Available online at www.sciencedirect.

com

Procedia - Social and Behavioral Sciences 62 (2012) 854 – 864

WC-BEM 2012

The impact of green product innovation on firm performance and

competitive capability: the moderating role of managerial
environmental concern
Ilker Murat Ar*
Karadeniz Technical University, Department of Business Administration, 61080, Trabzon, Turkey

Abstract

Recently, many companies have recognized the concepts of green or environmental innovation. However, relatively little
research attention has been devoted to the consideration of relations between green product innovation, firm performance and
competitive capability. Hence, this paper aims to bridge this gap by providing empirical evidence to encourage companies to
implement green product innovation in order to improve their firm performance and to enhance their competitive capability. It
also includes the moderating role of managerial environmental concern in this relation. A model is constructed to link the
aforementioned constructs. Data, which are collected through a questionnaire-based survey across 140 Turkish manufacturer
firms from various sectors, are analyzed using Structural Equation Modeling. According to statistical results, green product
innovation significantly positively affects both firm performance and competitive capability. On the other hand, managerial
environmental concern only moderates the relationship between green product innovation and firm performance. The results also
provide various implications for managers and present some suggestions for future researches.
© 2012
© 2012Published
Publishedby by
Elsevier Ltd. Ltd.
Elsevier Selection and/orand/or
Selection peer review
peerunder responsibility
review of Prof. Dr. of
under responsibility Huseyin
Prof. Arasli
Dr. Hüseyin Arasli
Open access under CC BY-NC-ND license.
Keywords: Green innovation, green product innovation, firm performance, competitive capability, managerial environmental concern.

1. Introduction
With the rapid growth of global economy, the issues on resources and the environment, which become the key
bottlenecks of sustainable economic development, have aroused common concern. How to ease the conflicts
between economic growth and high energy consumption as well as environmental deterioration is a challenge for the
whole world (Juan, 2011). Thus, one of the challenges of this time is how to achieve ecologically sustainable living
standards (Huber, 2004). An important element in this issue has been the increased recognition that new
technological products and processes must embody greener characteristics than in the past (Conway and Steward,
1998). So, it is commonly recognized that environmental innovations provide an important key to sustainability
(Frenken and Faber, 2009). Therefore, the role of business in relation to environmental issues has increasingly come
up during the last decade.
Under the growing environmental considerations, many countries have implemented environmental protection
laws to reduce the environment impact of industry (Yang and Chen, 2011). Therefore, the efforts of industry to
improve the environmental performance of its production cycles are has increased and it has become a primary
objective in many contexts (Barbiroli and Raggi, 2003). Innovations which obtain total or partial improvements to
the environmental performance or that show a quicker or slower return on investment are gathered (Barbiroli and

*
Tel.:+90-462-3778780, E-mail address: [email protected]

1877-0428 © 2012 Published by Elsevier Ltd. Selection and/or peer review under responsibility of Prof. Dr. Hüseyin Arasli
Open access under CC BY-NC-ND license. doi:10.1016/j.sbspro.2012.09.144
 Ilker Murat Ar / Procedia - Social and Behavioral Sciences 62 (2012) 854 – 864 855

