Determinants of environmental innovation adoption among manufacturing firms in Shaggar City, Ethiopia

Environmental awareness is the main factor driving the growth of environmentally friendly innovative techniques among firms in developing countries. The main aim of this study was to examine factors that affect a manufacturing firm’s decision to participate in innovation practices. Primary data was gathered using a structured questionnaire from 303 randomly selected firms out of 1429 manufacturing firms based on their percentage by employing five skilled and experienced enumerators who work as industrial social protection officers. Researchers have used prior researchers’ works during variable selection and used both descriptive and inferential statistics during data analysis. A test for the independence of irrelevant alternatives has been conducted to determine whether the choice between any two alternatives is independent of the availability of additional alternatives or not. The result of the multinomial logit revealed that operating profit, wastewater treatment, initial capital, rehabilitation cost, and research and development cost are factors that significantly affect a manufacturing firm’s decision to participate in innovation practices. The government, policymakers, and firms themselves play a significant role in addressing the financial needs for firms to engage in more environmentally friendly processes and product innovations through tax breaks, grants, and subsidies.