Eco-innovation is an explicit aim of major EU policy strategies. Many environmental policy de facto require firms to eco-innovate to comply with policy requirements, while the overlap between policy-driven and market-driven eco-innovation strategies is increasingly important for many firms. Barriers to eco-innovation can then emerge as a critical factor in either preventing or stimulating EU strategies, policy implementation, and 'green strategies' by firms.
In this paper, we propose a taxonomy of EU SMEs in terms of barriers to eco-innovation. The aim is to discriminate among SMEs on how they differ in terms of perception of barriers and engagement in environmental innovation, thus highlighting the need to look at eco-innovation barriers in relation to firms' attitudes, technological and organizational capabilities, and strategies.
We identify six clusters of SMEs. These clusters include firms facing 'Revealed barriers', 'Deterring barriers', 'Cost deterred' firms, 'Market deterred' firms, 'Non eco-innovators' and 'Green champions'. The clusters show substantial differences in terms of eco-innovation adoption. We show that our proposed taxonomy has little overlap with sector classifications. This diversity should be taken into account for successful environmental innovation policies.