Page 102 - Hojnik, Jana. 2017. In Persuit of Eco-innovation. Drivers and Consequences of Eco-innovation at Firm Level. Koper: University of Primorska Press
P. 102
In Pursuit of Eco-innovation
Findings derived from a meta-analysis comprising 37 empirical works
(Horváthová 2010) show that the empirical evidence regarding the rela-
tionship between environmental performance and financial performance
is inconclusive: half of studies find that the impact is positive, while the
rest document either a negative or an insignificant impact. Horváthová
(2010) emphasizes that, under certain conditions, studies investigating
the relationship between environmental performance and financial per-
formance are more likely to find a positive effect of environmental perfor-
mance on financial performance. These conditions include the following:
common law countries, appropriate time coverage and qualitative meas-
ures of environmental performance (Horváthová 2010). Researchers also
came to negative conclusions. In contrast to researchers who found a pos-
itive association between eco-innovation and firm performance (Rao and
102 Holt 2005; Clemens 2006; Montabon et al. 2007; Eiadat 2008; Fraj-An-
drés et al. 2009; Molina-Azorin et al. 2009; Huang and Wu 2010; Zeng et
al. 2011; Ar 2012; Cheng and Shiu 2012; Cheng et al. 2013; Cruz-Cázares
et al. 2013; Leonidou et al. 2013a; Lin et al. 2013a), opposite findings also
exist. Some researchers found a negative relationship between eco-inno-
vation and firm performance in the short term (Ramanathan et al. 2010),
while other researchers (Pickman 1998 in Ramananthan et al. 2010; Hor-
váthová 2012; Ghisetti and Rennings 2014) argue that innovation brings
benefits to companies after a few years’ lag, whereas no immediate bene-
fits are brought to companies deriving from innovation efforts. Thereby,
Triguero et al. (2013) argue that environmental product innovations can
be more costly than non-environmental ones and, therefore, companies
have to sacrifice the short-term profits in order to achieve mid-term and
long-term business goals. In addition, Horváthová (2012) has found that
the relationship between financial performance and environmental per-
formance was negative after one year and turned positive after two years.
Finally, Li (2014) has not found any significant effect of environmental
innovation practices on firms’ financial performance. In conclusion, the
relationship between eco-innovation and firm performance can vary ac-
cording to the eco-innovation type – those focused on efficiency are prof-
itable, while the externalities reducing eco-innovations are not (Rexhäus-
er and Rammer 2013; Ghisetti and Rennings 2014). In Table 8 below, we
summarize findings of past research related to the relationship between
eco-innovation and firm performance.
Findings derived from a meta-analysis comprising 37 empirical works
(Horváthová 2010) show that the empirical evidence regarding the rela-
tionship between environmental performance and financial performance
is inconclusive: half of studies find that the impact is positive, while the
rest document either a negative or an insignificant impact. Horváthová
(2010) emphasizes that, under certain conditions, studies investigating
the relationship between environmental performance and financial per-
formance are more likely to find a positive effect of environmental perfor-
mance on financial performance. These conditions include the following:
common law countries, appropriate time coverage and qualitative meas-
ures of environmental performance (Horváthová 2010). Researchers also
came to negative conclusions. In contrast to researchers who found a pos-
itive association between eco-innovation and firm performance (Rao and
102 Holt 2005; Clemens 2006; Montabon et al. 2007; Eiadat 2008; Fraj-An-
drés et al. 2009; Molina-Azorin et al. 2009; Huang and Wu 2010; Zeng et
al. 2011; Ar 2012; Cheng and Shiu 2012; Cheng et al. 2013; Cruz-Cázares
et al. 2013; Leonidou et al. 2013a; Lin et al. 2013a), opposite findings also
exist. Some researchers found a negative relationship between eco-inno-
vation and firm performance in the short term (Ramanathan et al. 2010),
while other researchers (Pickman 1998 in Ramananthan et al. 2010; Hor-
váthová 2012; Ghisetti and Rennings 2014) argue that innovation brings
benefits to companies after a few years’ lag, whereas no immediate bene-
fits are brought to companies deriving from innovation efforts. Thereby,
Triguero et al. (2013) argue that environmental product innovations can
be more costly than non-environmental ones and, therefore, companies
have to sacrifice the short-term profits in order to achieve mid-term and
long-term business goals. In addition, Horváthová (2012) has found that
the relationship between financial performance and environmental per-
formance was negative after one year and turned positive after two years.
Finally, Li (2014) has not found any significant effect of environmental
innovation practices on firms’ financial performance. In conclusion, the
relationship between eco-innovation and firm performance can vary ac-
cording to the eco-innovation type – those focused on efficiency are prof-
itable, while the externalities reducing eco-innovations are not (Rexhäus-
er and Rammer 2013; Ghisetti and Rennings 2014). In Table 8 below, we
summarize findings of past research related to the relationship between
eco-innovation and firm performance.
