Page 121 - Hojnik, Jana. 2017. In Persuit of Eco-innovation. Drivers and Consequences of Eco-innovation at Firm Level. Koper: University of Primorska Press
P. 121
Hypotheses Development 121
Hypothesis 6a: The relationship between eco-innovation’s perfor-
mance and company growth is direct and positive.
Hypothesis 6b: The relationship between eco-innovation’s perfor-
mance and company profitability is direct and positive.
Eco-innovation and economic performance
In addition to the previous hypothesis, we also explore the relationship
between eco-innovation’s performance and economic performance by us-
ing self-reported measures. This hypothesis is added because in the pre-
vious one (Hypotheses 6a and 6b), we employ “harder” measures of firm
performance, pertaining to company growth (in terms of growth over
two business years pertaining to number of employees and net sales) and
profitability (profitability indicator ratios, such as ROA, ROE and ROS),
and those data are collected through the database GVIN. In this case, we
adopt “soft” self-reported measures, in order to test the relationship be-
tween a company’s adoption of eco-innovation and the effect on econom-
ic performance. This results from the discussion of how financial perfor-
mance (especially regarding profitability indicator ratios) of a company’s
eco-innovation implementation becomes positive over a two-year lag,
while it is negative after a one-year lag (Horváthová 2012). Economic per-
formance, therefore, will be tested in this hypothesis by obtaining compa-
ny respondents’ perception of the effect of eco-innovation on companies’
economic performance. Many research works have adopted self-reported
measures to estimate the effect of eco-innovation on firm performance
(Rao and Holt 2005; Clemens 2006; Eiadat et al. 2008; Cheng and Shiu
2012; Cheng et al. 2013). In our case, this approach presents added value,
because we will be able to see whether there are any differences between
using profitability indicator ratios or self-reported measures when test-
ing the relationship between eco-innovation and firm performance. The
above discussion leads us to postulate the following hypothesis:
Hypothesis 7: The relationship between eco-innovation’s perfor-
mance and economic performance is direct and positive.
Eco-innovation and competitive benefits
Implementation of eco-innovations may result in other competitive ben-
efits related to company performance (Sharma and Vredenburg 1998).
The benefits that companies can seize from successful implementation
of eco-innovation are as follows: cost savings, enhanced corporate image,
improved relationship with local communities, access to new green mar-
Hypothesis 6a: The relationship between eco-innovation’s perfor-
mance and company growth is direct and positive.
Hypothesis 6b: The relationship between eco-innovation’s perfor-
mance and company profitability is direct and positive.
Eco-innovation and economic performance
In addition to the previous hypothesis, we also explore the relationship
between eco-innovation’s performance and economic performance by us-
ing self-reported measures. This hypothesis is added because in the pre-
vious one (Hypotheses 6a and 6b), we employ “harder” measures of firm
performance, pertaining to company growth (in terms of growth over
two business years pertaining to number of employees and net sales) and
profitability (profitability indicator ratios, such as ROA, ROE and ROS),
and those data are collected through the database GVIN. In this case, we
adopt “soft” self-reported measures, in order to test the relationship be-
tween a company’s adoption of eco-innovation and the effect on econom-
ic performance. This results from the discussion of how financial perfor-
mance (especially regarding profitability indicator ratios) of a company’s
eco-innovation implementation becomes positive over a two-year lag,
while it is negative after a one-year lag (Horváthová 2012). Economic per-
formance, therefore, will be tested in this hypothesis by obtaining compa-
ny respondents’ perception of the effect of eco-innovation on companies’
economic performance. Many research works have adopted self-reported
measures to estimate the effect of eco-innovation on firm performance
(Rao and Holt 2005; Clemens 2006; Eiadat et al. 2008; Cheng and Shiu
2012; Cheng et al. 2013). In our case, this approach presents added value,
because we will be able to see whether there are any differences between
using profitability indicator ratios or self-reported measures when test-
ing the relationship between eco-innovation and firm performance. The
above discussion leads us to postulate the following hypothesis:
Hypothesis 7: The relationship between eco-innovation’s perfor-
mance and economic performance is direct and positive.
Eco-innovation and competitive benefits
Implementation of eco-innovations may result in other competitive ben-
efits related to company performance (Sharma and Vredenburg 1998).
The benefits that companies can seize from successful implementation
of eco-innovation are as follows: cost savings, enhanced corporate image,
improved relationship with local communities, access to new green mar-
