Political and Socioeconomic Factors That Determine the Financial Outcome of Successful Green Innovation

Kevin Riehl, Florian Kiesel and Dirk Schiereck
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Kevin Riehl: Law and Economics Department, Technical University of Darmstadt, 64289 Darmstadt, Germany
Florian Kiesel: Economics and Management Department, Free University of Bozen-Bolzano, 39100 Bolzano, Italy
Dirk Schiereck: Law and Economics Department, Technical University of Darmstadt, 64289 Darmstadt, Germany

Sustainability, 2022, vol. 14, issue 6, 1-23

Abstract: Green innovation and technology diffusion must be financially and commercially attractive to convince corporate decision makers. This paper focuses on the factors that determine the financial outcome of successful green innovation activities conducted by large, listed companies. We employ a cross-industry dataset including more than 97,954 reports on corporate environmentalism from 286 international listed companies. Our results indicate that economic, political, cultural, firm-specific, investor-related, and governance factors significantly determine the financial performance of green innovation, measured by abnormal returns. Moreover, we can show that factors that reduce the competition in green innovation markets benefit the financial success of firms operating via them. Finally, we find an opposing influence for several factors that benefit earlier stages of innovation (e.g., research output) while harming the later stages (e.g., market introduction and financial performance). These findings imply that a spatial separation strategy for different stages of innovation supports corporate environmentalism activities. Moreover, physical property rights, the governments’ willingness to support green technologies, and economic framework conditions such as oil price, GDP, or public R&D budget need to be balanced by policymakers to address and stimulate green innovation.

Keywords: green innovation; corporate environmentalism; Porter hypothesis (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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