Using new technologies to reduce the emission of greenhouse gases within the production process can lead to an increase of productivity. Emission-reducing innovations, however, also require adjustments in the organization and production processes. Failing to achieve these adjustments may result in a loss of productivity. This is the result of an empirical study based on a survey among 3,896 companies in Germany conducted by the Centre for European Economic Research (ZEW) in Mannheim.
To determine the increase or loss of productivity, ZEW researchers used a control group of firms. The firms in this group had neither introduced new technologies to lower CO2 emissions, nor had they changed their organizational structure during the observation period from 2006 to 2008. Compared to this control group, there is an increase in productivity of 0.7 per cent for firms which introduced such technologies and adjusted their production process and their internal organization accordingly. Companies which use green technologies within the production process, but neglected organizational adjustments, are facing a loss of productivity of some 1.5 per cent.
Adjustments like a more flexible process organization, modifications in the organizational structure, a different composition of teams, or a restructuring of the areas of responsibility allow for a more efficient employment of new technologies. Employing “green” innovations more efficiently can compensate for possible negative effects on productivity, which may be caused by emission-reducing technologies. Such effects can occur, for example, if the reductions in power consumption due to new technologies fall short of the costs due to the introduction of those technologies.
The ZEW study addresses a topic to which researchers have been paying rather little attention to date. The study examines if companies introducing an innovation into their production process to lower the emission of greenhouse gases can increase productivity if they make organizational changes at the same time. The answer to this question is of considerable importance, since many industrial enterprises in Germany have increasingly been using greenhouse gas emission-reducing technologies in recent years. The results of the ZEW study show that the potentials of green innovations can only be fully exploited if firms make accompanying organizational adjustments.
Source: ZEW.