Raggi, 2003). Under the trends of strict international environmental regulations, conventions of environmental
protection and popular environmental awareness of consumers impact the rules and patterns of the global industrial
competition in the industries around the world (Chen et al., 2006; Chen, 2008). Therefore, corporate environmental
management will play an important role in today business spheres.
All technologies and innovations which have developed a new product or service have made a positive
contribution to the environment. This context reflects to a new product innovation that delivers environmental
benefits. These benefits can be concluded as savings in energy, decreasing in CO2 emissions, savings in water use,
improvements in recycling, increase in biodiversity, and reduction in environmental pollution.
innovation can create growth and competitive capability, increase productivity and economic wealth for firms. It can
also reduce waste and environmental damage for planet, provide better goods and services at a cheaper price and
create jobs for people (Carrion-Flores and Innes, 2010). In conclusion, it can be said that innovation is the key factor
to sustainability for firms and countries.
Porter (1991) has found that organizations can further reduce production costs and increase economic efficiency
by applying environmental related initiatives. The increase in green sales, as a percentage of total sales, was
achieved primarily by focusing on products with a significantly lower environmental impact throughout its lifecycle.
In this point, green innovation is becoming increasingly important for companies to raise their environmental
awareness by producing products that do not contain hazardous and toxic substances (Chiou et al., 2011). With the
increasing of this environmental trend, green innovation becomes a critical factor for companies to obtain
sustainable development (Lin and Chang, 2009) and it contributes to the transformation towards a sustainable
society (Carrillo-Hermosilla et al., 2010).
If innovation literature is reviewed, studies about green or environmental innovation can be grouped as below.
Studies in the first group are about the process of green product design or eco-innovative design. Chang and Chen
(2004), Rennings et al. (2006), Ziegler and Nogareda (2009),
(2011) can be example for this context. Studies in the second group are about the relationship between
environmental innovation and science or government policy. In this context, there are studies such as Rennings
(2000), Kemp and Pontoglio (2008), J nicke (2008), Cantono and Silverberg (2009), Frenken and Faber (2009),
Carrion-Flores and Innes (2010), and Demirel and Kesidou (2011).
While innovation processes toward sustainable development have received increasing attention during the last
two decades, especially empirical approaches to analyze these processes are poorly developed. While the innovation
and market potential of a new product is emphasized, its environmental impact is often neglected (Yang and Chen,
2011). Furthermore, the issue of the impacts of environmental concern on the corporate competitive capability was
not paid much attention by the academic community recently.
An identification of green innovation concept is a challenging endeavor because of the analytical and empirical
shortcomings. On the other hand, there is a lack of data on developing countries and emerging economies like
Turkey on green innovation applications. Although Turkish economy has grown dramatically in the past decades
and this has had a negative impact on the natural environment, there are no empirical studies on Turkish firms
Therefore, this study examined the relationship between green innovation, or
the ability to develop green products, firm performance and competitive capability for Turkish firms. Theoretically,
the contribution of this research is to consider the interplay and relationships between all of these factors, which has
not previously been considered for Turkish firms. This study will particularly answer the main question that is about
whether there are any significant direct links between green innovation, firm performance and competitive
capability. In addition to this, it aims to determine the moderating role of managerial environmental concern.
The paper is organized as follows. The next section presents the theoretical framework and develops the research
hypotheses. Section 3 discusses the methodology and how the data were collected and analyzed. Section 4 exposes
the main statistical results and Section 5 discusses these results, concludes this paper, and identifies implications for
practice and further researches needed in this area.
856 Ilker Murat Ar / Procedia - Social and Behavioral Sciences 62 (2012) 854 – 864

2. Theoretical Framework and Hypothesis Development

2.1. Green Innovation

Defining green innovation is not an easy task although several attempts have been made in the literature
(Carrillo-Hermosilla et al., 2010). Klemmer et al. (1999) determined the environmental innovations as a subset of
innovations that lead to an improvement of ecological equality. Chen et al. (2006, p.332) defined green innovation

technologies that are involved in energy-saving, pollution-prevention, waste recycling, green product designs, or
According to Halila and Rundquist (2011), the term, eco-innovation
(environmental innovation, green innovation or sustainable innovation), is often used to identify those innovations
that contribute to a sustainable environment through ecological improvements. Eco-innovations are defined by Beise
and Rennings (2003) as applications consist of new or modified processes, techniques, practices, systems and
products to avoid or reduce environmental harms.
In this paper, green innovation is defined as all the measures taken by relevant stakeholders to promote the
development and application of improved or new, process, products, techniques and management systems that
contribute to negative environmental impacts and attain specific ecological goals (Kemp and Arundel, 1998).
According to Chen et al. (2006), green innovation can be classified into three main categories as green product
innovation, green process innovation, and green managerial innovation. This classic division allows creating a focus
for the eco-innovation concept and suggesting possible areas of application. This study focuses on green product
innovation and analyzes the relationships between green product innovation, firm performance, and competitive
capability using managerial environmental concern through moderator variable as can be seen in Figure 1.

