The Microeconomics of Environmental Innovation in the Packaging Industry (1994)

8/15/2019 The Microeconomics of Environmental Innovation in the Packaging Industry (1994)

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June 1994

THE MICROECONOMICS OF ENVIRONMENTAL INNOVATION IN

THE EUROPEAN PACKAGING INDUSTRY

Alberto Cottica

Nomisma - Eco&Eco

Paper prepared for the Fifth Annual Conference of the European Association ofEnvironmental and Resource Economists - Dublin, 22-24 June 1994

The research work that made this essay possible was carried under the scientific supervision of

Sebastiano Brusco. Data input was shared among myself, Federica Tagliazucchi, Giuseppe Di Lena and

Donata Maccelli. The econometric estimation rested entirely on Raffaele Miniaci's broad shoulders;

German interviews were carried out by Sabine Geissler. I am deeply indebted to Jim Skea for

discussion, to Paolo Bertossi for encouragement and helpful comments, and to David Ulph for asking

the right questions.

I also wish to thank all industry experts and companies' spokespersons who accepted to help me alongthe way. I wish to mention John Beckett and Ruth Steinholtz at Cadbury Beverages Europe, Alberto

Bruna at Henkel, Dieter Brkle and Jean-Jacques Couchoud at Elf Atochem, Giulio Cainelli and

Fabrizia Forni at ERVET, Professor Vittorio Capecchi at University of Bologna, Milena Cucconi at

Farcon, Robert Dangerfield and Brian Waygood at British Steel Tinplate, Elie Eliasco at Pechiney,

Carlo Guidetti at Tetra Pak, Adriano Landi at Barilla , Jennifer Lovell at Shell Chemicals, Carlo

Montalbetti at COMIECO, Marcello Pieroni and Dr Iascone at Istituto Italiano dell'Imballaggio, Frau

Rafalski at Tengelmann, Len Randall at Marks&Spencer, Dr Rudi at VIAG, Franoise Schell at

Prisunic, Francesco Sutti at Saffapack, Roberto Tagliaferri at IMA R&D, Peter White at

Procter&Gamble, and above all the exceedingly patient Paolo Simonazzi at IMA.

Correspondence to: Alberto Cottica, Nomisma-Eco&Eco, Strada Maggiore 29, 40125 >Bologna, Italy

Tel. (+39) 051 64 83 309 - Fax (+39) 051 225 352 - E-Mail eco&[email protected]


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1. Introduction

1. INTRODUCING THE DATABASE OF PACKAGING INNOVATIONS INEUROPE

2. Setting the stage: size and structure of the packaging filire

3. A database of innovations in the European packaging filire: data sourcesand their reliability

4. A database of innovations in the European packaging filire: availableinformation

2. THE SOURCES AND PROCEEDINGS OF ENVIRONMENTAL INNOVATIONIN PACKAGING: SOME ANECDOTAL EVIDENCE

5. Interview format

6. Strategies for reducing the environmental impact of packaging: sourcereduction by elimination of overpacking

7. Strategies for reducing the environmental impact of packaging: sourcereduction by lightweighting

8. Strategies for reducing the environmental impact of packaging: re-using

9. Strategies for reducing the environmental impact of packaging: usingrecycled material

10. Strategies for reducing the environmental impact of packaging: materialsshift

11. Strategies for reducing the environmental impact of packaging: developingrecycling technologies

12. A set of hypothesis on the microeconomics of environmental innovation inpackaging


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3. THE DETERMINANTS OF ENVIRONMENTAL INNOVATION INPACKAGING: A DISCRETE-CHOICE MODEL

13. The data

14. The model

15. Results

16. Interpreting results: technology and demand effects on the innovativeprocess

17. Interpreting results: the role of firm size and position within the filire

18. Interpreting results: packaging innovation as a superproduct quest

19. Interpreting results: private optimality of environmental innovation

20. Interpreting results: the role of regulation

21. Conclusions

REFERENCES


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1 . Introduction

The majority of European large grocery goods companies have now environmentalpolicy statements on packaging. Reading through them, one has the impression thatpackaging is undergoing a process of change, aimed at the reduction of itsenvironmental impact. The word "sustainability" is used in almost all of these

statements.

But is this impression correct? Does the European packaging industry innovate toreduce the environmental impact of packaging? How does it do it? Is the processgenerating "green" innovations any different from that generating innovations otherwiseoriented? Which sort of stimuli set "green" innovative processes in motion? How doinnovating activities respond to environmental regulation? These questions share amicroeconomic focus. This paper reports the results of an empirical investigation intothe microeconomics of environmental innovation in the European packaging industry.

It does so by a rather unusual research methodology, consisting of a two-stageinvestigation of the innovation generating process in the packaging industry, and of the

role played by environmental concerns in it. The first stage consists in round of talkswith industry experts and firms' spokespersons in Germany, the UK, France and Italy,that highlighted innovation strategies and generated hypothesis regarding themicroeconomics of environmental innovation, i.e. what explains the choice of aparticular firm of steering its technical progress on what Giovanni Dosi would call anenvironmentally friendly technological trajectory. The second stage consists in thesetting up of a database of innovative packings on which these hypothesis were tested.Chapter 1 provides background information on the European packaging filire and datasources; Chapter 2 reports on the innovation strategies adopted by different groups ofplayers within the filire and spells out a set of microeconomic hypothesis; Chapter 3presents an econometric model to test them.


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1. INTRODUCING THE DATABASE OF PACKAGING INNOVATIONS INEUROPE

2. Setting the stage: size and structure of the packaging filire

There is no such thing as a packaging industry. Packaging is rather a filire, i.e. anumber of firms, belonging to different industries, linked to each other by customersupplier relationships. The metal, chemical, glass, paper, mechanics and electronicsindustries all draw a part of their turnover from packing goods. For this reason, it is nouse turning to non-speciaize statistical sources to find out how many firms are actuallyinvolved in the process.

We distinguish eight different filire partitions, henceforth called "sectors".

The RAW AND FINISHED MATERIALS FOR PACKAGING sector (sector 1)includes, together with raw materials manufacturers stricto sensu, firms which treatsuch materials into shapes that can enter a production line. This is especially importantwith plastics, where things like bars and tubes, coupled sheets and PET pre-forms aremanufactured. These firms are called "converters" in the industry's technical jargon.Firms in sector 1 employ technology that range from "mass production" to finechemistry.

The FINISHED PACKINGS AND COMPONENTS sector (sector 2) includesmanufacturers of items such as boxes, bags, bottles, aerosol containers, but also edgereinforcements, pouring spouts and labels (pallets manufacturers are counted in sector7). Plastic films and plastic sheets are also included, which is somewhat odd becausethey are manufactured by means of conversion techniques. So, converters are splitbetween this sector and the raw materials one. It is important to notice that theclassification is done accordingly to the markets firms cater for, not to the technologythey employ. so, for example, Rocco Bormioli, the largest glass manufacturers in Italy,is recorded as a finished packings producer because it has vertically integrated forwardto supply bottles, rather than glass, to packaging users. The range of technologies usedhere is therefore quite wide, spanning from chemistry to fine mechanics.

The MACHINERY FOR THE MANUFACTURE OF PACKING AND PACKAGINGPRODUCTS sector (sector 3) includes manufacturers of machines that performoperations such as expanded polystyrene pressing, diecutting, injection moulding. This

sector employs a highly flexible fine mechanics technology.

The PACKING AND PACKAGING MACHINERY sector (sector 4) includesmanufacturers of machines that perform the operations of putting a product in its pack.Feeding and filling machines, forming machines, closing machines, palletizers areexamples of the range of products. The technology employed is fine mechanics again,with an important contribution of electronics in the latest years: in the newest models,electronics may account for as much as 40% of the selling price [Capecchi, 1993].

The AUXILIARY MACHINES AND EQUIPMENT sector (sector 5) includesmanufacturers of such miscellaneous equipment as shaping machines for polyurethanefoam, washing machines for containers, labelling machines, cutters. Fine mechanics

seems to be again the prevailing technology, but not the only one employed.


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It is important to keep in mind that most firms in the filire are multiproduct. We have,however, assigned each of them to only one sector on the basis of the number ofproducts belonging to each sector manufactured. The flow chart in Figure 1., therefore,should not be taken too literally.

Among the four countries, France, Italy and the UK publish yearly PackagingDirectories, which keep track of most, if not all, firms involved in the filire. TheItalian packaging filire (users are not included in the definition of filire) consists ofabout 2,200 firms; the British one of about 2,600 firms; the French one, of about 3,000firms. These figures are liable to be underestimated, since very small firms, or firms towhom the production of packaging is marginal, may just not bother to make an entryinto the Directories. In fact, a different estimate [III, 1992] Quotes a figure of about

3,500 firms for Italy.

It is much more difficult to estimate the filire turnover in the presence of verticaldisintegration. An IFEC estimate based on calculations done by the European Institutesof Packaging reports the production of packs to be worth around 76 bln ECU in 1992[Morino, 1992]. The four countries account for over three fourths of this figure. TheIFEC estimate does not take into account our sector 4, which normally sells directly topackaging users. According to a COPAMA estimate, it is worth about a further 6 blnECU in 1990 [Reis, 1992]. The entire filire production should therefore amount toaround 82 bln ECU, as shown in Table 1.

TABLE 1. PRODUCTION OF PACKS AND PACKAGING AND PACKING

MACHINES IN EUROPE.

