Why does R&D investment matter for green research networks?

Green innovation is crucial for sustainable development and requires the integration of different knowledge and capabilities. The European Commission has promoted collaborative research initiatives to foster networks among institutional sectors through European Framework Programs. These programs involve partners of different regions and institutional sectors (universities, public research centers, firms) and the heterogeneity of partners is expected to facilitate the production and diffusion of knowledge, thereby favouring the green innovation of the regions belonging to the network conditional on building the necessary absorptive capacity. This study looks at the role of intra and extra-regional collaborations and at the mediating role of R&D investment for green innovation in European regions from 2003-2021. R&D investment is expected to enhance absorptive capacity, facilitating effective knowledge transfer within green innovation networks. Key findings from the research suggest that both intra and extra regional collaborations matter for green innovation and that higher levels of R&D investment significantly boost the positive effect of networks on green innovation. This relationship underscores the importance of sustained financial commitment to R&D activities, which not only enhances the internal capabilities but also amplifies the benefits derived from external collaborations. The findings of the study have critical implications for policymakers and managers who are aiming to optimize collaborative efforts in sustainability projects. Results explain why EU-supported cooperative initiatives and policies are needed to boost innovation and to contribute to the EU's achievement of climate neutrality by 2050 through green innovation. The formation of networks is an important tool for fostering private-public collaborations and stimulating the applicability of new ideas in the commercial sphere but, due to the complexity of green knowledge, it requires complementary private and public investment in R&D for building absorptive capacity and maximizing its benefits. Key takeaways: 1. Participation in European green networks enhances regional green innovation. 2. Effective knowledge transfer requires a moderate to high level of R&D expenditure. This investment ensures that firms have the necessary capabilities to absorb and utilize external knowledge effectively. 3. Policy frameworks should support sustained R&D investment to enhance absorptive capacity.