Firm
Performance
H1
Green Product
H3a
Innovation
H2 Competitive
Capability
H3b

Managerial
Environmental
Concern

Figure 1. The proposed theoretical model

2.2. Green Product Innovation and Firm Performance

The reasoning behind the proposed relationship between green product innovation and firm performance is based
on several factors. Green product innovation encourages the efficient use of raw materials, resulting in lower costs
for raw materials and may lead firms to find new ways of converting waste into saleable products that provide
additional revenues (Porter and Van der Linde, 1995). Moreover, it should be resulted in enhanced cash flow and
consequently enhanced business performance by reputation is in itself a source of market advantage (Eiadat et al.,
2008). The argument of Krammerer (2009) is that green products which besides their public benefits have private
environmental benefits for the customer will generate stronger consumer demand.
Businesses can increase resource productivity through green innovation to make up with the environmental costs
(Chen et al., 2006). The study conducted by Carrion-Flores and Innes (2010) based on a panel data of 127 US
manufacturing industries is remarkable about the relationship between environmental innovation and environmental

The terms eco-innovation, environmental innovation and sustainable innovation are used synonymously for green innovation.
 Ilker Murat Ar / Procedia - Social and Behavioral Sciences 62 (2012) 854 – 864 857

pollution targets, spurring successful demands for improved environmental performance. Even so, the same study
indicated that tightened pollution targets elevate the potential cost-saving benefits of environmental R&D, and
thereby spur more innovation. Findings obtained from the study conducted by Gluch et al. (2009) on Swedish
construction industry indicate that organizations can affect their capacity to absorb green innovations and improve
their business performance. The results of the survey conducted by Pujari (2006) on environmental new product
development projects in North America reports that eco-innovation activities have a positive impact on the market
performance. Therefore, this study implies the following hypothesis:
Hypothesis 1 (H1). There is a positive relationship between green product innovation and firm performance.

2.3. Green Product Innovation and Competitive Capability

Under new economy era, intangible assets become an important determinant for competitive advantages of firms
(Chen, 2008). Moreover, global environmental issues are now among the most important long-term strategic topics
confronting business organizations (Guziana, 2011). In this context, green product innovation applications which
improve corporate images, develop new markets and obtain competitive capability (Porter and Van der Linde, 1995;
Shrivastava, 1995) help firms to improve their environmentally based leadership reputation relative to competitors
(Eiadat et al., 2008). Brunnermeier and Cohen (2003) propose that environmental innovation is more likely to occur
in industries that are internationally competitive.
Porter and Van der Linde (1995) proposed that the competition between the firms on adequate environmental
management has become a critical competitive advantage and it can be a source of profits for the firms.
Furthermore, they indicated that firms that focus on product innovation as priority can achieve competitive
advantage over competitors. Firms which use environmental applications to differentiate their products from others
gain a competitive capability according to Reinhardt (1998). Chen et al. (2006) found that green product innovations
are positively associated with competitive advantage of firms. Findings of Carrillo-Hermosilla et al. (2010)
suggested that the capacity of eco-innovations provides new business opportunities. The empirical results of the
study conducted by Chen (2008) showed that the intellectual capital about green innovation had positive effect on
competitive advantages of firms. Yalabik and Fairchild (2011) developed an economic analysis in order to examine
the effect of competitive pressure on firm investments in environmentally friendly production. Their results showed
that competition over environmentally sensitive customers can improve the effectiveness of environmental
innovations. d environmental aspects of products as bases for corporate greening
and identified three main motivations for the companies within environmental technology sector. According to its
empirical results, competitive advantage is one of these motivations. Therefore, engaging in green product
innovation actively has positive influence upon corporate competitive capability. Thus, this study proposes the
following hypothesis:
Hypothesis 2 (H2). There is a positive relationship between green product innovation and competitive capability.