Packs - 1 9 9 2 Mach ine s - 1 9 9 0

Germany 1 6 ,7 3 2 ,5 9

France 1 4 ,4 5 0 ,5 0

It aly 1 2 ,9 3 1 ,6 4

UK 1 2 ,1 7 0 ,3 0

Rest of Europe 1 9 ,7 7 0 ,8 9

Europe 7 6 ,0 3 5 ,9 2

Bi ll io n ECU. Sources: IFEC, Copama. Exchange rat e o f11 / 3 / 1994

We have found the total number of employees in Europe to be somewhere around550,000, plus a further 20,000 in the "auxiliary " sectors 5, 6 and 7. Of the 550,000,about 450,000 operate in the "vertically integrated finished packings and componentssector" (sectors 2, 3, 1 and 8). The remaining 50,000-plus operate in sector 4. This issummarized and broken down by country in Table 2.


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TABLE 2. NUMBER OF EMPLOYEES IN SECTORS 2, 3, 1 AND 8 ANDIN SECTOR 4 IN GERMANY, FRANCE, THE UK AND ITALY

Em p lo y ees Pack s Mac h in es To t al

Germany 14 3 .7 01 38 .1 49 1 81 .8 5 0

France 12 4 .1 06 7 .3 10 1 31 .4 1 6

It aly 11 1 .0 42 24 .2 12 1 35 .2 5 4

UK 10 4 .5 10 4 .3 71 1 08 .8 8 1

Tot al 48 3 .3 59 74 .0 41 5 57 .4 0 1

Source: own est imat e on ETAS, IFEC and Copama data

There is a further complication to introduce, which will not be analysed further butmust be kept in the background. The discussion has so far been in terms of packaging

filire, but in fact different techniques are wielded by different firms to treat differentraw materials into packings; therefore, it would be more rigorous to speak of glass,plastics, paper, metals filires. Firms tend to specialize in materials: in general, a firmmaking glass bottles will not have any cardboard box in its range, and it won't evenhave plastic bottles. The exceptions to this rule are the very large packaging firms(Carnaud Metalbox, VIAG, Pechiney). Figure 2 and 3 show how the Europeanpackaging production, expressed in weight and in value, is distributed among thedifferent raw materials.

FIGURE 2. PRODUCTION OF PACKAGING MATERIALS IN EUROPE(BY WEIGHT)

2 0 %

3 9 %4 %

2 9 %

8 %

Metals

Cardboard

wood

Plast ics

Glass

Source: IFEC, III


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FIGURE 3. PRODUCTION OF PACKAGING MATERIALS IN EUROPE(BY VALUE)

3 6 %

1 8 %1 %

4 4 %

1 %

Met als

Cardboard

wood

Plast ics

Glass

Source: IFEC, III

3. A database of innovations in the European packaging filire: datasources and their reliability

One of the key issues here is the relationship between environmental regulation andtechnical progress. As a vast body of literature documents, it is by no means easy tomeasure the latter. However, industrial economists have tried to do it by asking a panelof experts to build lists of innovations, to each of which a string of variables could beattached. The result is a database of innovations which lends itself to statisticaltreatment. This has provided important insight in the economics of innovation[Townsend et. al. 1981, Scherer 1982]. This work draws on that tradition.

In order to monitor technical progress in the packaging industry, a database ofpackaging innovations in Europe in the last 15 years was set up. Innovative packingscompetition in the four countries are used as data sources. Interviews with industryexperts and firms' representatives have shown European competition to be fairlyrepresentative of the industry's innovative activity.

All of these countries hold competitions, organized by the national packaging institutes,for innovative packaging solutions. In addition to these five competitions (there are twoin the UK), there is a fourth one held, at a European level, by the European PackagingFederation. It is worth it to recall the main characteristics of each of these data sources.

ITALY: OSCAR DELL'IMBALLAGGIO - Oscar dell'Imballaggio is the oldest of the

European packaging competitions: the first edition was held in 1956 (meaning that theentries were accepted in 1956 and the prizes were awarded in 1957) and knew almost


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no discontinuities to the present day. It is organized yearly by Istituto Italiano perl'Imballaggio. Entry is restricted to Italian firms (that is, to Italian innovators, whereasusers do not have to be Italian). Data have been obtained from 1981 on.

FRANCE: IFEC PRIZE - The Institute Francais pour l'Emballage et leConditionnement organizes a yearly competition similar to Oscar dell'imballaggio, and

nearly as old as its Italian counterpart. Its outstanding features are the large number ofprizes awarded each year (40-50) and the good quality of IFEC's files, from which datacan be obtained directly. Data have been obtained since 1978, with a fewdiscontinuities.

UNITED KINGDOM: STARPACK. Organized yearly by the Institute of Packaging,Starpack is modelled on Oscar dell'Imballaggio. One major difference is that there arethree ranks of awards: Gold, Silver and Bronze Stars. We have adopted the policy ofentering all innovations, regardless of their rank. Data have been obtained since 1978,with a few discontinuities.

UNITED KINGDOM: INNOVATORS OF THE YEAR. The Institute of Packaging has

been running this competition since 1989. It is structured in a way roughly similar toOscar dell'imballaggio, with three differences. The first one is that there is only onewinner for each of the "categories" (initially three, now five); the second one is that theentry is open to foreign firms as well; the third one is that, since 1990, a "Packagingand the environment" category was created. Data regarding all four editions have beengathered.

GERMANY: VERPACKUNGSWETTBEWERB. The RKW organizes a competitionstructured in a way similar to the Oscar - IFEC model. It issues a large number ofawards per edition (usually about 40), but it is held only every three years. Data areavailable for all editions since 1978.

EUROPE: EUROSTAR - Eurostar was established by the European PackagingFederation only one year after the launch of Oscar dell'Imballaggio, and explicitlylinked to the national competitions: the winners of the former enter automatically thelatter. To avoid double counting, innovations from Germany, France, the UK and Italycountries have been excluded from the data set. Data are unusually hard to obtain, andhave been gathered for a limited number of editions; this is due to the fact that the EPFonly exists on paper: national associations take turns in organizing Eurostar.

There seems to be an ample consensus that such competitions are representative of theinnovative activities going on in the packaging filire. They are important enough forfirms to enter, but not important enough for them to try to bias their outcome.Individual freelance designers, and even industrial design students, have been knownto make winning entries. Also, since rules typically require that packs be already traded

on the mass market before they can enter (except for the prototypes, which is wereindividual designers come in), clever-but-economically-unviable ideas are screened out.The witnesses the research group has talked to maintain it is reasonably safe to treataward-winning packs as a proxy of innovation on packaging (but not, for example, inrecycling techniques).

4. A database of innovations in the European packaging filire:available information

Each of the about 1,400 innovations awarded with one of these prizes was coded into astring of data.

Available information concerns:


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* The year of entry

* The name of the innovator and of the user of the innovation, and their countriesof location (for innovators, the latter is usually bounded by regulations internalto each competition: for example, a company has to be Italian to enter Oscardell'Imballaggio. Multinationals get round the problem by entering competitions

with their local subsidiaries. When there is no user, innovations are treated asprototypes.

* The sector (in the sense given above) to which the innovator belongs within thefilire. The coding is as in section 1.

* The sector in which the pack is to be used, coded with the relevant EUROSTATthree-digits code

* The number of employees of both innovators and users. Firms were grouped ineight classes: up to 10 employees, from 11 to 25, from 26 to 50, from 51 to100, from 101 to 250, from 251 to 500, from 501 to 1,000 and over 1,000.

* The function served by the pack. This may be presentation, transport or both.

* The reasons, given by the jury, for the awarding of the prize. They are quiteeasily grouped into nine categories.

Use of new mat erials

Packing previously unpacked product s

Cost reduction

Dist ribut or f riendliness

User f riendliness

Product protectionAesthetics

Low env i ro nmen t a l impac t

Others

The jury can, and often does, give more than one reason for finding the prize-winning pack innovative. In these cases, all of them were reported, and an effortwas made to extrapolate the main one.

VIII. The number and kind of the materials used to manufacture the pack (labels and

inks not included). The possibilities are wood, aluminium, steel and othermetals, paper and cardboard, polyethylene (henceforth PE), PET, PVC,polystyrene, other plastics and composites (e.g. tetrapak).

IX. The total number of recorded innovations presented by the same industrialgroup entering this particular innovation. The choice of looking at groups,rather than single firms, is due to the centralization of some R&D facilities andto the frequent innovative spillovers between firms within the same group.


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2. THE SOURCES AND PROCEEDINGS OF ENVIRONMENTALINNOVATION IN PACKAGING: SOME ANECDOTAL EVIDENCE

5 . Interview format

The reduction of the environmental impact of packaging can happen by means of verydifferent technical innovation strategies. This section illustrates them, highlighting theirsimilarities and differences; its purpose is to generate a range of hypotheses about themicroeconomics of environmental innovation, to be tested for through the use ofeconometric techniques. It consists of anecdotal evidence, gathered by a series ofdiscussions held with industry experts and companies spokespersons in the fourcountries, which were carried out mostly in the period January-March 1994. These

talks were aimed at finding evidence on the state-of-the-art of environmental innovationin packaging rather than sketching a picture of the general trend; therefore, weconcentrated on companies known for being particularly sensitive to environmentalconcerns. Most of them are members on environment-oriented trade associations, suchas ERRA or INCEPT. Respondents were asked to confirm or challenge, supportingtheir response with examples, the following two statements, generated by earlierstatistical treatment of the data on Italian innovations alone:

1. environmental innovation, like packaging innovation in general, is largely doneby manufacturers of finished packings and components. These, however, workin very close connection with their customers, who identify problems andpriorities; it is almost as if packings manufacturers were acting as R&D facilitiesfor packaging fillers.

2. environmental concerns and regulatory recycling targets for packaging are notinducing any significant shift from materials that are difficult to recycle(plastics, composites) to materials that are easily recyclable (glass, metals,paper).

