Journal of Business Research 101 (2019) 697–706

Contents lists available at ScienceDirect

Journal of Business Research

journal homepage: www.elsevier.com/locate/jbusres

Green process innovation, green product innovation, and corporate financial T

performance: A content analysis method☆
Xuemei Xiea, , Jiage Huob, Hailiang Zouc,
⁎ ⁎⁎

a
School of Management, Shanghai University, China
b
Department of Industrial and Systems Engineering, The Hong Kong Polytechnic University, Hong Kong
c
SHU-UTS SILC Business School, Shanghai University, China

ARTICLE INFO ABSTRACT

Keywords: Green technology innovation has received continuous attention from the business sector in recent years, yet few
Green process innovation studies have examined the internal mechanisms and contingent conditions that link green technology innovation
Green product innovation to a firm's financial performance. Using data from 209 listed companies that belong to heavily polluting man-
Green subsidies ufacturing industries, collected via the content analysis method, we find that green process innovation has a
Green image
positive impact on green product innovation, and that both green process innovation and green product in-
Content analysis
novation can improve a firm's financial performance. We also find that green product innovation mediates the
relationship between green process innovation and a firm's financial performance, and that a firm's green image
moderates the relationship between green product innovation and financial performance. However, our study
shows that the moderating effect of green subsidies on the relationship between green product innovation and a
firm's financial performance is not supported. Based on these findings, we provide several recommendations for
managers and government entities to effectively implement green technology innovation.

1. Introduction competitiveness using win-win logic (Porter & Van der Linde, 1995),
with companies that are pioneers in green innovation strategies po-
Green technology innovation has received continuous attention tentially achieving and sustaining competitive advantages (Albort-
from the business sector because of the growing concern over the state Morant, Leal-Millán, & Cepeda-Carrión, 2016). According to Rekik and
of the environment (Abdullah, Zailani, Iranmanesh, & Jayaraman, Bergeron (2017), implementing green practices is beneficial to small
2016). In fact, it is essential that manufacturing firms, especially those and medium-sized enterprises (SMEs) in terms of both financial per-
in heavily polluting manufacturing industries, shoulder the responsi- formance and environmental performance.
bility of protecting the environment. In addition to benefits from ad- Green technology innovation is expected to produce a double divi-
justing their processes to protect the environment, firms should also dend: limiting the environmental burden while contributing to the
consider customer needs and corporate social responsibility (Woo, technological modernization of the economy (Rennings, Ziegler,
Chung, Chun, Han, & Lee, 2014). Ankele, & Hoffmann, 2006). According to Ziegler and Nogareda (2009),
In certain respects, pollution can be seen as evidence of the in- particular criteria must be met in order for green technology innovation
efficient use of resources (Chen, 2008), which affects firms' profits. New to work effectively: first, it must be based on new technological
technology has been credited with solving environmental problems by knowledge, and second, it must already be in place (i.e., new products
mitigating the effects of pollutants (Jaffe, Newell, & Stavins, 2005). must have already been introduced into the market or new processes
Here, green innovation has been deemed essential in dealing with en- must have already been introduced within the firm). Many manu-
vironmental issues (Kong, Feng, & Ye, 2016). Environmental sustain- facturing firms have started to implement both process-oriented, en-
ability is imperative, and provides an opportunity to improve vironmentally-beneficial strategies and product-oriented,

☆
The authors thank two anonymous referees for their helpful and valuable suggestions. The authors also gratefully acknowledge financial support from the
National Natural Science Foundation of China (71472118, 71772118, 71503160), Shanghai Pujiang Program (18PJC056), and Program for Professor of Special
Appointment (Eastern Scholar) at Shanghai Institutions of Higher Learning.
⁎
Correspondence to: X. Xie, School of Management, Shanghai University, Shanghai 200444, China
⁎⁎
Correspondence to: H. Zou, SHU-UTS SILC Business School, Shanghai University, Shanghai 200231, China
E-mail addresses: [email protected] (X. Xie), [email protected] (J. Huo), [email protected] (H. Zou).

https://doi.org/10.1016/j.jbusres.2019.01.010
Received 11 June 2018; Received in revised form 7 January 2019; Accepted 9 January 2019
Available online 15 January 2019
0148-2963/ © 2019 Elsevier Inc. All rights reserved.
X. Xie et al. Journal of Business Research 101 (2019) 697–706