2.4. Moderating Role of Managerial Environmental Concern

Organizational support is an important issue to achieve successful innovation applications. This argument is also
recognized for green product innovation. In addition, Ho et al. (2009) demonstrated that the more the support for
innovation of management, the more the willingness that companies will have to implement green innovations. Qui
et al. (2010) stressed that managerial environmental concerns account as one of the key factor affecting the adoption
of green practices. It can act as a trigger to green innovation, which will in turn make companies more performance
and competitive.
According to the survey results of Lin and Ho (2008), organizational encouragement exhibit significant
influences on the willingness to adopt green practices. The results of the study by Jansson et al. (2010) showed that
values, beliefs and norms determine willingness for eco-innovation adoption. Findings of
pointed out that although Turkish managers begin to be sensitive about environmental subjects, it
does not reflect to their environmental innovation practices. Lin and Chang (2009) explored the mediation effect of
corporate environmental ethics between green relationship learning and green innovation performance in the Taiwan
manufacturing industry. Moreover, Qi et al. (2010) found that managerial concern is the most important driver for
858 Ilker Murat Ar / Procedia - Social and Behavioral Sciences 62 (2012) 854 – 864

the adoption of green practices based on their analysis on Chinese construction industry. Hence, this study claims
the following hypothesis:
Hypothesis 3 (H3). Managerial environmental concern moderates the relationships between green product
innovation, firm performance, and competitive capability.
H3a: The relationship between green product innovation and firm performance are stronger in high managerial
environmental concern than in low managerial environmental concern.
H3b: The relationship between green product innovation and competitive capability are stronger in high managerial
environmental concern than in low managerial environmental concern.

3. Research Method

3.1. Questionnaire Development

In order to empirically test the conceptual model, this study adopts a 14-item-questionnaire which consists of
green product innovation (four items), firm performance (three items), competitive capability (three items), and
managerial environmental concern (four items). They were adopted from Chiou et al. (2011), Eiadat et al. (2011),
Tang (2006), and Eiadat et al. (2011) respectively. A 7-point Likert scale was used to measure the items. Appendix
also contains the construct measures.
Green product innovation was operationalized in firm ever taken the action when designing the product. These
action are using environmentally friendly material, improving environmentally friendly packaging, recovering
-of-life products, and using eco-labeling. Firm performance was measured in terms of sales growth,
market share, and return on investment.
environment were used for competitive capability. They are generally
Managerial environmental concern

3.2. Sampling and Data Collection

The sample of this study is the list of the largest 1000 exporters explained by Turkish Exporters Assembly (TEA)
for 2010. However, three criteria were used in the sampling. Firstly,
Secondly, given that the need for integration increases as the size
of the firm grows, a company also had to have at least ten employees in order to minimize the effects of extremely
small company size. Furthermore, manufacturer firms were selected as population. Finally, the sample of this study
is Turkish manufacturer and exporter firms operated at least 5 years and have at least ten employees in the list of
TEA.
The data was collected from many cities in Turkey during three months, between June and August 2011. Data
collection was conducted face to face. A total of 410 questionnaires were disseminated, with a response rate of
34.1%, 140 questionnaires were received. This sample size is acceptable for a causal model with 14 indicators
according to Bentler and a
sample size of 140 is sufficient for using Maximum Likelihood Estimation procedures of 100 to 200, as suggested
by Hair et al. (1995).