The interviews resulted in a clearer identification of the research strategies available toreduce the environmental impact of packaging through innovation, and of the complexrelationship between choice of innovation strategy, technical constraints and marketstructure variables. A common feature of all strategies is that they identify a more orless environmentally-friendly waste management option to be applied to the innovativepack. In what follows, we divide our anecdotal evidence on state-of-the-art

environmental packaging innovation according to the options proposed in the EUPackaging Directive: source reduction, re-using and recycling. Somewhat loosely, wehave grouped incineration with energy recovery with recycling, a positionenthusiastically shared by respondents.

It is important to underline that respondents rejected strongly the idea that any wastemanagement option is inherently environmentally superior to the others: plastics andcomposites producers and fillers, for example, point to the superior energy efficiencyof plastics packaging, lighter to transport, and maintain that recycling is, generallyspeaking, an inefficient option. Metals producers, on the other hand, prefer to talkabout high recycling rates and not about energy consumption; paper producers highlightthe fact that they are tapping renewable resources, and that the forestry industry

contributes to fight global warming. Although some of the more research-orientedcompanies use life-cycle models to evaluate the overall environmental impact of


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packings, it is true that no clear benchmark has been established to tell regulators andconsumers what is environmentally friendly and what isn't.

6. Strategies for reducing the environmental impact of packaging:source reduction by elimination of overpacking

Source reduction can take place in either of two ways. One is the elimination of whatindustry experts are beginning to call overpacking, layers of packaging which, whileadding to the service content of the pack, are not strictly necessary to its delivering asatisfactory performance. Overpacking is, of course, a totally subjective concept.

One example of elimination of overpacking comes from the experience of the Italianfood producer Barilla. Its successful minicakes, a relatively expensive and high-marginrange of products (Dolcetti), used to be conditioned one by one in small rigid paperbaskets, which could be stacked inside a plastic sack. The paper baskets systemensures a better protection of the product, and it makes it easier to extract one minicakefrom the pack. Nevertheless, they were eliminated: now minicakes are simply

conditioned into the sack. Barilla integrates the R&D on packaging into an 11-strongresearch unit, and designed the innovation itself. About 12% of the research unit's timeis devoted to the reduction of the environmental impact of packaging.

Of the four under investigation, Germany is probably the country where overpacking ismost counterproductive in marketing terms. What's more, the implementation of theDual System has imposed an additional cost on all packs earlier than elsewhere. Theresult of this is a richer array of innovations in the sense of overpacking abatement. It isworth it to report four examples from different industries.

* Bottles of wine from Asbach & Co. Weinbrennerei are no longer wrapped intransparent polypropylene foil, which gives the bottle a more glossyappearance. This saves about 40 tons of foil a year.

* The cosmetics producer Croldino Schneider manufactures a hand-washingcream which comes in plastic tubes. The tube used to come into a cardboardbox for presentation and space-fractionating purposes, which has now beenremoved. About two tons of cardboard a year have been saved.

* Schller Lebensmittel & Co. produces ice cream on an industrial basis. Icecream is conditioned in polystyrene thermal boxes, which used then to bepackaged in cardboard boxes for presentation purposes. The cardboard boxeshave now gone, and the presentation function is taken care of by paper labelsstuck directly on the polystyrene box.

* Hans Warholtz Konserven's sardines are conditioned into tinplate steel cans;they too used to come in presentation cardboard boxes. Now the informationabout the product is printed on the tin, and the cardboard box has beenremoved.

Blister packaging is also increasingly being regarded as overpacking. Blisters are PVCthermally shaped packs, often glued to a cardboard base for presentation purposes.Consumers, and German consumers in particular in particular, tend to dislike this sortof pack, and they are now being substituted for. Beiersdorf, for example, manufacturesan office glue stick called Tesa, which used to come in a blister (about five times thesize of the stick itself), with an eyelet, used to hang the pack to displays in stationerystores. In 1992, the blister was eliminated altogether, and a PET hook fitted to the cap

of the stick. This way, the stick can still be displayed while saving the PVC. Themanufacturer calculates the material saving in about 4 tons per year. A slightly differentversion of this same idea won a VPW in 1993.


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An extreme version of the same operation was done by the German bicycle componentmanufacturer Prophete. Prophete sells, among other things, bicycle bells, which usedto come in a blister as well . The brand is printed on the bells themselves, so the blisterwas eliminated altogether. A small cardboard tag carrying the bar-code is now the onlyform of packaging attached to Prophete bells.

7. Strategies for reducing the environmental impact of packaging:source reduction by lightweighting

Another path to source reduction is what goes under the name of lightweighting. Itconsists in redesigning the pack so that it delivers the same performance with lessmaterial. From a merely technical point of view, lightweighting is more interesting thanelimination of overpacking, because it involves "real" re-engineering of the pack, andtherefore a comparison of R&D costs and expected benefits. The raw materials side oflightweighting is called downgauging; this means producing a grade of a polymerwhich will yield good properties even when extruded to a very thin layer.

This innovation strategy is, of course, a no-regret one; a lighter pack costs less moneythan a heavier one, regardless of what it does to the environment (in fact, if theenvironmental problems caused by packaging were thought to be waste generationonly, it could successfully be contended that lightweighting does not do much good tothe environment, because it does not necessarily reduce the volume of packagingwaste). This encouraged lightweighting even before the environment became a coreissue in the political agenda of European governments. Figure 4 depicts the decrease inbody weight of a representative 0.44 l steel beverage can. It is immediate to see that the30% reduction in weight did not come in a single wave, but by means of severalincremental innovations dating back to 1979. Environmental awareness of consumershas sped up the process; the introduction in various forms, of packaging leviesthroughout Europe are expected to speed it up further.

FIGURE 4 - WEIGHT OF A 0.44 L STEEL BEVERAGE CAN OVER TIME

Source: Brit ish St eel Tinplat e

25

30

35

40

45

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

It can certainly be contended that lightweighting is taking place in pretty much allconsumer good industries and with packs of all packaging materials. This shows inTable 4.


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TABLE 4 - MATERIAL SAVING THROUGH LIGHTWEIGHTING 1970-1990

Pack Mat er ial 1 9 7 0 ( g) 1 9 9 0 ( g) Variat ion

Wine bot t le 0 .75 l Glass 4 5 0 3 5 0 - 2 2 %

Beer bot t le 0 .25 l Glass 2 1 0 1 3 0 - 3 8 %Can 4 / 4 St eel 69 56 - 1 9 %

Heavy dut y sack Paper 2 4 7 2 1 5 - 1 3 %

Shopping carrier PE 23 6 .5 - 7 0 %

Yoghurt glass PS 6 .5 3 .5 - 4 5 %

Det ergent bot t le 2 l HDPE 1 2 0 67 - 4 5 %

Shr inkwrap f i lm PE 1 4 0 0 3 5 0 - 7 5 %

for pallets

Source: various sources, report ed from Elf At ochem

An example of lightweighting from the soft drinks industry comes from the Japanesefirm Hosokawa, that sells drinks and diet integrators for athletes. These drinks come inflexible packs: a "specialized supplier" sort of relationship between the Japanese userand two Italian societies, Guala Pack (a packaging manufacturer) and Safta (aconditioning technology producer), has led to the development of CheerPack, a flexiblecontainer for liquid whose main feature is that of being confortable to carry (it adapts itsshape) and easily reclosable. These are useful features to athletes, who take a sip at atime while, for example, taking part in a bicycle race. CheerPack weighs about 65%less than earlier soft drinks flexible packs. It won an Oscar dell'imballaggio in 1990.

Detergent producers have taken this concept one step further, and lightweighted theirproduct as well as their packs. Procter&Gamble is probably the single company thatpursues lightweighting most vigorously; it is worth recalling the Ariel Ultra story.

Ariel is a laundry detergent. In 1989, P&G introduced Ariel Ultra, the first compactdetergent in Europe. The formulation had been changed; the detergent could now be aeffective with a smaller amount of powder, which was placed directly inside thewashing-machine drum. As a result of this, Ultra, like all compacts, uses lesspackaging per load washed than non-compacts. P&G calculates that, on Ariel Ultraalone, more than 12,500 tons of packaging material have been saved throughoutEurope. The move was quickly imitated by competitors, and compact detergents enjoynow a share ranging from 20 to 60%, depending on the country. It is estimated that theoverall savings on packaging materials in Europe since the introduction of compactsamount to 800,000 tonnes approximately. Notice that this involved no packaginginnovation at all.

The second step in the lightweighting of Ariel was the introduction, in 1992, of a refill,which comes in a minimal package similar to a sugar bag. Once home, the consumerpours the detergent in the carton (which lasts 4-5 refills on average) and disposes of therefill bag. This saves a further 50% of packaging material with respect to the compactcarton. Again, only fine tuning of the pack was needed, so innovative activities werelimited to a minimum; again, the move was quickly imitated by all major Europeandetergents producer. With a stronger innovative effort, Henkel produced a lightweightpack for liquid detergents, essentially a flexible pack with a cardboard reinforcement tohold it standing.

The refill philosophy is being enthusiastically adopted by detergent manufacturers.Refills of liquid detergents, however, posed a technical problem, that of finding an

ultra-light packaging solution that was also waterproof. P&G's Dash 3 Ultra is anexample. In this case, the answer was found in laminate stand-up pouches (the stand-


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up feature is necessary to optimize exploitation of shelf space in supermarkets), a 20-year-old French invention that had hitherto found very limited application. Theexpertize for manufacturing pouches from laminate was held by a French convertercalled Soplaril, a subsidiary of the plastic giant Elf Atochem. P&G asked Soplaril todevelop the pouch; Soplaril, then, worked together with Elf Atochem for the fine tuningof the laminate, almost a textbook example of specialized supplier relationship. Soplaril

is now enjoying a rapid growth due to the rediscovery of the stand-up pouch onenvironmental grounds. The savings of packaging material are, in this case, even moresignificant: a pouch weighs 70% less than a plastic bottle.

