Green Innovation and the Financial Performance of Publicly Traded Companies: Modeling with Panel Data

Abstract

In the last few years, many researchers have focused on green innovation. However, few studies have examined the mechanism that links green innovation to firm performance. Green innovation combines green products and green innovation processes. It covers various aspects such as energy reduction, harmful emissions, waste elimination, efficiency improvement and financial performance while implementing technological innovations and sustainability.

This paper proposes a modeling of green innovation, namely product innovation and process innovation, on financial performance.

We applied an econometric approach to panel data on 76 listed Moroccan firms, i.e., 836 observations. As estimation results, green process innovation has a positive impact on firms’ financial performance, while green product innovation has a negative impact on firms’ performance. However, green product innovation has a negative impact on asset profitability, but a positive impact on green process innovation. This explains why companies are starting to implement green innovation in Morocco, and have not yet reached the level of production of a completely green product.

Keywords: Green process innovation, green product innovation, financial performance, listed Companies, panel data.

JEL Classification: C01, L25, O31, Q56

Paper type: Empirical research,