Does Green Product Innovation Help or Hinder Firm Performance?

Abstract

Earlier research theorized a linear effect of green product innovation on firm performance and reported mixed results indicating that the relationship between these focal variables is more complex than was conceptualized by prior research. This study theorizes a curvilinear impact of green product innovation (GPI) on a firm’s growth. Furthermore, this research posits that this curvilinear relationship is negatively moderated by marketing intensity and sustainability disclosure strategy, and positively moderated by a firm’s propensity to engage in deviant corporate practices. Employing an appropriate econometric modelling technique, this study demonstrates that initially there is a positive effect of green product innovation on firms’ growth which subsequently becomes negative. Also, this study demonstrates that this inverse U-shaped relationship between green product innovation and firm growth is attenuated (the U-shaped curve flattens) by a firm’s sustainability-disclosure strategy as well as marketing intensity and accentuated (the U-shaped curve steepens) by a firm’s level of engagement in deviant corporate practices.