environmentally-beneficial strategies. analysis method, thus making our findings more specific and more
Generally, green technology innovation is often divided into green meaningful. Finally, we provide a discussion of the implications for
process innovation and green product innovation (Salvadó, de Castro, firms and governments that implement green technology innovation
Verde, & López, 2012, p.39). Previous research has examined the im- and increase the financial rewards of applying green technology in-
pacts of different types of green technology innovation, suggesting that novation, which can help policymakers design more powerful tools to
both green process innovation and green product innovation are per- guide green innovation practices.
formance predictors (e.g., Chan, Yee, Dai, & Lim, 2016; Cheng, Yang, &
Sheu, 2014; Kam-Sing Wong, 2012; Xie, Huo, Qi, & Zhu, 2016). How- 2. Theoretical framework and hypotheses
ever, much of the literature has ignored the internal mechanisms and
contingent conditions of the relationships between green technology 2.1. The two types of green technology innovation
innovation and firm performance (e.g., Chang, 2011; Chen, Lai, & Wen,
2006; Chiou, Chan, Lettice, & Chung, 2011; Kam-Sing Wong, 2012; Green technology innovation includes two primary strategies: green
Sezen & Çankaya, 2013). Part of the problem is that green technology process innovation and green product innovation (Salvadó et al., 2012,
innovation involves a lot of uncertainty because of the so-called p.39). Green product innovation aims to change or modify product
“double externality” problem (Rennings, 2000): on the one hand, the designs by using nontoxic compounds or biodegradable materials
potential positive effect of green innovation on a firm's financial per- during the production process in order to reduce the disposal impact on
formance takes time to materialize (Aguilera-Caracuel & Ortiz-de- the environment and to improve energy efficiency (Lin, Tan, & Geng,
Mandojana, 2013), while on the other hand, the transformation of 2013). Green product innovation requires a fresh view of the product
green technology innovation into financial rewards depends on many life cycle, from the manufacturing process to distribution, and from use
underlying mechanisms and contingent conditions. Given that innova- to disposal or reuse/recycling—in other words, a “cradle to grave”
tion failure has become an increasingly important topic, especially approach (Noci & Verganti, 1999). More specifically, green product
pertaining to heavily polluting industries (Dai & Zhang, 2017), it is innovation includes improvements in the durability or recyclability of
worth investigating the factors that can affect firms' financial returns products, the reduction of raw materials, the selection of en-
after applying green strategies. Thus, two research questions are ad- vironmentally healthier raw materials, and the removal of hazardous
dressed in this study: (a) First, what are the relationships between green substances (Kivimaa & Kautto, 2010). Meanwhile, green process in-
process innovation, green product innovation, and firms' financial novation aims to reduce energy consumption during the production
performance? (b) Second, are there contingent factors that affect the process or during the process that converts waste into an article of value
relationship between green product innovation and firms' financial (Salvadó et al., 2012, p.39). Particularly, green process innovation in-
performance? cludes reducing air or water emissions, lessening water consumption,
Theoretical and empirical evidence suggests that the rate and di- improving resource and energy efficiency, and switching from fossils
rection of technological advances are influenced by market and reg- fuels to bioenergy (Kivimaa & Kautto, 2010). By doing so, those firms
ulatory incentives, as well as by economic, incentive-based policies pioneering green technology innovation strategies can achieve and
(Jaffe et al., 2005). The present study first investigates the im- sustain various competitive advantages (Albort-Morant et al., 2016),
plementation of green product innovation from the perspective of obtaining not only cost efficiency but also profitability (Chan et al.,
market incentives resulting from the interaction between innovation 2016).
and sustainability (Dangelico & Pujari, 2010). Next, our study focuses Prior research has suggested that a firm's process innovation is
on the perspective of regulatory incentives. According to Jaffe et al. closely linked to its product innovation (Oke, 2007). We posit that a
(2005), market failures provide a strong rationale for a suite of public firm's green process innovation is positively related to its green product
policies that foster emissions reductions, as well as the development innovation for several reasons. First, because green process innovation
and adoption of environmentally beneficial technology. In this way, requires systematic improvements to the entire operational and man-
green subsidies are viewed as important tools that governments can use agerial processes to improve the efficiency of resources (Li et al., 2017),
to motivate and support green innovation strategies (Xie et al., 2016), it may also promote the design and production of green products while
accomplished by decreasing the financial burden on firms during the laying the foundations for implementing green product innovation.
implementation of green innovations. According to Kam-Sing Wong (2012), green process innovation can
According to Chen (2010), appearing “green,” or presenting a help firms achieve success in producing new green products by devel-
“green image” is defined as “a set of perceptions of a brand in a con- oping a green product competitive advantage. Second, process in-
sumer's mind that is linked to environmental commitments and en- novation can help firms improve their product quality, widen product
vironmental concerns” (p.309). A green image can help firms attract assortment, or produce entirely new products, thus allowing them to
more customers by affecting consumer choice and improving consumer enhance their market share (Bigliardi & Ivo Dormio, 2009; Damanpour,
brand loyalty (Chang & Fong, 2010). Many consumers want to buy 2010). Hence, process innovation plays an important role in product
products from environmentally friendly firms, although there are, of innovation (Martinez-Ros, 1999). Thus, we advance the following hy-
course, some who will not pay premium prices for green products pothesis:
(Dangelico & Pujari, 2010). Nonetheless, generally speaking, having a
Hypothesis 1. The level of a firm's green process innovation is
green image is more important than ever for firms to win over more
positively correlated to its level of green product innovation.
customers who are willing to pay more for the newest green products.
To fill the aforementioned research gap and to extend our under-
standing of how green technology innovation can improve firms' fi- 2.2. Green process innovation and a firm's financial performance
nancial performance, we propose a comprehensive theoretical frame-
work that examines the mediating mechanisms and contingent Green process innovation tends to be more internally sourced and
conditions of the relationship between green technology innovation and costlier to implement, but has also proven to be more effective than
financial performance. This study thus expands our current under- other green practices (Gopalakrishnan, Bierly, & Kessler, 1999). Green
standing of the ways in which firms can improve the financial returns process innovation can be an additive solution (e.g., smokestack
from green technology innovation by examining the mediating effect of scrubbers) or can be integrated into the production process through
green product innovation and the moderating effects of a firm's green substituting inputs, optimizing production, or reclaiming outputs
image and green subsidies. Next, we measure green process innovation (Rennings, 2000).
and green product innovation at the firm level by using the content Previous research has shown that green process innovation has a

698
X. Xie et al. Journal of Business Research 101 (2019) 697–706

positive impact on firms' competitive advantage and sustainability green image involves the stakeholders' perception of the firm's positive
(Chen et al., 2006; Cheng et al., 2014; Sezen & Çankaya, 2013). Thus, environmental or green characteristics. A green image is viewed as an
overall, it makes good business sense for firms to invest in green process important determinant of consumer satisfaction, and firms that invest
innovation (Li et al., 2017). Therefore, we posit that a firm's green in improving their green image not only avoid the potential trouble of
process innovation practices are conducive to enhancing its financial environmental protests and legal penalties but also enhance consumer
performance. First, green process innovation improves existing pro- expectations about environmental friendliness and sustainability (Chen,
duction processes or adds new processes to reduce adverse environ- 2010). What is more, a green image can help firms generate a more
mental impacts, thus improving a firm's environmental compliance and positive public image, which, in turn, can enhance sales and increase
bringing differentiation advantages (Cheng et al., 2014). Furthermore, stock prices (Zhu & Sarkis, 2006). Many companies in China have re-
Xie et al. (2016) found that clean technologies and end-of-pipe tech- cently tried to establish themselves as “green” due to increasing en-
nologies that are essential aspects of green process innovation are po- vironmental awareness and greater public pressure (Zhu & Sarkis,
sitively related to financial performance. Thus, we hypothesize: 2006).
Green product innovation has a positive impact on firm perfor-
Hypothesis 2. A firm's green process innovation is positively correlated
mance (Lin et al., 2013). However, a firm's green product innovation
to its financial performance.
efforts only pay off when they are adequately promoted (Amores-
Salvadó et al., 2014). According to both De Medeiros, Ribeiro, and
2.3. The mediating role of green product innovation Cortimiglia (2014) and Lin, Zeng, Ma, Qi, and Tam (2014), consumer
pressure and expectation fulfillment are success factors. However,
Green product innovation or the introduction of new or improved Rehfeld, Rennings, and Ziegler (2007) found that the higher prices—not
products, such as improvements in technical components or materials lower quality or diminished reliability—of green products appear to be
(Cheng et al., 2014; Pujari, 2006), aims to reduce environmental im- one of the major reasons for low market performance. According to
pacts during a product's life cycle (Christensen, 2011), and satisfy Dangelico and Pujari (2010), consumers are often not willing to pay a
market needs by creating new products (Cheng et al., 2014). In recent premium price for green product attributes. Thus, maintaining or im-
years, green product innovation has been recognized as one of the key proving customer loyalty can be a challenge when firms begin to im-
factors in achieving growth and environmental sustainability plement green product strategies.
(Dangelico & Pujari, 2010). In this regard, a firm's corporate image could be an important cri-
Additionally, investing in green product innovation can help pre- terion to judge the quality of an unfamiliar product (Chang & Fong,
vent companies from facing environmental protests and legal penalties 2010), and it may lead to increased consumer trust and, in turn, greater
while also allowing them to develop new market opportunities and influence over consumers' purchasing decisions (Chen, 2010). A green
achieve new green product success (Chiou et al., 2011; Kam-Sing Wong, image might also lead consumers to feel an increased affinity for a
2012). Moreover, green product innovation is critical for developing company or a specific product, causing brand loyalty to grow (Zhu &
green competency, strengthening a firm's green image, and improving Sarkis, 2006). As a consequence, a firm's green image can potentially
its financial performance (Ar, 2012; Chen et al., 2006; Cheng et al., increase overall customer satisfaction (Chang & Fong, 2010)—meaning
2014; Huang & Jim Wu, 2010; Lin et al., 2013). the more favorably a customer perceives a company's corporate image,
As discussed in H1 and H2, we hypothesize that green process in- the more positively they will perceive the company's reputation
novation is key for improving a firm's financial performance and fa- (Foroudi, Melewar, & Gupta, 2014; Heinberg, Ozkaya, & Taube, 2018).
cilitating green product innovation. When high levels of product in- Given that customer loyalty and corporate reputation are crucial factors
novation are simultaneously backed by high levels of manufacturing that influence potential return (Chang & Fong, 2010; Dangelico, 2016),
process innovation, this strategy provides the strongest competitive a firm with a better green image can gain more economic return from
advantage by far (Kotabe & Murray, 1990). In addition, according to its green product innovation, leading us to the following hypothesis:
Damanpour (2010), the integrative view of research on green process
Hypothesis 4. A green image moderates the relationship between a
innovation and green product innovation reflects the so-called “re-
firm's green product innovation and its financial performance.
source-based view” (RBV), in which the synergistic influence of a firm's
internal resources—including its product and process knowledge re-
sources—positively impacts the firm's competitive advantage and per- 2.5. The moderating role of green subsidies
formance.
Green process innovation requires the systematic improvement of Green product innovation, which involves minimizing environ-
the whole operational and managerial process, which demands high mental impacts by conserving energy and resources (Lee & Kim, 2011),
levels of financial investment (Li et al., 2017). This type of innovation is is viewed as an important factor in achieving environmental and eco-
also time-consuming and can produce effects that are not always per- nomic success. Amores-Salvadó et al. (2014), however, found that a
fectly direct or evident (Li et al., 2017). Despite this, we propose that firm's commitment to green product innovation has a positive, but not
green process innovation can promote green product innovation (see statistically significant effect on performance, suggesting that any fi-
H1), which can be invested into producing new products, thus easily nancial compensation resulting from the initial product innovation in-
translating into increased revenue and technological advantage (Li vestment could be considered insufficient by some managers. Thus,
et al., 2017). Hence, we argue that green process innovation can im- determining what green product technologies might achieve technical
prove a firm's financial performance by encouraging green product and commercial success is not without significant risk and uncertainty
innovation, leading to the following hypothesis: (Dangelico & Pujari, 2010; Lin, Zeng, Ma, & Chen, 2015). It is also
important to note that a substantial investment in resources is necessary
Hypothesis 3. Green product innovation mediates the relationship
to obtain strong green product development performance (Chen,
between green process innovation and a firm's financial performance.
Chang, Lin, Lai, & Wang, 2016). Because of the high costs, only those
companies with deep pockets can afford to invest in green product in-
2.4. The moderating role of a green image novation (Dangelico & Pujari, 2010). Adding to the challenge, many
consumers exert continuous pressure on firms to encourage green
A firm's corporate image can be understood as the desired general product innovation (Lin et al., 2014), yet they are often unwilling to
impression of the firm in the minds of its key stakeholders (Amores- pay premium prices for green product attributes (Dangelico & Pujari,
Salvadó, Martín-de Castro, & Navas-López, 2014). A firm's corporate 2010).

