The recent ‘greening’ of the economy represents possible one of the most profound examples of economic change. While the environment used to be considered a burden to business this perspec-tive has changed making ‘eco-innovation’ increasingly recognized as a driver of economic devel-opment. Evolutionary economic research into the greening of industry and the economy is, howev-er, limited, so explanations of this dramatic change are lacking. This paper seeks to remedy this gap and forward evolutionary explanations and historical cases on the dynamics and scope of green economic change. The theme of the greening of industry and the economy is of interest because of the focus on the fundamental social and economic difficulties of changing direction in technology. Defining the greening of the economy as a techno-economic paradigm change the paper suggests expanding on Perez’s framework (Perez, 1983, 2000, 2010) of such paradigmatic changes. While paradigmatic changes are often seen as induced by a technological major ‘key factor’, the greening of the econo-my presents a special case. It is rather, the paper suggest, on the one hand, the evolution of a new green generic trajectory of resource efficient problem solving, and simultaneously, the emergence of new green selection criteria on the market. These lead to a series of interrelated eco-innovations, which gain still more force as the green market matures. In the search for the origins of paradigmatic changes, the paper suggests to focus on the neglected ongoing firm learning. In seeking to link up changes at the micro-level of firms with macro institu-tional and social changes, the paper suggests to synthesize insights from the long wave discussion, innovation systems theory and the evolutionary capabilities approach. The change in the underlying technological trajectory and the changes in selection mechanisms, the paper argues, evolve to a large degree as part of interactive, creative economic processes between firms. The evolutionary capabilities perspective is important in contributing to a better micro theoretical framework of inno-vation systems theory, in contributing to explain when and where interfirm coordination and learn-ing take place and hence the direction of (green) economic evolution. More specifically they are the sum of three interrelated processes. Ongoing (ex ante) coordination, conflictual (ex post) coordina-tion, and knowledge cooperation. Firms, it is argued, do make each other go green as part of the economic process, entailing major in-stitutional and organizational changes which form important parts of the green economic evolution. The greening of the economy reflects important features of modern complex economic systems, making room for new broader, value-based notions of innovation.
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14th International Schumpeter Society Conference, 2012