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Journal of Cleaner Production 16S1 (2008) S7eS13 www.elsevier.com/locate/jclepro

General wisdom concerning the factors affecting the adoption of cleaner technologies: a survey 1990e2007
Carlos Montalvo*
TNO Netherlands Organisation for Applied Scientic Research, Schoemakerstraat 97, P.O. Box 6030, 2600 JA Delft, The Netherlands Available online 26 November 2007

Abstract Cleaner technologies (CT) have recently received much attention in diverse media and policy agendas. This comes out of the clear role they play in environmental protection and sustainability and the large potential to contribute to economic growth and competitiveness. The realization of both potentials depends on the level diffusion and exploitation achieved, today very low. This article presents a selective survey of papers that today represent the general wisdom concerning the factors affecting adoption as a primary condition to diffusion and exploitation of CT. The paper helps to clarify the challenges facing diffusion modelers and policy makers when dealing with policy design, assessing the levels of diffusion achieved as well as the factors affecting diffusion of a particular technology. The paper ends outlining further research need in the eld. 2007 Elsevier Ltd. All rights reserved.
Keywords: Technology adoption; Technology diffusion; Diffusion modeling; Technology policy; Environmental policy

1. Introduction During the rst years of the of the 21st century the attention given to the state of the environment e at both local and global level e has increased dramatically compared to concern in the last years of the 20th century. We are seeing not only popular, commercial lms,1 but also national governments enacting policy directed to increasing awareness of issues, such as systemic pollution and climate change [1].2 It is only in the most recent years that governments have been regarding technological innovation as the solution to the challenge of environmental degradation and a way of boosting the competitiveness of national economies [2,3]. Seeing technological innovation as the main means of providing environmental sustainability presents two major policy issues. The rst concerns the fact that despite the raised awareness of the environmental

* Tel.: 31 15 269 5490. E-mail address: carlos.montalvo@tno.nl 1 See movie e An inconvenient truth http://www.climatecrisis.net/ and movie e The 11th hour http://wip.warnerbros.com/. 2 See Environmental Knowledge Hub, http://ekh.unep.org/?q node/2042, visited 10.09.2007. 0959-6526/$ - see front matter 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.jclepro.2007.10.002

problems caused by production and consumption patterns there is little acceptance that the current technological stock presents serious anomalies in terms of infringement of the basic laws of thermodynamics, anomalies that extend to the new, so-called alternative technologies (e.g., photovoltaic cells, fuel cells, bio-fuels, etc.) [4,5]. The second issue relates to the myriad factors affecting the diffusion of new cleaner technologies and how these factors interact, which requires appropriate policy mixes in order to minimise negative synergies and conicts. Often potentially relevant factors related to the adoption of new technologies have not been included in the analysis. The factors may differ between sectors but this has not been systematically studied. Often the study focuses on one industry. This limits generalisations and insights for policy. In this paper, we address this second issue in an attempt to make the adoption of new technologies by individual users, and their diffusion across the economy, more transparent by showing the dependency between the various factors involved and their likely interrelation. The paper makes clear the difculty to generate a dynamic diffusion model that includes all the relevant variables. The objective is to highlight the challenge involved in generating policies that promote the diffusion of cleaner technologies at the aggregated level. If

