Regulation and firm perception, eco‐innovation and firm performance

Abstract

Purpose -Recent OECD (2010, 2011) reports argue that eco-innovation is the key to realising growth. The purpose of this paper is to analyse the drivers of eco-innovation and to compare the impact of eco-innovation and non-eco-innovation on firm performance. The paper provides insights into the role government regulation can play in directing and stimulating eco-innovation. Design/methodology/approach -The approach utilised by this paper is empirical in nature. A modified innovation production function is used to assess the impact of regulation, consumer expectations and voluntary agreements on the performance of eco-innovation while a knowledge augmented production function is used to assess the impact of eco-innovation on firm performance. Findings -The findings suggest that regulation and customer perception can explain a firm"s decision to engage in eco-innovation. Eco-innovation is also found to be more important than non-eco-innovation in determining firm performance. Research limitations/implications -Due to the limited availability of accounting data this paper uses turnover per worker as the measure of firm performance. As a result it is not possible to assess the impact of eco-innovation on firm costs. Social implications -The finding that regulation drives eco-innovation and that there is no trade-off between the optimal outcomes of lower levels of pollution for society and higher profit margins for businesses suggests that regulators and policy makers can stimulate growth and create a greener society. Originality/value -This paper provides an empirical analysis of the Porter and van der Linde"s (1995) theory of environmental regulation and firm performance using novel real world data from over 2,000 Irish businesses.

The Effect of Sustainability as Innovation Objectives on Innovation Efficiency

“…First, the perceived importance of environment improvement by managers negatively affect to innovation performance. It is quite surprising because most of the previous literature pointed out that innovation improving environment leads to higher firm performance [37,[39][40][41][42][43]. Given that previous literature considered the output only, however, the result of this study does not counter the literature, but rather point to the possibility that the input that is required to perform environmental innovation is much higher than the actual output transformed from it.…”

“…Though eco-innovation is more important than non-eco-innovation in determining firm performance, eco-innovators face greater difficulty in attracting venture capital for development compare to other innovators [37,38].…”

The Effects of Government Support on Corporate Performance Hedging against International Environmental Regulation

“…When firms could not properly anticipate demands or perceived too much cost to accomplish eco-innovation in global market, the government needs to help minimize the adverse effects via its support policies [41]. In the same line, this study proposes the government support exercises positive effects on eco-innovation of firms and to their export processes.…”

Dynamic Capabilities in Automotive Pollutants Reduction Technologies: Case Study

“…This is due to the fact that, today, organizations deal with a myriad of environmental challenges such as: global warming, pollution control and a growing demand for environmentally correct products (Doran & Ryan, 2012). Hence, one of the ways organizations respond to these demands is through environmental regulatory mechanisms that are manifested through policies and normative guidelines established by governments in order to direct and stimulate the innovative process of organizations toward less pollutant products, for example (Doran & Ryan, 2012).…”

“…This is due to the fact that, today, organizations deal with a myriad of environmental challenges such as: global warming, pollution control and a growing demand for environmentally correct products (Doran & Ryan, 2012). Hence, one of the ways organizations respond to these demands is through environmental regulatory mechanisms that are manifested through policies and normative guidelines established by governments in order to direct and stimulate the innovative process of organizations toward less pollutant products, for example (Doran & Ryan, 2012). Regarding the generation of sustainable technologies or practices in the sector, it can be considered that attention to environmental aspects starts with the introduction of new technologies in manufacturing processes, in cooperation with key suppliers (Caniëls, Gehrsitz, & Semeijn, 2013).…”