8. Strategies for reducing the environmental impact of packaging: re-using

In principle, containers can be used several times, thus lowering the amount ofpackaging waste produced per unit of product packaged. In fact, quite a lot of transportpackaging (pallets) and some primary packaging (typically, beverage bottles) arerecovered for re-use on a regular basis. Switching to re-usable containers, however,

can be very difficult, because it involves setting up a product-specific recovery system.Prize-winning innovations of re-usable containers in the database are all transport packsbut one.

Despite such difficulties, re-use of primary packaging is being contemplated by thebeverage industry. Plastic manufacturers, and notably ICI, are undertaking highlystructured and very expensive R&D projects about what goes under the name of"flavouring" to make plastic bottles re-usable. The technical problem with this istwofold. Firstly, bottles are washed with very hot water before re-use, and mostplastics will melt or degrade. Secondly, since both plastics and flavours of soft drinksare oil-based, beverage and bottle interact chemically, and the latter retains the taste ofthe former. In fact, contact with some plastics can alter substantially the taste of somebeverages; to prevent these problems, the beverage industry works with a flavour-material compatibility matrix. Glass bottles, on the other hand, are perfectly reusablebecause of a relatively high melting point and chemical inertness. A first success wasobtained by Continental PET, who produced a re-usable PET bottle for Coca-Cola:however, it won't work with less strong-tasting drinks, like water.

9. Strategies for reducing the environmental impact of packaging:using recycled material

Another possible strategy to reduce the environmental impact of packaging is toincorporate recycled material in it. This creates a market for secondary raw materials,thus diverting some waste from the waste stream.

In some cases, use of recycled material in packaging does not stem from environmentalconsiderations at all; it is simply a cost-saving feature of the production process. Thisis, for example, the case of steel cans, which embody 25% of scrap steel, or of mostcardboard packaging (typically, detergent cartons). Substitution of recycled materialfor virgin material, on the other hand, poses several technical problems, due to poorerperformance and relatively bad looks of the former. For this reason, reduction ofenvironmental impact by this innovation strategy is not as widely pursued as, forexample, lightweighting. Nevertheless, some companies, especially, but not only, inthe detergent industry, have gone down this route. The innovation database recordsseveral examples.

One part of recycled PE can be mixed with three of virgin PE to yield a material withreasonable mechanical properties, reasonable enough to condition liquid detergents.However, recycled PE has a disagreeable grey-green colour, disliked by marketing


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men; furthermore, the colour is subject to random variations. Two routes have beenattempted by Procter&Gamble to solve these problems. The Viakal bottle, winner of anItalian Oscar in 1992, incorporates a coloured master batch to camouflage the grey-green: then, a shrinkwrap label with good graphics was added, in order to cover thecolour variations.

A better result, from an aesthetic point of view, is guaranteed by the development of acoextrusion technology, that allows the blow-moulding of a three-layer bottle. Themiddle layer is made of recycled PE; the inner and the outer one, of virgin PE. Again,the weight of the former is about 25% of the total weight of the bottle. This innovationwon another Italian Oscar, in 1990. Interestingly, the R&D that led to the invention ofthe coextrusion technology was done jointly by P&G and several of its suppliers; thecompany launched the idea and proposed converters to solve the problem. This way, ashare of the R&D costs was dumped on to the supplier; the deal was that, had they beensuccessful, P&G would sign a large order at a relatively advantageous price for the newbottle.

10 . Strategies for reducing the environmental impact of packaging:materials shift

Of particular interest are those innovations that imply a change in the raw materials fromwhich the packing is made. This is the only innovation strategy that is not aimed to anyone waste management option; it is generally, but not always, directed to increasing therecyclability of the pack. "Recyclability" is, in the packaging industry, a fairly abstractconcept; which has nothing to do with the existence of collection, sorting and recyclingsystems. For example, single material plastic packs are marketed as easily recyclable;what that means is that, if recycling facilities and a separate collection system for thatparticular plastic existed, the pack could all go into the same polypropylene or PET bin.The reason why we are interested in looking at this particular kind of innovation is thatpackaging regulation, especially in Germany, is now rearranging the set of incentives touse some raw materials rather than other. The principle is to collect a sort of levy onpacks, that is then used to pay collection, sorting and recycling costs. Table 5 reportsthe set of prices that packaging users selling their products in Germany have to pay toparticipate in the Duales System.

TABLE 5 - DSD TARIFFS PER KILO OF RAW MATERIAL

Mat er ial DM/ Kg

Glass 0 ,1 5Paper and cardboard 0 ,4 0

Tin 0 ,5 6

Aluminium 1 ,5 0

Plast ics 2 ,9 5

Cardboard composit es 1 ,6 9

Ot her composit es 2 ,1 0

Nat ural mat erials 0 ,2 0

Source: DSD, March 1994


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The Duales System introduces an incentive to move out of plastics and composites. Inthe case of some polymers, like PE, the DSD levy amounts to about 100% of the priceof the virgin material, so the incentive can be quite substantial2. Under theseconditions, one would expect to find a trend to replace plastic packaging with glass,paper and metal packaging.

Some of the firms interviewed have reported developing or using "green" innovativepackings that embody some material substitution. A well-marked trend concerns themove out of PVC, perceived as environmentally unfriendly3.This has gone so far thatTengelmann, Germany's largest retailer, sells nothing in PVC. In the beverageindustry, for example, PVC was almost totally replaced by HDPE in bottle caps, andby PET in bottles for non-carbonated drinks. The food industry is also moving out ofPVC: Marks&Spencer reported replacing its PVC trays for prepared meals (a pack thathas to be microwaveable) with foams, whereas Barilla removed PVC trays from its lineof minicakes. The latter is a quite interesting example of how innovations tend to haveconsequences all along the packaging filire; Barilla's minicakes used to sit on PVCtrays. The company's environmental policy is now to move out of all plastics thatcontain elements other than hydrogen, carbon and oxygen, so as to minimize the

environmental impact of incineration, so PVC had to be taken out. . The choice was touse cardboard instead. This involved no innovation in the packaging manufacturingtechnology, because a cardboard tray is very easy to make with a simple diecutting-shaping-gluing process. However, it involved adding a step to Barilla's conditioninglines: PVC trays are bought from a converter, put on a conveyor belt by a machine, andanother machine places the minicake on them. On the contrary, cardboard trays areshaped and glued in Barilla's plant, so the conditioning line had to be modified in orderto support a shaping and gluing continuous process. Barilla's packaging expertsdesigned the tray, and a medium-sized packaging technology firm in Bologna designedand realized the improvement to the conditioning lines. This move takes out of thewaste stream 150 mln PVC trays a year.

Barilla is an example of a company making extensive use of packaging material shift,aimed at either recyclability enhancing, incinerability enhancing or both. Otherinnovations of this kind are the substitution of the PE, aluminium and paper compositeformerly used in biscuit packs with a two-layers PE-aluminium composite (with thepercentage of paper rising from 60 to 80 per cent) and the replacement ofpolypropylene-aluminium composites with metallized polypropylene in all packs.

PVC is at the centre of another example of all-filire innovation which involves materialshifts. In the pharmaceutical industry, pills, capsules and the like are usuallyconditioned in blisters. The "traditional" blister is made of a PVC transparent shell,glued to an aluminium foil; pressing on the PVC makes the pill tear the aluminium anddrop out the back of the packing. In the 80s, German pharmaceutical companiesdecided to move out of PVC, which can release toxic substances when incinerated.

Unfortunately, PVC was the only cheap polymer with good barrier properties forwhich a thermal shaping technology existed.

It was decided that polypropylene could be the closest substitute for PVC. Bayer starteda joint R&D project with the Italian packaging technology company IMA; IMAtechnicians built a prototype polypropylene blister-making machine, initially very

2 It must be noted, however, that the levies are expressed by weight, which mitigatesthe disadvantage for low-weight plastics.

3

The move out of PVC has reached innovation as well. A Hausman test comparinginnovative packs invented before 1992 with those invented in 1992 show that the latteruse significantly less PVC.


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similar to the standard PVC ones, and started feeding it polypropylene. Some of theproblems they met with could be solved by modifying the machine; for example, itturned out that pre-heating polypropylene before thermally shaping it improved greatlythe performance of the machine. Other problems were solved by means of fine-tuningthe grade of the polymer. The process was a trial-and-error one, where both finemechanics and fine chemistry technologies were used to get round obstacles, and fed

into each other. The results of the process were a new blister-making machine thatcould work with polypropylene and a new grade of propylene to feed to it. In order toincrease the recyclability of blisters, German companies are now working on the all-propylene blister, which is already employed by some manufacturers. It is a kind ofblister which replaced the aluminium foil with an easy-to-tear polypropylene foil.

Another example of recyclability-improving material shift is EcoTop, a steel can topdeveloped by British Steel Tinplate. Cans are made of two parts: bodies, whichundergo a blow-moulding process, and tops. At the moment, about a half of the bodiesare made of steel, the other half of aluminium; on the contrary, tops are all aluminiummade because of technical difficulties in producing steel tops with a satisfactoryperformance. EcoTop has no ring to pull, but two "buttons" to push down and fond

inside the can, one to pour the drink, the other for air to flow in as the drink is pulled. Itdoesn't perform as smoothly as traditional tops, but it can be marketed as veryenvironmentally friendly because of the lower energy intensity of steel with respect toaluminium and because of the very easy recyclability of all-steel cans, made possible bythe new top. Steel can be pulled out of the waste stream by magnetic extraction and sentback to the furnace for re-melting. British Steel feels the environment is now the singlemost important ground for competition to producers of raw materials for packaging.

