Green innovation and financial performance: A study on Italian firms

• Published in: Research policy Vol. 51; no. 6; p. 104530
• Main Authors: Vasileiou, Efi, Georgantzis, Nikolaos, Attanasi, Giuseppe, Llerena, Patrick
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.07.2022
• Subjects: Environmental innovation; Financial performance; Marketing innovation; Organisational innovation; Process innovation; Product innovation; Synergies; Environmental innovation; Organisational innovation; Financial performance; Product innovation; Marketing innovation; Process innovation; Synergies
• ISSN: 0048-7333; 1873-7625
• DOI: 10.1016/j.respol.2022.104530

•Environmental innovation can be a profitable firm strategy.•The profitability of environmental innovation depends on its interaction with other innovation domains of the firm.•Organizational innovation is the most systematically synergic type of innovation enhancing the profitability of environmental innovation.•A meaningful distinction concerns benefits perceived by the firm and those perceived by the consumers.•In the case of firm-specific environmental benefits, synergies between environmental innovation and other product and process-specific innovations, as well as organizational innovation enhance the profitability of environmental innovation.•In the case of consumer-specific environmental benefits, only organizational innovation enhances the profitability of environmental innovation. As the environmental agenda gains momentum all over the world, enterprises face the challenge of combining economic and environmental goals. An obvious, recurrent, and yet not fully answered question is whether, and under which circumstances, an improvement in a firm's environmental performance leads to higher profits. Looking at innovation data, the present study, addresses the question whether Environmental Innovation (EI) is synergic with other types of innovation. To this aim, we separately consider the competitive gains from efficiency increases and cost savings due to different types of environmental innovations (EI) affecting the supply and the demand sides of a firm's activity. Using the Italian CIS dataset (2006–2008), we identify synergic interactions between EI and some but not all other types of innovation.