The role of technological innovation in responding to environmental concerns

ABSTRACT

This study empirically examines the impact of stakeholder pressure and concerns about public image on the use of technological innovations i.e. the use of innovations in environmental products and processes, and the subsequent impact on environmental and financial performance. Data were collected by mail survey from a random sample of 577 chief financial officers in Australian manufacturing organisations. The results show that pressures from stakeholders have a direct association with the use of innovations in environmental processes, and an indirect association with environmental and financial performance due to the subsequent association of the use of innovations in environmental processes on these outcomes. Public image is directly associated with the use of innovations in both environmental products and processes, and indirectly associated with environmental and financial performance due to the subsequent association between the use of innovations in environmental processes with these outcomes. The findings provide managers with an insight into the importance of improving environmental processes to enhance both environmental and financial performance, and how pressures from stakeholders to consider environmental issues and concerns about public image promote the enhancement of technological innovation.

KEYWORDS:

• technological innovation
• stakeholder pressure
• public image
• environmental performance
• financial performance

Disclosure statement

No potential conflict of interest was reported by the author(s).

Conflict of interest statement

All authors certify that they have no affiliations with or involvement in any organisation or entity with any financial interest or non-financial interest in the subject matter or materials discussed in this manuscript.

Notes

1 Tornatzky and Fleischer’s framework has been used extensively to provide an insight into the relationships between contexts and the use of innovations (Hoti 2015).

2 NB Any subsequent references to ‘innovation’ in the article refer to environmental innovation and specifically the use of innovations in environmental products and/or environmental processes.

3 In line with Cohen (1988), these results indicate a large effect (i.e. > 0.35) with respect to resource usage, a medium effect (0.15–0.34) with respect to innovations in environmental processes, regulatory compliance, stakeholder interaction and financial performance, and a low effect (< 0.15) with respect to innovations in environmental products and productivity. In respect of these low effects, we rely on Moksony (1990, 3) who argue that R² values are not as crucial when testing a theory as low values merely indicate that ‘the dependent variable is affected by a host of other factors in addition to the ones considered in the analysis’.

4 The structural equation model is a path model used to assess the direct and indirect relationships between variables. It provides crucial insights into the strength and significance of the hypothesised model relationships, with the strength of such relationships being represented by path coefficients (Hair et al. 2014). Organisation size was included as a control variable. It was found to be associated with two dimensions of environmental performance [resource usage (β = 0.17; p = 0.04) and stakeholder interaction (β = 0.21; p = 0.01)].

5 Bootstrapping involves ‘resampling’ the data various times with replacement to generate an empirical estimation of the entire sampling distribution of a path model (Cheung and Lau, 2008).