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diffusion is the outcome of the micro-decisions inuenced by micro-, meso- and macro-contexts [6,7], in order to understand the diffusion process, we must ask what are the relevant adoption variables (stimuli, facilitating factors and barriers) and what changes in the adoption environment will induce rms to adopt an innovation at a particular moment in time? In other words, what drives or hampers the diffusion of innovations in cleaner production at rm level? A number of authors have contributed to the debate over the barriers and drivers to innovation in cleaner technologies that has taken place in the last decade. However, despite this increased interest from scholars and policy-makers little systematic and comprehensive work linking the drivers and barriers to actual adoption at rm level (see e.g., Ref. [8]) and diffusion at sector level (see e.g., Ref. [9]) has been done. These authors established causality links and explored the interactions between drivers in order to prioritise and focus policy efforts to promote innovation in rms; however, they offer no insights about how to link adoption decisions to technology diffusion curves at sector level. The approach of Van Wijk et al. [9] presents a similar structure (or clustering of drivers and barriers) focusing on the exploration of barriers at sector level. This approach has not been validated; it does not explore interactions between drivers, but offers methodological insights about how to link drivers and barriers to diffusion patterns. Interactions between (clusters of) drivers are examined in Montalvo et al. [10], which empirically validated a model to explore and determine the factors that could inuence innovation in cleaner technologies at rm level, in the European context. This review follows the approach in Montalvo [11], which classies factors affecting innovations in cleaner technologies at rm level. These are organised along the following dimensions: government policy, economics, markets, communities and social pressure, attitudes and social values, technological opportunities and technological capabilities and organisational capabilities. The structure of the present paper follows this classication. The survey shows some degree of overlap between the factors affecting the adoption of cleaner technologies at rm level. 2. Public policy The literature on environmental policy recognises that one of the major drivers of environmentally responsible behaviour in industry is the intervention of public policy in the form of environmental policy and enforcement of regulations, (e.g., Refs. [12e20]). The application of government policies has ranged from direct command-and-control to voluntary programmes to economic instruments [21,22]. The last traditionally includes charges and taxes, emission charges, user charges, product charges or taxes, administrative charges or fees, subsidies, depositerefund schemes, marketable permit arrangements, nancial enforcement incentives or nancial assistance [22]. Economic instruments generally have been associated with standards limiting the amount of residuals or hazardous waste released to the environment through end-of-pipe technologies or waste management practices. There is no doubt that pollution control has brought environmental improvements and

that enforcement of the regulations has been the main means through which they have been achieved. This, and the fact that regulation in relation to technical change is frequently mentioned in the literature, can be misleading in the context of clean technologies (i.e., prevention of residuals and waste creation through organisational and technical change). Government intervention under the traditional policy approaches mentioned above has not been successful in promoting pollution prevention at source [23e29]. This is commonly acknowledged at government level. It is also accepted that the way in which environmental policies have been designed and enforced does not particularly favour the development and adoption of cleaner technologies in industry (e.g., Refs. [30e33]). One of the main reasons for this is that emissions and discharge rate standards provide little or no incentive to go beyond the required standard reduction and, thus, they fail to promote and sustain research and development (R&D) and investment in innovation. Regulations might produce incentives for rms to pre-empt future changes in regulations, stricter standards [20,34,35] or future liabilities [36], but experience shows that they do little to promote and encourage development of continuous environmental performance improvement through innovation. Innovation in products and processes aimed at reducing pollution at source are generally regarded as being one way to improve not only aspects of product and process performance, but also economic efciency and competitiveness (e.g., Refs. [37,18,19,38]). It is also now received wisdom that technological change is critical to achieving long-term and cost-effective solutions to the environmental problems generated by industry (e.g., Refs. [39e45,20,32]). If innovation in cleaner technologies brings so many benets why is that covenants, eco-labelling, intellectual property protection, eco-taxes, international agreements and law, etc., have had such limited success in promoting innovation? To date, there are no clear trends in the types of relationships among diffusion of cleaner technology and the levels and forms of public intervention [8,2]. What about the effects of policies based on the notion of Best Available Techniques (BATs) such as the European Integrated Pollution Prevention and Control Directive (96/61/EC)? Unlike pollution control best available technologies and techniques are sector specic, which requires sector and possibly plant specic knowledge. This poses large and perhaps unrealistic knowledge demands on authorities trying to regulate cleaner production [46]. This represents a major challenge for the regulatory authorities and government policy as the current regulatory schemes are designed to promote yesterdays technologies. Furthermore, it has been argued that current regulations will gradually become obsolete and counterproductive, and unable to induce process embedded innovation [47]. Thus, the impact of regulation could be negative if the conditions required to apply certain schemes are not appropriate. Conversely, if government intervention takes the form of providing the right conditions and stimuli for rms to change we could expect a positive relationship between regulation and the level of diffusion of cleaner technologies. The next sections provide some insights into other possible factors