699
X. Xie et al. Journal of Business Research 101 (2019) 697–706

H2 (+)

Green image

Green technology innovation H4 (+)

H3 (+)

Green process H1 (+) Green product Financial

innovation innovation performance

H5 (+)

Green subsidies

Fig. 1. Conceptual model.

Environmental law and policy are critical for the implementation of China (2008, no. 373),2 we chose 17 manufacturing industries in need
green product innovation (Chen, 2001; De Medeiros et al., 2014; of environmental protection verification. Companies listed as special
Rehfeld et al., 2007). While a meaningful internal or external en- treatment (ST) and particular transfer (PT) firms were omitted because
vironmental standard is needed, unilaterally pursuing environmental these firms had experienced unusual financial performance. We also
goals without considering economic incentives could put firms in the omitted firms that did not publish Corporate Social Responsibility Reports
“danger zone,” where stricter standards may lead to lower overall en- in 2013, which we needed to obtain data pertaining to green process
vironmental quality (Chen, 2001). Green subsidies—subsidies that innovation, green product innovation, and green image. Finally, using
manufacturing industries receive from the government to fund or aid the content analysis method, we obtained a data set of 209 firms listed
their environmental practices (Xie et al., 2016)—can address market in the publication Stock A Markets of Shanghai or Shenzhen Stock Ex-
failures (Green, 2006). They can also be an effective way to balance change in 2013. Data concerning green subsidies, financial perfor-
regulatory strictness and innovation-friendliness. First, green subsidies mance, financial constraints, total assets turnover, age, and size of firms
can help firms internalize environmental costs while rewarding green were obtained from the firms' annual reports.
investment (Horbach, Rammer, & Rennings, 2012; Xie et al., 2016), as
well as mitigate financial pressures triggered by investing in green 3.2. Variables
practices, which, in turn, encourages firms to develop greener products
and practices. Second, green subsidies can help firms internalize green 3.2.1. Dependent variable: financial performance
innovation practices (Horbach, 2008), support ecological responsibility, Return on assets (ROA) is a standard accounting measure of fi-
and fuel the active engagement of the resources necessary for devel- nancial performance commonly used in the green innovation literature,
oping green products. indicating the outcomes of specific past and present actions (Amores-
Overall, green subsidies can help firms smooth away the difficulties Salvadó et al., 2014). ROA is more stable than sales growth or return on
caused by developing green products and encourage them to invest sales in measuring financial performance because of both the man-
more resources in green product innovation, which, in turn, allow them agerial effect of short-term activities and uncertainty about the external
to benefit more from green product innovation, which leads to the environment in emerging markets (Li & Wong, 2003). Thus, because of
following hypothesis: its stability and reliability, we used ROA to measure the financial per-
formance of the firms.
Hypothesis 5. Green subsidies moderate the relationship between a
firm's green product innovation and its financial performance.
3.2.2. Independent variable: green process innovation
The conceptual model is shown in Fig. 1. In this study, green process innovation was divided into clean
technologies and end-of-pipe technologies (del Río González, 2005;
3. Data and variables Rennings et al., 2006; Salvadó et al., 2012). According to Frondel,
Horbach, and Rennings (2007), Hammar and Löfgren (2010), Klassen
3.1. Data and Whybark (1999), and Lee and Rhee (2005), clean technologies
were measured by three indexes, and following del Río González
For our research, we used the industry classification results of listed (2005), Frondel et al. (2007), and Hart (1995), end-of-pipe technologies
firms on the China Securities Regulatory Commission official website,1 were measured by two indexes (see Table 1). Data from both items were
choosing an initial 1585 manufacturing firms from the list. Based on the determined according to the description of a firm's Corporate Social
environmental protection verification status of industries published by Responsibility Report by using the content analysis method, whereby
the Ministry of Environmental Protection of the People's Republic of each item was scored 0 to 2: 0 if there was no related description; 1 if

1 2
http://www.csrc.gov.cn/pub/newsite/scb/ssgshyfljg/201304/t20130402_ http://www.zhb.gov.cn/gkml/hbb/bgth/200910/t20091022_174891.
223006.html. htm#.

