covering managerial, economic, legal and technological aspects.

Results and conclusions

Patent rights (innovation governance) and standards and regulations (for production and environmental governance) together with market mechanisms were of pivotal importance for the successful development and diffusion of the environmental innovation studied in the empirical case together with collaborative innovation management by resourceful partners. The case highlights aspects of both technology-based and performance-based regulations and questions the common presumption that technology-based regulations are inferior to performance-based regulations in terms of incentives for R&D and innovation.

Implications for R&D/innovation management

The results of the paper have implications on policy as well as managerial level.

Keywords (3 to 7): incentive; governance; innovation; environment; sustainability; management; policy