Environmental innovation and firm performance: How firm size and motives matter

Petra Andries, Ute Stephan*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

There is limited understanding of the precise circumstances under which environmental actions-such as environmental innovation-contribute to firm performance. Building on the resource-based view and on stakeholder theory, this study argues that the general positive effect of environmental innovation on financial performance varies significantly with firm size and the motives underlying a firm's engagement in environmental innovation. Integrating survey data and lagged annual account data on 1761 Flemish companies, we find that larger firms benefit financially from environmental innovation driven by regulation or industry codes of conduct, while smaller firms benefit from environmental innovation introduced in response to customer demand. While it is increasingly accepted that environmental innovation relates positively with firm performance, the current study highlights important boundary conditions of this relationship.

Original languageEnglish
Article number3585
JournalSustainability (Switzerland)
Volume11
Issue number13
DOIs
Publication statusPublished - 29 Jun 2019

Bibliographical note

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

Keywords

  • Environmental innovation
  • Firm performance
  • Firm size
  • Motives

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