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Environmental orientation and firm performance: The mediation mechanism of green innovation

Author

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  • Cemal Zehir

    (Professor of Management, School of Business Administration,Yildiz Technical University, Davutpasa, 34500, Istanbul, Turkey)

  • Burcu Ozgul

    (Institute of Social Sciences, Yıldız Technical University,Davutpasa, 34500, Istanbul, Turkey)

Abstract

This study aims to investigate the mediation effect of green product and green process innovation by focusing on the role of internal and external environmental orientation over firm performance to expand researches on environmental orientation. With this aim, a conceptual model has been recommended by unifying institutional theory and natural resource-based view. Data collected from 315 firms who have ISO14001 Environmental Management Certificate and took part in Turkey’s first and second ISO 500 Industrial Enterprises list in 2018 have been tested by using SmartPLS 3 software as part of Structural Equation Modelling. Empirical proofs show that internal and external environmental orientation has a positive effect on both green product innovation and green process innovation. Additionally, it has been concluded that internal environmental orientation has a direct positive effect on firm performance, while external environmental orientation has an indirect effect, which is through green product and green process innovation. The reason could be rooted in the ecological responsibility feeling of internal environmental orientation. External environmental orientation, though, could be limited only with fulfilling legal requirements with legitimacy acquiring desire. Firms strategically directed to the green product and green process innovation by doing more than the laws require and taking the lead could increase their firm performance. These findings contribute to theory and practice, enriching our understanding of how two dimensions of environmental orientation affect firm performance. Key Words: Internal Environmental Orientation, External Environmental Orientation, Green Product Innovation, Green Process Innovation, Firm Performance

Suggested Citation

  • Cemal Zehir & Burcu Ozgul, 2020. "Environmental orientation and firm performance: The mediation mechanism of green innovation," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(5), pages 13-25, September.
    • Handle: RePEc:rbs:ijbrss:v:9:y:2020:i:5:p:13-25
    DOI: 10.20525/ijrbs.v9i5.883
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    References listed on IDEAS

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    Cited by:

    1. Parvez Alam Khan & Satirenjit Kaur Johl & Shakeb Akhtar, 2021. "Firm Sustainable Development Goals and Firm Financial Performance through the Lens of Green Innovation Practices and Reporting: A Proactive Approach," JRFM, MDPI, vol. 14(12), pages 1-23, December.
    2. Parvez Alam Khan & Satirenjit Kaur Johl & Shakeb Akhtar, 2022. "Vinculum of Sustainable Development Goal Practices and Firms’ Financial Performance: A Moderation Role of Green Innovation," JRFM, MDPI, vol. 15(3), pages 1-24, February.

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