Innovation in the Green Economy: An Extension of the Regional Innovation System Model?

Policy makers increasingly look to green innovation as a source of job creation. Using the case of California, we argue that green innovation complicates traditional models of innovation and its role in economic development. This study uses secondary source data and a survey of 650 green and traditional businesses to define the green economy, identify innovation of products and services, and link innovation to sectoral and regional growth. The authors find that the type of innovation and its role varies widely by sector. The most environmentally challenged firms are among the most likely to innovate new processes, whereas new green innovative companies are more likely to respond to local and regional markets. Innovation does not necessarily foster growth. It is a boost to traditional firms, but emerging green firms may need additional tools and the support of local networks to transform new ideas and products to new markets.