11 . Strategies for reducing the environmental impact of packaging:developing recycling technologies

Some materials, like plastics and composites, are difficult to recycle; of others,recyclability, while already good, can still be improved. In order to reduce theenvironmental impact of packaging, then, some firms work on the development ofbetter, cheaper recyling technologies. It is mostly raw material manufacturers, whohave the necessary expertise and feel the green movement's pressure more than firmselsewhere in the filire, engaging themselves in such efforts. Recycling has become avery important public relation issue for highly visible multinational companies, whofund pilot schemes and produce literature. Especially active in this field are plasticsproducers: APME, the association of plastic manufacturers in Europe, lists 109 plasticrecycling schemes going on. Nevertheless, technical progress in this direction has notso far been impressive.

Shell claims to be doing quite a lot of R&D on what goes under the name of "feedstock

recycling". The idea is to work waste plastics into an oily feedstream suitable for co-feeding to existing petrochemical or refinery processes, such as gasification, distillationor hydrogenation into more refined processes. This option features a higher publicacceptability than waste-to-energy (the additional plants would be seen as part ofexisting refineries), and a better energy balance, as hydrocarbon molecules are notdestroyed. Moreover, feedstock equipment will be easy to integrate into existingrefineries or petrochemical plants, thereby minimizing the capital cost of the operationand exploiting economies of scale in full. However, such plants are large and very farfrom each other; this implies such schemes would have high transportation costs. Fullydeveloped feedstock recycling technology is not yet available.

Elf Atochem is heavily involved in Valorplast, the French plastic recycling consortium.

They follow a line of research to improve plastics sorting technologies; Valorplast willsoon be starting a sorting plant which employs an Italian X-ray scanning technology to


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separate PVC from PET, and tests are being run on a different line which separates PEas well.

British Steel Tinplate declared that steel producers are constantly working for theimprovement of their recycling technologies. To them, it is not a public relation issue;scrap steel is a strategic resource for the industry, since all grades of steel employ a

relatively high proportion of scrap and some, like stainless steel, are made of 99%recycled material. A tin-separating treatment to recycle the layer of tin that covers scraptinplate steel was also developed.

Tetra Pak is engaged in several R&D projects to recycle cardboard composites. It istrying to develop technologies that recycle waste composite into items such as palletspacers, thermal insulating material and even shoe sole reinforcements, as well asinvestigating repulping techniques. However, it is dubious that these products can finda market in the short term. Finally, Marks and Spencer funded the development of atechnology for the recycling of PVC. It is not being used, because the company finds itis too expensive.

12 . A set of hypothesis on the microeconomics of environmentalinnovation in packaging

The interviews show that the packaging filire is simultaneously pursuing severalstrategies in order to reduce the environmental impact of packaging. Often, differentstrategies are pursued within the same company, as Table 6 shows.

TABLE 6 - EXAMPLES OF ENVIRONMENTAL INNOVATIONSTRATEGIES

St r at eg y Co m pan ies

El iminat ion of overp ack ing Tengelmann, Barilla, German companies

Ligh t weig ht ing Henkel, P&G, Tet ra Pak, Barilla, M&S, Cadbury, Brit ish Steel

Re-using Coca Cola, ICI

Us ing recyc led mat e r i a l P&G, Henkel

Mat er ia l sh i f t IMA, Barilla, M&S, Henkel, Brit ish Steel , P&G, Cadbury, Tengelmann

Develop ing r ecyc l ing t echniques Tet ra Pak, Shell, British Steel, Elf A t ochem

However different in concept and technicalities, these strategies share some similarities.

Firstly, with the partial exception of the development of recycling techniques,

environmental innovation in packaging tends to be very incremental. This reflects theexistence of a number of technical constraints underpinning this as well as othersectors. For example, if the beverage industry were to replace cans with glass bottles,transportation costs would increase; this would make the existing scale-intensivebeverage plants inefficient, and would call for a new industry configuration,characterized by a larger number of smaller plants serving regional or national markets.The Belgian non-returnable beverage container tax is having precisely such effects.However, within the rigidities imposed by the technical properties of materials and thepackaging needs of different products, the environmental impact of packaging attractsquite a lot of attention. Many routes to environmental improvements are beinginvestigated at the same time, and the technologies employed are flexible enough toyield a relatively high degree of innovativeness. This is reflected by the unexpectedly

high number of innovations in the database that make some kind of environmentalclaim, 110 out of 1407.


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Secondly, there is a very high degree of "vertical" cooperation in the innovativeprocess. Often, the history of an environmentally friendly innovative pack begins withits filler imagining it and asking to its supplier of packings to make it for him. Thelatter, then, sets out to solve the technical problems implied by the manufacturing of thenew pack. Sometimes, this implies cooperating with the raw material manufacturer tofine-tune the material to suit the need; sometimes it implies modifying the conditioning

technology, a task that is generally carried out by packaging technology firms. In thelong run, suppliers and customers learn to work together towards a common goal; thisis reflected in the time span, typically very long, of business relationships in this area.Quite often, indeed, the researcher investigating these business relationships findthemselves looking at examples of quasi-vertical integration la Richardson; in thebeverage industry, for example, the can factory sits next door to the beverage factory,and the two are linked by a system of conveyor belts that carry 6,000 empty cans aminute from the former to the latter. In the detergent industry, there are examples of aJapanese-style relationship with converters blow-moulding bottles for liquid detergents;the converter rents a shed inside the detergent producer's plant, so as to abatetransportation and financial costs and to keep a real-time quality control on the blow-moulding process.

Thirdly, the environment has a marketing appeal. This shows in the marketing policy ofboth raw material producers and packaging users who happen to have environmentalclaims to make. British Steel is an obvious example; low collection costs and low(relatively to aluminium) energy content of steel are being banked on by the company,which is trying to stop the loss of market share to aluminium. Several companies takeenvironmental communication seriously enough to fund education programs. Thisseems to be at least compatible with a demand-pull theory of environmental innovationin packaging. In fact, some companies maintain their environmental policy is totallyconsumer-driven, and well ahead of government regulation.

Taken together, the common features of environmental innovation in packaging seem todraw a picture familiar to industrial economists.

Its incremental nature seem to fit well Giovanni Dosi's [1984] theory of technicalchange. He characterizes technology in terms of technological paradigms ortechnological research programs. In analogy with Kuhn's [1975] scientific paradigm, atechnological paradigm is essentially a body of scientific and technical knowledge usedto satisfy a need. "Normal" innovative activity focuses on improving only some of thecharacteristics displayed by a certain technology, which Dosi calls a technologicaltrajectory. Economic variables play a focusing role, calling the researchers' attentionon some characteristics, ignoring the other. For example, the oil shocks of the 70s setthe internal combustion engine paradigm on an energy saving trajectory; a low fuelconsumption was recognized to "good" even before the oil shocks, but it wasn'timportant enough to actually work on. Nowadays, energy efficiency improving is part

of the standard research program of engine designers. The rise of green consumerismand environmental regulation do not seem to be inducing a change of paradigm in thepackaging industry. On the other hand, they seem to be quite successful in steering theexisting paradigms on a whole range of environmental impact reducing trajectories,which were described as "innovation strategies" in this chapter. In passing, one maynote that incremental innovation is much more easily market-driven than paradigmshifts. The notion of technological trajectory, then, fits in well with the marketingappeal of environmental issues described above.

Keith Pavitt's [1984] notion of "specialized supplier" relationship between innovatorand innovation user in certain industries also springs to mind when investigating thepackaging filire. It is our conviction that vertical disintegration plays an important role

in making the technology so fluid, liable to be steered smoothly on to "green"technological trajectories. On the one hand, it minimizes sunk costs; when Barillawanted to replace PVC trays with paper trays it simply cancelled the order to a plastic


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3. THE DETERMINANTS OF ENVIRONMENTAL INNOVATION INPACKAGING: A DISCRETE-CHOICE MODEL

13 . The data

As pointed out in chapter 1, the research team collected 1407 packaging innovationawarded with prizes in the countries being con sidered or at the European level. Annexe1 contains the main descriptive statistics; this section contains a brief outline of thecharacteristics of this population of innovative packs.

About 100-120 prizes were awarded each year, from 1978 to 1993 (relative to entriesdated from 1977 to 1992). The number of prizewinning packs making environmental

claim has been constantly on the rise, from 1-2 in the late 70s to around 15 in the late80s, reaching a maximum of 30 in 1992.

Medium-sized and large firms are the largest contributors to innovations.Within thefilire, almost all innovators belong to the finished packings and component industry.The second most innovative sector is the raw materials one which, however, hasproduced no environmental innovations. Among the industries using innovative packs,the most important ones are obviously the grocery goods ones; the food industry is thesingle largest contributor, followed by the detergent and the beverage industry. Thedetergent industry is the single largest contributor to environmental innovation.

The materials most frequently used are plastics (PE being the most popular one), paperand cardboard, steel, glass and aluminium, in this order. The materials pattern ofenvironmental innovation is roughly the same as that of non-environmental innovation.

14 . The model

The world of packaging innovation is a multidimensional one. A pack has severalcharacteristics that innovators can choose to improve, from its ability to protect theproduct to its aesthetic appeal; in Dosi's terms, innovators can choose to move alongseveral technological trajectories. In the innovation database, this shows in themultiplicity of reasons given by juries for the awarding of their prizes. It seemsappropriate to model an innovation decision with discrete-choice techniques. Adependent discrete-choice variable (CHOICE) was constructed in the following way.

