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Diffusion Dynamics of Sustainable Innovation - Insights on Diffusion

Patterns Based on the Analysis of 100 Sustainable Product and Service
Innovations

Article in Journal of Innovation Management · August 2016

DOI: 10.24840/2183-0606_004.002_0004

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Diffusion Dynamics of Sustainable Innovation - Insights

on Diffusion Patterns Based on the Analysis of 100 Sus-
tainable Product and Service Innovations
Klaus Fichter1,2, Jens Clausen2
1
University of Oldenburg, Department of Economics, Business and Law, Oldenburg, Germany,
2
Borderstep Institute for Innovation and Sustainability, Berlin, Germany
[email protected], [email protected]

Abstract. There is a growing consensus about the urgent necessity to green the
economy and to decouple economic growth from environmental pressure.
Against this background, the article explores three questions: (1) What are key
factors influencing diffusion dynamics of sustainable product and service inno-
vations? (2) To what extent do diffusion processes of sustainable product and
service innovations differ from each other, and can different groups of diffusion
processes be identified? (3) Which factors, actors, and institutional settings are
characteristic of different groups of diffusion processes?
While diffusion research on sustainable innovation so far has been limited to
case studies with just one or a small number of cases or has been focused on in-
dividual sectors, the empirical data presented here cover a large number of cas-
es from a broad variety of product fields. This allows for generalizations as well
as relevant insights and conclusions for sustainability, environmental and inno-
vation policies.
The empirical investigation of 100 sustainable product and service innovations
revealed that diffusion processes of sustainable innovations differ substantially:
The cluster analysis showed that five groups of sustainable innovations can be
differentiated which differ significantly in terms of the factors influencing the
diffusion process. The empirical results thus both support the assumption that
different types of diffusion paths do in fact exist and also permit characteriza-
tion of the various types of diffusion paths. The evolutionary concept of diffu-
sion paths develops significant explanatory power on the basis of which faster
or slower cases of diffusion and the success or failure of sustainable innovations
can be better understood.
Keywords. Innovation, Diffusion of innovations, Sustainable development, En-
vironmental protection, Comparative analysis, Evolutionary economics, Path
concept.

1 Introduction

There is overwhelming evidence that mankind has become a geological force

(Crutzen, 2002) and that we are overloading the Earths’s carrying capacities. Rock-
ström et al. (2009) explored planetary boundaries and conclude, “Anthropogenic
pressures on the Earth System have reached a scale where abrupt global environmen-
tal change can no longer be excluded.” (Rockström et al., 2009, p. 1) Despite the fact
that there has been an intensive political as well as scientific debate about the concept

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of sustainable development for more than 20 years (United Nations, 2012), even to-
day not a single nation on the planet can claim to be sustainable in the sense that it
provides for human well-being within Earth’s carrying capacities (United Nations
Environment Programme (UNEP), 2011, p. 21). Many countries enjoy a high level of
human development – but at the cost of a large ecological footprint (Burns et al.,
2010). Others have a very small footprint, but face urgent needs to improve access to
basic services such as health, education, and potable water (Malik, 2013).
Against this background, there is a growing consensus about the urgent necessity to
green the economy and to decouple economic growth from environmental pressure
(Organisation for Economic Co-operation and Development (OECD), 2011). Green-
ing the economy requires a strategy for sustainable transitions and fundamental
changes in production and consumption patterns (UNEP, 2011). One key element in
promoting and managing the multilevel challenge of sustainable transitions (Geels,
2010) is the development, implementation, and diffusion of radically new or signifi-
cantly improved products (goods or services), processes, or practices which reduce
the use of natural resources and decrease the release of harmful substances across the
whole life cycle (Eco Innovation Observatory (EIO), 2013, p. 2). Thus, sustainable
innovation and its diffusion are a key strategy for a societal transformation process
toward sustainable development and a green economy. Understanding of diffusion of
sustainable innovations recently has gained more importance given the fact that some
sustainable innovations are already at a mature stage (Karakaya, Hidalgo & Nuur,
2014).
The central problem – and this is the evaluation of the status quo on which the present
study is based – is not a lack of sustainable innovations, but that their diffusion
throughout the economy and society is too narrow and too slow to solve the urgent
challenges of sustainability such as climate protection and resource conservation. In
other words: from a sustainability perspective, we are not confronted primarily with a
problem of innovation, but a problem of diffusion!
Against this background the objective of this work is to contribute to the clarification
of the following questions:
• What are key factors influencing diffusion dynamics of sustainable product
and service innovations?
• To what extent do diffusion processes of sustainable product and service inno-
vations differ from each other, and can different groups of diffusion processes
be identified?
• Which factors, actors, and institutional settings are characteristic of different
groups of diffusion processes?
This article will explore these questions by presenting and discussing the results of an
empirical study of 100 cases of diffusion of sustainable products and services from
ten different sectors. In the first part of the paper, we develop a conceptual framework
for investigating the diffusion of sustainable product and service innovations. In Sec-
tion 3 we define the unit of analysis, present the guiding research questions, and ex-
plicate the methodology of our empirical investigation. The methodological approach
of the empirical study is innovative because it blends case study methodology using
process-generated data with statistical identification of factors and clusters. In the

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following part of the paper (Section 4) we present the correlation and results from the
factor analysis as well as the results from the cluster analysis. Based on these results
we characterize five different clusters of diffusion of sustainable innovation. In the
final part of paper we draw conclusions with regard to the guiding research questions,
describe the limitations of the study, and outline further research needs.

2 Conceptual framework

Based on an extensive literature review, in the following section we will clarify the
term “sustainable innovation” and present key insights from diffusion research in
regard to factors influencing the adoption rate of innovation in general and sustainable
innovation in particular. Building on central concepts of sustainable innovation and
diffusion research, we then develop a conceptual framework for the analysis of the
diffusion of sustainable innovation. We do this by drawing on insights from evolu-
tionary economics in the construction of a path concept of diffusion, by providing a
concept of how changes in the diffusion path come about, by looking at possibilities
for assessing environmental effects of diffusion processes, and finally by pulling these
elements together in a conceptual framework for the empirical investigation of the
diffusion of sustainable product and service innovations.
2.1 Sustainable innovation

Sustainability-oriented innovation and technology studies have received increasing

attention over the past 10 to 15 years (Markard et al., 2012, p. 955). The importance
of sustainable innovation management is growing both in practice and in academia
(Schiederig et al., 2012). What exactly is meant by “sustainable innovation”? Numer-
ous terms to describe similar phenomena have been used widely in academia. The key
terms used since the mid-1990s include “environmental innovation” and “eco-
innovation” (Fussler, 1996; Rennings, 2000; Kemp & Pearson, 2007; Jänicke 2008;
OECD, 2009; Gerstlberger & Will 2010, Horbach et al., 2012), “sustainability inno-
vation” (Fichter & Pfriem, 2007; Arnold & Hockerts, 2011; Belz, Schrader & Arnold,
2011), “sustainable innovation” (Wüstenhagen et al., 2008; Nill & Kemp, 2009;
Hockerts & Wüstenhagen, 2010), “sustainability-oriented innovation” (Klewitz &
Hansen, 2014), and “green innovation” (Schiederig et al., 2012). While a distinction
between social and environmental issues in innovation is made to some extent, a clear
line is difficult to draw. A recent analysis of 8,516 journal publications shows that
“40.7% (3,469) apply the notion ‘environmental innovation’, 31.9% (2,716) the no-
tion ‘sustainable innovation’, 17.6% (1,495) ‘eco-innovation’ and 9.8% (836) the
notion ‘green innovation’. It appears that more than 80% of the publications use only
one notion, indicating that the notions are used consistently within individual publica-
tions.” (Schiederig et al., 2012, p. 183) The analysis shows that three different ideas
of green, eco/ecological, and environmental innovation are used largely synonymous-
ly, while the notion of sustainable innovation broadens the concept and includes a
social dimension.
There has been a rich debate in the economic literature about the distinctive features
of environmental innovations and eco-innovations as opposed to general innovations

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(Rennings, 2000). One of the most referenced definitions is provided by Kemp and
Pearson (2007): “Eco-innovation is the production, application or exploitation of a
good, service, production process, organizational structure, or management or busi-
ness method that is novel to the firm or user and which results, throughout its life
cycle, in a reduction of environmental risk, pollution and the negative impacts of
resource use (including energy use) compared to relevant alternatives”. (Kemp and
Pearson, 2007, p. 7). The EU-funded Eco-Innovation Observatory (EIO) describes
eco-innovation as “any innovation that reduces the use of natural resources and de-
creases the release of harmful substances across the whole life-cycle” (EIO, 2013, p.
10). This broad definition builds on an existing understanding of innovation and em-
phasizes types of inputs, outputs, as well as full life-cycle impact as key indicators of
eco-innovation. Concepts of sustainable or sustainability innovation include these
ecological aspects as a key feature, but also explicitly claim that radically new or
significantly improved products (goods or services), processes, or practices should
contribute to economic and social goals of sustainable development (Wüstenhagen et
al., 2008). Rather than just focusing on short-term profits, stakeholders expect firms
to meet a triple bottom line of economic, environmental, and social value creation
(Elkington, 1999; Schaltegger & Wagner, 2011). Against this background, Fichter
(2005) defines sustainable innovation as “the development and implementation of a
radically new or significantly improved technical, organizational, business-related,
institutional or social solution that meets a triple bottom line of economic, environ-
mental and social value creation. Sustainable innovation contributes to production and
consumption patterns that secure human activity within the Earths’s carrying capaci-
ties.” (Fichter, 2005, p. 138) In this paper we will follow this concept of “sustainable
innovation.”