3.3. Analyses

Three main hypotheses of this study were tested using Structural Equation Modeling (SEM) AMOS 4.0 and
SPSS 16 software packages. SEM is designed to examine and test the relationships and hypotheses among research
constructs in order to identify latent variables in the conceptual model, and to determine the direction and
significance of these relationships (Byrne, 2001). In order to test the moderating effects, this study conducted
multiple group analyses in the SEM competing model.
First, an exploratory factor analysis was applied to purify the measurement scales. Second, confirmatory factor
analysis was performed for validation test. The structural model corresponding to the substantive model of interest
 Ilker Murat Ar / Procedia - Social and Behavioral Sciences 62 (2012) 854 – 864 859

then was tested. Measurement and structural submodels were simultaneously estimated to provide assessment of the
posited construct relations without the confounding effects of measurement error (Anderson and Gerbing, 1988).
To further evaluate the moderating effects of managerial environmental concern, original model and competing
model was compared by dividing firms into two groups, firms have higher managerial environmental concern and
firms have lower managerial environmental concern. Moderation analysis essentially has two components were
performed according to Walsh et al. (2008). The first is examining the general moderating effect of the moderator
on all the links among the three constructs. The second is determining the moderator effect and the direction of the
moderation for each individual link. Based on this process, firstly, a Chi-square difference test between a model in
which was restricted all two paths and one in which we free them was performed. This test indicates whether a
general moderating effect exists among the three constructs. The Chi-square difference of 5.99 (p=0.05) with two
degrees of freedom indicates a significant general moderating effect. Next, it was considered the two individual
paths, for which a moderating effect occurs if the improvement in the Chi-square from the restricted to the non-
restricted model is significant. The Chi-square difference between the two models (one df) is greater than 3.84
(p=0.05), which enables us to indicate the moderator effect.

4. Analysis and Results

4.1. Descriptive Statistics

If the characteristic of the sample is determined, it is showed that all of the participants have less than 50
employees and more than 10 employees. So, they can be evaluated as Small-Medium Enterprises (SMEs) in terms
of number of employees. All of the participating firms have been operational more than five years. They were
employed by companies in many sectors such as textile (29%), food (22%), information and communication
technologies (15%), auto parts and equipment (12%), forestry (9), industrial machinery (7%), and other (4%). When
responses were grouped by position title, it can be seen that owner and department manager have the highest
percentage (73%). Moreover, 78% of respondents have an R&D department for less than three years.
In order to accomplish of potential non-response bias, early and late responses were analyzed as suggested by
Armstrong and Overton (1977) in terms of two business items, firm age and number of employees. The results of t-
tests revealed that the mean differences on each measure were not significant at a significance level of 0.05. Thus,
non-response bias is not a concern.

4.2. Measurement Model

The measurement model includes all of the indicator items of the constructs shown in Table 1. The global fit
indices of this model ( 2/df=1.69, GFI =0.90, NFI=0.91, CFI=0.95, and the RMSEA=0.02) indicate that the
hypothesized model fits the data. However, critical psychometric properties such as unidimensionality, reliability,
and validity should be examined.
To test the unidimensionality of the multi-item constructs, items that loaded on multiple constructs and had too
low item-to-construct loadings were deleted. In order to examine the composite reliability (CR), it is computed the
composite reliability estimates. Discriminant and convergent validity was measured by means of average variance
extracted (AVE). Fornell and Larcker (1981) suggest that, in order to confirm discriminant validity, the AVE value
of each construct should exceed the squared correlation among other constructs in the proposed model.
The entire set of items was subjected to confirmatory factor analysis (CFA) to verify unidimensionality,
discriminant and convergent validity. According to results of CFA, shown in Table 1, factor loadings of items to
corresponding constructs range from 0.70 to 0.90, and all loadings are significant (p<0.001), which further supports
unidimensionality. Because all of the composite reliabilities exceed the 0.70, it can be said that all constructs
sufficiently fulfilled this criteria. Cro

T are well above the threshold (0.60) according to Fornell and

Larcker (1981). Thus, all constructs are satisfactory and convergent validity is acceptable. Finally, the fact that the
square root of the AVE value for each construct is larger than the correlation coefficients is evident for convergent
validity. It can be seen in Table 2.
860 Ilker Murat Ar / Procedia - Social and Behavioral Sciences 62 (2012) 854 – 864

