Curvilinear Relationship between Corporate Innovation and Environmental Sustainability

Abstract

This paper proposes and tests the impacts of firms' innovation activities, such as patents, on their involvement in environmental sustainability, such as environmental performance. Combining resource allocation and eco-innovation perspectives assuming constant levels of trade-off costs, this study proposes diminishing trade-off costs between corporate innovation and environmental sustainability. Specifically, this research hypothesizes a U-shaped relationship, suggesting that a firm will suffer trade-off costs between innovation and environment-oriented activities up to a certain level, and that once a firm accumulates an adequate level of innovation, it may reduce trade-off costs, caring more for environmental issues. A proposed hypothesis is supported by empirical testing of a sample of 11,657 firm-year observations with 1564 firms, spanning from 1991 to 2010. We also found that corporate patenting activities are relevant to undesirable impacts on environmental performance overall, instead of satisfying outcomes. We suggest that firms and managers should care for environmental sustainability issues once they accumulate an adequate level of innovation assets through patenting activities.

Linking Corporate Environmental Performance to Financial Performance of Pakistani Firms: The Roles of Technological capability and Public awareness

“…For example, McWilliams and Siegel [59] pointed out that a company's research and development activities and corporate social performance are positively correlated since many aspects of CSR create either product innovation, a process innovation, or both. Furthermore, following a few previous research results showing that both CSR and technology-related activities contribute to the intangible resources of the firms [58,60]. Similarly, Surroca, Tribó and Waddock [58] contend that companies could take advantage of CEP by employing activities and resources such as technological capability, the culture of the company, reputation, and human capital, which can strengthen firm performance [9].…”

Friends or foes? A systematic literature review and meta‐analysis of the relationship between eco‐innovation and firm performance

“…With reference to industry, we notice that most researchers have drawn on multi‐industries (e.g., Aboelmaged & Hashem, 2019; Palmer & Truong, 2017; Xing et al, 2019), with some taking a single industry perspective, mainly focusing on manufacturing (Chen & Liu, 2018; Stanovcic et al, 2015; Tariq et al, 2019) and on the service sector (Aboelmaged, 2018; Chang, 2018). As far as geographical region is concerned, most previous studies have focused on either developed (e.g., Lee & Kim, 2017; Saunila et al, 2018) or developing countries (e.g., Fernando et al, 2019; Zhang & Yang, 2016), while a variety of approaches is also observed in the measurement methods used (e.g., Chan et al, 2016; Li et al, 2017; Wu, 2017).…”

Cleaner Production and LCA as Complementary Tools in Environmental Assessment: Discussing Tradeoffs Assessment in a Case of Study within the Wood Sector in Brazil

“…Sometimes, enterprises pursuing technological innovation can obtain contradictory results in environmental performance. Some authors affirmed that even the pursuit of environmental innovation could lead to undesirable results on environmental performance [9] because of the complexity of factors involved during the life cycle of the product. Therefore, it is necessary to analyze the relationship between environmental tools-such as CP-and broader environmental approaches, methods, and tools-such as life cycle assessment (LCA)-in order to make them more effective [10].…”