2.2 Diffusion research

While “innovation” is the process of developing and implementing a radically new or

significantly improved solution, we define “diffusion” as the process of imitation and
adaptation of an innovation by a growing number of adopters. It comprises the period
after the first successful implementation or after market introduction.
With regard to key factors influencing diffusion dynamics, diffusion research offers a
vast array of concepts and empirical studies that deal with diffusion processes in gen-
eral as well as with factors influencing the adoption rate of sustainable innovation in
particular (Clausen et al., 2011, Karakaya, Hidalgo & Nuur, 2014). Rogers’s pioneer-
ing work on diffusion processes underlines the importance of the attributes of innova-
tions. Rogers (2003, p. 219 ff.) indicates that the relative advantage, compatibility,
complexity, trialability, and observability of an innovation are important variables
that can influence the speed of adoption. When these attributes are applied to the
diffusion of sustainable product innovations, they can be considered to be relevant
product-related variables. For these reason, they were used as product-related factors
for examining diffusion paths of sustainable innovations.
Besides product-related variables, adoptor-related factors also play an important role
in explaining the diffusion of innovations. It appears established that the adoptor
group of “innovators” plays an important role during market introduction and in the
first phase of diffusion, and this holds for both individuals (Rogers, 2003) and organi-

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zations (Gurisatti et al., 1997; Mukoyama, 2003). In reference to the adoptor-related

factors affecting the diffusion trajectory, the question of the “presence” and participa-
tion of user-innovators as well as their early involvement in the innovation process
seem to play important roles (Baldwin, Hienerth & von Hippel, 2006; Lüthje & Her-
statt, 2004). The necessity of behavior changes and the requirement to develop new
(consumption) routines inhibit the diffusion of innovations (Konrad & Nill, 2001;
Scholl, 2009). Uncertainties concerning the function and the quality of the product,
but also the regulatory environment of an innovation, delay the adoption process in
the case of individuals as well as businesses (Hintemann, 2002). Fundamental differ-
ences seem to exist between private individuals and businesses as adoptors when it
comes to decision-making and in the relative importance of cost-effectiveness and
liquidity. In businesses, decisions are usually made collectively, and companies tend
to value function, quality, and cost-effectiveness more highly (Mukoyama, 2003). In
contrast, the price plays a lesser role if cost-effectiveness is given, even if SMEs
(small and medium-sized enterprises) routinely mention limited availability of capital
when surveyed concerning obstacles to adopting innovations (Hitchens et al., 2004).
In the case of private individuals, on the other hand, a high price is often a constraint
even independently of cost-effectiveness because of limited liquidity (Bottomley and
Fildes, 1998; Andrews & DeVault, 2009).
Concerning supplier-related factors, various authors point to the role of pioneering
suppliers of innovations (Wüstenhagen et al., 2008; Hockerts & Wüstenhagen, 2010),
whereby their orientation toward sustainability could also play a role in the context of
sustainability. Suppliers’ sizes and reputations are important, besides the availability
of relevant products and services on the market (Barney, 1991; Fombrun, 1996;
Shapiro & Varian, 1999). Against this background, the variables (sustainability) goals
of innovators, size and reputation of innovators, and the completeness and availability
of products and services on the market can be considered to be relevant factors poten-
tially influencing diffusion dynamics.
Concerning suppliers, Nelson (1994) in particular also refers to the development of
supporting structures within the sector, so sector-related factors could be relevant for
the analysis as well. The existence and activities of industry trade associations ap-
pears to be relevant especially in the context of obtaining financial support from the
government, reducing regulatory obstacles, or developing exnovation tools for phas-
ing out predecessor products (Nelson, 1994; Bruns, Köppel, Ohlhorst, & Schön,
2008). The role of market leaders also appears to be relevant for diffusion. For exam-
ple, whether they spend years litigating against laws promoting renewables or wheth-
er innovators in the field in question are involved from the beginning can be expected
to have a significant impact on the speed of diffusion. Intermediaries as change agents
should also be taken into consideration as a possible supporting factor (Antes &
Fichter, 2010).
Because of the double externality problem of environmental innovations, the political
factors of government intervention play a special role in their development and diffu-
sion (Jänicke, 2008, 2005; Rennings, 1998). The diverse political instruments used by
governments to support the diffusion of environmental innovations (Jänicke, 2008) as
well as the societal forces impacting innovation and diffusion processes can be
grouped in four different factors: governmental push and pull activities as well as

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institutional obstacles (Andersen & Liefferink, 1997; Jaffe & Stavins, 1995), lead
market policies (Beise & Rennings, 2005), media reporting, and campaigns by non-
governmental organizations (Brunner & Marxt, 2013).
Furthermore, diffusion research based on evolutionary economics also stresses the
fact that there is an inherent dynamic in the diffusion path because of path dependen-
cies, competing industry standards, and dominant designs (Nelson & Winter, 1982;
Brown, Hendry & Harborne, 2007), and due to self-reinforcing effects such as the
critical mass phenomenon (Arthur, 1989; Cowan, 1990; Lehmann-Waffenschmidt &
Reichel, 2000, p. 349) or network effects (Geroski, 2000; Rogers, Medina, Rivera &
Wiley, 2005; Vollebergh & Kemfert, 2005). The path-specific factors include the
historical ties and self-reinforcing forces with effects on (routine) paths to date, the
effects of price developments (up or down), and the forces resulting in new ties when
new paths are established. Against this background, we constructed three path-
specific factors to examine the diffusion paths of sustainable innovations: path de-
pendencies due to historical ties, interactions between competing diffusion paths, and
self-reinforcing effects within the diffusion path itself.
Based on theoretical and empirical work on factors influencing the diffusion process,
six key areas of influence on diffusion speed can be distinguished: (1) product-related
factors, (2) adoptor-related factors, (3) supplier-related factors, (4) sector-related
factors, (5) government-related factors, and (6) path-related factors. Within the key
areas, different factors have been identified (Clausen, Fichter & Winter, 2011).

2.3 Path concept of diffusion

When it comes to explaining why the diffusion speed of sustainable innovations does
differ and what the key factors influencing diffusion dynamics are, evolutionary eco-
nomics is a powerful theory to build on. During the past 30 years, numerous authors
have placed the path concept developed in evolutionary economics at the center of
their studies and approaches for explaining innovation and diffusion trajectories,
using the work by Nelson and Winter (1982) as a starting point (Clausen et al., 2011).
The path concept provides a good basis for studying existing path dependencies, po-
tential exit options for creating new paths (Sydow, Schreyögg & Koch, 2009), and the
factors emerging over the course of the diffusion process. To date, studies of trajecto-
ries have considered linear chains of events, bifurcation and multifurcation points,
and linkages between different paths (Lehmann-Waffenschmidt & Reichel, 2000;
Lehmann-Waffenschmidt, 2010). While lock-in to a particular path and the path de-
pendencies that arise or have an effect here are discussed intensely, the questions as to
how and why bifurcation and multifurcation points emerge and how actors can inten-
tionally create new paths have received little attention. Precisely at this point, howev-
er, creating a link to the insights and conceptualizations of innovation process re-
search appears promising (Van de Ven, 1999) because it deals with the emergence
and the trajectories of innovation processes. In order to be able to create this linkage,
however, it is vital to first make clear that innovation is a specific mode of transfor-
mation, and just one of several possible modes. Fundamentally speaking, four modes
of transformation can be differentiated, and all of them are relevant for the sustaina-
bility of innovations (Fichter, 2014):

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1. V ariation: Gradual changes to existing technologies and practices optimize the

path. Schumpeter characterizes this mode of transformation as “adaptive re-
sponse” (Schumpeter, 1947).
2. Innovation: the attempt to achieve a lock-in break in a routine path. In the suc-
cessful case of “breaking away” from a routine path, a split (bifurcation or
multifurcation) occurs, and a new path is formed (path creation). Schumpeter
characterizes this mode of transformation as “creative response” (Schumpeter,
1947).
3. Diffusion by imitation and adaptation: Innovative solutions already being used
successfully in other regions, markets, or organizations are taken on and
adapted. A relatively young path is broadened and disseminated; chains of
events (imitation and adaptation processes on the part of specific adoptors)
within this path branch out further and multiply. In part, however, innovative
solutions are also adapted and varied in specific ways.
4. Exnovation: Previously used technologies, products, or practices are discon-
tinued or phased out. A previous path is terminated. Examples include the ban
on light bulbs in the European Union, Germany’s nuclear phase-out, and deci-
sions by companies to withdraw products from the market due to unprofitabil-
ity or insufficient turnover.
The path conceptions existing to date do not differentiate between the four modes of
transformation described above, even though it is precisely these four modes that
provide an explanation of how bifurcation and multifurcation points can occur. Un-
derstanding the dynamics of sustainable innovation requires a further move to “inter-
disciplinary crossovers” (Geels, Hekkert & Jacobsson, 2008, 527). On the basis of the
fundamental understanding presented above, an innovation path can be interpreted
from an interdisciplinary standpoint as an innovation process and thus as an intention-
ally organized process for branching out from routine paths. Hence, an innovation
path encompasses the chain of events of an innovation project. Extending the concept
of the innovation path, a diffusion path can be understood as a chain of events of a
particular diffusion process over time. The diffusion path includes the imitation and
adaptation events on the part of the adoptors as well as the activities and measures
affecting those adoptors, including, for example, the activities of suppliers, the ser-
vices provided by market intermediaries (e.g., wholesalers and retailers) and policy
intermediaries (e.g., energy or climate protection agencies) (Antes & Fichter, 2010) as
well as, for instance, the efforts on the part of the government to intervene in the form
of legal provisions and support programs. Thus, the diffusion path is embedded with-
in a diffusion system which, as a social system (Rogers, 2003, p. 23 ff.), encompasses
both diffusion-relevant actors and specific institutional arrangements. Against this
background, we defined the term “diffusion path” as follows:
A diffusion path encompasses the chain of events of a certain diffusion
process over time and its embeddedness in a specific diffusion system.
It depicts the diffusion of an innovative solution by means of imitation
and adaptation and can be caused by the efforts of actors to stabilize a
new path and to establish it long-term or by self-reinforcing effects.