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promoting or hampering innovation and diffusion of cleaner technologies. 3. Economics As mentioned above innovation in cleaner technologies is supposed to bring many benets to adopting rms. In the innovation literature economic risk (seen as possible gains or losses) and uncertainty are seen as central concepts determining and organising innovative activity [48,49]. On the positive side of risk some of the most frequent benets mentioned are off-setting part of the rising costs of compliance (e.g., Refs. [50e52,34]) and waste disposal [35]; saving of raw materials via waste or energy minimisation [53e55]; and higher quality of products and efciency gains (e.g., Refs. [34,56e60]). For sectors producing intermediate goods economic opportunities might arise derived from the access to new markets up-stream where consumers are willing to pay for e at least temporarily e more expensive, but more environmentally friendly products. It can be expected that rms facing these potential benets might be more prone to adopt new cleaner technologies. The downside of risk and uncertainty is related to the likelihoodeunlikelihood of appropriating the benets of innovations [61], the timing and trade-off of investments in relation to business cycles, the age of current production processes and the possible economic benets rendered by adoption of newer and untested new technologies [62,51,20]. Linked to these last are the availability and access to capital markets. New technologies in general tend to be more efcient in many respects e including environmental performance. Thus, there is little difference between investments aimed at increasing productivity, increasing quality or expanding capacity in order to compete, and those aimed at protecting the environment. This lack of differentiation creates problems with respect to capital access as: (1) investment banking protocols do not include Clean Production denitions [33] and (2) there is a lack of expertise appropriate to evaluate the economic and nancial aspects of cleaner production project efciency and investment [63]. The stock market indexes have begun to include listings of eco-rms, which include rms whose environmental sustainability is not clear.3 All these problems derived from a lack of preferential investment and scal schemes to promote cleaner production [46,63]. Some authors have mentioned the huge potential of cleaner production to promote a new wave of long-term growth. The logic behind such expectations is that there is a need for worldwide technological stock replacement and this has the potential to become one of the main economic multipliers of the 21st century [32,30]. From the above discussion we might expect a positive relationship between the perceived economic consequences derived from innovative activities in cleaner technologies and their level of diffusion within an industrial sector.

4. Markets In past years the environmental economics and management literature have characterised environmental problems as market failures. These market failures have been characterised by the release of environmentally damaging externalities [64,15]. Although market failures in relation to the environment are still dominant, reports in have consistently indicated that, in some cases, the market has already started to play an important role in promoting environmental responsiveness in industry. In general, the major market driving forces reported concern consumers with heightened environmental awareness (e.g., reported by Refs. [36,52,65e67]). But there are other factors that might inuence the diffusion of cleaner technologies. For example, rms confronting more heterogeneous, hostile and dynamic markets can be expected to adopt branding and to make efforts to entice consumers to use and gain social legitimacy from more environmentally friendly products [68,61,69]. Similarly, rms operating in countries with lax environmental regulations, but serving mature global markets with a preference for environmentally sound products are more likely to embrace cleaner technologies [13,34,55]. Furthermore, global markets and supply chains can also play an important role in providing the right or wrong signals concerning the international prices of raw materials and inputs [47]. Industrial sectors in which prices of raw materials are high and which are experiencing demand for environmentally sound intermediate goods up-stream in the supply chain, could be expected to be more disposed to adopting more environmentally efcient production processes. In general, we can expect a positive relationship between environmentally oriented market pressures and the level of adoption in a specic sector. Similarly, we can expect a positive relationship between market pressures and perceived economic risks. Firms facing consistent demands from their customers, for sound environmental products in the short- and mediumterm might consider investing in cleaner technologies for the longer-term. Furthermore, we can foresee a positive relationship between the attitudes of top management and market pressures. 5. Communities and social pressure In general the role of communities and the social pressures referred to in the literature are represented by the levels of awareness of a variety of stakeholders concerning environmental and sustainability issues and how active they are in pushing for change in industrial environmental behavioural trends. Those stakeholders who might potentially be pushing for cleaner production could be within rms. For example, investors and shareholders might exert pressure for change [70,71] or senior staff may try to increase the morale of employees by demonstrating greater environmental awareness [72,8,73]. In this respect public image and social legitimacy in relation to environmental behaviours are factors that have been mentioned as motivating rms to embrace cleaner production [58,61].

NASDAQ Clean Edge U.S. Index (CLEN), NASDAQ Clean Edge U.S. Liquid Series Index (CELS), and First Trust NASDAQ Clean Edge U.S. Liquid Series Index Fund (QCLN).

