Firm Growth as a Driver of Sustainable Product Innovation: Mediation and Moderation Analysis; Evidence from Manufacturing Firms

Abstract

Facing worldwide environmental and social concerns, manufacturing firms are trying to adopt effective environmentally friendly actions to mitigate their environmental impacts. Although the existent literature has provided many insights about the drivers of sustainable product innovation, little is known about the impact of firm growth. Thus, we intend to contribute to this gap in the literature by examining the impact that firm growth can have on sustainable product innovation. To achieve this goal, the partial least square (PLS) modeling technique was used to analyze a dataset of 3250 manufacturing firms from 39 different countries. The results reveal that firm growth exerts a positive effect on sustainable product innovation and that the relationship is partially mediated by the adoption of environmental practices. The findings also indicate that managerial barriers lessen the effectiveness of the adoption of environmental practices in facilitating the development of sustainable product innovation, while improving labor conditions increases it. However, operational barriers do not exert a significant moderating effect between the adoption of environmental practices and sustainable product innovation. These results prompt interesting insights related to theory development in environmental management and sustainable product innovation research.