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2.4 Conceptual framework for the analysis of the diffusion of sustainable innovation

We used the diffusion path concept developed above to analyze the diffusion of sus-
tainable innovation. On that basis we defined a diffusion path as the chain of events of
a certain diffusion process. A diffusion path is embedded in the diffusion system of a
specific region or sector and influenced by its actors, institutions, and resources
(Geels et al., 2008). We distinguished six key areas of influence on diffusion speed on
the basis of theoretical and empirical work on factors influencing the diffusion pro-
cess (cf. Section 2.2): (1) product-related factors, (2) adoptor-related factors, (3) sup-
plier-related factors, (4) sector-related factors, (5) government-related factors, and (6)
path-related factors. A total of 22 variables potentially influence diffusion dynamics
and were taken into account when analyzing diffusion dynamics. Major qualitative
changes in the direction or speed of diffusion can be classified as tipping points (mar-
ket introduction of a product, reaching critical mass, bifurcation or multifurcation
points, change of direction and abrupt changes in the trajectory and market exit of the
product) (Schelling, 1971, p. 181 ff.; Granovetter & Soong, 1986; Coenen, Benne-
worth & Truffer, 2012; Hess, 2014).

Fig. 1. Research framework for analyzing the diffusion of sustainable innovation

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3 Material and methods

In the following section we give a precise definition of the unit of analysis employed
in the empirical investigation, introduce the guiding research questions, and describe
the methodology of our empirical research design.

3.1 Unit of analysis

The unit of analysis of the empirical investigation presented in this paper is diffusion
dynamics of sustainable product and service innovations. Since diffusion processes
are very complex fields of investigation, we limited the scope of the study in three
ways. (1) We decided to focus on product and service innovations. We did this for
two reasons: First, because products and services have a huge impact on production
and consumptions patterns and on achieving economic, environmental, and social
goals. Second, because the diffusion of marketable goods can be observed more easily
(e.g. based on market data and other publicly available information) than process-
related, institutional, or social innovation. This is especially important when investi-
gating a large number of cases. (2) Furthermore, we decided to investigate the diffu-
sion process in a specific geographical region or country. Because of funding con-
straints (cf. Acknowledgements), we decided to choose a European country and se-
lected Germany as the largest national market in Europe. (3) Finally, we decided to
focus the analysis on the period between market introduction and the time of investi-
gation (2011). In order to study the diffusion process sufficiently, we defined that the
duration between market introduction and the time of investigation had to be at least
three years. Thus, we chose only products that had been introduced to market before
2008.
3.2 Guiding research questions

The guiding research questions for the empirical investigation are:

1. What are key factors influencing diffusion dynamics of sustainable product
and service innovations?
2. To what extent do diffusion processes of sustainable product and service inno-
vations differ from each other, and can different groups of diffusion processes
be identified?
3. Which factors, actors, and institutional settings are characteristic of different
groups of diffusion processes?
3.3 Methodology

Since no large-scale study across sectors or product fields on the diffusion of sustain-
able innovations has been conducted to date, this study broke new ground for empiri-
cal research. Two different methodological approaches were available for this task:
The first approach would attempt to study the diffusion of a marketable good (product
or service innovation) across a long period of time, using selected indicators such as
market share, parallel to the process itself. Such a longitudinal study was not feasible
in the context of the 3-year duration of the project on which the present study is based
because it would have required an observation period of more than three years. A

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second, alternative approach would be to model the diffusion of an innovation retro-

spectively using process-generated data, i.e., using authentic data created over time
and for purposes other than answering the research questions formulated here. Such
data covering long periods of time are often not available, or not in the quality desira-
ble for purposes of research, for which reason such a procedure was out of the ques-
tion here as well. In order to do justice to the present research problem nonetheless,
we selected a research approach that encompasses a new form of methodological
triangulation and which must therefore be briefly described and justified:
As sufficient data generated during the process itself are not available for the object of
this study – diffusion of sustainable innovations – we decided on the following proce-
dure for surveying data.
Selection of cases. First, we selected all those product fields from the universe of all
marketable goods that are of particular importance for sustainable development and
that can make a major contribution to reaching national and international sustainabil-
ity goals. We used studies and sustainability strategies at the national and internation-
al levels for this purpose. The selection of product fields was to refer to the geograph-
ical area selected for the study (Germany). Both the lead markets and the fields al-
ready identified in German and European environmental and innovation policy were
to be taken into account. They include the lead markets for environmental technology
mentioned in the Umwelttechnologie-Atlas für Deutschland (Environmental Technol-
ogy Atlas for Germany) “GreenTech made in Germany 2.0” (Bundesministerium für
Umwelt, Naturschutz und Reaktorsicherheit (BMU), 2009) as well as the future mar-
kets for environmental innovations identified by the European Commission in the EU
Lead Market Initiative (Commission of the European Communities (COM), 2007).
When selecting cases, it was important to ensure that a sufficient range of products
and services were covered in order to guarantee that the study actually included nu-
merous sectors and product fields. Against this background, we decided to study at
least 10 different product fields. Thus, we oriented sampling toward the main criteria:
relevance for sustainability and range of the product fields.
In addition, the goal was to ensure that it would be possible to study a certain range of
different products, services, and technologies in each product field in order to be able
to elaborate possible commonalities and differences within each one. Against this
background, we decided to use 10 different products from 10 different product fields
for the study (cf. Table 2).
Defining independent variables. We performed a comprehensive evaluation of the
literature as the basis for the empirical study. It yielded 22 potential factors influenc-
ing the diffusion trajectories of sustainable innovations in six fields of influence (cf.
Section 2.2 and Figure 1) for which it can justifiably be assumed that they have an
influence on the diffusion trajectories of sustainable product and service innovations
or correlate with the dynamics of diffusion. We used these 22 potential factors as
independent variables for the empirical study. We developed a coding system for each
factor to assess the value of the variable (cf. Appendix 1).
Construction of the dependent variable “diffusion dynamics”. One of the key goals of
the study was to elaborate obstacles and drivers in the diffusion process, so we had to
assess the progress of the diffusion process in this regard. Market penetration, i.e.,
market share, is most useful as a measure of diffusion of marketable goods. The

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amount of time required for the process, measured as the time since market entry, is
relevant as well. Finally, a study across sectors and product fields must consider that a
comparison across product fields cannot be carried out readily because of their very
different underlying conditions. For this reason, the typical innovation and market
cycles of a product field must be taken into account when constructing a dependent
variable to be used as an indicator of diffusion dynamics across product fields.
That is why we drew upon three sub-indicators when constructing the indicator “dif-
fusion dynamics.” We defined them as follows with regard to the sample to be stud-
ied:
(1) Market share, using the scale:
a. up to 1% (coded as 1)
b. more than 1 and up to 10% (coded as 2)
c. more than 10 and up to 50% (coded as 3)
d. more than 50% (coded as 4)
(2) Duration of the diffusion process, measured as the time since market introduction:
a. before 1980 (coded as 1)
b. from 1980 to 1989 (coded as 2)
c. from 1990 to 1999 (coded as 3)
d. since 2000 (coded as 4)
(3) The diffusion speed of a specific innovation in relation to the other innovations in
the product field in question. We set the two values mentioned above for a particular
innovation in relation to the values of the other innovations in the product field, thus
generating a ranking order. After all, what constitutes “rapid” diffusion varies consid-
erably depending on the product field. The goal of adding 2 points to the value or
subtracting 2 points from it was to enhance the value of the two most successful inno-
vations in each product field and to reduce it for the two least successful ones. In in-
dividual product fields where it appeared impossible to differentiate reasonably be-
tween the three top innovations, we applied this method to the top or bottom three
innovations. In other product fields, where the gap between the top or bottom two
innovations was so large that it appeared unreasonable to assign them the same val-
ues, we did so for just the one top or bottom innovation. Table 1 shows the classifica-
tion, Table 2 the results. The variable “diffusion dynamics” results from the summa-
tion of the values of the sub-variables market share, duration of diffusion process, and
rank of a specific product/service within the product field. The minimum value of the
variable “diffusion dynamics” is 0 (no dynamics), the maximum value is 10 (very
high dynamics).