Value 1 stands for the decision to innovate on the reduction of the environmental impacton the pack. CHOICE takes value 1 whenever the main or one accessory motivation forthe awarding of the prize is environmental friendliness. There is here an element ofasymmetry: environmental innovations are defined by means of both main andsecondary reasons for the awarding of the prize; other innovations are groupedaccording to the main reason only, once environmental ones have been taken out. Thiswas done for technical reasons: the reduction of environmental impact is the main claimto a packaging award for only 35 packs, too low a figure to run a multilogit estimation.

Value 2 is more complex to define. Loosely, we could say it stands for the decision tominimize the pack's production cost. CHOICE takes value 2 whenever the main reason

for the awarding of the prize is "cost reduction", "use of new materials" (generallyintroduced on cost effectiveness grounds), or other minor reasons.


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Value 3 stands for the decision to minimize the logistical and distribution costs.CHOICE takes value 3 whenever the main reason for the awarding of the prize is"distributor friendliness" or "product protection"; these innovations are aimed at theoptimization of exposition space in supermarkets, or of truck space, or at reducing thechances of damaging products during transport.

Value 4 stands for the decision to enhance the pack's user friendliness. CHOICE takesvalue 4 whenever the main reason for the awarding of the prize is "user friendliness";easy-open cans, no-spill lids and so on.

Value 5 stands for the decision to improve the pack's attractiveness to the consumer.CHOICE takes value 5 whenever the main reason for the awarding of the prize is"aesthetics".

Table 7 shows innovations grouped by main reasons for the awarding of the prize andby values assigned to CHOICE.

TABLE 7 - INNOVATIONS BY MAIN REASON FOR AWARDING THEPRIZE AND VALUE OF CHOICE

L o w en v i r o nm en t a l im p ac t 3 5 CHOICE= 1 1 1 0

Cost reduct ion 1 4 8

Use of new mat erials 44 CHOICE=2 2 0 9

Ot hers 17

Dist ribut or f r iendliness 2 3 3

Packing previously unpacked product s 2 0 CHOICE= 3 5 3 8

Product prot ect ion 3 2 9

User f r iendliness 2 8 0 CHOICE=4 2 6 0

Aest het ics 2 3 8 CHOICE=5 2 2 7

TOTAL 1 3 4 4 TOTAL 1 3 4 4

Asymmetries apart, CHOICE has a potentially serious shortcoming as an innovation-modelling device; it implicitly assumes that technical trajectories are mutually exclusive.The reality is quite different, as the discussion in chapter 2 should have pointed out,and often R&D efforts lead to packs that are better than the ones they replace in morethan one characteristics. This suggests that a binary choice approach might be moreappropriate than a multiple choice one to model innovation. Nevertheless, estimationwith a dichotomous version of CHOICE (ENV=1 iff CHOICE=1, 0 otherwise) doesnot yield significantly different results; furthermore, multiple choice models allowcomparisons between groups of innovations; for example, the string of parameter

characterizing "green" innovation can be tested for statistically significant differencefrom "cost reduction" innovation. The rest of this chapter is therefore devoted to thepresentation and interpretation of multiple choice models.

The estimation technique employed is the multinomial logit. The model is of the kind

prob(1) =e

x 1

1 + ex 1

+ ex 3

+ ex 4

+ ex 5

where prob(1) stands for the probability that CHOICE=1 and 1 for the set ofcoefficients attached to the vector x of explanatory variables when CHOICE=1.

CHOICE=2 is chosen as the base alternative.


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Regressors are divided into four groups. The first one, from ITALY to UK refersobviously to the country of the innovator; the second one, FOOD to SERVICES, refersto the industries using innovative packs; the third one, from ALUMINIUM to PVC +OTHER PL. to the materials used; the fourth one, composed of PRESENTATION andBOTH, to the function performed. All these variables are dummies; NMATERIALS,the number of materials used, INNUMBER, the total number of innovation done by the

innovative firm (at the group level), and TIME (a variable set to 1 in year 1978, 2 in1979 and so on) are continuous variables. Table 8 summarizes the meaning of settingall dummies of the same groups, to zero, i.e. which countries, industries, materials andfunction are incorporated within the constant term.

TABLE 8 - COMPOSITION OF THE CONSTANT TERM IN COUNTRY

Country of the innovative firm All but D, F, UK, I, NL

Industry in which the pack is used Agriculture, clothes and textile,petrochemical, pharmaceutical, hardware,mechanics, automobiles, miscellaneous

Materials Paper and cardboard, wood

Functions Transport

It is very important to keep in mind that parameters do not measure absoluteinnovativeness, but the influence on CHOICE given that one is doing an innovationanyway.

15 . Results

This section is devoted to the presentation of the multiple choice model section 13 hasrecognized the need for. Estimates for parameters and tests are simply presented; anyattempt of interpretation is left to the following sections. In fact, this section can beskipped altogether by readers who do not find econometrics exciting.

Table 9 summarizes the values of the parameter computed under the specification of themodel we call COUNTRY, for reasons that will soon become clear. Regressorsregarding firm size and position within the filire are dropped; this allows the model torun on 1337 observations, thus recovering the possibility of adding regressorsregarding the country of the innovator.

Coefficients that are significant at the 90% significance level are marked by an asterisk;coefficients that are significant at the 95% significance level by two asterisks. Thisnotation will be held on to throughout the rest of the paper.


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TABLE 9 - THE COUNTRY MODEL

Number of obs 1 3 3 7

chi2 ( 9 6 ) 7 5 7 ,9 0

Prob > chi2 0Pseudo R2 0 .1 94 1

Re g r e s so r ENV IRONMENT

( CHOI CE= 1 )

DIST. COSTS

( CHOICE= 3 )

US. FRIEND.

( CHOICE= 4 )

AESTHETICS

( CHOICE= 5 )

It aly 0 ,7 4 8 3 2 9 5 -0 ,0 6 7 2 7 6 -0 ,0 6 4 6 0 2 4 -0 ,9 7 6 7 7 1 3

France -0 ,4 2 7 2 8 8 9 -0 ,0 6 1 3 7 0 9 0 ,0 2 6 3 1 3 -0 ,3 1 7 7 1 1 3

Germany -0 ,5 11 56 07 - 0 ,7 84 0 00 4 -0 ,4 56 81 47 * * - 2 ,2 5 4 8 6

UK -0 ,3 5 9 2 6 7 3 -0 ,1 2 5 1 8 1 0 ,8 3 5 8 0 2 3 0 ,6 5 5 6 2 3 4

food 0 ,3 2 5 2 0 5 4 0 ,0 3 6 8 4 4 4 -0 ,1 6 3 0 3 5 3 * * 0 ,6 8 7 6 5 7

dairy -0 ,0 8 4 7 5 9 2 -0 ,5 9 4 0 9 1 1 -0 ,7 3 7 1 3 8 7 0 ,2 7 6 7 3 3 6

beverages 0 ,6 4 4 1 5 5 1 0 ,2 6 2 2 0 6 3 - 0,0 26 73 76 * * 1 ,0 77 68 4

chemicals 0 ,7 3 2 6 7 8 4 0 ,1 1 4 6 9 3 2 - 0 ,1 00 85 64 - 0 ,2 01 11 45

detergents 0 ,4 9 1 0 8 6 9 -0 ,8 02 35 1 - 0,3 79 23 53 * * 1 ,3 36 62 7

services 0 ,6 2 4 6 7 3 2 -0 ,2 30 7 87 5 -0 ,2 51 39 48 -0 ,4 59 38 33

aluminium -0 ,0 05 17 69 0 ,4 5 3 8 9 7 6 * *1 ,2 84 31 1 -0 ,5 61 92 21

glass 0 ,3 2 6 8 5 1 2 * * -0 ,9 91 1 17 7 0 ,2 0 4 7 4 6 2 0 ,5 0 1 5 5 7 3

met als -0 ,8 4 4 2 8 5 7 -0 ,3 4 8 7 8 8 1 4 0 ,5 8 2 5 6 8 3 -0 ,2 8 0 6 7 1 3

PE 0 ,5 9 2 5 4 4 9 0 ,2 0 7 1 9 4 3 * * 0 ,8 1 7 0 3 4 -0 ,3 9 7 5 2 8 8

PS -0 ,7 9 2 2 3 9 8 0 ,0 1 2 4 8 2 7 -0 ,1 6 4 6 7 5 4 -0 ,5 7 0 8 6

PET 1 ,2 2 0 9 6 4 -0 ,4 1 3 4 3 7 9 0 ,6 9 0 7 5 2 9 -0 ,9 8 3 2 8 6 9

composit es -0 ,2 09 5 6 55 * -0 ,5 8 85 5 56 -0 ,4 3 1 27 8 6 * * - 1 ,2 5 9 4 4

PVC+ot her pl. -0 ,1 3 62 6 68 -0 ,0 3 63 0 05 0 ,6 41 15 59 * -0 ,5 2 9 0 6 7present at ion 0 ,2 81 98 69 * * - 0 ,7 2 4 9 7 6 8 * * 1 ,4 8 31 2 6 * * 4 ,8 0 65 8 5

both -0 ,5 2 8 3 4 3 9 0 ,1 7 3 4 3 0 7 * * 1 ,1 6 7 0 9 6 * * 3 ,4 0 0 9 7 5

innumber 0 ,0 0 1 5 1 9 2 0 ,0 0 6 4 9 0 8 0 ,0 0 0 5 1 8 4 -0 ,0 0 8 7 6 3 3

nmat erials 0 ,2 5 1 4 1 2 1 * * 0 ,5 26 54 09 0 ,0 9 6 6 0 3 1 * * 0 ,8 23 73 3

t ime * * 0 ,1 9 2 2 8 2 8 * * 0 ,4 6 6 2 4 8 0 ,0 2 6 8 9 6 6 * 0 ,0 4 5 9 2 9 4

const ant t erm * * -3 ,2 0 9 5 03 0 ,4 55 03 4 1 * * - 1 ,5 7 0 2 2 * * - 5 ,2 6 4 5 5

Log-likelihood -1 5 7 3 ,1 1 3 2 Base case CHOICE=2

Two separate sets of tests were run on the parameters characterizing COUNTRY. Thefirst one concerns the joint significance of all parameters for each value of CHOICE. Inparticular, four F-tests were run on the null hypothesis that

i=

1i = 2,3,4,5

Their results are summarized in Table 10.


