The impact of legitimacy pressure and corporate profitability on green innovation: Evidence from China top 100

Abstract

Green innovation is an important approach for achieving sustainable development. Most research on determinants of corporate green innovation has focused on either external or internal drivers. Combining institutional theory and resource-based view, the scientific value of this study lies in simultaneously exploring the influence of external legitimacy pressure and internal corporate profitability, and their interaction on green innovation. Samples of the top 100 listed companies in China, from 2008 to 2012, were used and the results demonstrated that legitimacy pressure from stakeholders has a significantly positive influence on both corporate green product innovation and process innovation. The results also revealed that corporate profitability positively affects green product innovation, while there was found to be no significant influence on green process innovation. Moreover, corporate profitability positively moderates the relationship between legitimacy pressure and green product innovation. The results show that not only the single factor of external legitimacy pressure and internal profitability, but also their interaction, affects corporate green innovation practices. This offers an integrating perspective on how corporations can be more innovative in sustainability.