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Table 1. Assessment of the rank of a specific product/service within the product field
Product field 2 points subtracted from value 2 points added to value
Organic food Max. 1% market share More than 10% market share
Renewable resources Max. 10% market share and market More than 50% market share
introduction before 1990
Renewable energy Max. 10% market share and market More than 50% market share or
systems introduction before 1990 more than 10% market share and
market introduction after 1980
Low-exergy energy Max. 10% market share and market More than 10% market share
systems introduction before 1980 or max. 1%
market share and market introduction
before 1990
Energy-efficient electric Max. 10% market share and market More than 10% market share and
devices and lighting introduction before 1990 market introduction after 2000 or
more than 50% market share and
market introduction after 1990
Construction and heating Max. 10% market share and market More than 10% market share and
technology introduction before 1990 market introduction after 1990
Green IT end devices Max. 10% market share More than 10% market share and
market introduction after 2005
Energy efficiency in data Max. 10% market share and market More than 10% market share and
centers introduction before 2005 market introduction after 2000
Telecommunications and Max. 10% market share and market More than 10% market share and
online media introduction before 2000 market introduction after 2000 or
more than 50% market share and
market introduction after 1990
Sustainable mobility Max. 1% market share and market More than 10% market share
introduction before 1990

Table 2. Construction of the dependent variable “diffusion dynamics”

Market share
in 2011 (time
Market intro-
Product field

product field
of investiga-

Rank in the

dynamics
Diffusion
duction in
Germany

Value

Value
tion)

Organic baby food 1969 1 50 to 100% 4 +2 7

Bionade (organic soft-drink
1995 3 1 to 10% 2 0 5
brand)
Organic food

Organic food subscriptions 1985 2 0 to 1% 1 -2 1

Organic wine 1965 1 0 to 1% 1 -2 0
Organic bread 1991 3 1 to 10% 2 0 5
Fair trade coffee 1992 3 1 to 10% 2 0 5
MSC-certified fish 1997 3 10 to 50% 3 +2 8

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Market share
in 2011 (time
Market intro-
Product field

product field
of investiga-

Rank in the

dynamics
Diffusion
duction in
Germany

Value

Value
tion)
Free-range eggs 1990 3 1 to 10% 2 0 5
Organic milk 1991 3 1 to 10% 2 0 5
Tea from the Teekampagne 1985 2 1 to 10% 2 0 4
Starch-based biodegradable
2005 4 0 to 1% 1 0 5
packaging
Natural fiber plastic composites 1990 3 1 to 10% 2 0 5
Biogenic lubricants 1999 3 1 to 10% 2 0 5
Insulating materials from renew-
Renewable resources

1982 2 1 to 10% 2 -2 2
able resources
Natural paints 1980 1 1 to 10% 2 -2 1
Wood-plastic composite (WPC)
2004 4 1 to 10% 2 0 6
deck flooring
Laundry detergents based on
1985 2 50 to 100% 4 +2 8
renewable resources
Organic cotton 1990 3 0 to 1% 1 0 4
Woolen rugs with the Rug-
1995 3 1 to 10% 2 0 5
mark/Goodweave seal
Organic shoes 1990 3 1 to 10% 2 0 5
Biodiesel 1990 3 1 to 10% 2 0 5
Biogas facilities 1980 2 10 to 50% 3 +2 7
Large-scale hydroelectric facili-
Renewable energy systems

1880 1 50 to 100% 4 +2 7
ties
Small-scale hydroelectric facili-
1980 2 50 to 100% 4 +2 8
ties
Pellet heating systems 1998 3 1 to 10% 2 0 5
Photovoltaics 1985 2 1 to 10% 2 -2 2
Skysails 2005 4 0 to 1% 1 0 5
Thermal solar power 2007 4 0 to 1% 1 0 5
Wind power (onshore) 1975 1 10 to 50% 3 0 4
Wind power (offshore) 1991 3 0 to 1% 1 0 4
Solar-powered absorption refrigera-
1960 1 0 to 1% 1 -2 0
tion systems
Low-exergy energy systems

Small-scale cogeneration plants 1880 1 10 to 50% 3 +2 6

Bioenergy villages 2005 4 0 to 1% 1 0 5
Geothermal and hydrothermal
1995 3 0 to 1% 1 0 4
cooling
Long-term thermal energy stor-
1995 3 0 to 1% 1 0 4
age
Mobile heat transport 2009 4 0 to 1% 1 0 5
District heating 1880 1 10 to 50% 3 +2 6

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Market share
in 2011 (time
Market intro-
Product field

product field
of investiga-

Rank in the

dynamics
Diffusion
duction in
Germany

Value

Value
tion)
Solar thermal energy 1978 1 1 to 10% 2 -2 2
Deep geothermal facilities 1984 2 0 to 1% 1 -2 1
Heat pumps 1975 1 10 to 50% 3 +2 6
Highly efficient freezers 2004 4 10 to 50% 3 +2 9
Highly efficient refrigerators 2004 4 1 to 10% 2 0 6
Highly efficient clothes dryers 1998 3 1 to 10% 2 0 5
Energy-saving light bulbs 1985 2 1 to 10% 2 -2 2
Energy-efficient
electric devices

Highly efficient dishwashers 1999 3 50 to 100% 4 +2 9

Induction cookers 1987 2 1 to 10% 2 -2 2
LED lighting fixtures 2007 4 1 to 10% 2 0 6
Master-slave multiple-socket
2000 4 1 to 10% 2 0 6
outlets
Highly efficient circulation pumps 2000 4 1 to 10% 2 0 6
Highly efficient washing ma-
1998 3 50 to 100% 4 +2 9
chines
Passive houses 2000 4 1 to 10% 2 0 6
Prefabricated wood building 1920 1 10 to 50% 3 0 5
Construction and heating

Composite insulation systems 1957 1 1 to 10% 2 -2 1

Heat recovery ventilation 1970 1 1 to 10% 2 -2 1
technology

Windows with triple glazing 1990 3 50 to 100% 4 +2 9

Condensing boilers 1990 3 10 to 50% 3 +2 8
Underfloor and wall heating 1980 2 10 to 50% 3 0 5
Radiator thermostats 1969 1 50 to 100% 4 0 5
Time-controlled thermostat 1999 3 1 to 10% 2 0 5
Hydronic balancing 1970 1 10 to 50% 3 0 4
Inkjet printers 1984 2 50 to 100% 4 0 6
Multifunctional devices 1994 3 50 to 100% 4 0 7
80-plus power supply units 2005 4 50 to 100% 4 +2 10
Green IT end devices

2 ½” hard disks 1992 3 50 to 100% 4 0 7

Windows energy options 1995 3 1 to 10% 2 -2 3
Notebooks 1987 2 50 to 100% 4 0 6
Netbooks 2007 4 10 to 50% 3 +2 9
Nettops/Mini-PCs 2005 4 10 to 50% 3 +2 9
Thin clients 1997 3 1 to 10% 2 -2 3
LCD monitors 1989 2 50 to 100% 4 0 6

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Market share
in 2011 (time
Market intro-
Product field

product field
of investiga-

Rank in the

dynamics
Diffusion
duction in
Germany

Value

Value
tion)
Energy-efficient servers 2005 4 10 to 50% 3 +2 9
Server energy management 2003 4 10 to 50% 3 +2 9
Energy efficiency in data centers

Solid-state drives 2006 4 1 to 10% 2 0 6

Fiber optic cables 1983 2 10 to 50% 3 0 5
Highly efficient uninterruptible
2002 4 50 to 100% 4 +2 10
power supplies
Water-cooled racks 2007 4 1 to 10% 2 0 6
Hot aisle/cold aisle separation 2000 4 1 to 10% 2 -2 4
Free cooling 1980 2 50 to 100% 4 0 6
Blade servers 2001 4 10 to 50% 3 +2 9
Server virtualization 1999 3 10 to 50% 3 0 6
E-mail 1993 3 50 to 100% 4 +2 9
Teleconferencing 1993 3 10 to 50% 3 0 6
Videoconferencing 1991 3 1 to 10% 2 -2 3
Telecommunications and

Virtual answering machines 1997 3 1 to 10% 2 -2 3

online media

Teleworking 1989 2 10 to 50% 3 0 5

MP3 music files 1995 3 10 to 50% 3 0 6
Video on demand 2006 4 10 to 50% 3 +2 9
Online marketplaces for second-
1999 3 10 to 50% 3 0 6
hand goods
Digital cameras 1991 3 50 to 100% 4 +2 9
E-book readers 2008 4 0 to 1% 1 0 5
Hybrid vehicles 1997 3 0 to 1% 1 0 4
Electric cars 1995 3 0 to 1% 1 0 4
3-liter (75 mpg) cars 1999 3 0 to 1% 1 0 4
Sustainable mobility

Natural gas cars 1995 3 0 to 1% 1 0 4

Low-resistance tires 1992 3 1 to 10% 2 0 4
Carsharing 1988 2 0 to 1% 1 -2 1
Ride-sharing agencies 1968 1 0 to 1% 1 -2 0
Mobile navigation devices ena-
2006 4 50 to 100% 4 +2 10
bling drivers to avoid traffic jams
German half-price railcard 1992 3 10 to 50% 3 +2 8
Auto trains 1930 1 0 to 1% 1 -2 0