700
X. Xie et al. Journal of Business Research 101 (2019) 697–706

Table 1
Variables and measurements.
Variables Measurements Data sources Sources

Firm size Total assets (billion) Firms' Annual Reports Lin et al. (2015)
Financial constraints Asset-liability ratio Firms' Annual Reports Xie et al. (2016)
Total assets turnover Ratio of main business income to total assets Firms' Annual Reports Lucas and Noordewier (2016)
Firm age Number of years listed in the Chinese stock market to year 2013 Firms' Annual Reports Lin et al. (2015)
Green process innovation PROC1. Aiming to reduce the consumption of resources and Firms' Corporate Social Frondel et al. (2007); Klassen and Whybark
energy and improve resource and energy efficiency Responsibility Reports (1999)
PROC2. Using recycled materials, recycling techniques, and
environmental technologies
PROC3. Applying environmental campaigns
PROC4. Using pollution-control equipment Frondel et al. (2007); del Río González
PROC5. Adopting pollution-control projects and technologies (2005)
Green product innovation PROD1. Making changes to product designs in order to avoid Firms' Corporate Social Amores-Salvadó et al. (2014); Chiou et al.
polluting or toxic compounds within production processes Responsibility Reports (2011); Kam-Sing Wong (2012)
PROD2. Improving and designing environmentally-friendly
packaging for existing and new products
PROD3. Making product design modifications aimed to improve
energy efficiency during usage
Green image GI1. Complying with environmental regulations and having a high Firms' Corporate Social Amores-Salvadó et al. (2014)
awareness of environmental risks Responsibility Reports
GI2. Demonstrating strength in improving energy efficiency via
corresponding environmental performance
GI3. Demonstrating the ability to reduce waste via corresponding
environmental performance
Green subsidies Amount of subsidies related to environmental protection (billion) Firms' Annual Reports Lin et al. (2015)
Financial performance Return on assets (ROA) Firms' Annual Reports Amores-Salvadó et al. (2014); Li and Wong
(2003)

there was only a plain description without implementation details (e.g., firm's operational performance. Following Lucas and Noordewier
detailed plans, an implementation process, or quantitative terms, thus (2016), we used the ratio of main business income to total assets to
indicating a firm was indeed conducting a related type of innovation); measure total assets turnover in order to assess a firm's financial per-
and 2 if there was a related description with rich details (i.e., numerical formance at the firm-level. The fourth control variable was firm age, as
indicators to describe corresponding environmental practices). We firms can lose their ability to compete and innovate over time, even
computed the value of green process innovation as the average of clean though they can also bring knowledge, skills, and specialization to in-
technologies and end-of-pipe technologies. novation (Isidro & Sobral, 2015). Following Lin et al. (2015), we
measured firm age using the number of years from its initial listing in
3.2.3. Mediator: green product innovation the Chinese stock market to the year 2013.
According to Amores-Salvadó et al. (2014), Chiou et al. (2011), Lin
et al. (2013), and Kam-Sing Wong (2012), we measured green product 3.3. Reliability test
innovation using three indexes (see Table 1). In our study, the three
items were scored using the content analysis method described above. The data on green process innovation, green product innovation,
and green image were obtained by using the content analysis method
3.2.4. Moderators manually. The data were then coded by two coders. Following Hussain,
3.2.4.1. Green image. Amores-Salvadó et al. (2014) used items related Rigoni, and Orij (2018), we calculated the Krippendorff's alpha as the
to a firm's awareness of environmental risks and environmental reliability measure for the data of the three variables discussed above;
achievements to capture their green image. Thus, in our study, green the value of alpha should have registered > 0.67 for us to draw useful
image was measured using three items (see Table 1). The three items conclusions. Following Hayes and Krippendorff (2007), we used
were also scored using the content analysis method. KALPHA macro in SPSS to compute the Krippendorff's alpha.3 Initially,
60 reports were coded by the two coders, and the inter-coder reliability
was measured by these data. The values of Krippendorff's alpha for the
3.2.4.2. Green subsidies. Subsidies are most frequently used in
indexes on green process innovation, green product innovation, and
environmental policy instruments by the government to incentivize
green image were all greater than the threshold value of 0.67, and thus,
environmental practices (Lin et al., 2015). Using the firms' annual
the reliability of the data was supported.
reports, green subsidies were measured by the number of government
subsidies related to environmental protections (Lin et al., 2015).
4. Results

3.2.5. Controls Table 2 presents the descriptive statistics and Pearson correlation
We controlled for the following variables that may influence fi- coefficients of the variables. The results show that green process in-
nancial performance. This first variable was firm size, used to consider novation is significantly correlated with green product innovation. The
the tendency of larger firms to achieve better performance (Chun, Shin, results also show that a firm's green image and green subsidies are
Choi, & Kim, 2013). Following Lin et al. (2015), we used a firm's total significantly related to its green process innovation, as well as to its
assets to measure its size. The second variable was financial constraints, green product innovation.
used to control for the effect of a firm's financial structure and any lack Table 3 illustrates the regression results of the green product in-
of resources (Chun et al., 2013). Following Xie et al. (2016), we used novation's mediating effect. The results of model 5 in Table 3 show that
the asset-liability ratio to measure financial constraints, which reflects
the extent to which a firm's assets are financed by debt. The third
variable was total assets turnover, which is an important indicator of a 3
The macro is available at http://www.afhayes.com.

701
X. Xie et al. Journal of Business Research 101 (2019) 697–706

Table 2
Descriptive statistics and correlations.
Variables Descriptive statistics Correlations

Mean S.D. 1 2 3 4 5 6 7 8 9

1. Financial performance 0.042 0.057 1.000

2. Firm size 20.443 39.368 −0.031 1.000
3. Financial constraints 0.469 0.206 −0.516⁎⁎⁎ 0.295⁎⁎⁎ 1.000
4. Total assets turnover 0.838 0.653 0.118⁎ 0.088 0.011 1.000
5. Firm age 17.153 4.137 0.074 0.013 0.043 0.024 1.000
6. Green process innovation 0.959 0.412 0.048 0.250⁎⁎⁎ 0.198⁎⁎⁎ −0.017 0.090 1.000
7. Green product innovation 0.359 0.394 0.104 0.245⁎⁎⁎ 0.081 0.025 −0.034 0.245⁎⁎⁎ 1.000
8. Green image 1.014 0.549 0.094 0.175⁎⁎ 0.234⁎⁎⁎ 0.011 0.105 0.405⁎⁎⁎ 0.196⁎⁎⁎ 1.000
9. Green subsidies 0.095 0.218 0.015 0.619⁎⁎⁎ 0.232⁎⁎⁎ 0.052 −0.043 0.221⁎⁎⁎ 0.247⁎⁎⁎ 0.163⁎⁎ 1.000

⁎⁎⁎
Correlation is significant at the 0.01 level (2-tailed).
⁎⁎
Correlation is significant at the 0.05 level (2-tailed).
⁎
Correlation is significant at the 0.1 level (2-tailed).