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Experience has shown that external stakeholders play an important role in promoting sound environmental behaviour. In general, it seems that local communities are concerned not only about the environment but also about human health have in the past been strict watchdogs and are continuing to full this function [51,74]. More broadly public pressure and demands from consumer groups, NGOs and the political Green Parties are all promoters of environmental protection (e.g., Refs. [72,9,36,51,34,75,76,55]). It is important to mention that there is little empirical evidence concerning the role played by the various stakeholders in the promotion of cleaner production specically. Huhtala [33] pointed out that one factor restricting a more decisive participation of diverse stakeholders (for example, in the nancing community) is the lack of a clear understanding of what the concept of cleaner production entails and encompasses. In terms of the relationship between diffusion of cleaner production and the role of local and international communities and social pressure it is clear that we can expect this to be positive. The stronger the social demand for clean production the stronger the likelihood that diffusion will occur. 6. Attitudes and social values Peoples attitudes have been dened as the predisposition to act based on the assessment of possible outcomes [77]. Similarly, social values have been seen as the criteria against which people justify their actions [78]. By their mere denition both concepts have the potential to play an important role in leading rms and industry to embrace innovation in cleaner technologies. Positive attitudes are likely to arise from the perceived or expected good environmental and societal outcomes arising from the adoption and diffusion of cleaner technologies. The literature linking attitudes and social values in decisionmakers in industry is vast. Generally, it is believed that sustainable entrepreneurship lies mainly in the personality, ethos and position of high-ranking ofcial and CEOs (e.g., Refs. [34,51,58,79e81]). Such entrepreneurship is believed to arise from an awareness of the salient environmental issues [82,46,50] and the perceived potential of cleaner technologies to abate risk and environmental impacts [71,83]. All these factors are supposed to have the potential to inuence the predisposition of decision-makers in rms. This implies that the conduct and commitment of top management to cleaner production are of great relevance to the diffusion of cleaner technologies [52]. As attitudes change, based on the potential outcomes of the adoption and diffusion of cleaner technologies, it is likely that there will be a stronger relationship between the perceived economic benets and the risks that investment in new technologies might entail for rms. Therefore, based on the above discussion, we can expect to nd a positive relationship between the attitudes of decisionmakers in industry and the level of adoption in individual sectors. A very positive attitude will indicate that there are conditions e within the rm and in its general context e promoting the diffusion of cleaner technologies. It should be noted also

that a rm might have strong motivations (arising from government policies, markets, economic opportunities, etc.) for pushing for the diffusion of cleaner production but still might not adopt new technologies, in either the short-term or the long-term. In the next section we try to provide some insight into the origins of such a dissonance between drivers, rm commitment and willingness to engage in cleaner production and nal adoption of new technologies at rm level and diffusion at sector level. 7. Technological opportunities and capabilities As mentioned above despite strong forces to induce industry to adopt new cleaner technologies, diffusion might advance at a very slow pace or not at all. This could be explained by the capacity at the industry level to innovate and to change. Factors mentioned in the literature explaining the capacity of a sector to change include the following. At a high level of aggregation there is dominance of specic technological paradigms and regimes bringing systemic technological path dependency [68]. The cost of replacing a complete production process in sectors, such as iron and steel, cement, and pulp and paper, is extremely high. Due to the size of investments and longevity of production processes it is very likely that the diffusion of new processes will occur in an incremental way [53,84,60]. There are similar problems in the decommissioning of current stocks of artefacts and equipment at user and consumer levels (e.g., cars, fridges, electronic appliances, etc.). Closely linked to the above is the stock of technological opportunities of cleaner technologies that is available. The level of awareness of the existence of such technological opportunities and the degree of techno-economic attractiveness (i.e., efciency, quality, cost reductions, increased environmental performance, etc.) related to the natural cycle of technological stock replacement could be expected to play an important role in their uptake [62,82,51,20,34,85]. Closely related to these technological opportunities are the rm and sector level capabilities needed to actually adopt new technologies [56,44,86,8]. It has been reported that insufcient availability of expertise in clean production (eco-design) [52], the current training and clean technology capacity building at the sector level [62,33] and the insufcient understanding and experience in cleaner production project development and implementation [63], play a role in the adoption of new cleaner production processes. These factors can be expected to become even more critical at the level of small- and mediumsized enterprises, where the rm strategy is frequently a one-man show and there is little R&D activity [46]. Finally, rms face the challenge of technological risk [8]. The gains promised by new technologies have yet to materialise, a situation that contrasts strongly with the perceived reliability of current, familiar operating processes. In the literature on technology management it has been established that adoption or development of new production processes implies the capacity to integrate new knowledge and large organisational change [83].

