Eco-Innovation and Firm Performance: Evidence from South America

Abstract

Eco-innovation has received a great deal of attention in academia and the business sector because it promotes a firm’s sustainable development and seeks to improve its performance. The prime objective of this study was to analyze the effect of the process, organization, and product eco-innovation on the company’s financial and environmental performance. Using a structural equation model estimated by maximum likelihood and a sample from 214 South American manufacturing companies in Colombia, Ecuador, and Perú, we found that organizational eco-innovation (OE) and process eco-innovation (PCE) are positively and significantly associated with the firm’s environmental and financial performance. In contrast, product eco-innovation (PDE) is not significantly associated with the two types of performance described. Likewise, OE has a significant and positive indirect influence on PDE, environmental performance, and financial performance. These findings suggest that OE and PCE positively affect the firm’s performance. On the contrary, PDE does not have this effect, extending the discussion that eco-innovation is specific to the context of the study.

Eco-innovation and performance of SMEs in Ecuador

“…Our results support the prediction of H1, consistent with previous findings that green design is a useful tool for improving organizational performance (Almeida and Wasim, 2022; Barriga Medina et al , 2022; Wang and Sarkis, 2013).…”

“…This hypothesis is supported by Doran and Ryan (2012), Wang and Sarkis (2013), and Lee (2015). In the South American region, Barriga Medina et al (2022) reported a significant positive relationship between eco-innovation and performance in a sample of 214 manufacturing companies in Colombia, Ecuador, and Peru. However, Filbeck and Gorman (2004) and Brännlund and Lundgren (2010) suggest a contrary relationship and argue that “green” investments reduce profitability for most firms.…”

“…Previous studies of the impact of eco-innovation on performance have shown mixed results, including a positive influence overall (Mathieu et al , 2015), a positive influence on only some performance aspects (Barriga Medina et al , 2022), and no significant influence (Ryszko, 2016). This research aimed to empirically verify the effect of eco-innovation on performance and its influence on the perception and decisions of managers in an emerging market.…”

“…The last decade has brought a growing interest in innovation activities in Latin America (Barriga Medina et al , 2022; Morais Pereira et al , 2020; Pineda Escobar, 2022; Sanchez-Henriquez and Pavez, 2021). The ongoing disconnect between firms' innovation models and performance in this region could be explained by specific firms' behaviors, policy effects, and innovation models (Santos et al , 2014).…”

Assessing the Climate-Neutral Investment Projects in the Context of Environmental Protection and Energy Security

“…In addition, in the context of climate change accompanied by limited natural resources, it is of particular importance to implement measures that strengthen energy security by developing environmentally friendly processes through the transition to green energy, sustainable and smart city mobility, and optimization of agro-biomass supply chains that include the production, promotion and consumption of environmentally friendly products and services. Creation of a system for managing climate-neutral investment projects is considered through the lens of developing and implementing eco-innovations with an environmental and economic effect, for instance, the impact of environmental innovations on the operation, organization, marketing, financing, and environmental performance of the company (Barriga Medina et al, 2022). It is therefore important to ensure investment support for the innovative development of municipal transport infrastructure on the basis of climate neutrality and energy efficiency, namely building a network of charging stations for electric vehicles, bicycle paths, and amassing a fleet of ecological public transport.…”