Is It Necessary to Centralize Power in the CEO to Ensure Environmental Innovation?

Beatriz Aibar-Guzmán and José-Valeriano Frías-Aceituno
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Beatriz Aibar-Guzmán: Facultad de Ciencias Económicas y Empresariales, University of Santiago de Compostela, 15782 Santiago de Compostela, Spain
José-Valeriano Frías-Aceituno: Facultad de Ciencias Económicas y Empresariales, University of Granada, 18071 Granada, Spain

Administrative Sciences, 2021, vol. 11, issue 1, 1-21

Abstract: Using data from a sample of 4863 international firms corresponding to the period 2002–2017, this paper examines the role that chief executive officer (CEO) power plays in environmental innovation and the impact that these strategies have on financial performance. Both issues have been the subject of considerable debate in the literature, with opposite views and contradictory findings. The results indicate that investing in environmental innovations related to the use of clean technologies, ecological production processes, and the design, manufacture and commercialization of environmentally sustainable products requires that CEOs have a greater degree of power in order to support projects that do not entail a higher return in the short and medium terms. Additionally, the results show that the negative economic effect of eco-innovation reverses in the fourth and fifth years after environmental innovations were implemented. Thus, this study supports the view regarding a “bright side” of CEO power with regard to corporate sustainability.

Keywords: eco-innovation; environmental innovation; CEO power; CEO ability; financial performance; upper echelon theory (search for similar items in EconPapers)
JEL-codes: L M M0 M1 M10 M11 M12 M14 M15 M16 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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