Table 1: Results of the measurement model (confirmatory factor analysis)

Factor
Research Constructs Research Items Loading CR AVE R2
Green Product Innovation 0,90 0,83 0,69
(GPI) GPI1. Using less or non-polluting/toxic materials (Using 0.902
environmentally friendly material)
GPI2. Improving and designing environmentally friendly 0.710
packaging (e.g.: less paper and plastic material used) for
existing and new products.
-of-life products and 0.851
recycling
GPI4. Using eco-labeling. 0.884
Firm Performance 0,91 0,81 0,74
(FP) FP1. Sales growth 0.890
FP2. Market share 0.812
FP3. Return on investment 0.726
Competitive Capability 0,89 0,78 0,70
(CC) CC1. My clients can easily substitute my products for the 0.793
products of my competitors
CC2. The arrival of new competing products is a constant 0.761
threat
CC3. My products quickly become obsolete 0.785
Managerial Environmental 0,88 0,73 0,62
Concern (MEC) MEC1. Environmental innovation is not necessary to 0.781
achieve high levels (reverse code)
MEC2. Environmental innovation is an important 0.726
components of strategy
MEC3.Most environemntal innovations are worthwhile 0.700
MEC4. Envronmental innovation is an effective strategy 0,714
Notes: All factor loadings are standardized and significant at 5%, CR: Composite Reliability, AVE: Average Variance Extracted.

Table 2: Correlations and the square root of the AVE

Research Construct GPI FP CC MEC

GPI 0.91 0.48 0.67 0.32
FP 0.90 0.71 0.16
CC 0.88 0.23
MEC 0.85
Note: Diagonal is the square root of the AVE.
4.3. Structural Model

Having satisfied the requirement arising from measurement issues, the structural model in Figure 1 was
subsequently tested. According to the results are presented in Table 3, the 2 of the base model is 127.367 with 33
degrees of freedom. Also, 2/df is 1.49 and the GFI is 0.85, NFI is 0.94, CFI is 0.96, RMSEA is 0.10 respectively.
These results indicate a good fit of the model.

Table 3. The results of path analysis (Base Model)

Effect Regression Coefficient Hypothesis Support

0.639* H1 Yes
0.836* H2 Yes
2
= 127.367, df = 33, 2/df = 3.86, GFI=0.85, NFI=0.94, CFI=0.96, and RMSEA=0.10
* p<0.01

As shown in Table 2, the coefficient on the path from green product innovation to firm performance is 0.639
(p<0.01). This positive significant coefficient suggests that Hypothesis 1 is supported. The path coefficient from
green product innovation to competitive capability is 0.836 (p<0.01), which support Hypothesis 2. Therefore, green
product innovation significantly positively affects firm performance and competitive capability. According to results
of path analysis, it can be said that green product innovation has stronger effect on competitive capability than firm
performance.
 Ilker Murat Ar / Procedia - Social and Behavioral Sciences 62 (2012) 854 – 864 861

4.4. Moderating Effect

Moderator variable which can be qualitative (e.g., sex, race, class) or quantitative (e.g., level of reward) affect the
direction and/or strength of the relation between an independent or predictor variable and a dependent or criterion
variable (Baron and Kenny, 1986). In this study, the two-group comparison of structural equation modeling was
used to test the moderating effects of managerial environmental concern on the relationships between green product
innovation, firm performance, and competitive capability. The sample was split into two groups based on the mean
of managerial environmental concern. Firms scoring above the average scale
on managerial environmental concern
(n=69) on managerial environmental concern. Two-group comparison was then performed to examine whether there
were any differences in structural parameters between firms in high managerial environmental concern and in low
managerial environmental concern.
In the first step, the moderator effect was tested after confirming the influence of the two main effects.
Specifically, it was conducted a Chi-square difference test for possible moderator effect in which we compare
restricted and non-restricted models. With 2 degree of freedom, the restricted model exhibits a significant Chi-
2
=8.17, df=2, p>0.05) for managerial environmental concern. The analysis of managerial
environmental concern as a moderator generally supports H 3.
In the second step, the parameter from green product innovation to firm performance was constrained to be equal
and then the parameter was not constrained (allowing it to be free). The test of the moderating effect of managerial
environmental concern on the relationship green product innovation and competitive capability followed the same
2
procedure. difference test have only 1 degree of freedom. Finally,
the results of the moderator effect can be seen in Table 4.

