Does green corporate investment crowd out other business investment?

Weche, John P.

doi:10.1093/icc/dty056

Cited by 10 publications

(12 citation statements)

References 33 publications

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“…Restrained by resources, it is a huge strategy for an organization to shift from traditional technological innovation to green innovation (Hottenrott and Rexhuser, 2015). Supports and implementation in green technology investment would necessarily crowd out other business investment (Weche, 2019) and lead to reduction of innovation outputs and mount of financial uncertainty (Petroni et al, 2019). Under the guidance of harmonious balance, the equilibrium allocation between green research and non-green counterpart is badly needed to be addressed for decision-makers inside and outside the organizations (Weche, 2019;Xing and Starik, 2017).…”

Section: Introductionmentioning

confidence: 99%

Green research intensity and diversified performance: the moderating role of environmental regulation

Nie

Gong

Lai

2022

EJIM

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PurposeWhile implementing green innovation-driven strategies when facing growing grim environmental problems and the realistic demands of achieving high-quality development is increasingly urgent, changing abruptly is inevitably detrimental to the smooth functioning of social and economic development. Restrained by resources, innovation-driven strategy is a huge strategy for an organization to shift from traditional technological innovation to green innovation. Supports and implementation in green technology investment would necessarily crowd out other business investment and lead to reduction of innovation outputs and mount of financial uncertainty. Under the guidance of harmonious balance, the equilibrium allocation between green research and non-green counterpart is badly needed to be addressed for decision-makers inside and outside the organizations. The differentiated inputs of them would lead to different effects on organizational performance in practice.Design/methodology/approachThe authors first conducted a Hausman test on green research intensity (GRI) and innovation performance, economic performance, social performance, and environmental performance, respectively. Adopting the fixed effects model for estimation seems accurate, if there is no significant heteroscedasticity shown in the BP test. The authors then adopted the least square dummy variable method to handle individual heterogeneity (Xia et al., 2020). After controlling the industry effect and time effect simultaneously, the results were consistent with that of fixed effects model, thereby eliminating the impact of heteroscedasticity.FindingsThe authors construct a multi-dimensional performance system—innovation performance, economic performance, social performance, and environmental performance—to probe into the influence of GRI from the resource-based view and allocation theory. Different performance does not benefit equally from increasing the intensity of green research. Performance increase may squeeze out the quantity of total innovation but can compensate quality for knowledge spillovers of green technology. The organization's growth and long-term value may be beneficial from the increase, but not the short-term financial performance. While the relationship between GRI and social performance has the characteristic of reverse U-curve, there has to be some scale of green research to gain considerable and nonlinear environmental performance. Low level of green research may increase pollution until green research has cross over the inflection point. These relationships are intensely moderated by the environmental regulation.Research limitations/implicationsBecause of the focus of this study is on the organizational performance of green research, the analysis comes with some limitations that should be addressed in future research. Data were inter-professional, with large enterprises and small businesses innovating green technology at the same time. Though the hypotheses presented here were grounded in existing theoretical rationale, the generality of this study cannot be assumed. Multi-performance of green activities in small- and medium-sized businesses should be further explored. Additionally, concrete index of the corresponding evaluation system constructed here contribute more to practical activities of green innovation. Refinement of synergy performance index is the task for future work. Further, grounded in Chinese context, the authors' results could be compared with other scenario with institutional heterogeneity to provide detailed evidences for institutional theory. Future studies could also move forward to longitudinal case study to delicately investigate the performance differentiation of green research when in different development stage.Originality/valueFirst, what and how the authors do is novel as the authors use listed Chinese manufacturing companies to probe into the complex relationship between GRI and multiple performance rather than discussing the performance of green innovation input from a single perspective merely. Second, the authors systematically define the performance as economic performance, environmental performance, social performance and innovation performance in depth, which consider adequately the tangible and intangible value as well as internal and external benefits of green research. And finally, in the context of environmental regulation, the study discusses the differentiation of the increase of green research intensity from the perspective of resource constraints, providing reference for optimizing the resource allocation in green and non-green research and solving the decoupling between earnest social appeal and sluggish or reluctant green behaviors.