Case analysis. We prepared a qualitative profile for each case, using secondary infor-
mation. This secondary information was available in the form of market analyses,
life-cycle analyses, websites of inventors, manufacturers, wholesalers, and retailers as
well as product- or use-related Internet sources. In total, about 5,000 sources of in-
formation were accessed and about 1,200 were cited in the 100 case studies. The

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description of the cases in each of the profiles followed a defined format and a given
coding system (cf. Appendix 1). This included key data on the object of innovation
and the diffusion process as well as the 22 variables (cf. Table 3) which we had elabo-
rated as potentially relevant for the trajectory of the diffusion process. In this way, it
was possible to survey qualitative secondary information quantitatively. At the same
time, this en-sured that we surveyed the same data for all cases. In other words, the
procedure is similar to participant observation.
The profile format fulfilled the function of a standardized survey instrument, similar
to a standardized observation protocol. We surveyed the variables using 3-point scales
(2, 1, 0 or 0, -1, -2) and 5-point scales (-2 to +2). The result of the survey was a da-
taset including key data about 100 cases of sustainable innovations as well as values
for the 22 independent variables.
A coding team evaluated the independent variables using the 3-point and 5-point
scales and assigned a value to each factor in each case. For example, we coded the
case “heat pumps” with the value of 0 for the variable “perceptibility,” since the in-
novation is hardly visible to the public and perceptibility can thus neither be assigned
an effect promoting (+1 or +2) or inhibiting (-1 or -2) diffusion. The coding team
comprised five researchers with specific expertise in the particular technology, prod-
uct/service, or market.
We took two measures to ensure inter-rater reliability. First, we conducted a pretest in
which all the researchers (observers) analyzed and coded the same case independently
of one another. We specified details for assessing the cases in a uniform manner on
this basis. Second, at least one person, usually two, checked and evaluated each of the
100 profiles again. The team of five researchers, who then jointly specified the evalu-
ations, discussed any deviations. In this way, we quantified qualitative data in the
present paper and made them accessible to statistical evaluation without claiming in
the slightest to have depicted causal relationships or undertaken measurements. For
this reason, we first carried out the quantitative evaluation descriptively with the goal
of identifying groups of sustainable innovations that are comparable in terms of cer-
tain factors and their diffusion trajectories.
Factor analysis. We conducted a factor analysis to identify linkages between the inde-
pendent variables. The goal of a factor analysis is to reduce the complexity of a da-
taset and potentially discover structures that may not have been surveyed but nonethe-
less exist empirically (Hair et al., 2006; Hardy & Bryman, 2004). A factor analysis
produces new variables that indicate the linkage of each of the 22 empirical factors
with the newly calculated factors in form of factor loading. In other words, the reduc-
tion of complexity is achieved by consolidating factors that “fit together,” as it were,
to form a single new factor. The first step in the factor analysis was to perform calcu-
lations to verify the suitability of the 22 factors for factor analysis. Here, the variable
“institutional obstacles” (factor 16) proved mathematically unsuitable; we excluded it
from the further analysis for this reason. We then calculated the principal component
analysis with a varimax rotation (Hair et al., 2006; Hardy & Bryman, 2004). Com-
pared with other methods of factor analysis, this method has the advantage of maxim-
izing the factor loadings of those factors with especially high loads. This serves to
support content-related interpretation of the newly determined factors and their later
use in cluster analysis. We based the naming of the new factors on our interpretation

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and oriented it toward the 22 original variables and their loading on the factors.
Cluster analysis. In order to identify diffusion paths, it was necessary to elaborate
groups of innovations that are as similar as possible with a view to the factors. In
other words, we posited that some of the sustainable innovations studied here are
similar concerning the factors we had identified in the factor analysis and that influ-
ence the diffusion process. To this end, we used the method of cluster analysis. In
cluster analysis, cases are assigned to groups on the basis of influencing factors. They
are assigned in such a way the homogeneity within a group is maximized while ho-
mogeneity between groups is minimized. In the present case, we conducted a cluster
center analysis using the latent variables identified in the factor analysis (Hair et al.,
2006; Hardy & Bryman, 2004).

4 Results
4.1 Correlation and results from the factor analysis

We tested the correlation between the 22 independent variables and the three depend-
ent variables “market share,” “diffusion time” and “diffusion dynamics” (cf. Table 3).
Table 3. Correlations between 22 independent variables and 3 dependent variables of
100 diffusion cases
Dependent variables
Duration of the
Factor Kendall’s tau-b and approximate significance Market Diffusion
diffusion process since
group Independent variable share dynamics
market introduction
Relative advantage of the innovation
Product- Perceptibility
related Compatibility 0.158*
factors Low complexity
Trialability
User innovators -0.203* -0.175* -0.190*
Adoptor-
Low need for behavior modification 0.316** 0.235**
related
Uncertainties on the part of adoptors 0.264** 0.292**
factors
Price, costs, cost-effectiveness 0.198* 0.160*
Supplier- “Green” pioneers -0.207*
related Renown and reputation of suppliers 0.326** 0.276**
factors Completeness and availability of service 0.269** 0.201* 0.315**
Sector- Role of the industry trade association
related Role of market leaders 0.235** 0.330** 0.385**
factors Intermediaries as change agents
Institutional obstacles
Policy-
Governmental push and pull activities -0.328** -0.164*
related
Lead market policies
factors
Media and campaigns
Path- Path dependencies
related Price development 0.176*
factors Self-reinforcing effects 0.285**
V alues of Kendall’s tau-b: 0 to 0.05: no correlation; up to 0.2: weak correlation; up to 0.5:
medium correlation; more than 0.5: strong correlation. Only those correlations that are at least
significant and at least weak are shown. * significant at 5% level; ** significant at 1% level

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The fact that we could identify a significant correlation with regard to the key de-
pendent variable “diffusion dynamics” for just 9 of the 22 factors suggests that further
latent variables are hidden behind the surveyed variables. For this reason, we con-
ducted a factor analysis (cf. Chapter 3.3) to clarify whether such latent variables that
impact the diffusion trajectory exist. We carried out a principal component analysis
with a varimax rotation (cf. Table 4). We drew mostly on the strong factor loadings (>
0,5 or < -0,5) for the substantive interpretation and characterization of the new fac-
tors. The factor analysis explains 62.9% of the variance, i.e., the seven newly devel-
oped factors can explain 62.9% of the variance in the field. According to Bartlett’s
test of sphericity, the analysis is highly significant (p < 0.01).
Table 4. Factor analysis: Rotated component matrix

Small Influence of

Comprehensibility
Compatibility with

of the innovation
established sup-
Market power of

Incentive to buy
Political push &

Price and cost-

effectiveness
Component

pioneers

routines
pliers

pull

1 2 3 4 5 6 7
Factor 1: Relative advantage of the
-.095 .187 -.082 .687 .135 -.055 .273
innovation
Factor 2: Perceptibility of the innovation .170 .017 .561 -.015 -.167 -.015 -.147
Factor 3: Compatibility of the innovation -.106 -.139 .035 .113 .602 .272 .250
Factor 4: Complexity of the innovation .064 -.078 -.002 .032 .004 .077 .831
Factor 5: Trialability of the innovation .293 -.634 .297 .063 -.099 -.108 .085
Factor 6: User-innovators -.167 -.180 .741 .173 -.032 .085 -.002
Factor 7: Need for behavior modifica-
.128 .060 -.168 -.031 .779 -.183 -.102
tion
Factor 8: Uncertainties on the part of
.031 -.001 -.268 .112 .290 .082 .487
adoptors
Factor 9: Price, costs, cost-
-.030 .184 -.157 .019 -.013 .805 .312
effectiveness
Factor 10: “Green” pioneers -.034 .180 .705 -.231 .249 -.258 .025
Factor 11: Size and reputation of
.730 .040 -.092 .236 .201 .099 .044
suppliers
Factor 12: Completeness/availability of
.467 -.092 .160 .134 .501 .122 .220
service
Factor 13: Role of the industry trade
.354 .626 -.181 -.064 -.036 .156 -.154
association
Factor 14: Role of market leaders .495 -.285 -.417 .196 .089 -.368 -.014
Factor 15: Intermediaries as change
.620 .280 .195 -.142 -.083 -.101 .369
agents
Factor 17: Governmental push and pull -.142 .744 .171 .164 .036 -.314 .141
Factor 18: Lead market policies .069 .725 .197 .167 -.172 .119 -.014
Factor 19: Media and campaigns .483 .193 .417 .209 -.210 .282 -.060
Factor 20: Path dependency .552 -.264 -.056 -.269 -.003 -.011 -.133
Factor 21: Price development .149 .003 .057 .812 -.008 .124 -.100
Factor 22: Self-reinforcing effects .306 -.227 .168 .250 .226 .564 -.300
V alues of the factor loadings: > 0.5 and < -0.5: strong loading; 0.4 to 0.5 and -0.4 to -0.5: weak loading