Table 3
Regression results of the mediating effect of green product innovation.
Variables Financial performance Green product innovation

Model 1 Model 2 Model 3 Model 4 Model 5

Controls
Firm size 0.122⁎⁎ (1.993) 0.094 (1.513) 0.073 (1.161) 0.242⁎⁎⁎ (3.398) 0.199⁎⁎⁎ (2.777)
Financial constraints −0.558⁎⁎ (−9.114) −0.575⁎⁎⁎ (−9.406) −0.574⁎⁎⁎ (−9.424) 0.011 (0.157) −0.016 (−0.221)
Total assets turnover 0.111⁎ (1.898) 0.117⁎⁎ (2.004) 0.115⁎⁎ (1.991) 0.004 (0.062) 0.012 (0.183)
Firm age 0.094 (1.602) 0.083 (1.424) 0.088 (1.527) −0.038 (−0.554) −0.054 (−0.812)

Predictors
Green process innovation 0.133⁎⁎ (2.192) 0.111⁎ (1.810) 0.204⁎⁎⁎ (2.92)
Green product innovation 0.105⁎ (1.732)
R squared 0.304 0.320 0.330 0.062 0.100
Adjusted R squared 0.291 0.304 0.310 0.043 0.077
F-value 22.297⁎⁎⁎ 19.131⁎⁎⁎ 16.6⁎⁎⁎ 3.353⁎⁎ 4.486⁎⁎⁎
Change in R2 0.304 0.016 0.010 0.062 0.038
Change in F-statistic 22.297⁎⁎⁎ 4.804⁎⁎ 3.000⁎ 3.353⁎⁎ 8.525⁎⁎⁎

⁎⁎⁎
p < 0.01.
⁎⁎
p < 0.05.
⁎
p < 0.10.

green process innovation is positively related to green product in- innovation is significantly related to financial performance. Thus, H2 is
novation, thus providing support for H1. Innovation types (such as supported. Both green process innovation and green product innovation
process innovation and product innovation) are complementary, and have a positive influence on financial improvement (see models 2 and
influence organizations jointly; hence, each type cannot truly be un- 3). From RBV, when firms conduct green process innovation and green
derstood without understanding its interrelationship with other types product innovation, they can accumulate product and process knowl-
(Damanpour, 2010). Unlike Klepper (1996), who argued that devoting edge resources, thereby improving their financial performance by in-
more effort to process innovation will make product innovation shrink, creasing their unique and valuable resources. As one can see, the two
we believe that green process innovation can facilitate green product green innovation strategies used in tandem promote better financial
innovation. Product innovation typically refers to an assembled product performance overall.
that can be sold to a consumer when manufactured, whereas process Moreover, the results show that green product innovation mediates
innovation creates new products or enhances the cost/performance the relationship between green process innovation and financial per-
attributes of existing products (Maine, Lubik, & Garnsey, 2012). It is formance (Baron & Kenny, 1986). On one side, green process innova-
important to note that, according to Lin et al. (2013), the success of tion is positively associated with financial performance (see model 2 in
green product innovation depends on sustainable business operations. Table 3), and has a positive influence on green product innovation (see
Green process innovation is such a process, in which all aspects ex- model 5 in Table 3). On the other side, green product innovation is
perience deep change with the aim of reducing the environmental im- positively associated with financial performance (see model 3 in
pact of production, beginning at the source (Gopalakrishnan et al., Table 3), with the coefficient of green process innovation becoming
1999). Because of this, green process innovation lays the foundation for smaller when green product innovation is entered into model 3. From
other environmental practices, including green product innovation. this, we find that H3 is supported. The results demonstrate that green
From RBV, we know that a firm's resources and capabilities are key process innovation not only has the potential to affect financial per-
determinants of their competitive advantage and success. Conse- formance directly but also to influence financial performance via green
quently, the efficient use of resources is of great value to firms. Because product innovation. As a differentiation strategy, green product in-
green process innovation can facilitate green product innovation, firms novation can enable firms to create new businesses, seize green op-
can begin with green process innovation when they implement en- portunities, and lead in their markets (Chang, 2016). Green process
vironmental strategies in order to leverage it to make full use of firm innovation can help firms develop greater competency (e.g., by using
resources. innovative tools, devices, and knowledge) when upgrading required
The results of model 2 in Table 3 demonstrate that green process manufacturing processes for new green product development, which, in

702
X. Xie et al. Journal of Business Research 101 (2019) 697–706

Table 4
Regression results of moderating effects.
Variables Financial performance

Model 1 Model 2 Model 3 Model 4 Model 5

Controls
Firm size 0.122⁎⁎ (1.993) 0.073 (1.161) 0.054 (0.705) 0.055 (0.730) 0.027 (0.320)
Financial constraints −0.558⁎⁎ (−9.114) −0.574⁎⁎⁎ (−9.424) −0.566⁎⁎⁎ (−9.152) −0.560⁎⁎⁎ (−9.078) −0.561⁎⁎⁎ (−9.089)
Total assets turnover 0.111⁎ (1.898) 0.115⁎⁎ (1.991) 0.116⁎⁎ (1.996) 0.121⁎⁎ (2.096) 0.122⁎⁎ (2.114)
Firm age 0.094 (1.602) 0.088 (1.527) 0.095 (1.623) 0.100⁎ (1.711) 0.097⁎ (1.663)

Predictors
Green process innovation 0.111⁎ (1.810) 0.130⁎⁎ (1.990) 0.133⁎⁎ (2.033) 0.134⁎⁎ (2.052)
Green product innovation 0.105⁎ (1.732) 0.108⁎ (1.755) 0.106⁎ (1.727) 0.106⁎ (1.724)

Moderators
Green image −0.062 (−0.951) −0.058 (−0.906) −0.061 (−0.942)
Green subsidies 0.036 (0.486) 0.020 (0.268) 0.107 (0.816)
Green image × green product innovation 0.099⁎ (1.702) 0.106⁎ (1.801)
Green subsidies × green product innovation −0.087 (−0.809)
R squared 0.304 0.330 0.334 0.344 0.346
Adjusted R squared 0.291 0.310 0.307 0.314 0.313
F-value 22.297⁎⁎⁎ 16.6⁎⁎⁎ 12.535⁎⁎⁎ 11.57⁎⁎⁎ 10.46⁎⁎⁎
Change in R2 0.304 0.010 0.004 0.010 0.002
Change in F-statistic 22.297⁎⁎⁎ 3.000⁎ 0.558 2.898⁎ 0.654

⁎⁎⁎
p < 0.01.
⁎⁎
p < 0.05.
⁎
p < 0.10.

turn, can lead to new green products in the marketplace (Cheng et al., punishments (Chen, 2010). Additionally, a company's green image is an
2014). Consequently, green process innovation encourages green pro- important criterion when judging the quality of an unfamiliar product,
duct innovation by increasing product differentiation. Further, firms so a better green image can yield a higher level of customer satisfaction
willing to undertake green product innovation can take advantage of (Chang & Fong, 2010). Because of this, a better green image will help
the positive effect of green process innovation, thereby developing a firms undertake green product innovation in order to increase their
greater competitive advantage. Therefore, it is clear that firms should market performance, and will, if promoted effectively, attract en-
enhance their green process innovation and green product innovation vironmentally conscious consumers who want to buy green products,
jointly in order to improve their financial performance. thus further encouraging firms to implement green product innovation.
The results of model 4 in Table 4 show that green image enhances Interestingly, we found that green subsidies did not moderate the
the relationship between green product innovation and financial per- relationship between green product innovation and financial perfor-
formance. Thus, H4 is supported. Fig. 2 illustrates that the positive mance (see model 5 in Table 4). Thus, we find that H5 is not supported.
impact of green product innovation on financial performance is This result is consistent with previous research that indicated that green
stronger among firms with a better green image, indicating that green subsidies might weaken the positive relationship between green process
product innovation is more beneficial when firms have a better green innovation and financial performance (Xie et al., 2016). There are
image. However, as Amores-Salvadó et al. (2014) showed, green pro- several possible reasons for this. First, most Chinese manufacturing
duct innovation efforts only yield dividends when those efforts are firms are still in the beginning stages of implementing green product
adequately promoted. In China, environmental regulation has grown innovation. With rising environmental awareness, the government has
increasingly rigorous, and a firm's green image is more important than just begun to use green subsidies as a tool to motivate environmentally
ever, especially because of the rise of environmentally conscious con- friendlier strategies. However, thus far, motivation is somewhat lim-
sumers and strict international environmental protection regulations ited, and it will never be enough to support firms' reluctance to invest in
(Chen, 2010). A firm's green image is now a crucial factor affecting what they perceive to be risky practices or to depend on green subsidies
strategy and performance, and those firms with a better green image alone. Further, given that green production requires more time and
will have less trouble with either environmental protests or legal money than traditional methods, the use of green subsidies is not a
great incentive for firms just starting green practices, as they are faced
with far more capital investment. Second, in addition to financial bar-
riers, there are technological barriers that also prevent firms from
conducting green product innovation thoroughly and successfully.
Third, due to the general higher price of green products, there are
plenty of consumers who are unwilling to pay extra for the green pro-
duct attributes after the products have been produced (Dangelico &
Pujari, 2010). Hence, the use of green subsidies is not a powerful en-
ough incentive for many Chinese manufacturing firms just beginning to
implement green innovation strategies (Xie et al., 2016).