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TABLE 10 - COUNTRY: JOINT SIGNIFICANCE OF PARAMETERSDIFFERENCE FROM ENVIRONMENTAL INNOVATION(CHOICE=1) OFINNOVATION OF OTHER KINDS

2=

1 KO**3=

1 KO**4=

1 KO**5=

1 KO**

The second set of tests concern the joint significance of groups of parameters across alldifferent values of CHOICE. The null hypothesis is that, for each group j ofparameters

j1= j

2= j

3= j

4= j

5= 0

Table 11 summarizes the results.

TABLE 11 - COUNTRY: TESTING FOR ZERO VALUE OF GROUPS OFPARAMETERS ACROSS VALUES OF CHOICE

Country KO**

Industry in which the pack is used KO**

Materials KO **

Functions KO **

NMATERIALS KO **

INNUMBER OK

TIME KO**

This model of technological trajectory choice in packaging innovation can be used totest the appropriateness of the Dosi-Pavitt-Ulph framework spelt out in chapter 2 todescribe technical change in this filire. In order to do so, that framework must betranslated into testable hypothesis; such a translation, and a test of the translatedhypothesis, is the subject of the following sections.

There is, however, one exception. That innovation occurs along a technologicaltrajectory rather than through a paradigm shift is obviously not picked up by thedatabase described in chapter 1, and therefore it cannot be tested for. This statement,however, has quite solid nonstatistical evidence standing for it: it is hard not to notice aparadigm shift when one occurs. This point will not be dealt any further with.


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16 . Interpreting results: technology and demand effects on theinnovative process

One of the hypothesis generated by the nonstatistical evidence presented in chapter 2 isthat environmental innovation should display demand-pull, as opposed to technology-push, characteristics. If this were true, we would expect that:

1. environmental innovation, when compared to production cost reductioninnovation, should be more concentrated on presentation packaging than ontransport packaging. Consumers hardly ever see transport packaging, so themarketing appeal of an environmentally friendly shrinkwrap film for pallets islikely to be close to zero. In this respect, environmental innovation shouldbehave more or less like aesthetic improvements. In terms of the model, thismeans testing that the coefficient estimates on PRESENTATION and BOTHwhen CHOICE=1 are positive and significant. A further, useful test is tocompare the values of the coefficient estimates of environmental innovation(CHOICE=1) are similar to those of aesthetic innovation (CHOICE=5), whichis very likely to be market-pull in nature.

2. environmental innovation, when compared to production cost reductioninnovation, should be more concentrated on grocery good industries. In thoseindustries, as it is well known, packs play a strategic role in the purchasedecision. In terms of the model, this means testing that the coefficient estimateson variables representing grocery goods industries are positive andsignificant.This is, however, a much weaker test than the former, because therole of environmental issues in determining purchase patterns vary quite a lotacross grocery good markets. One feels the need for a deeper investigation ineach industry before accepting econometric results as proof of such ahypothesis.

The results do not seem to provide strong support for a consumer-driven theory ofenvironmental innovation in packaging. A glance at table 9 shows that the coefficient onPRESENTATION packaging is indeed positive, but not statistically significant,whereas the coefficient on the dummy representing packings that serve both apresentation and a transport purpose (BOTH) is negative (recall that the base istransport packaging). The parallel we tried to draw with aesthetic improvements isrejected by the data; when CHOICE=4 the coefficients on PRESENTATION andBOTH are positive, high and significant at the 99% significance level.

Grocery good industries do not seem to be specializing in environmental innovationeither. Coefficients on FOOD, BEVERAGES and DETERGENTS are positive asexpected, but the one on DAIRY is unexpectedly negative. None is significant at the90% (nor, indeed, at the 80%) level . Again, aesthetic innovation behaves differently;

all coefficients on grocery goods industries are positive, and all but DAIRY aresignificant at the 95% level. Coefficients on other industries are negative. Thisregularity seems to point to an important role played by pack design in determining thepurchase decision in supermarkets; obviously the pack's environmental friendliness isnot as effective in this respect.

If demand-pull factors do not seem to influence environmental innovation anydifferently than production cost reduction innovation, it is worth it to test fortechnology-push effects. In the innovation database, the raw materials variables can beinterpreted as innovation opportunity variables; comparing their coefficients whenCHOICE=1 should give an idea of the extent to which some materials specialize ingreen innovation more than others.

With respect to the constant term, which incorporates paper, cardboard and wood, thecoefficient estimates on GLASS, PE and PET are positive; those on ALUMINIUM,


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other METALS, PS, COMPOSITES and PVC+OTHER PLastics are negative. None isstatistically significant at the 90% level, although the coefficient on PET, a plastic thathas a reputation for being environmentally friendly, is significant at the 85% level. Theconclusion is that the environmental innovation opportunities offered by packagingmaterials do not seem to be radically different from their production cost reductionopportunity.

These results do not, by themselves, allow the researcher to label environmentalinnovation in packaging as demand-pull, nor as technology-push. In fact, the wholedatabase only allows to draw comparisons between innovations along differenttrajectories, whereas innovation economics has concentrated mostly on the problem ofwhether to innovate. Data do, however, yield some insight into the matter.

Nonstatistical evidence for the demand-pull nature of at least some environmentalinnovation is quite robust, and nowhere contradicted by data. Nonsignificance ofcoefficient estimates on industry variables certainly does not, by itself, deny it. Thedetergent industry is an example of an industry where firms anticipate environmentalregulation in order to compete for market share. The fact that the coefficient estimate on

DETERGENTS is not highly significant in the model should not come as a surprise: ina market where price elasticity of demand is high, innovation that abates productioncosts also provides innovative firms with a weapon for market share competition. Whatthe model does, then, is simply comparing two different trajectories along which firmsface the same sort of incentives.

The nonsignificance of the coefficient estimate on PRESENTATION cannot deny thatsome environmental innovation is demand-pull either; what it does say is that there is atleast some environmental innovation, that done on transport packaging, that isn'tdemand-pull. This, together with the significance of the coefficient estimate onTEMPO, can be interpreted as an indirect proof of the existence of a regulation effect.On the other hand, it must be kept in mind that most environmental innovation, as mostpackaging innovation in general, is done on presentation packaging; transportpackaging (the "certainly not demand-pull" component) only accounts for 12% of totalgreen innovation.

17. Interpreting results: the role of firm size and position within thefilire

The degree of intra-filire "specialized supplier" cooperation in running innovativeactivities is another variable that is not directly picked up by the data. On the grounds ofrather robust nonstatistical evidence, it is safe to state that such degree is high. Aninteresting question, then, is whether this relationship holds in environmentalinnovation as well as in innovation in general. In specialized supplier relationship the

innovator is a smaller firm than her customer, and she is positioned just upstream of thelatter in the filire. In econometric terms, this means testing for the significance ofcoefficient estimates on variables representing the position within the filire whenCHOICE=1.

Unfortunately, we cannot do it with the COUNTRY model, which includes no suchvariables among its regressors. It has proved much more difficult than expected toattach a number of employees to firms in the packaging filire. The Italian Packagingdirectory is the only source to report this piece of information for all firms listed; thenumber of employees of the UK top 300 firms is also reported, in a separate directory.However, it was not possible, within the time and budget limits of this paper, tocomplete French and German records, as well as the majority of British ones. Similar

problems, especially in the case of German firms, were met to ascertain the positionwithin the filire of innovative firms. In order to assess the impact of firm size andposition within the filire variables on CHOICE, we have built a different specification


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of the model, and fed to it the 384 observations for which both the number ofemployees and the position within the filire is known. Since most of these describeeither Italian or British innovations, it is not possible to include dummy explanatoryvariables for the countries. Table 12 presents the results.

TABLE 12 - THE SIZE MODEL

Number of ob 3 8 4

chi2 ( 9 6 ) 2 8 2 ,2 7

Prob > chi2 0

Pseudo R2 0 .2 4 99

Re g r e s s o r EN V IRON MEN T

( CHOICE= 1 )

DIST. COSTS

( CHOICE= 3 )

US.FRIEND.

