The impact of legitimacy pressure and corporate profitability on green innovation: Evidence from China top 100

Abstract

Green innovation is an important approach for achieving sustainable development. Most research on determinants of corporate green innovation has focused on either external or internal drivers. Combining institutional theory and resource-based view, the scientific value of this study lies in simultaneously exploring the influence of external legitimacy pressure and internal corporate profitability, and their interaction on green innovation. Samples of the top 100 listed companies in China, from 2008 to 2012, were used and the results demonstrated that legitimacypressure from stakeholders has a significantly positive influence on both corporate green product innovation and process innovation. The results also revealed that corporate profitability positively affects green product innovation, while there was found to be no significant influence on green process innovation. Moreover, corporate profitability positively moderates the relationship between legitimacy pressure and green product innovation. The results show that not only the single factor of external legitimacy pressure and internal profitability, but also their interaction, affects corporate green innovation practices. This offers an integrating perspective on how corporations can be more innovative in sustainability.

Turning green subsidies into sustainability: How green process innovation improves firms' green image

“…From a profit perspective, environmental incidents can damage a firm's image (Laari, Töyli, & Ojala, ). Green process innovation is related to energy savings, pollution prevention, waste recycling, and reduced toxicity in innovation processes (Huang & Li, ; Li et al, ). This is consistent with the objective of environmental policies, which aim to increase an industry's ratio of clean‐to‐polluted production systems and improve general consumption (Dröge & Schröder, ).…”

“…In the last few decades, a growing number of manufacturing firms have focused on green process innovation to maintain sustainable development (Li et al, ; Radu & Francoeur, ). For example, many manufacturing industries are concerned with alternative clean energy sources and recycling (Choi & Yi, ).…”

The impact of technological innovation on building a sustainable city

“…There is even a relationship between legitimacy pressure, profitability, and green innovation. Green innovation will lay the foundation for balancing profit and environmental responsibility, and at the same time achieve the harmonious development of socioeconomic environmentally [24]. The continuity of technological innovation involves green technological innovation, green institutional innovation, and green business model innovation [25].…”

Monitoring effect of transparency: How does government environmental disclosure facilitate corporate environmentalism?

“…Second, our research goes beyond the simple static view of the relationship between environmental institutions and corporate behavior in the past by highlighting the role of government officials in boosting the diffusion of institutional pressure (Berrone, Fosfuri, Gelabert, & Gomez‐Mejia, ; Li et al, ) and the role of organization slack and IC in receiving and perception of institutional pressure. By exploring the interplay of GBC, organization slack, and IC with EIT, our study helps to understand the different roles of government and firms in constructing the relationship between institution and firms' behavior.…”