Location determinants of green technological entry: evidence from European regions

TLDR: In this article, the authors explore the spatial distribution and the location determinants of new green technology-based firms across European regions and find evidence of a significant role played by the characteristics of the regional innovation system.

Abstract: In this paper, we explore the spatial distribution and the location determinants of new green technology-based firms across European regions. Integrating insights from evolutionary economic geography and the literature on knowledge spillovers, we study the importance of new knowledge creation and the conditioning role played by regional technological relatedness in fostering combinatorial opportunities underlying the process of green technological entry. The analysis is based on a dataset covering over 900 NUTS3 regions for 15 European countries obtained merging economic data from ESPON-Eurostat and patent information from the PATSTAT-CRIOS database for the period 1996–2006. Our results show that the geographical distribution of green technological entry across European regions is not evenly distributed, offering evidence of spatial path dependence. In line with this, we find evidence of a significant role played by the characteristics of the regional innovation system. New green innovators are more likely to develop in regions defined by higher levels of technological activity underlying knowledge spillovers and more dynamism in technological entry. Moreover, our findings point to an inverted-U relationship between regional technological relatedness and green technological entry. Regions whose innovation activity is defined by cognitive proximity to environmental technologies support interactive learning and knowledge spillovers underlying entrepreneurship in this specific area. However, too much relatedness may cause technological lock-ins and reduce the set of combinatorial opportunities.