Research tidbits: Innovation, CSR and performance

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How does green innovation affect company performance? Read on to find out in this week’s research tidbits.

Green innovation and performance 
Synthesizing insights from a dynamic capability perspective and social network theory, this study identifies the factors influencing green innovation and examines the relationships between influencing factors, green innovation, and performance. This study uses structural equation modeling to test the research hypotheses.

The results indicate that dynamic capability, coordination capability, and social reciprocity are significant drivers of green innovation, including green product innovation and green process innovation. Green product and process innovation have positive effects on environmental performance and organisational performance. These findings are relevant to firms in quest of green management and innovation.

Jing-Wen Huang and Yong-Hui Li. 2017. Green Innovation and Performance: The View of Organizational Capability and Social Reciprocity.
Journal of Business Ethics, 145(2), 309–324.

 

CSR, Innovation, and firm performance in sluggish growth contexts 
The few studies that analyze the impact of a combined strategy of innovation and corporate social responsibility (CSR) on firm performance mostly focus on financial performance.

In contrast, the current study considers the simultaneous impact of technological innovations (product and process) and CSR on firm growth, which provides a measure of medium-term economic performance. With a sample of 213 firms and a two-step procedure, this study reveals the differentiated effects of strategic versus responsive CSR behaviour on the two technological innovation types, as well as the effects of the two innovation types on growth.

The findings thus indicate that firms with strategic CSR achieve growth through both their product and their process innovations.

Rachel Bocquet, Christian Le Bas, Caroline Mothe and Nicolas Poussin. 2017. CSR, Innovation, and Firm Performance in Sluggish Growth Contexts: A Firm-Level Empirical Analysis.
Journal of Business Ethics, 146(1), 241–254.

 

Innovation at the base of the pyramid (BOP) 
Why and how does a multinational corporation adapt its strategy and organisational capabilities to address markets at the base of the pyramid (BOP)?

This paper builds on the results of a 3-year action research program conducted with Lafarge, a global building materials company, during which it started to consider the BOP segment as a strategic business opportunity.

The article shows how pilot projects and global action networks created as part of the action research in the Indonesian subsidiary and the firm’s head office contributed to this change. The paper then discusses the implications of BOP strategies in terms of organisational capabilities.

Perrot, F. 2017. Multinational Corporations’ Strategies at the Base of the Pyramid: An Action Research Inquiry. 
Journal of Business Ethics, 146(1), 59–76.

 

European Green Mutual fund performance – comparative analysis
We conduct the first comparative analysis of the financial performance of European green, black (fossil energy and natural resource) and conventional mutual funds. Based on a unique dataset of 175 green, 259 black and 976 conventional mutual funds, the investigation contrasts the financial performance of the three dissimilar investment orientations over the 1991–2014 period.

Over the full sample period, green mutual funds significantly underperform relative to conventional funds, while no significant risk-adjusted performance differences between green and black mutual funds could be established during the same period. Environmentally friendly investment vehicles display a significant exposure to small cap and growth stocks, while black funds are more exposed to value stocks.

Remarkably, the green funds’ risk-adjusted return profile progressively improves over time until no difference in the performance of the green and the conventional classes could be discerned. Further evidence suggests that the green funds are beginning to significantly outperform their black peers, especially over the 2012–2014 investment window.

Gbenga Ibikunle and Tom Steffen. 2017. European Green Mutual Fund Performance: A Comparative Analysis with their Conventional and Black Peers. 
Journal of Business Ethics, 145(2), 337–355.

 

Success factors in the green innovation market 
This study aims to map out the relationships that make up green innovation initiatives in Brazilian industry. The sample comprised 100 managers at manufacturing companies, most of them operating in the business of farm machinery and equipment (45 managers) and steel structures (14 managers).

To develop this study, Medeiros et al. (J Clean Prod 65:76–86, 2014) study, mapping critical factors that drive the success of green product innovation and the paradigm of complexity, was used as a reference study. Based on the results, it was possible to identify that the operational dynamic of the factors and variables that affect market success do not happen in an isolated or fragmented way; they occur systematically with different contingencies and structured basic and intermediate skills in order to meet the expectations of consumers, laws, and environmental legislation.

Initially, the technological expertise factor was noted as very important for sustaining green product innovation. Furthermore, since proactive leaders are an important factor for successfully developing environmentally sustainable products, it must be added to technological expertise as the foundation for developing green innovation. After defining the basis for green product innovation, the intermediary conditions necessary for using the available technology appropriately were mapped out. In this sense, variables such as “elimination of cultural barriers,” “capacity for critical reflective analysis,” and “experimentation” are also very important.

In addition, some of the variables of the cross-functional collaboration and market knowledge factors were a part of the structure that organisations need to transform potential into developing green products, which is the basis for the third level of the model. The fourth level of the model has the “meeting consumer expectations” and “following law and legislation” factors, which make up the main goals for developing environmentally sustainable products according to a number of surveys that were conducted.

Janine Fleith de Medeiros, Gabriel Vidor and José Luís Duarte Ribeiro. 2018. Driving Factors for the Success of the Green Innovation Market: A Relationship System Proposal.
Journal of Business Ethics, 147(2), 327–341.

 

Investors not disadvantaged by socially responsible investments 
This study formulates a two-factor empirical model under the intertemporal CAPM framework to evaluate the cross-sectional implications of socially responsible investments in the US equity market.

The results show that socially responsible investments have no asset pricing impact on the US market. The authors argue that this ‘no financial impact’ finding indicates that investors will not be disadvantaged financially by investing in socially responsible funds or corporations.

Yuchao Xiao, Robert Faff, Philip Gharghori and Byoung-Kyu Min. 2017. The Financial Performance of Socially Responsible Investments: Insights from the Intertemporal CAPM.
Journal of Business Ethics, 146(2), 353–364.

2018-04-10T12:27:32+00:00 April 10th, 2018|News, Research Tidbits|