Environmental Regulations, Green Innovation and Performance: An Analysis of Industrial Sector Companies from Developed Countries and Emerging Countries

Borsatto, Jaluza Maria Lima Silva; Bazani, Camila; Amui, Lara

doi:10.15728/bbr.2020.17.5.5

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Article • BBR, Braz. Bus. Rev. 17 (5) • Sep-Oct 2020 • https://doi.org/10.15728/bbr.2020.17.5.5 copy

Environmental Regulations, Green Innovation and Performance: An Analysis of Industrial Sector Companies from Developed Countries and Emerging Countries

Authorship SCIMAGO INSTITUTIONS RANKINGS

ABSTRACT

This study analyzes whether the rigor of environmental regulations encourages industrial companies in developed and emerging countries to invest in Green Innovation (GI), and what is the impact on financial performance. The sample was composed of 159 industrial companies, listed in the Financial Times’ 500 largest companies by market value in 2015. For the analysis, Structural Equation Modeling was used to verify the relationship between the variables. The main results were that the strictness of the countries’ environmental regulations, and the size of the companies had a statistically significant positive impact only on construct GI2, composed of the variables Global Compact and environmental investments. Countries competitiveness did not positively influence companies’ GI efforts, and the degree of internationalization of companies had no significant effect on any of the GI constructs. Furthermore, the efforts of companies in GI do not reflect positively on their financial performance.

KEYWORDS
Green Innovation; Financial Performance; Environmental Regulations; Institutional Environment; Structural Equation Modeling

Variables	Acronyms	Measurement Form	Authors	Source
Environmental Regulations	ER	Factorial analysis of the OECD IEP and IET indicators	-	OECD
Global Competitiveness Index	GCI	GCI	-	WEF Competitiveness Report
Size	SIZE	Factorial Analysis of the variables Market Value, Total Sales, Total Assets and Number of Employees.	(7); (9); (13); (17); (18); (20); (21)	Data Stream Thomson Reuters
Degree of Internationalization	DI	External Sales / Total Sales	(1); (2); (3); (4); (10); (19); (22)	Data Stream Thomson Reuters
Performance	PERF	Factorial Analysis of the variables ROA and ROE	-	Data Stream Thomson Reuters
Green Innovation	GI₁	ISO 14001	(5); (6); (8); (11); (14); (15)	Sustainability Reports and Company Website
	GI₁	GRI	(11); (12); (14)	GRI Website and Company Website
	GI₂	UN Global Compact	-	UN Global Compact Website
		DJSI	(16)	RobecoSam
		Environmental Investments	(16)	Data Stream Thomson Reuters

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https://doi.org/10.1007/s10551-006-9025-... ).

Constructs	Variables	Factorial Loading	SD	p-value	SCR	AVE
SIZE	MV	0.891	0.018	0.000	0,900	0,696
	TS	0.923	0.012	0.000
	TA	0.850	0.030	0.000
	Employ	0.644	0.060	0.000
ER	EP	0.991	0.008	0.000	0,841	0,732
ER	ET	0.694	0.074	0.000
GI₁	ISO	0.749	0.307	0.015	0,831	0,714
GI₁	GRI	0.930	0.247	0.000
GI₂	GC	0.819	0.113	0.000	0,758	0,612
	DJSI	0.743	0.148	0.000
	EI	0.891	0.018	0.000	0,900	0,696
PERF	ROA	0.977	0.081	0.000	0,761	0,631
PERF	ROE	0.553	0.098	0.000

	SIZE	ER	GI1	GI2	PERF
SIZE	0.834
ER	0.254	0.856
GI₁	0.069	- 0.174	0.845
GI₂	0.222	0.031	0.268	0.782
PERF	- 0.097	- 0.114	- 0.182	- 0.107	0,794

Hypotheses	Variables	structural coefficient	SD	p-value	Decision
H1a	ER → IGI₁1	-0.178	0.194	0.358	Reject
H1b	ER → IGI₂	0.209	0.106	0.050	Accept
H2a	GCI → IGI₁	-0.086	0.171	0.616	Reject
H2b	GCI → IGI₂	-0.404	0.132	0.002	Reject
H3a	SIZE → IGI1	0.163	0.124	0.190	Reject
H3b	SIZE → IGI2	0.431	0.093	0.000	Accept
H4a	DI → IGI₁	0.137	0.139	0.462	Reject
H4b	DI → IGI₂	0.143	0.081	0.078	Reject
H5a	GI₁ → IPERF	0.027	0.100	0.938	Reject
H5b	GI₂ → IPERF	-0.489	0.059	0.000	Reject

Indicators	R2	R2 adjusted	Gof	f2
SIZE	0.331	0.323	0.479	0.127
GI1	0.085	0.044	0.246	0.016
GI2	0.176	0.138	0.328	0.015
GCI	0.474	0.471	0.688	0.072
DI	0.102	0.092	0.319	0.020
PERF	0.079	0.071	0.049	0.011

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