How Does Open Innovation Modify the Relationship between Environmental Regulations and Productivity?

Abstract

With increasingly severe environmental regulations, a pressing issue has been the need for firms to develop efficient strategies to achieve environmental protection and high productivity. Several environmental experts argue that firms can respond to environmental regulations through innovation; however, the question of how to innovate is unanswered in the environmental literature. Therefore, this study focuses on the open innovation strategy approach to respond to environmental regulations and maintain high productivity by incorporating the idea of innovation management. We first divide open innovation strategy into two modes of external technology acquisition: foreign and domestic. Next, we examine these modes' mediation effects on environmental regulations and productivity. In addition, we test the moderating effect of internal R&D on the relationship between external technology acquisition and productivity. Using data on 35 Chinese industrial sectors from 2001 to 2010, the empirical findings show that foreign technology significantly and positively mediates the link between environmental regulations and productivity, while domestic technology does not. Internal R&D investment, as an absorptive capacity, positively moderates the effect of foreign technology; however, it negatively moderates the effect of domestic technology on productivity. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

Bridging market demand, proactivity, and technology competence with eco‐innovations: The moderating role of innovation openness

“…Corporations may escalate environmental behaviors by virtue of rational, elaborated objectives. On the other hand, based on the RBV, environmental proactivity aligns firms' practices with society's acceptability to strengthen their stakeholder integration capability (Gabriel & Mina, 2015;Hart, 1995 Ghisetti et al, 2015;Hu et al, 2017). We focus on customer and argue that market demand infers highly correct or precise information and motivates firms to work on environmental issues, reinforcing the firm with direction on more eco-innovation fields (Tsai & Liao, 2017).…”

“…First, beyond viewing market demand, environmental proactivity, and technology competence as straightforward determinants of firms' adoption of eco-innovation (e.g., Hu et al, 2017), our consideration focuses on undertaking more types of ecoinnovation. First, beyond viewing market demand, environmental proactivity, and technology competence as straightforward determinants of firms' adoption of eco-innovation (e.g., Hu et al, 2017), our consideration focuses on undertaking more types of ecoinnovation.…”

“…Firms pursuing eco-innovation acknowledge that environmental-specific knowledge is quite different from their relevant business field (De Marchi, 2012). Hence, acquiring environmental knowledge from external sources could help firms devise suitable approaches to extend the benefits of open innovation in the environmental management literature (Ghisetti, Marzucchi, & Montresor, 2015;Hu, Wand, & Li, 2017). Hence, acquiring environmental knowledge from external sources could help firms devise suitable approaches to extend the benefits of open innovation in the environmental management literature (Ghisetti, Marzucchi, & Montresor, 2015;Hu, Wand, & Li, 2017).…”

With a little help from a stranger: The impact of external change agents on corporate sustainability investments

“…Second, external change agents may also provide organizations with knowledge and expertise important for change (Birkinshaw et al, ). In fact, as the literature on open innovation has shown, organizations cannot develop all necessary knowledge internally (Chesbrough, ; Hu, Wang, & Li, ; Laursen & Salter, ). Rather, to be able to compete in the market, organizations need to integrate external expertise, for example, on technologies (Karim & Mitchell, ; Teece, Pisano, & Shuen, ).…”

“…Second, external change agents may also provide organizations with knowledge and expertise important for change (Birkinshaw et al, 2008). In fact, as the literature on open innovation has shown, organizations cannot develop all necessary knowledge internally (Chesbrough, 2003;Hu, Wang, & Li, 2017;Laursen & Salter, 2006).…”