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The principal component analysis with a varimax rotation revealed seven new factors.
The derivation of the seven new factors can be explained as follows:
Factor 1: Market power of established suppliers. The variables “size and market pow-
er of suppliers,” “intermediaries as change agents,” and “path dependency” load high-
ly on the factor. The variables “role of market leaders,” “media and campaigns,” and
“completeness and availability of products and services on the market” round out the
picture with weak loadings. Overall, a factor emerges that encompasses both the sup-
pliers themselves and the market and policy intermediaries active in their environ-
ment. The new factor is therefore most aptly described as “market power of estab-
lished suppliers.” The high loading of the variables “size and reputation of suppliers”
as well as the high loading of the factor “path dependency” imply the existence of a
factor that would tend to describe the diffusion of incremental innovations of existing
and established products that have already formed their paths. The factor explains
11.3% of the variance of the 22 original factors.
Factor 2: Political push & pull. “Governmental push and pull activities” and “lead
market policies” load highly on the factor, the “role of the industry trade association”
loads weakly. If the role of an industry trade association in relation to the prevalence
and support of an innovation is considered mainly as political lobbying, then the new
factor can be most precisely described by the term “political push & pull.” The factor
is the only one that describes the effect of governmental support instruments on the
diffusion of innovations. The factor explains 11.25% of the variance of the 22 original
factors.
Factor 3: Small influence of pioneers. What is remarkable about this factor is that
both the variables “user-innovators” and “green pioneers” load similarly, even though
the user-innovators take on a pioneering role on the demand side, while the “green”
pioneers are on the supply side. This shows that the influence of the two sides – sup-
pliers and adoptors – should not be considered separately, but can certainly be com-
bined in a single aggregate factor. This factor is described most accurately as “small
influence of pioneers”, since user innovators and small green pioneers usually have
significantly less resources and power to influence market penetration than estab-
lished market leaders and big companies. The factor also refers to possible coopera-
tion between pioneering “green” suppliers and user-innovators, who are supported by
strong “perceptibility of the innovation” as well as a presence in “media and cam-
paigns.” The fact that the role of market leaders loads slightly negatively points to the
fact that they often are not among the first to supply an innovation. For this reason,
one may assume that there is often a division of labor, as it were, between pioneering
suppliers and market leaders. While it is mostly newly established and small compa-
nies that take on the role of pioneering suppliers in the case of radical innovations, the
established companies are more strongly represented in the case of incremental inno-
vations. In the case of radical innovations, market leaders often appear to enter into
the market as followers only at a later point in time. The factor “small influence of
pioneers” explains 10.17% of the variance of the 22 original factors.
Factor 4: Incentive to buy. The variable “price development” loads very highly on the
factor, the variable “relative advantage of the innovation” somewhat less highly. The
factor refers to the high incentive to buy that is triggered by significant price reduc-
tions. The fact that the factor “relative advantage” also loads highly suggests that

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besides a good price, adoptors must perceive both a useful function and an advantage
in order to make the decision to buy. The new factor is therefore most aptly described
as “incentive to buy.” The factor explains 7.7% of the variance of the 22 original
factors.
Factor 5: Compatibility with routines. The adoptor-related variable “need for behavior
modification,” the product-related variable “compatibility,” and the supplier-related
variable “completeness and availability of service” load highly on the factor, whereby
“need for behavior change” loads most highly by far. All three original variables refer
to “compatibility with routines,” which is why this is an appropriate term for the new
factor. It suggests that the adoptors are in principle change-averse in terms of both
purchasing and use and that it is safe to assume that an innovation’s ability to prevail
as well as its diffusion dynamics depend decisively on its compatibility with routines
during purchase and use. The factor explains 7.65% of the variance of the 22 original
factors.
Factor 6: Price and cost-effectiveness. The variable “price, cost, cost-effectiveness”
loads highly on the factor, the variable “self-reinforcing effects” does so somewhat
less. In contrast to the factor “incentive to buy” (see above), this is about the price
difference between the innovation and (established) competing products or about the
cost-effectiveness of innovative durable consumer goods or investment goods. High
cost-effectiveness seems to result in self-reinforcing effects which obviously also
have an effect in the case of this factor. The new factor is to be called “price and cost-
effectiveness.” It explains 7.5% of the variance of the 22 original factors.
Factor 7: Comprehensibility of the innovation. The product-related variable “com-
plexity of the innovation” loads highly on this factor, the adoptor-related variable
“uncertainties on the part of adoptors” significantly less highly. If the comprehensibil-
ity of a product increases, i.e., if its complexity is reduced, this apparently diminishes
uncertainties on the part of adoptors. That is why the new factor will be called “com-
prehensibility of the innovation.” It explains 7.4% of the variance of the 22 original
factors.
The analyses show that the original classification of the 22 factors in product-,
adoptor-, supplier-, sector-, policy, and path-related factors for descriptive purposes
does not readily result in the identification of individual factors as primary drivers of
the diffusion process. Instead, the seven newly identified factors make clear that in-
fluences from several “spheres of influence” (product, adoptor, supplier, sector, poli-
cy, path) interact and have joint impacts. The new factors then had to be tested for
their significant effects on the dependent variables and their sustainability effects.
Since the newly formed factors are metric variables, we calculated the Pearson coeffi-
cient of correlation.
Various correlations between the seven new factors and the dependent variables exist.
In our sample, the factor “market power of established suppliers” correlates most
strongly with the dependent variables. This is true of the market share, the speed of
diffusion, and the indicator for diffusion dynamics.

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Table 5. Correlation between 7 independent variables and 3 dependent variables of 100 diffu-
sion cases
Pearson coefficient of correlation
Duration of the Diffusion
Market share
Factor diffusion dynamics
(Kendall’s tau-b)
(Kendall’s tau-b) (Pearson)
Market power of established suppliers 0,240** 0,209** 0,321**
Political push & pull -0,144*
Small influence of pioneers -0,217** -0,193** -0,294**
Incentive to buy
Compatibility with routines 0,190* 0,255*
Price and cost-effectiveness 0,156*
Comprehensibility of the innovations
*The correlation is significant at the 0.05 level (2-tailed). **The correlation is significant at
the 0.01 level (2-tailed).
For the factor “political push & pull,” we could not determine any significant correla-
tions with the indicators market share and diffusion dynamics. Possible reasons in-
clude that government interventions and political lobbying on the part of trade associ-
ations are not equally relevant across all diffusion cases, but differ according to prod-
uct field and type of diffusion. In other words, this could be an indication that it is
important to differentiate between different kinds of innovations and diffusion paths.
The fact that the factor “small influence of pioneers” correlates negatively with the
dependent variables can be explained by the fact – as is also the case with the individ-
ual original factors – that many innovations introduced to the market by “green” pio-
neers are (1) marketed by lesser-known firms, so they cannot benefit from the ad-
vantages of a well-known brand or company in terms of brand awareness and trust,
and (2) that far fewer resources are available for marketing and distributing these
innovations because they are often supplied by small businesses. User-innovators are
also typically individuals who may vigorously advocate an innovation because they
expect concrete advantages from using it, but generally have a small amount of re-
sources to promote the prevalence and availability of the innovation. In addition, it is
important that the share of the radical innovations introduced to the market by
“green” pioneers is higher, which explains longer diffusion times. For at the 1% level
(p = 0.002), there is a significant correlation of medium strength (tau-b = 0.276) be-
tween the characteristic “radical innovation or incremental innovation” and the diffu-
sion time, which is longer for radical innovations.
The factors “incentive to buy” and “comprehensibility of the innovation” do not dis-
play any correlations with the dependent variables in the sample studied. Here, too,
this may be caused by the fact that the price development of innovative products and
their relative advantage as well as the comprehensibility of a new product or service
on the market may not be equally important across all product groups and diffusion
cases. This could be an indication that it is important to differentiate between different
kinds of innovations and diffusion paths.
“Compatibility with routines” displays a significant correlation both for market share
and for the indicator “diffusion dynamics.” Thus, the factor appears to be of substan-
tial importance for the trajectory of the diffusion process across all 100 diffusion

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cases studied. The results also suggest that compatibility with routines is very strong
specifically in the case of the incremental innovations offered by market leaders and
that this has positive effects on market share and diffusion dynamics.
“Purchase price and cost-effectiveness” display a weakly significant correlation with
market share. The dependent variable “diffusion dynamics” is more important, how-
ever. Here, we could not ascertain a significant correlation in the sample studied. In
this case, too, the reason might be that the factor is not equally important across all
product groups and diffusion cases. So this could also be an indication that it is im-
portant to differentiate between different kinds of innovations and diffusion paths.
4.2 Results from the cluster analysis

As the calculations of the correlations and the factor analysis have shown, it is possi-
ble only to a limited extent to identify factors significant across all diffusion cases.
For this reason, it made sense to examine whether certain groups of diffusion process-
es could be identified within the totality of all diffusion cases. In order to identify
diffusion paths, it was necessary to elaborate groups of innovations that are as similar
as possible with a view to the factors. The cluster analysis (cf. 3.3.6) yielded five
clusters shown in Table 6.
Table 6. Cluster centers
Cluster
Efficiency-enhancing

with unclear or long-

pioneering suppliers

havior modifications
Radical innovations
requiring major be-

Complex products
investment goods

supported invest-
ment goods from
from established

Comprehensible
products for end

Government-

term benefits
suppliers

users

1 2 3 4 5
Market power of established
.99160 .34578 -.47389 -.64769 -.80748
suppliers
Political push & pull -.32205 -.32389 .86447 -.00058 .14153
Small influence of pioneers -.55480 -.10547 .61458 .31545 -.37331
Incentive to buy -1.11651 .31417 .02196 -.14456 .08638
Compatibility with routines -.05103 .26034 .83118 -1.86155 -.20292
Price and cost-effectiveness .72731 -.36589 .65029 .56147 -1.02361
Comprehensibility of the
-.38440 .36159 .05332 .47251 -1.53775
innovation

The five clusters identified can be described by the key characteristics, actors, and
strength of diffusion dynamics shown in Table 7.

