IDEAS home Printed from https://ideas.repec.org/a/spr/endesu/v26y2024i9d10.1007_s10668-023-03632-z.html
   My bibliography  Save this article

Green innovation, firm performance, and risk mitigation: evidence from the USA

Author

Listed:
  • Lewis Liu

    (The University of Queensland)

Abstract

This research examines the correlation between corporate green innovation and its positive impacts by analyzing firm-level data from the S&P 500 spanning the years 2001 to 2022. Drawing on previous studies, this research employs rigorous methodologies and measures to assess the influence of green innovation. The study investigates the drivers of green innovation and assesses its potential effects on firm performance and risk reduction. Firstly, it explores the factors that contribute to the adoption of green innovation. Secondly, it examines how green innovation affects firm performance and mitigates risks. The findings of the study demonstrate that implementing green innovation leads to a reduction in firm volatility and credit risk, while also enhancing firm value and emission performance. The robustness tests conducted further reinforce these conclusions, thereby contributing to the existing body of literature that highlights the crucial role of corporate characteristics in promoting sustainable business practices through green innovation. These insights hold significant value for investors, policymakers, and regulators, providing them with valuable information for making informed decisions regarding green investments and the formulation of policies that foster sustainability through green innovation.

Suggested Citation

  • Lewis Liu, 2024. "Green innovation, firm performance, and risk mitigation: evidence from the USA," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(9), pages 24009-24030, September.
    • Handle: RePEc:spr:endesu:v:26:y:2024:i:9:d:10.1007_s10668-023-03632-z
    DOI: 10.1007/s10668-023-03632-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10668-023-03632-z
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10668-023-03632-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gregor Dorfleitner & Johannes Grebler, 2022. "Corporate social responsibility and systematic risk: international evidence," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 23(1), pages 85-120, January.
    2. Abdelmohsen A. Nassani & Asad Javed & Joanna Rosak-Szyrocka & Ladislav Pilar & Zahid Yousaf & Mohamed Haffar, 2023. "Major Determinants of Innovation Performance in the Context of Healthcare Sector," IJERPH, MDPI, vol. 20(6), pages 1-14, March.
    3. Zhongju Liao & Ping Liu & Shuchun Liu, 2021. "A meta-analysis of environmental innovation and firm performance," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 64(11), pages 2047-2065, July.
    4. Hao, Jing & He, Feng, 2022. "Corporate social responsibility (CSR) performance and green innovation: Evidence from China," Finance Research Letters, Elsevier, vol. 48(C).
    5. Bashir, Muhammad Adnan & Dengfeng, Zhao & Amin, Fouzia & Mentel, Grzegorz & Raza, Syed Ali & Bashir, Muhammad Farhan, 2023. "Transition to greener electricity and resource use impact on environmental quality: Policy based study from OECD countries," Utilities Policy, Elsevier, vol. 81(C).
    6. Pan, Minjie & Zhao, Xin & lv, Kangjuan & Rosak-Szyrocka, Joanna & Mentel, Grzegorz & Truskolaski, Tadeusz, 2023. "Internet development and carbon emission-reduction in the era of digitalization: Where will resource-based cities go?," Resources Policy, Elsevier, vol. 81(C).
    7. Dev R. Mishra, 2017. "Post-innovation CSR Performance and Firm Value," Journal of Business Ethics, Springer, vol. 140(2), pages 285-306, January.
    8. Van Ha Nguyen & Frank W. Agbola & Bobae Choi, 2022. "Does Corporate Social Responsibility Enhance Financial Performance? Evidence from Australia," Australian Accounting Review, CPA Australia, vol. 32(1), pages 5-18, March.
    9. Xiang, Xiaojian & Liu, Chuanjiang & Yang, Mian, 2022. "Who is financing corporate green innovation?," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 321-337.
    10. Vasileiou, Efi & Georgantzis, Nikolaos & Attanasi, Giuseppe & Llerena, Patrick, 2022. "Green innovation and financial performance: A study on Italian firms," Research Policy, Elsevier, vol. 51(6).
    11. Wang, Juxian & Ma, Mengdi & Dong, Tianyi & Zhang, Zheyuan, 2023. "Do ESG ratings promote corporate green innovation? A quasi-natural experiment based on SynTao Green Finance's ESG ratings," International Review of Financial Analysis, Elsevier, vol. 87(C).
    12. Meles, Antonio & Salerno, Dario & Sampagnaro, Gabriele & Verdoliva, Vincenzo & Zhang, Jianing, 2023. "The influence of green innovation on default risk: Evidence from Europe," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 692-710.
    13. Lee, Ki-Hoon & Min, Byung & Yook, Keun-Hyo, 2015. "The impacts of carbon (CO2) emissions and environmental research and development (R&D) investment on firm performance," International Journal of Production Economics, Elsevier, vol. 167(C), pages 1-11.
    14. Lahcene Makhloufi & László Vasa & Joanna Rosak-Szyrocka & Farouk Djermani, 2023. "Understanding the Impact of Big Data Analytics and Knowledge Management on Green Innovation Practices and Organizational Performance: The Moderating Effect of Government Support," Sustainability, MDPI, vol. 15(11), pages 1-22, May.
    15. Megumi Suto & Hitoshi Takehara, 2022. "Employee‐oriented corporate social responsibility, innovation, and firm value," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 765-778, July.
