Barriers or Challenges? How European Companies Respond to Barriers to Eco‐Innovation

ABSTRACT The aim of this study is to analyse the barriers to eco‐innovation faced by firms. We adopt strategic choice theory as a conceptual framework to examine how perceived barriers influence firms' intentions to eco‐innovate. This framework is relevant for understanding the difference between deterrent barriers, which prevent firms from initiating innovation, and revealed barriers, which emerge during the innovation process. We investigate four commonly identified categories of innovation barriers: financial, knowledge‐based, market‐related and regulatory. The objective is to assess whether they primarily function as deterrents or whether they are revealed as firms engage in the eco‐innovation process. For the empirical analysis, we employ survey data from European firms, pooling observations from 2015, 2017, 2021 and 2024. A distinguishing feature of the dataset is that it captures firms' intentions to undertake further eco‐innovation over the subsequent 2 years, thereby mitigating endogeneity concerns related to reverse causality. Our results indicate that the perception of barriers appears to be positively associated with the intention to eco‐innovate, which suggests that they are revealed rather than deterrent barriers and are part of firms' experiential learning processes. This pattern is consistent across all four barrier categories examined. We further distinguish between the pre‐ and post‐COVID periods and find that the results hold across both temporal contexts.