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Section: Introductionmentioning

confidence: 99%

Green research intensity and diversified performance: the moderating role of environmental regulation

Nie

Gong

Lai

2022

EJIM

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“…Hottenrott and Rexhäuser (2015) show that in Germany, regulation-induced green technology pushes out other R&D investments (2006)(2007)(2008). Using a panel of newly established German manufacturing firms, Weche (2019) argues that investment in environmental protection crowds out investment in other aspects of the firm.…”

Section: Crowding-out Effect Of Environmental Innovationmentioning

confidence: 99%

When does environmental innovation crowd out process innovation? A dynamic analysis

Shang

2022

Manage Decis Econ

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It is known that environmental innovation may crowd out process innovation. Less known are the exact conditions under which crowding‐out effect occurs. This article fills the gap by developing a dynamic control model of environmental and process innovation. The result shows that when the depreciation rate of process innovation is sufficiently high, environmental innovation investment crowds out process innovation investment. By comparing monopolist and social planner optimum, we find that the problem of insufficient investments can happen for environmental and process innovation for a smaller emission tax.

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“…Despite the prevalence and importance of the subsidies to firm innovation (Hu and Deng, 2019; Jia and Ma, 2017; Sung, 2019; Szücs, 2018), some studies have paid increasing attention to their crowding-out effects. The crowding-out effects are usually referred to the following two phenomena: The use of one decreases the use or participation of the other (Bahal et al , 2018; Chakraborty et al , 2018; Huffman and Bognanno, 2017; Weche, 2018); and The use of one eliminates the benefits or positive roles of using the other (Cao and Lumineau, 2015; Fong et al , 2019; Gubler et al , 2016; Hunt and Fund, 2016). …”

Section: Introductionmentioning

confidence: 99%

“…The use of one decreases the use or participation of the other (Bahal et al , 2018; Chakraborty et al , 2018; Huffman and Bognanno, 2017; Weche, 2018); and…”

Section: Introductionmentioning

confidence: 99%

Do government subsidies crowd out technological capabilities?

Chen

Xiang

et al. 2020

CMS

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Purpose Extant research on the crowding-out effects of government subsidies on the positive role of firm innovation resources or activity remains limited. This paper aims to investigate the crowding-out effects of subsidies on the utilization of technological capabilities and also the contingency mechanisms of market-oriented economy based on the resource-based view (RBV), given the co-existence of the subsidies and technological capabilities for firm innovation in transitional economy. Design/methodology/approach This paper used panel data of 115 Chinese high-tech firms from 2002 to 2010. Fixed-effects model was used to test several hypotheses. Findings This paper empirically demonstrates that the subsidies crowd out the utilization of firms’ technological capabilities for invention outcomes in the near-term. Furthermore, this paper finds that the crowding-out effects are weaker when firms have high export intensity or are located in provinces with high market-oriented systems. Research limitations/implications The findings of this paper apply to Chinese firms. Future research could test their generalizability to different samples and other transitional economies. Practical implications This paper highlights the crowding-out effects of the subsidies, revealing that high-tech firms should balance the direct effects and crowding-out effects of the subsidies. Originality/value This paper highlights the neglected interactions between the subsidies and technological capabilities based on RBV and provides a more nuanced understanding of the crowding-out effects of the subsidies in transitional economy.

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Does green corporate investment crowd out other business investment?

Cited by 10 publications

References 33 publications

Green research intensity and diversified performance: the moderating role of environmental regulation

Green research intensity and diversified performance: the moderating role of environmental regulation

When does environmental innovation crowd out process innovation? A dynamic analysis

Do government subsidies crowd out technological capabilities?

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