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Table 7. Characterization of clusters of diffusion of sustainable innovation

Key Diffusion
Cluster characteristics Actors dynamics Examples

High cost-effectiveness due to Highly efficient

increased efficiency uninterruptible
Efficiency- Predominantly investment goods power supply
Predominantly
enhancing Predominantly incremental innova- (UPS)
established
investment tions suppliers with High Energy-
goods from
Minor functional benefit good reputa- efficient serv-
established
Require few behavior modifications tions ers
suppliers
Government support does not play Videoconfer-
an important role encing services

Good comprehensibility of the

innovation
Predominantly Organic milk
Comprehen- Almost exclusively goods for end
users established Highly efficient
sible prod- dish-washer
suppliers with High
ucts for end Predominantly well-known products
good reputa- MP3 music file
users with improved characteristics
tions
Good trialability
Require few behavior modifications
Govern- Strong political push & pull
ment- Almost exclusively investment Photovoltaics
goods High signifi- Passive hous-
supported
cance of es
investment Good technical compatibility
“green” pio- Medium
goods from Few behavior modifications on the Wind power
neers and the
“green” part of purchasers plants
government
pioneering Cost-effectiveness (because of
suppliers government support)
Strong need for behavior modifica-
tions on the part of users
Thin client &
Radical Predominantly high degree of server-based
innovations innovation High signifi- computing
requiring Obstacles because of strong path cance of start- Low to Bioenergy
major be- dependence ups and young medium villages
havior modi- Good comprehensibility of the businesses
fications Carsharing
innovation
No self-reinforcing effects yet in
spite of government support
Complex products or systems Long-term
thermal energy
Complex High purchase price or unclear storage
cost-effectiveness Predominantly
products
small business- Absorption
with unclear Low capacity for connection to Low
es with scant refrigeration
or long-term existing technical system requires reputation systems
benefits change of system
3-liter (75 mpg)
Weak political push & pull cars

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5 Conclusions
5.1 Key insights

In order to clarify the question “What are key factors influencing diffusion dynamics
of sustainable innovation?”, we tested the correlation between 22 independent varia-
bles and three dependent variables: “market share,” “diffusion time,” and “diffusion
dynamics.” The fact that we could identify a significant correlation with regard to the
key dependent variable “diffusion dynamics” for just 9 of the 22 factors suggests that
further latent variables are hidden behind the surveyed variables. For this reason, we
conducted a factor analysis, which enabled us to identify seven new factors. Three of
these new factors proved to correlate significantly with the diffusion dynamics of all
100 sustainable innovations investigated. The “market power of established suppliers”
and the “compatibility with routines” correlate positively with diffusion dynamics and
the “small influence of pioneers” negatively.
As the calculations of the correlations and the factor analysis have shown, it is possi-
ble only to a limited extent to identify key factors significant across all diffusion cas-
es. For this reason, it made sense to examine whether certain groups of diffusion
processes could be identified within the totality of all diffusion cases. The cluster
analysis showed that five groups of sustainable innovations differ significantly in
terms of the factors influencing the diffusion process and in terms of diffusion dy-
namics. The empirical investigation of 100 sustainable product and service innova-
tions thus revealed that diffusion processes of sustainable innovations differ substan-
tially and in which regard. This answers our second research questions “To what
extent do diffusion processes of sustainable innovation differ from each other, and
can different groups of diffusion processes be identified?” The characterization of
clusters of diffusion of sustainable innovation allows for insights which factors, ac-
tors, and institutional settings are characteristic of different groups of diffusion pro-
cesses, which clarifies our third research question.

5.2 Limitations

Since no large-scale study across sectors or product fields on the diffusion of sustain-
able innovations has been conducted to date, this study broke new ground for empiri-
cal research. As a pioneering empirical investigation in a very young field of research,
the study naturally had to limit its scope. The results can claim validity only for sus-
tainable product and service innovations and not for other types of innovations such
as process, institutional, or social innovations. Furthermore it should be underlined
that the investigation was limited to diffusion processes in one specific country (Ger-
many). Despite the fact that this is one of the first large-scale studies on the diffusion
of sustainable product and service innovations, the number of 100 cases is still limited
when it comes to applying techniques of inductive statistics. In our sample we had 83
product innovations, but only 13 service innovations and 4 mixed product-service
innovations.
5.3 Managerial implications

We identified three factors that correlate significantly with diffusion dynamics. This

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finding is particularly relevant for innovation management and new venture creation:
(1) “Market power of established suppliers” correlates positively and the “small influ-
ence of pioneers” negatively with diffusion dynamics. Start-ups often underestimate
the power and relevance of established companies and market players. If a new ven-
ture follows a strategy of fast growth, it should thoroughly check market forces and
consider strategic alliances with established companies. (2) “Compatibility with rou-
tines” correlates positively with diffusion dynamics. This finding underlines the ur-
gent necessity to assess the impact of a new product or service on user behavior in a
very early stage of product development and to check the compatibility with routines
systematically in the testing phase. Innovation management literature provides a
broad array of methodologies and tools for user integration in idea and product devel-
opment as well as in product testing. Innovation managers and decision makers
should take this aspect of compatibility with routines very seriously when deciding on
market introduction and developing marketing strategies.
The three factors which we identified as especially relevant for the diffusion success
of sustainable product and service innovations as well as the differences between the
five clusters of diffusion cases also have important implications for policy makers: (1)
Our findings point out that some types of sustainable product innovations require
substantial governmental support in order to diffuse. While the group of “Govern-
ment-supported investment goods from green pioneering suppliers” (photovoltaics,
wind energy etc.) is already well supported in Germany, policy makers and govern-
mental organizations should thoroughly check the group of “Complex products with
unclear or long-term benefits” as to their need for additional governmental interven-
tion. (2) The fact that “compatibility with routines” correlates positively with diffu-
sion dynamics leads to the recommendation that governmental R&D funding pro-
grams should consider this aspect more explicitly. This can, for example, be done by
making it a requirement to assess this aspect in government-funded R&D projects and
by providing a higher funding rate for radical innovations which require major chang-
es in user behavior or organizational routines.

5.4 Further research

As the seven factors developed in the factor analysis demonstrate, what matters in the
development of intervention strategies is precisely the interplay of the various fields
of intervention and the simultaneous design of the factors. It is therefore the task of
further analysis and research to develop a multi-intervention approach for influencing
the diffusion of sustainable innovations. The evolutionary concept of diffusion paths
presented in this article develops significant explanatory power on the basis of which
faster or slower diffusion and the success or failure of sustainable innovations can be
better understood. The next step in research on diffusion paths of sustainable innova-
tion is to connect the insights on the factors, actors, and institutional settings which
are characteristic of different groups of diffusion processes with the examination of
key events (tipping points) in the trajectory of these processes.
The limits of our investigation outlined above indicate further research needs. One
important question, for example, is whether there are significant differences between
the diffusion processes of innovative sustainable products and innovative sustainable
services. Answering this kind of questions will permit the development of diffusion

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paths of sustainable innovation and will offer concrete starting points for interven-
tions by policy-makers, innovation actors, and societal groups.

Acknowledgements

This article comprises key findings from the research project “Diffusionspfade für
Nachhaltigkeitsinnovation“ (Diffusion paths of sustainable innovation), which was
funded by the German Federal Ministry for Education and Research (Funding ID
16I1601) and implemented by the Borderstep Institute for Innovation and Sustainabil-
ity, Berlin, Germany (www.borderstep.org). In the course of the project the authors
were supported by a large research team. We are grateful for this support and would
like to thank especially our Borderstep colleagues Wiebke Winter and Benjamin
Gryschka who were involved in the development of the 100 case profiles and contrib-
uted to the dataset of almost 1000 pages, which was the basis for our statistical analy-
sis. We would also like to give a special thank-you to Dr. Merle Hattenhauer, who is a
professional statistician and expert in SPSS-based techniques such as factor and clus-
ter analysis. Her support was extremely helpful and secured the statistical validity of
our research.

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Appendix 1: Profile and coding system for diffusion cases

Table 8. Case profile

Description of the diffusion case

Object:
What exactly is the object of innovation?
What about it is new?
How can the innovation be differentiated from previous/other prod-
ucts/services/solutions?
Is this a product [ ], a service [ ], or a combination of the two [ ]?

Market introduction:
When was the innovation introduced to the market in Germany?
Was it introduced to the market by established suppliers [ ], new companies1 [ ], or
both [ ]?

Adoptors:
Who are the adoptors?
End users (households) [ ], professional users (businesses, public sector, etc.) [ ]?
End users: Is this a product/service purchased routinely (i.e., purchased more than
once per year) [ ] or not [ ]?
Professional users: Is this a capital good (depreciable) [ ] or a consumable [ ]?