    16. Anu, & Singh, Amit Kumar & Raza, Syed Ali & Nakonieczny, Joanna & Shahzad, Umer, 2023. "Role of financial inclusion, green innovation, and energy efficiency for environmental performance? Evidence from developed and emerging economies in the lens of sustainable development," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 213-224.
    17. Chkir, Imed & El Haj Hassan, Boushra & Rjiba, Hatem & Saadi, Samir, 2021. "Does corporate social responsibility influence corporate innovation? International evidence," Emerging Markets Review, Elsevier, vol. 46(C).
    18. Mbanyele, William & Huang, Hongyun & Li, Yafei & Muchenje, Linda T. & Wang, Fengrong, 2022. "Corporate social responsibility and green innovation: Evidence from mandatory CSR disclosure laws," Economics Letters, Elsevier, vol. 212(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xu, Yong & Zhao, Xin & Wang, Jian & Xie, Peijun, 2023. "Clarifying the dispute of corporate social responsibility: Evidence from green technological innovation," Technology in Society, Elsevier, vol. 75(C).
    2. Yixuan Chen & Shanyue Jin, 2023. "Corporate Social Responsibility and Green Technology Innovation: The Moderating Role of Stakeholders," Sustainability, MDPI, vol. 15(10), pages 1-20, May.
    3. Ying Lu & Sha Sun & Mingming Zhang & Zikun Yang, 2024. "Moving Towards Sustainable Development: Can Supply Chain Finance Promote Corporate Green Innovation?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 13001-13026, September.
    4. Zhao, Shikuan & Abbassi, Wajih & Hunjra, Ahmed Imran & Zhang, Han, 2024. "How do government R&D subsidies affect corporate green innovation choices? Perspectives from strategic and substantive innovation," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 1378-1396.
    5. Licheng Yang & Shijie Song & Chunlin Liu, 2024. "Green signals: The impact of environmental protection support policies on firms' green innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 3258-3278, May.
    6. Huang, Hongyun & Mbanyele, William & Wang, Fengrong & Song, Malin & Wang, Yuzhang, 2022. "Climbing the quality ladder of green innovation: Does green finance matter?," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    7. Luis E. Villegas & Andrés A. Acuña-Duarte & César A. Salazar, 2023. "Corporate Social Responsibility and the Willingness to Eco-Innovate among Chilean Firms," Sustainability, MDPI, vol. 15(12), pages 1-19, June.
    8. Lu, Zheng & Liang, Yanzi & Hu, Yanglin & Liu, Yang, 2024. "Is managerial myopia detrimental to corporate ESG performance?," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 998-1015.
    9. Lin, Xiaowei & Li, Ao & Xu, Yonghao & Ding, Zijun, 2023. "Does internal whistleblowing build more socially responsible firms？," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 197-214.
    10. Gao, Yongjun & Mohd Saleh, Norman & Abdullah, Ahmad Monir & Adznan, Syaima, 2024. "Climate-related disclosures under the TCFD framework and business green innovation: Evidence from China A-share companies," Finance Research Letters, Elsevier, vol. 63(C).
    11. Abd Hadi Mustaffa & Nur Zahidah Bahrudin & Zahariah Sahudin & Hasni Abdullah & Muhammad Ridzuan Abdul Aziz, 2023. "What have we Learned from Firm Efficiency Research for the Past 35 Years? A Bibliometric Analysis," Information Management and Business Review, AMH International, vol. 15(1), pages 216-227.
    12. Chen, Wen, 2023. "Bank connections, corporate social responsibility and low-carbon innovation," Energy Policy, Elsevier, vol. 183(C).
    13. Yan, Kai & Zhang, Ziyi & Yang, Lisi & Cao, Yuqiang & Shan, Yaowen, 2024. "Capital generates green: Evidence from China's national innovation system policy," International Review of Financial Analysis, Elsevier, vol. 91(C).
    14. Liu, Changyu & Wang, Jing & Ji, Qiang & Zhang, Dayong, 2024. "To be green or not to be: How governmental regulation shapes financial institutions' greenwashing behaviors in green finance," International Review of Financial Analysis, Elsevier, vol. 93(C).
    15. Bashir, Muhammad Farhan & Shahbaz, Muhammad & Malik, Muhammad Nasir & Ma, Beiling & Wang, Jianming, 2023. "Energy transition, natural resource consumption and environmental degradation: The role of geopolitical risk in sustainable development," Resources Policy, Elsevier, vol. 85(PA).
    16. Heying Liu & Chan Lyu, 2022. "Can ESG Ratings Stimulate Corporate Green Innovation? Evidence from China," Sustainability, MDPI, vol. 14(19), pages 1-20, September.
    17. Danilo Boffa & Antonio Prencipe & Luciano D’Amico & Christian Corsi, 2023. "Gender Inclusiveness and Female Representation on the Board of Directors of the Benefit Company Model: Evidence from Italy," Sustainability, MDPI, vol. 15(7), pages 1-20, March.
    18. Weiwei Wu & Jian Shi & Yexin Liu, 2024. "The impact of corporate social responsibility in technological innovation on sustainable competitive performance," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-13, December.
    19. Wei Li & Jie Li & Siwei Sun, 2023. "Influence of public credit risk on private capital in public–private partnership models," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1330-1343, March.
    20. He, Feng & Qin, Shuqi & Liu, Yuanyuan & Wu, Ji (George), 2022. "CSR and idiosyncratic risk: Evidence from ESG information disclosure," Finance Research Letters, Elsevier, vol. 49(C).

    More about this item

    Keywords

    Green innovation; Risk mitigation; Environmental investment; Firm performance;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:endesu:v:26:y:2024:i:9:d:10.1007_s10668-023-03632-z. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.