5. Discussion and conclusions

In this study, using the content analysis method to capture the data
of listed firms in China, we find that green process innovation has a
Fig. 2. Moderating effect of green image on the relationship between green positive impact on green product innovation and, further, that both
product innovation and a firm's financial performance. kinds of innovation can improve firms' financial performance. The

703
X. Xie et al. Journal of Business Research 101 (2019) 697–706

theory of RBV, institutional theory, and stakeholder theory can help this study. First, in recent years, companies have faced growing pres-
explain the positive impact of green technology innovation on firms' sure to be “greener” and more environmentally friendly (Sezen &
financial performance (Prakash, 2002). According to RBV, green pro- Çankaya, 2013). Because of this, firms should take advantage of both
cess innovation and green product innovation can be seen as two types kinds of green technology innovation to improve their financial per-
of organizational resources (Cheng et al., 2014). Since green process formance. In addition, since green process innovation can promote
innovation is process-oriented and green product innovation is product- green product innovation, firms should prioritize green process in-
oriented, the implementation of these two complementary innovations novation, especially when there are resource constraints.
will bring a greater competitive advantage to those firms applying both. Second, firms should attach more importance to cultivating a green
From the perspectives of both institutional theory and stakeholder image, which will increase consumers' willingness to pay for green
theory, green innovation strategies will help a firm gain the trust and products; in so doing, firms can increase their market share and im-
support of external institutions and key stakeholders by taking into prove their financial performance. However, a huge challenge here is
account the interests of external parties rather than just the firm's how companies can incorporate their environmental vision into their
economic goals (Prakash, 2002). corporate strategies, rather than seeking ways to promote their green
We also find that green product innovation mediates the relation- brands alone (Chen, 2010). Furthermore, to build a better green image,
ship between green process innovation and financial performance. firms should advertise their environmental practices—such as how they
Green process innovation facilitates the implementation of green pro- recycle, conserve water and energy, avoid disposable goods, or reduce
duct innovation, with the latter helping to translate the former into emissions released into the air, water, and soil—to consumers (Han,
revenue. Hence, green process innovation should be complemented Hsu, & Lee, 2009).
with green product innovation in order to ensure substantial profits Third, the government should design more effective tools beyond
from green technology innovation. green subsidies to motivate and support green strategies, and should
Moreover, we find that a green image moderates the relationship investigate why green subsidies have not been as effective as expected.
between green product innovation and firms' financial performance, Firms receiving green subsidies should be placed under scrutiny in
but that a lack of customer awareness can prove a key challenge that order to increase the probability that the subsidies are being used in the
firms must overcome (Dangelico & Pujari, 2010). In this case, a better most advantageous ways (Lin et al., 2015). Next, instead of designing
green image can influence purchasing decisions (Chen, 2010) and can policies drawn from a particular theory, government authorities should
increase the demand for green products. Thus, a firm's investment in its spend time listening to practitioners to better understand the difficulties
green image will pay off by achieving more financial gains from its that firms face when implementing green strategies.
green product innovation.
Unexpectedly, there is no empirical evidence supporting the mod- 5.3. Limitations and further research
erating effect of green subsidies on the relationship between green
product innovation and financial performance. According to Hou, Chen, This study provides an important theoretical framework for green
and Xu (2017), the overall level of green innovation growth in China's innovation management in transition economies. However, there are
manufacturing sector is relatively low, so manufacturing firms in China some limitations that need to be addressed. First, the measurements of
are short of effective support and suffer from high risk and uncertainty. green process innovation, green product innovation, and green image
Furthermore, because environmental policies in developing countries are based solely on the content in the firms' Corporate Social
change periodically (Dai & Zhang, 2017), manufacturing firms should Responsibility Reports. Future research should seek more valid mea-
increase their numbers of green products rather than depending heavily surements and collect panel data to measure these variables to better
on external factors (e.g., subsidies) (Yu, Han, & Hu, 2016). explore the dynamic relationship between green technology innovation
and firms' financial performance. Second, due to limited data, we only
5.1. Theoretical contributions examine the effects of green process innovation and green product in-
novation. Green management innovation, which is another kind of
The theoretical contributions of our study are twofold. First, our green innovation (Wahba, 2008), needs to be analyzed as well. Parti-
findings extend previous research (e.g., Lin et al., 2013; Xie et al., 2016) cularly, the interdependence between these three kinds of green in-
by investigating the indirect effect of green process innovation on firms' novation should be examined in the future in order to provide a more
financial performance. In our study, we divide green technology in- holistic understanding of green innovation. Third, future studies could
novation into “green process innovation” and “green product innova- use more variables to measure firm performance, for instance, applying
tion” and then explore the relationship between these two kinds of Tobin's Q ratio.
innovation, as well as the mediation effect of green product innovation In spite of these limitations, our research is crucial for both firms
in the process, which helps bridge the gap between different types of and government agencies, as the desire to have greener enterprises to
green strategies by conducting in-depth analysis on the relationship protect the earth seems likely to continue unabated.
between them.
The second contribution of our study lies within our framework of Acknowledgements
the theoretical and empirical analyses by examining how a firm's green
image and green subsidies interaction with green product innovation This research was supported by the National Natural Science
can have profound effects on financial performance. The external im- Foundation of China (Grant number: 71472118; 71772118; 71503160),
plementation environment of green product innovation is still some- Shanghai Pujiang Program (Grant number: 18PJC056), and Program
what uncertain, and thus far, firms have done little to motivate con- for Professor of Special Appointment (Eastern Scholar) at Shanghai
sumers to buy their more expensive green products (Rehfeld et al., Institutions of Higher Learning.
2007). Yet, our results reveal that a firm's green image can strengthen
the positive impact of green product innovation on its financial per- References
formance, which shed light on the contingent mechanism that green
product innovation improves financial performance. Abdullah, M., Zailani, S., Iranmanesh, M., & Jayaraman, K. (2016). Barriers to green
innovation initiatives among manufacturers: The Malaysian case. Review of
Managerial Science, 10(4), 683–709.
5.2. Managerial implications Aguilera-Caracuel, J., & Ortiz-de-Mandojana, N. (2013). Green innovation and financial
performance: An institutional approach. Organization & Environment, 26(4), 365–385.
There are several managerial implications that can be drawn from Albort-Morant, G., Leal-Millán, A., & Cepeda-Carrión, G. (2016). The antecedents of green

