Curvilinear relationship between corporate innovation and environmental sustainability

Jegoo Lee, Sang Joon Kim

Research output: Contribution to journalArticlepeer-review

11 Scopus citations

Abstract

This paper proposes and tests the impacts of firms' innovation activities, such as patents, on their involvement in environmental sustainability, such as environmental performance. Combining resource allocation and eco-innovation perspectives assuming constant levels of trade-offcosts, this study proposes diminishing trade-offcosts between corporate innovation and environmental sustainability. Specifically, this research hypothesizes a U-shaped relationship, suggesting that a firm will suffer trade-offcosts between innovation and environment-oriented activities up to a certain level, and that once a firm accumulates an adequate level of innovation, it may reduce trade-offcosts, caring more for environmental issues. A proposed hypothesis is supported by empirical testing of a sample of 11,657 firm-year observations with 1564 firms, spanning from 1991 to 2010. We also found that corporate patenting activities are relevant to undesirable impacts on environmental performance overall, instead of satisfying outcomes. We suggest that firms and managers should care for environmental sustainability issues once they accumulate an adequate level of innovation assets through patenting activities.

Original languageEnglish
Article number1267
JournalSustainability (Switzerland)
Volume9
Issue number7
DOIs
StatePublished - 20 Jul 2017

Keywords

  • Curvilinear relationship
  • Environmental performance
  • Environmental sustainability
  • Innovation
  • Patent
  • Trade-offcost

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