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8. Organisational capabilities Organisational capabilities refer to the rms endowments and capabilities to carry out innovation [84]. These include the level of knowledge and expertise in the specic new technology [34,83]. The level of expertise might range from the presence of abilities to purchase the appropriate machinery and equipment [33] to their operation and maintenance. When the knowledge is not present in the rm adoption will depend on the rms capacity to overcome skill lock-in, and to unlearn and acquire new skills [86,66,60]. Conducting and promoting organisational change involves the principale agent problem. That is, committed CEOs must have a high degree of self-efcacy and leadership, not only to sell the notion to shareholders but also to orchestrate behavioural change at shop oor level [79,8]. Another aspect related to the rms capabilities is the capacity to engage in fruitful relationships across the production chain and among end-users and suppliers. The capacity to outsource new knowledge through collaboration with suppliers, and end-user involvement, has received wide attention in the literature [57,90,82,51,83,90]. Such collaborations at interrm level have been reported to be problematic in terms of threats to technology secrecy [46]. Finally, closely related to collaboration amongst rms is the notion of inter- and intratrade across the supply chain and its inherent power relations. The capacity to engage with and inuence suppliers of technology, materials and inputs has been reported as a strong determinant of innovation. This is especially the case in industrial sectors close to large retail chains [91,61,82]. From the discussion on capabilities we can expect to nd positive relationships between the levels of technological opportunities, and technological and organisational capabilities in rms, and the degree of cleaner technology adoption in rms and diffusion at sector level. We can expect a negative relationship between technological factors and perceived economic benets and risks at rm level. Similarly, because a higher degree of control over the innovation process would reduce the level of technological risk and increase the chances of success, we can expect a positive relationship between technological and green organisational factors and attitudes at the decision-making level. 9. Remarks

of technology rather than on environmental performance slows or hampers innovation related to radical innovation or changes in the production process. Similarly, the role of consumers is considered an important driver of innovation. On the one hand, consumer demands for environmentally friendly products can be a strong driver. On the other hand, if a rm perceives that consumers have little willingness to pay for more expensive products, this might deter it from investing in cleaner technologies. The signals from the market must be the right ones. The large number of factors surveyed above and barriers and drivers identied, make the feasibility of modelling the decision to adopt in a dynamic fashion, a rather complex task. Most diffusion modelling exercises are conducted with a very few variables to describe the system being considered. The technology diffusion literature has for long been divided between two streams of research: those looking at the patterns of diffusion using as a backbone a logistic model or other epidemic model, and those looking at the structure and process of adoption decision-making. One of the big challenges of diffusion research is to unify both strands of research in a coherent model. The results of trying to deal with the two types of data in these different strands of research are problematic. The data are different in nature; the data drawn on to look at diffusion patterns consist of revealed preferences (levels of sales, investment levels, installed equipment, market penetration, etc.) e so-called hard data. The stream looking at the decision to adopt bases its quantitative analyses on expressed preferences (opinions, judgements, rating and ranking, etc.) e socalled soft data. The problem of linking expressed preferences to actual technology adoption or investments in innovation has been solved recently [11,10], but the challenge of linking diffusion patterns requires further research and the availability of coupled longitudinal studies using both types of data remains a problem. Once such data and studies are available it should be possible to fully understand the patterns of technological diffusion and its origins. Acknowledgement This work was partly funded by the European Commission 6th Framework Program. Contract no. SSPI-CT-2003-502487 (Project POPA-CTDA). References

The factors affecting the uptake of cleaner technology presented above are in line with the literature in the period 1993e 2007. These factors are generic to all economic activities with the particularity that in the studies reported the unit of analysis has primarily been the rm, i.e., the analyses are at the microeconomic level. Most of the factors identied in the empirical literature could be drivers and barriers to innovation depending on the circumstances, time and contexts in which they are considered. For example, regulatory frameworks are generally seen as one of the main drivers of environmental technology adoption in industry in recent years. At the policy level it is being acknowledged that regulation based on prescriptions

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