Page 98 - Hojnik, Jana. 2017. In Persuit of Eco-innovation. Drivers and Consequences of Eco-innovation at Firm Level. Koper: University of Primorska Press
P. 98
In Pursuit of Eco-innovation
offer) (Porter 1985 in Zhou et al. 2009). Therefore, eco-innovations can,
by cost efficiency or by introduction of eco-innovations that differ from
others and bring additional value to the customers, gain and achieve a
competitive advantage, whether on the domestic or international market
(Tien et al. 2005; Chen et al. 2006; Triebswetter and Wackerbauer 2008;
Chiou et al. 2011; Ar 2012; Hofer et al. 2012; Wong 2012; Leonidou et al.
2013a). Therefore, sustainable orientation in eco-innovation practices can
lower costs because companies reduce the inputs they use, while they also
generate additional revenues from better products and enable companies
to create new businesses; hence, smart companies now treat sustainabili-
ty as innovation’s new frontier (Nidumolu et al. 2009). Sustainability and
the eco-innovations related to it therefore impose pressure on companies
to change the way they think about products, technologies, processes and
98 business models (Nidumolu et al. 2009) and force them to act. Compa-
nies’ orientation towards sustainability (usually expressed in companies’
objectives and behavior with regard to sustainability) leads to a competi-
tive advantage, which is hard for competitors to imitate (Nidumolu et al.
2009). Lastly, Marin (2014) argues that environmental innovations guar-
antee a return, but this return compared to return of non-environmen-
tal innovations is substantially lower. Moreover, referring to the Porter
hypothesis, Marin (2014) concludes that the possible effects of policy-in-
duced environmental innovation on competitiveness are likely to show
up in the medium to long term (depending on early mover advantages of
environmental innovation and on the creation of new markets for envi-
ronmental technologies).
Firm performance
Ramanathan et al. (2010) warn that the relationship between environ-
mental innovation and financial performance can be ambiguous. Mixed
findings regarding this relationship identify environmental efforts as a
financial burden, which can hurt firm’s profitability, although findings
also show that companies that pursue sustainability and implement envi-
ronmental innovations benefit from enhanced efficiency and can exploit
new growth opportunities, leading to higher profitability and competi-
tive advantage (Schrettle et al. 2013). Companies endeavor to eco-inno-
vate and hence sacrifice their short-term profitability in order to acquire
higher mid-term and long-term business goals, although it is generally
known that environmental innovations require higher costs for their de-
velopment and introduction than other general innovations (Triguero et
al. 2013). Introduction of new environmentally friendly products or sig-
offer) (Porter 1985 in Zhou et al. 2009). Therefore, eco-innovations can,
by cost efficiency or by introduction of eco-innovations that differ from
others and bring additional value to the customers, gain and achieve a
competitive advantage, whether on the domestic or international market
(Tien et al. 2005; Chen et al. 2006; Triebswetter and Wackerbauer 2008;
Chiou et al. 2011; Ar 2012; Hofer et al. 2012; Wong 2012; Leonidou et al.
2013a). Therefore, sustainable orientation in eco-innovation practices can
lower costs because companies reduce the inputs they use, while they also
generate additional revenues from better products and enable companies
to create new businesses; hence, smart companies now treat sustainabili-
ty as innovation’s new frontier (Nidumolu et al. 2009). Sustainability and
the eco-innovations related to it therefore impose pressure on companies
to change the way they think about products, technologies, processes and
98 business models (Nidumolu et al. 2009) and force them to act. Compa-
nies’ orientation towards sustainability (usually expressed in companies’
objectives and behavior with regard to sustainability) leads to a competi-
tive advantage, which is hard for competitors to imitate (Nidumolu et al.
2009). Lastly, Marin (2014) argues that environmental innovations guar-
antee a return, but this return compared to return of non-environmen-
tal innovations is substantially lower. Moreover, referring to the Porter
hypothesis, Marin (2014) concludes that the possible effects of policy-in-
duced environmental innovation on competitiveness are likely to show
up in the medium to long term (depending on early mover advantages of
environmental innovation and on the creation of new markets for envi-
ronmental technologies).
Firm performance
Ramanathan et al. (2010) warn that the relationship between environ-
mental innovation and financial performance can be ambiguous. Mixed
findings regarding this relationship identify environmental efforts as a
financial burden, which can hurt firm’s profitability, although findings
also show that companies that pursue sustainability and implement envi-
ronmental innovations benefit from enhanced efficiency and can exploit
new growth opportunities, leading to higher profitability and competi-
tive advantage (Schrettle et al. 2013). Companies endeavor to eco-inno-
vate and hence sacrifice their short-term profitability in order to acquire
higher mid-term and long-term business goals, although it is generally
known that environmental innovations require higher costs for their de-
velopment and introduction than other general innovations (Triguero et
al. 2013). Introduction of new environmentally friendly products or sig-