704
X. Xie et al. Journal of Business Research 101 (2019) 697–706

innovation performance: A model of learning and capabilities. Journal of Business Heinberg, M., Ozkaya, H. E., & Taube, M. (2018). Do corporate image and reputation
Research, 69(11), 4912–4917. drive brand equity in India and China?-Similarities and differences. Journal of
Amores-Salvadó, J., Martín-de Castro, G., & Navas-López, J. E. (2014). Green corporate Business Research, 86, 259–268.
image: Moderating the connection between environmental product innovation and Horbach, J. (2008). Determinants of environmental innovation—New evidence from
firm performance. Journal of Cleaner Production, 83, 356–365. German panel data sources. Research Policy, 37(1), 163–173.
Ar, I. M. (2012). The impact of green product innovation on firm performance and Horbach, J., Rammer, C., & Rennings, K. (2012). Determinants of eco-innovations by type
competitive capability: The moderating role of managerial environmental concern. of environmental impact—The role of regulatory push/pull, technology push and
Procedia-Social and Behavioral Sciences, 62, 854–864. market pull. Ecological Economics, 78, 112–122.
Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator variable distinction in Hou, J., Chen, H., & Xu, J. (2017). External knowledge sourcing and green innovation
social psychological research: Conceptual, strategic, and statistical considerations. growth with environmental and energy regulations: Evidence from manufacturing in
Journal of Personality and Social Psychology, 51(6), 1173–1182. China. Sustainability, 9(3), 342–358.
Bigliardi, B., & Ivo Dormio, A. (2009). An empirical investigation of innovation de- Huang, Y. C., & Jim Wu, Y. C. (2010). The effects of organizational factors on green new
terminants in food machinery enterprises. European Journal of Innovation product success: Evidence from high-tech industries in Taiwan. Management Decision,
Management, 12(2), 223–242. 48(10), 1539–1567.
Chan, H. K., Yee, R. W., Dai, J., & Lim, M. K. (2016). The moderating effect of environ- Hussain, N., Rigoni, U., & Orij, R. P. (2018). Corporate governance and sustainability
mental dynamism on green product innovation and performance. International performance: Analysis of triple bottom line performance. Journal of Business Ethics,
Journal of Production Economics, 181, 384–391. 149(2), 411–432.
Chang, C. H. (2011). The influence of corporate environmental ethics on competitive Isidro, H., & Sobral, M. (2015). The effects of women on corporate boards on firm value,
advantage: The mediation role of green innovation. Journal of Business Ethics, 104(3), financial performance, and ethical and social compliance. Journal of Business Ethics,
361–370. 132(1), 1–19.
Chang, C. H. (2016). The determinants of green product innovation performance. Jaffe, A. B., Newell, R. G., & Stavins, R. N. (2005). A tale of two market failures:
Corporate Social Responsibility and Environmental Management, 23(2), 65–76. Technology and environmental policy. Ecological Economics, 54(2), 164–174.
Chang, N. J., & Fong, C. M. (2010). Green product quality, green corporate image, green Kam-Sing Wong, S. (2012). The influence of green product competitiveness on the success
customer satisfaction, and green customer loyalty. African Journal of Business of green product innovation: Empirical evidence from the Chinese electrical and
Management, 4(13), 2836–2844. electronics industry. European Journal of Innovation Management, 15(4), 468–490.
Chen, C. (2001). Design for the environment: A quality-based model for green product Kivimaa, P., & Kautto, P. (2010). Making or breaking environmental innovation?
development. Management Science, 47(2), 250–263. Technological change and innovation markets in the pulp and paper industry.
Chen, Y. S. (2008). The driver of green innovation and green image-green core compe- Management Research Review, 33(4), 289–305.
tence. Journal of Business Ethics, 81(3), 531–543. Klassen, R. D., & Whybark, D. C. (1999). The impact of environmental technologies on
Chen, Y. S. (2010). The drivers of green brand equity: Green brand image, green sa- manufacturing performance. Academy of Management Journal, 42(6), 599–615.
tisfaction, and green trust. Journal of Business Ethics, 93(2), 307–319. Klepper, S. (1996). Entry, exit, growth, and innovation over the product life cycle. The
Chen, Y. S., Chang, T. W., Lin, C. Y., Lai, P. Y., & Wang, K. H. (2016). The influence of American Economic Review, 86(3), 562–583.
proactive green innovation and reactive green innovation on green product devel- Kong, T., Feng, T., & Ye, C. (2016). Advanced manufacturing technologies and green
opment performance: The mediation role of green creativity. Sustainability, 8(10), innovation: The role of internal environmental collaboration. Sustainability, 8(10),
966–978. 1056–1073.
Chen, Y. S., Lai, S. B., & Wen, C. T. (2006). The influence of green innovation performance Kotabe, M., & Murray, J. Y. (1990). Linking product and process innovations and modes
on corporate advantage in Taiwan. Journal of Business Ethics, 67(4), 331–339. of international sourcing in global competition: A case of foreign multinational firms.
Cheng, C. C., Yang, C. L., & Sheu, C. (2014). The link between eco-innovation and Journal of International Business Studies, 21(3), 383–408.
business performance: A Taiwanese industry context. Journal of Cleaner Production, del Río González, P. (2005). Analysing the factors influencing clean technology adoption:
64, 81–90. A study of the Spanish pulp and paper industry. Business Strategy and the Environment,
Chiou, T. Y., Chan, H. K., Lettice, F., & Chung, S. H. (2011). The influence of greening the 14(1), 20–37.
suppliers and green innovation on environmental performance and competitive ad- Lee, K. H., & Kim, J. W. (2011). Integrating suppliers into green product innovation de-
vantage in Taiwan. Transportation Research Part E: Logistics and Transportation Review, velopment: An empirical case study in the semiconductor industry. Business Strategy
47(6), 822–836. and the Environment, 20(8), 527–538.
Christensen, T. B. (2011). Modularised eco-innovation in the auto industry. Journal of Lee, S. Y., & Rhee, S. K. (2005). From end-of-pipe technology towards pollution pre-
Cleaner Production, 19(2), 212–220. ventive approach: The evolution of corporate environmentalism in Korea. Journal of
Chun, J. S., Shin, Y., Choi, J. N., & Kim, M. S. (2013). How does corporate ethics con- Cleaner Production, 13(4), 387–395.
tribute to firm financial performance? The mediating role of collective organizational Li, D., Zheng, M., Cao, C., Chen, X., Ren, S., & Huang, M. (2017). The impact of legitimacy
commitment and organizational citizenship behavior. Journal of Management, 39(4), pressure and corporate profitability on green innovation: Evidence from China top
853–877. 100. Journal of Cleaner Production, 141, 41–49.
Dai, R., & Zhang, J. (2017). Green process innovation and differentiated pricing strategies Li, M., & Wong, Y. Y. (2003). Diversification and economic performance: An empirical
with environmental concerns of south-north markets. Transportation Research Part E: assessment of Chinese firms. Asia Pacific Journal of Management, 20(2), 243–265.
Logistics and Transportation Review, 98, 132–150. Lin, H., Zeng, S. X., Ma, H. Y., & Chen, H. Q. (2015). How political connections affect
Damanpour, F. (2010). An integration of research findings of effects of firm size and corporate environmental performance: The mediating role of green subsidies. Human
market competition on product and process innovations. British Journal of and Ecological Risk Assessment: An International Journal, 21(8), 2192–2212.
Management, 21(4), 996–1010. Lin, H., Zeng, S. X., Ma, H. Y., Qi, G. Y., & Tam, V. W. (2014). Can political capital drive
Dangelico, R. M. (2016). Green product innovation: Where we are and where we are corporate green innovation? Lessons from China. Journal of Cleaner Production, 64,
going. Business Strategy and the Environment, 25(8), 560–576. 63–72.
Dangelico, R. M., & Pujari, D. (2010). Mainstreaming green product innovation: Why and Lin, R. J., Tan, K. H., & Geng, Y. (2013). Market demand, green product innovation, and
how companies integrate environmental sustainability. Journal of Business Ethics, firm performance: Evidence from Vietnam motorcycle industry. Journal of Cleaner
95(3), 471–486. Production, 40, 101–107.
De Medeiros, J. F., Ribeiro, J. L. D., & Cortimiglia, M. N. (2014). Success factors for Lucas, M. T., & Noordewier, T. G. (2016). Environmental management practices and firm
environmentally sustainable product innovation: A systematic literature review. financial performance: The moderating effect of industry pollution-related factors.
Journal of Cleaner Production, 65, 76–86. International Journal of Production Economics, 175, 24–34.
Foroudi, P., Melewar, T. C., & Gupta, S. (2014). Linking corporate logo, corporate image, Maine, E., Lubik, S., & Garnsey, E. (2012). Process-based vs. product-based innovation:
and reputation: An examination of consumer perceptions in the financial setting. Value creation by nanotech ventures. Technovation, 32(3), 179–192.
Journal of Business Research, 67(11), 2269–2281. Martinez-Ros, E. (1999). Explaining the decisions to carry out product and process in-
Frondel, M., Horbach, J., & Rennings, K. (2007). End-of-pipe or cleaner production? An novations: The Spanish case. The Journal of High Technology Management Research,
empirical comparison of environmental innovation decisions across OECD countries. 10(2), 223–242.
Business Strategy and the Environment, 16(8), 571–584. Noci, G., & Verganti, R. (1999). Managing ‘green’ product innovation in small firms. R&D
Gopalakrishnan, S., Bierly, P., & Kessler, E. H. (1999). A reexamination of product and Management, 29(1), 3–15.
process innovations using a knowledge-based view. The Journal of High Technology Oke, A. (2007). Innovation types and innovation management practices in service com-
Management Research, 10(1), 147–166. panies. International Journal of Operations & Production Management, 27(6), 564–587.
Green, A. (2006). Trade rules and climate change subsidies. World Trade Review, 5(3), Porter, M. E., & Van der Linde, C. (1995). Toward a new conception of the environment -
377–414. Competitiveness relationship. The Journal of Economic Perspectives, 9(4), 97–118.
Hammar, H., & Löfgren, A. (2010). Explaining adoption of end of pipe solutions and clean Prakash, A. (2002). Green marketing, public policy and managerial strategies. Business
technologies—Determinants of firms' investments for reducing emissions to air in Strategy and the Environment, 11(5), 285–297.
four sectors in Sweden. Energy Policy, 38(7), 3644–3651. Pujari, D. (2006). Eco-innovation and new product development: Understanding the in-
Han, H., Hsu, L. T. J., & Lee, J. S. (2009). Empirical investigation of the roles of attitudes fluences on market performance. Technovation, 26(1), 76–85.
toward green behaviors, overall image, gender, and age in hotel customers' eco- Rehfeld, K. M., Rennings, K., & Ziegler, A. (2007). Integrated product policy and en-
friendly decision-making process. International Journal of Hospitality Management, vironmental product innovations: An empirical analysis. Ecological Economics, 61(1),
28(4), 519–528. 91–100.
Hart, S. L. (1995). A natural-resource-based view of the firm. Academy of Management Rekik, L., & Bergeron, F. (2017). Green practice motivators and performance in SMEs: A
Review, 20(4), 986–1014. qualitative comparative analysis. Journal of Small Business Strategy, 27(1), 1–18.
Hayes, A. F., & Krippendorff, K. (2007). Answering the call for a standard reliability Rennings, K. (2000). Redefining innovation—Eco-innovation research and the contribu-
measure for coding data. Communication Methods and Measures, 1(1), 77–89. tion from ecological economics. Ecological Economics, 32(2), 319–332.

