Abstract
Green entrepreneurship has been increasing with growing attention to environment protection by a variety of stakeholders. Green innovation, as the essence of green entrepreneurship, has attracted a broad range of scholarly attention with yet inconclusive findings regarding its effect on firm performance. According to our analyses of 1667 firms listed on SME board and GEM in China during the period from 2010 to 2019, we find interesting results regarding the type of green innovation involved and the moderating effect of firm age on the link between green innovation and SME performance. More precisely, we find green utility-model innovation positively influences firm performance for SMEs, whereas green invention innovation does not contribute to firm performance overall. More interesting, our empirical results suggest that older firms benefit more from both green invention innovation and green utility-model innovation than younger firms. This research contributes to the literature on green entrepreneurship as well as green innovation.
Highlights
With the growing attention paid to global environmental protection, firms are facing pressure to take responsibility in protecting the environment in order to meet regulations from local government (Ebrahimi & Mirbargkar, 2017) and to meet expectations from stakeholders and marketplaces (Bossle et al, 2016)
We further investigate whether firm age exerts a significant effect on the association between green entrepreneurship and SME performance, which has been overlooked in prior studies
We propose our second set of hypotheses: Hypothesis 2a: Comparing to younger firms, the positive effect of green invention innovation on SME performance is stronger for older firms
Summary
With the growing attention paid to global environmental protection, firms are facing pressure to take responsibility in protecting the environment in order to meet regulations from local government (Ebrahimi & Mirbargkar, 2017) and to meet expectations from stakeholders and marketplaces (Bossle et al, 2016). Green innovation is a long-term oriented green strategy aiming to decrease the pollution of business activities on the environment by use of innovation in products, and process among others (Guo et al, 2020). To put it differently, green innovation is the betterment of a product or a process that is eco-friendly to our environment (Ebrahimi & Mirbargkar, 2017). Green innovation has been viewed as a controversial green strategy since some researchers argue that green innovation requires high financial investment and can be harmful to performance (Driessen et al, 2013; Palmer et al, 1995; Stucki, 2019) due to the fact that innovation requires high cost of investment, while others argue that green innovation is a green strategy that can contribute to firm growth in a long-term since green innovation bring firms sustainable competitive advantages (Dangelico & Pujari, 2010; Porter & Van der Linde, 1995) and new markets (Arundel & Kemp, 2009)
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