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Do firms care about peers when choosing to go circular? Peer effect among Italian firms in the introduction of circular innovation

Author

Listed:
  • Elisa Chioatto

    (University of Ferrara – Department of Economics and Management (Ferrara, Italy); SEEDS)

  • Susanna Mancinelli

    (University of Ferrara – Department of Economics and Management (Ferrara, Italy); SEEDS)

  • Francesco Nicolli

    (University of Ferrara – Department of Economics and Management (Ferrara, Italy); SEEDS)

Abstract

The challenges posed by the achievement of the circular economy require the adoption of new innovative practices that are not simply green but specifically related to closing, narrowing, and extending resources cycles (Bocken et al., 2016). Understanding the relationship between eco-innovation and circular innovation and what factors favour their implementation is, therefore, pivotal. This paper offers new pieces of evidence on the role of social norms in increasing firms' propensity to adopt circular innovation. Drawing upon the literature corpus confirming the influence of the social context on firms' decision to innovate and enriching this analysis with recent evidence on the effect of peers in firm decision-making, the present study relies on survey data on 3270 Italian Small and Medium Enterprises with the extent to investigate the effect of peers behaviour in firms decision to adopt circular innovation. The empirical analysis shows a positive relationship between increased investment in circular innovation by peers and the decision of firms to innovate in the same realm. These results, therefore, offer a relevant starting point for the design of policy guidelines and organisational strategies in favour of the circular economy. Social norm information and comparison can be indeed complementary tools to the traditional market and regulatory levers for circular innovation adoption.

Suggested Citation

  • Elisa Chioatto & Susanna Mancinelli & Francesco Nicolli, 2022. "Do firms care about peers when choosing to go circular? Peer effect among Italian firms in the introduction of circular innovation," SEEDS Working Papers 0422, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jan 2022.
    • Handle: RePEc:srt:wpaper:0422
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    References listed on IDEAS

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    Keywords

    Circular innovation; Circular Economy; Eco-Innovation; Social Norm; Peer Effect;
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