705
X. Xie et al. Journal of Business Research 101 (2019) 697–706

Rennings, K., Ziegler, A., Ankele, K., & Hoffmann, E. (2006). The influence of different technological environmental innovations: Exploring the causal relationship. Research
characteristics of the EU environmental management and auditing scheme on tech- Policy, 38(5), 885–893.
nical environmental innovations and economic performance. Ecological Economics,
57(1), 45–59. Xuemei Xie is currently a Professor at School of Management, Shanghai University. Her
Salvadó, J. A., de Castro, G. M., Verde, M. D., & López, J. E. N. (2012). Environmental research interests include collaborative innovation, knowledge management, and green
innovation and firm performance: A natural resource-based view. Palgrave Macmillan. innovation. Her articles have appeared in more than thirty journals, such as Journal of
Sezen, B., & Çankaya, S. Y. (2013). Effects of green manufacturing and eco-innovation on Business Ethic, Technovation, Journal of Business Research, Business and Society, Psychology
sustainability performance. Procedia-Social and Behavioral Sciences, 99, 154–163. & Marketing, IEEE Transactions on Engineering Management, Technology Analysis & Strategic
Wahba, H. (2008). Does the market value corporate environmental responsibility? An Management, Journal of Cleaner Production, and Total Quality Management & Business
empirical examination. Corporate Social Responsibility and Environmental Management, Excellence, among others.
15(2), 89–99.
Woo, C., Chung, Y., Chun, D., Han, S., & Lee, D. (2014). Impact of green innovation on
Jiage Huo is currently a Ph.D Candidate at Hong Kong Polytechnic University. Her
labor productivity and its determinants: An analysis of the Korean manufacturing
industry. Business Strategy and the Environment, 23(8), 567–576. current research interests include green innovation management. Her articles have ap-
peared in journals such as the Journal of Business Research and IEEE Transactions on
Xie, X., Huo, J., Qi, G., & Zhu, K. X. (2016). Green process innovation and financial
performance in emerging economies: Moderating effects of absorptive capacity and Engineering Management, among others.
green subsidies. IEEE Transactions on Engineering Management, 63(1), 101–112.
Yu, Y., Han, X., & Hu, G. (2016). Optimal production for manufacturers considering Hailiang Zou is an Assistant Professor in global strategic management at the SHU-UTS
consumer environmental awareness and green subsidies. International Journal of SILC Business School in Shanghai University, Shanghai, China. He has taught and re-
Production Economics, 182, 397–408. searched on business strategy, with a particular interest in corporate social responsibility
Zhu, Q., & Sarkis, J. (2006). An inter-sectoral comparison of green supply chain man- (CSR) and corporate governance in emerging country contexts. He has published in
agement in China: Drivers and practices. Journal of Cleaner Production, 14(5), Journal of Business Research, Business Strategy and Environment, Business & Society, Journal
472–486. of Cleaner Production, and Management Decision.
Ziegler, A., & Nogareda, J. S. (2009). Environmental management systems and

706