Rethinking the Porter Hypothesis: The Underappreciated Importance of Value Appropriation and Pollution Intensity

Abstract

The impact of environmental regulation on the competitiveness of firms and industries remains a hot topic. Since the formulation of the Porter hypothesis, scholars from different research areas have tried to confirm or deny it. However, despite a vast literature engaging this debate, it remains unclear whether and under what conditions the hypothesis could be considered valid. We believe that this is due to the need to consider some additional factors. The aim of this review is to propose additional and significant themes, namely value appropriation and pollution intensity, to be considered when examining the impact of environmental regulation on the innovation and profitability of firms. Results show that the validity of the Porter hypothesis cannot be proved in any condition, but at the same time, there are additional factors that have a relevant influence on that construct, which can lead to a validation or rejection of the hypothesis.

Do firms with different levels of environmental regulatory pressure behave differently regarding complementarity among innovation practices?

“…The percentage of dirty firms that have introduced innovations with the three environmental orientations is significantly higher when compared with clean industries. These results corroborate Kunapatarawong and Martínez‐Ros () and Petroni et al () who argue that firms in dirty industries may feel a stronger need to differentiate themselves than those in clean industries to avoid punishment for not complying with regulations or to capture environmental market opportunities. With regard to organizational innovation, one third of firms in dirty industries have implemented organizational practices (about 33%).…”

“…Thus, we argue that complementarities between environmental innovation and business practices will have a different effect on productivity depending on the industrial regulation context, taking into account that, in general, dirty firms will have greater regulatory pressure to introduce improvements in their environmental impact (Petroni et al, ), but this pressure can make it difficult to achieve optimal investments in process in terms of the firms' objectives, both environmental and non‐environmental. In this cases, personal training can serve as a competence‐enhancing and motivating factor in strengthening the learning abilities of employees in managing green innovations (Biscotti et al, ; Huang, Hu, Liu, Yu, & Yu, ).…”

“…The pollution‐intense sectors are so‐called dirty industries (chemicals, rubber and plastics, iron and steel, pharmaceutical, nonmetallic mineral products, and electrical products); by analogy, clothing, transport equipment, machinery, and equipment are examples of clean industries (Al‐Ayouty, Hassaballa, & Rizk, ). Firms belonging to each industry are subjected to different environmental regulatory pressure that may have contrasting impacts on profitability (Petroni, Bigliardi, & Galati, ). Thus, the third contribution of this paper is to understand whether different innovation practices are complements or substitutes for firm profitability according to the industrial environmental regulation context by distinguishing between clean and dirty industries.…”

Sustainable Product Lifecycle: The Role of ICT

“…Markets are increasingly demanding sustainable products and services, as well as additional information about the environmental qualities of the products and services that consumers use [4][5][6]. To meet such expectations, modern management requires sophisticated tools that can improve the monitoring of the environmental traits of products and services in order to understand how these products and services can be made more sustainable.…”

The Intention to Purchase Recycled Products: Towards an Integrative Theoretical Framework

“…The concept of value appropriation/capture, which depends on the purchase (or not) by consumers of a certain product, is important to determine the value creation system of a company and to maintain its ability to develop and offer value propositions [38].…”