( CHOICE= 4 )

AESTHETIC

( CHOICE= 5 )

food 1 ,6 0 9 9 7 8 -2 ,2 4 7 7 4 3 0 ,0 9 9 9 0 7 5 1 ,0 8 9 4 0 7

dairy 1 ,7 3 3 7 9 7 -0 ,5 2 9 8 0 7 7 -1 ,8 5 9 2 0 2 1 ,1 9 4 2 3 1

beverages * 1 ,8 52 97 6 -0 ,1 01 96 09 -0 ,5 67 17 13 0 ,9 1 9 8 7 3chemicals 1 ,8 2 83 2 2 - 0,5 19 55 18 1 -0 ,3 67 4 8 15 -0 ,2 3 7 06 2 6

detergents 1 ,5 2 0 3 3 * * -1 ,6 2 0 4 6 9 -0 ,4 6 11 05 2 1 ,1 1 4 2 5

services * * 2 ,8 90 61 1 -0 ,1 79 78 92 0 ,6 0 1 7 0 2 8 -0 ,7 67 51 96

aluminium 1 ,8 2 0 6 4 2 0 ,4 0 7 4 6 9 7 1 ,6 1 9 5 9 8 -1 ,8 2 6 8 5 2

glass 1 ,2 8 1 8 0 6 -1 ,0 4 1 7 5 4 0 ,1 2 9 6 2 4 0 ,4 9 6 7 9 1

met als 0 ,4 5 7 2 0 3 3 -0 ,1 0 6 4 4 0 8 0 ,5 3 2 2 1 0 5 0 ,0 4 1 9 4 3 1

PE * * 2 ,5 8 0 9 2 7 0 ,0 0 9 0 4 3 4 0 ,9 9 9 9 1 0 7 -0 ,1 3 5 2 6 6 3

PS 0 ,7 4 9 4 9 7 1 0 ,0 0 0 3 1 2 1 1 ,1 0 3 0 5 5 0 ,6 2 2 0 3 5 9

PET 1 ,8 4 9 6 2 8 -0 ,1 5 5 0 3 6 3 -0 ,2 2 7 4 6 0 8 -1 ,5 9 7 7 5 3

composit es 0 ,2 13 20 9 -0 ,1 1 40 5 69 -0 ,1 7 78 4 26 -0 ,7 6 24 7 92

PVC+ot her pl. 0 ,6 06 83 78 -0 ,5 7 0 3 74 2 0 ,7 38 24 43 -0 ,6 5 5 7 54 2present at ion 0 ,8 68 85 9 -0 ,5 2 10 0 54 * * 2 ,0 1 93 9 2 * * 3 ,3 5 16 3 4

both -0 ,7 1 1 7 2 5 4 0 ,2 3 6 9 8 6 5 * * 1 ,9 3 9 1 9 1 * * 2 ,3 3 5 4 6

innumber -0 ,0 3 41 35 3 -0 ,0 08 7 86 8 -0 ,0 32 01 4 -0 ,0 15 77 8

nmat erials -0 ,4 57 76 08 * * 0 ,8 62 79 23 0 ,0 8 2 5 8 * * 1 ,0 41 06 6

t ime * * 0 ,1 3 0 5 3 7 2 0 ,0 4 0 1 6 2 5 0 ,0 7 1 3 5 8 7 0 ,0 7 1 1 9 5 3

emp 1 00 -2 50 0 ,3 34 8 56 7 0 ,3 63 81 8 8 0 ,7 8 19 51 0 ,7 84 39 8 7

emp > 250 -0 ,2 7 34 24 5 0 ,0 4 5 3 2 4 2 1 ,0 2 7 9 9 1 0 ,2 2 0 3 0 9 5

packs -0 ,2 7 7 1 4 6 -0 ,9 2 5 1 7 0 9 -0 ,6 8 8 9 0 6 6 -1 ,0 6 2 3 5 8

machines 0 ,7 7 5 7 3 2 4 -0 ,9 57 26 3 -1 ,5 82 16 7 -1 ,1 07 86 6

user -0 ,1 6 7 2 4 4 5 -0 ,4 5 8 9 9 8 5 -0 ,4 1 3 6 6 5 4 -0 ,9 3 0 0 3 7 7

const ant t erm * * - 3 ,4 1 3 4 8 2 0 ,1 32 65 8 * -2 ,2 8 7 4 4 3 * * - 4 ,1 1 3 3 3

Log-likelihood -4 2 3 ,5 3 4 4 2 Base cas CHOICE=2

Regressors are now divided into five groups. The first one, from FOOD toSERVICES, refers to the industries using innovative packs; the second one, fromALUMINIUM to PVC + OTHER PL. to the materials used; the third one, composed ofPRESENTATION and BOTH, to the function performed; the fourth one, composed ofEMP 100-250 and EMP > 250, to the number of employees; the fifth one, fromPACKS to USER, refer to the position of the innovator within the filire, as defined inchapter 1. As with COUNTRY, all these variables are dummies; NMATERIALS, thenumber of materials used, and INNUMBER, the number of innovation done by the

same firm (at the group level) as the innovative firm, are continuous variables.


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Table 13 summarizes the meaning of setting all dummies of the same groups to zero,i.e. which industries, materials, function, firm size and position within the filire areincorporated within the constant term.

TABLE 13 - COMPOSITION OF THE CONSTANT TERM IN SIZE

Industry in which the pack is used Agriculture, clothes and textile,petrochemical, pharmaceutical, hardware,mechanics, automobiles, miscellaneous

Materials Paper and cardboard, wood

Functions Transport

Number of employees 1-100

Position within the filire Raw materials, services

Two separate sets of tests were run on the parameters characterizing SIZE. The firstone concerns the joint significance of all parameters for each value of CHOICE. Inparticular, four F-tests were run on the null hypothesis that

i=

1i = 2,3,4,5

Where i is the vector of all parameters attached to variables when CHOICE=i . Theirresults are summarized in Table 14.

TABLE 14 - SIZE: JOINT SIGNIFICANCE OF PARAMETERSDIFFERENCE FROM ENVIRONMENTAL INNOVATION(CHOICE=1) OFINNOVATION OF OTHER KINDS

5=

1 OK2=

1 KO**3=

1

OK4=

1 KO*

What Table 14 is saying is that environmental innovation cannot be distinguished from"cost reduction and miscellaneous" innovation (CHOICE=5, row 1) and "userfriendliness" innovation (CHOICE=3, row 3) on the basis of the explanatory variablesincluded in the model. On the other hand, innovation of the "distributor friendliness"kind (CHOICE=2, row 2) and of the "aesthetics" kind (CHOICE=4, row 4) are bothsignificantly different from environmental innovation.

The second set of tests concern the joint significance of groups of parameters across alldifferent values of CHOICE. The null hypothesis is that, for each group j ofparameters


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j1= j

2= j

3= j

4= j

5= 0

Table 15 summarizes the results.

TABLE 15 - SIZE: TESTING FOR ZERO VALUE OF GROUPS OFPARAMETERS ACROSS VALUES OF CHOICE

Industry in which the pack is used OK

Materials KO *

Functions KO **

Number of employees OK

Position within the filire OK

NMATERIALS KO **

INNUMBER OK

TIME OK

A glance at table 12 shows that none of the coefficient estimates on firm size (EMP100-250 for firms with 100 to 250 employees and EMP > 250 for firms with more than250 employees) or position within the filire (PACKS for sector 2, MACHINES for

sectors 4 and 5, USER for packaging users) is significant. Table 15 confirms that thisis true across all values of CHOICE, and not only for environmental innovation.

These results, combined with the nonquantitative evidence presented above, allow todraw quite strong a conclusion; the packaging filire tackles and solves all innovationproblems in the same way. The specialized supplier approach to innovation, asexplained in chapter 2, is to build long-term alliances of packaging users and packagingmanufacturers, where the latter solve technical problems chosen by the former.Interviews suggest that, as environmental concerns became more important, the verysame user-supplier teams that had successfully innovated along other technologicaltrajectories applied their expertise to the new problem. Data are fully compatible withthe existence of a specialized supplier relationship: well above 50% of both

environmental and non-environmental innovation is done by firms with less than 500employees; about 15% by firms with less than 100. Figure 5 reports the distribution byclass of employees of the innovator referred to environmental and non-environmentalinnovations.


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FIGURE 5 - NON-ENVIRONMENTAL AND ENVIRONMENTALINNOVATIONS BY NUMBER OF EMPLOYEES OF THE INNOVATIVE

FIRM.

0 ,00

5 ,00

1 0 , 0 0

1 5 , 0 02 0 , 0 0

2 5 , 0 0

3 0 , 0 0

3 5 , 0 0

4 0 , 0 0

4 5 , 0 0

5 0 , 0 0

1 -2 5 2 6 -1 0 0 1 0 1 -5 0 0 > 500

NON-ENV

ENV

A reasonable interpretation for the coefficient estimates and figure 5 is that theeconomies of scale in innovative activities are very similar in environmental innovationand non-environmental innovations, and that they are not so strong as to prevent small

firms to do some innovation.

18 . Interpreting results: packaging innovation as a superproduct quest

The results discussed so far suggest that the profiles of the typical environmental andnon-environmental innovators coincide. Variables representing the industry usinginnovations, materials used, innovator size, innovator position within the packagingfilire do not seem to make any significant contribution to explaining the innovator'sdecision to do an environmental innovation rather than an innovation of another kind.The issue of whether R&D competition in the packaging filire resembles more a questfor specialization or one for a superproduct, however, has not been addressed.

Tables 16 and 17 present a list of the most innovative firms, respectively in non-environmental and in environmental innovation. They show that some leading firms ininnovation in general also lead in environmental innovation.


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TABLE 16 - NON-ENVIRONMENTALLY MOST INNOVATIVE FIRMS BYNUMBER OF ENVIRONMENTAL AND NON-ENVIRONMENTALINNOVATIONS, 1978-1992

T o p no n - env inn o v at o r s Env No n - En v

Carnaud Met albox 3 47SOCAR 0 45Saint -Gobain 2 33Reed Corrugat ed 0 264 P 3 18CEBAL 1 18Rochet te 2 17Europa Cart on 3 12Zewawell 0 12

Beghin-Say 0 12BSN 4 11Impr imer ie Rey 0 10Gust av St abernack 0 10Lembacel 0 10

TABLE 17

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The Microeconomics of Environmental Innovation in the Packaging Industry (1994)

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