Sector
The innovation is in which sector?
Description: NACE code: 2
When was the industry or trade association in Germany established? ______

Key events
Which events had major effects on the diffusion trajectory to date, and which ones are
responsible for bifurcation and multifurcation points or for linkages between paths?

Squeeze out
Is the innovation on the market at the same time as its predecessor product, or is only
one or the other on the market?

1
A “new company” is defined here as a company that was established for the purpose of developing and
marketing the innovation in question.
2
Nomenclature statistique des activités économiques dans la Communauté européenne (NACE) is the
Statistical Classification of Economic Activities in the European Community.

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Both at the same time [ ], one or the other [ ]

Basic innovation
Is this a basic innovation or an incremental innovation?
Basic innovation [ ], incremental innovation [ ]
Data collection about the individual diffusion cases and coding of the values of the
individual factors followed the format described above.
For each diffusion case, exactly one value was assigned to each factor. We gathered
the information required for this coding from documents available online and offline
and documented the sources in an appendix. We studied a total of approx. 5,000
sources, most of them on the Internet, and cited approx. 1,200. In order to ensure
intersubjective reproducibility and inter-rater reliability, a coding team composed of
several people coded the case profiles, and team members reviewed each other’s
work.
As a matter of principle, the coding referred to the entire diffusion process to date, i.e.,
to the period from market introduction to today, using the information available. Where
differentiation according to various phases was necessary, we noted this explicitly.
Coding followed the principle of rejecting the null hypothesis. In general, we assumed
each factor to have zero influence. Only in cases where the empirical information
suggested a different assumption in a manner that was indisputable and intersubjec-
tively transparent did we assign a value of 1 or 2 for a supporting or very strongly
supporting influence or -1 or -2 for an inhibiting or very strongly inhibiting influence.

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HANDLE: http://hdl.handle.net/10216/84410

Table 9. Code system for the assessment of factors in diffusion cases

Product-related factors Code

1. Relative advantage of the innovation: 2: New useful function or strong cost advantage
Which functional or economic advantage does 1: Less important new function or small cost ad-
the innovation have in comparison with the vantage
predecessor product?
0: No relative advantage discernible

2. Perceptibility: 2: Clearly perceptible AND perceptible in public

In the absence of particular efforts to provide 1: Less clearly perceptible or perceptible only in
information about the innovation, can third interior spaces or the like
parties perceive its use?
0: Not perceptible

3. Compatibility: 2: The innovation can easily be connected and has

synergies with its environment
Does the innovation have the capacity for
connection to the existing technical, institution- 1: The innovation can easily be connected and results
al, and cultural systems? in small advantages in its environment
0: Neutral
-1: Connection requires time and effort or learning
-2: Capacity for connection can be established only
with difficulty

4. Complexity: 0: Uncomplex
Is the innovation complex for the adoptor, and -1: Slightly complex
is specialized knowledge required to under-
stand it? -2: Requires specialized knowledge

5. Trialability: 2: Easy to try out and at low cost

Can users try out the innovation without much 1: Trying out the innovation requires considerable
time and effort? time and effort
0: Cannot be tried out

Adoptor-related factors Code

6. User innovators: 2: A larger group of innovators exists

Can user innovators be identified during the 1: A smaller group of innovators exists
innovation process or at the time of market intro-
0: Unknown
duction? If so, who are they, and what kind of
innovators are they? Are there indications that
user innovators were integrated in the manu-

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facturer’s innovation process in a targeted

fashion?

7. Need for behavior modification: 0: No behavior modification required

Does use of the innovation require behavior -1: Behavior modification required
modification on the part of the adoptor?
-2: Significant behavior modification required

8. Uncertainties on the part of adoptors: 0: No uncertainties known

To what extent were or are there uncertainties -1: Minor uncertainties
on the part of the adoptors concerning the
innovation? -2: Significant uncertainties

9. Price, costs, cost-effectiveness: 2: High cost-effectiveness or cheaper

To what extent do aspects relating to price, 1: Lower cost-effectiveness or somewhat cheaper
costs, or cost-effectiveness support or inhibit
adoption of the innovation? 0: Neutral
-1: Slightly uneconomical or somewhat more expen-
sive
-2: Significantly uneconomical or significantly more
expensive

Supplier-related factors Code

10. “Green” pioneers: 2: The innovation was/is supplied by pioneers with

explicitly “green” or sustainable goals
Do pioneering suppliers of the innovation have
ecological goals and convictions? 1: “Green” or sustainable goals played a (minor) role
0: No “green” goals on the part of the pioneering
suppliers

11. Renown and reputation of the suppliers: 2: Well-known companies with a good reputation
supply the innovation
Do suppliers of the innovation who are well-
known and have a good reputation exist al- 1: Less well-known companies supply the innovation
ready?
0: Only suppliers who are not well-known

12. Completeness and availability of ser- 2: Availability and service are guaranteed everywhere
vice:
1: Minor limitations to availability or service
Is the innovation offered for sale on the market
with a complete service package, and is it 0: Neutral
easily available to customers? -1: Poor availability or lacking service have slightly
inhibiting effects
-2: Poor availability or lacking service have distinctly
inhibiting effects

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Sector-related factors Code

13. Role of the industry trade association: 2: Strong and active industry trade association
Is an industry trade association in existence at 1: Less strong or less active industry trade associa-
the time of market introduction; does it have tion
political influence, and does it use it for sup-
porting the innovation? 0: No industry trade association

14. Role of market leaders: 2: Market leaders were involved in introducing the
innovation from the beginning
Who were the market leaders in the industry in
which the innovation was introduced, and do 1: Market leaders provided slight support for the
they support or inhibit its diffusion? innovation
0: Market leaders remained neutral
-1: Market leaders slightly inhibited the diffusion
-2: Market leaders steadfastly opposed the diffusion

15. Intermediaries as change agents: 2: Numerous intermediaries steadfastly supported the

diffusion
To what extent have market intermediaries
(e.g., wholesalers and retailers) and policy 1: Some intermediaries supported the diffusion
intermediaries (e.g., energy, efficiency, climate
protection agencies) accelerated or inhibited 0: No active intermediaries known
the diffusion trajectory to date?

Political factors Code

16. Institutional obstacles: 0: No obstacles

To what extent have legal or administrative -1: Minor obstacles
rules inhibited the diffusion of the innovation to
date? -2: Significant obstacles

17. Governmental push and pull activities: 2: Significant support

To what extent was the diffusion of the innova- 1: Limited support
tion accelerated by regional, national, or EU-
0: No support
wide provisions (push) or support activities
(pull)? Did explicit environmental or sustaina-
bility goals play a role?

18. Lead market policies: 2: A lead market policy is being pursued actively
Is the innovation part of a targeted lead market 1: Minor aspect of a lead market
policy at the regional, national, or EU level? Do
explicit environmental or sustainability goals 0: Unknown

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play a role?

19. Media and campaigns: 2: The innovation was a topic in the media for a
longer period of time
To what extent did the media (press, radio, TV,
etc.) and NGO campaigns accelerate or inhibit the 1: The innovation has been a topic in the media spo-
diffusion trajectory? radically
0: Reporting about the innovation is rare

Path-related factors Code

20. Path dependencies: 2: The innovation developed very rapidly to become

the dominant design
To what extent have technological or economic
path dependencies inhibited the speed of 1: The innovation has achieved the status of domi-
diffusion to date? nant design in some market segments
0: Neutral
-1: Predecessor products inhibited diffusion because
of minor lock-in effects
-2: Predecessor products inhibited diffusion because
of major lock-in effects

21. Price development: 2: The price has decreased significantly since market
introduction, for example through economies of
How has the price (adjusted for inflation) scale or subsequent innovations
developed over the course of the diffusion
process? 1: The price has decreased slightly
0: The price has remained constant or has increased

22. Self-reinforcing effects: 2: Significant critical mass phenomenon

Can self-reinforcing effects, e.g., imitation of 1: Slight critical mass phenomenon
role models/celebrities/opinion leaders or
critical mass phenomena be observed? 0: No self-reinforcing effects

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Data collection about the effects of the diffusion followed the format documented
below.

Table 10. Code system for the assessment of factors in diffusion cases

Categories of effects Code

Effects at the product level: 2: Significant improvement compared with the prede-
cessor product
Does the individual product have a proven
beneficial social or ecological effect? Are facts 1: Slight improvement
and figures available in this regard?
0: No improvement known

Rebound effects: 0: No rebound effects known or to be expected

Are rebound effects to be observed, or are -1: Rebound effects very likely to be expected
they likely to occur in the future?
-2: Significant rebound effects are already proven or
obvious

Ability for re-invention: 2: This is a basic innovation that obviously creates

many new opportunities
Does the innovation provide the opportunity for
regional or user-specific modifications and 1: Individual modifications or subsequent innovations
inventions? Does the innovation provide a are known
basis for subsequent innovations?
0: Unknown

Diffusion curve: Uncoded: Documentation of development of market

share over the longest possible period of time, depend-
Which data about the diffusion have become ing on data availability
known over time, and how large is the market
share of the innovation in Germany today?

Market penetration: 4: 50 to 100%

What is the market share of the innovation on 3: 10 to 50%
the accessible market at this point in time?
2: 1 to 10%
1: 0 to 1%

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