Table 4. The moderating effects of managerial environmental concern

Moderator
2
Effect High Low (df) Hypothesis Support
0.539 0.292 4.119* (1) H3a Yes
0.755 0.673 3.403 (1) H3b No
*:p<0.05

As it can be seen in Table 4, the link between green product innovation and firm performance was found to be
different across the two groups. Examining the coefficients of the two groups in terms of the relationship between
green product innovation and firm performance, is stronger for managers have high environmental concern
(p<0.05). This supports Hypothesis 3a.
The relationship between green product innovation and competitive capability was not significantly different
2 2
across the two groups according t <3.84). Therefore, Hypothesis 3b does not
support based on these results. Thus, the effects of green product innovation on competitive capability do not
influenced from the level of managerial environmental concern.

5. Discussion and Conclusion

Constant arrival of innovation is positively associated with firm performance and competitive capability. So, in
the past, much innovation research was undertaken for these constructs. But there is a limited research which focus
on relationship between green product innovation, firm performance, and competitive capability. The objective of
this study was to provide additional insight into the relationship between green product innovation, firm
performance, and competitive capability by examining the moderator effect of managerial environmental concern.
In this context, firstly, the evidence presented in this paper highlights the relationship between green product
innovation, firm performance, and competitive capability. It showed that green product innovation is generally
positively affects firm performance and competitive capability. This result demonstrated the strong and significant
influence of green product innovation on firm performance and competitive capability, confirming the innovation
literature (Pujari, 2006; Chen et al., 2006; Chiou et al., 2011). However, this study claimed that green product
innovation has stronger effect on competitive capability than firm performance.
862 Ilker Murat Ar / Procedia - Social and Behavioral Sciences 62 (2012) 854 – 864

These findings may have important implications for managers and policy makers to promote firm performance
activities by means of environmental innovation measures. For instance, the evidence shows that it is important to
recognize that a change in a regulatory policy may affect green product innovation, which in turn may result in firm
performance. Similarly, any regulatory policy change intended to promote green product innovation should be
evaluated to competition. But, innovation policy is insufficiently oriented toward green system innovations and
badly coordinated with other areas of policy, especially environmental policy (Kemp, 2007). So, many programs
should be implemented for integrating environment and innovation policies as part of strategic decisions and also
green innovation policy should be aligned other innovation related policies. Besides, managers should more focus
on environmental issues which provide incentives for innovation. National public administrations are starting to
show interest in ental activity, considering its impact (Del Brio and Junguera, 2003).
Secondly, in the moderator analysis, managerial environmental concern generally affects the relationships
between green product innovation, firm performance, and competitive capability as a moderator. According to this
result, relationship between green product innovation and firm performance is stronger for managers have high
environmental concern than low one. On the other hand, in contrast with our expectation, the effects of green
product innovation on competitive capability do not influenced from the level of managerial environmental concern.
This finding can be also explained in the light of claim. According to it, product innovation
activities may not result with competitive capability although companies seek competitive advantage primarily
through product innovation. The reasons of this situation can be sectorial differences and competition level in the
sector. Similar pattern can be concerned for this study because the sample was employed by companies from various
sectors.
As with all empirical studies, this study suffers some limitations, which also suggest further research
opportunities. First, the present research is based on a convenience sample in Turkey with manufacturing sector.
Since replications of this study should occur in different environmental and cultural contexts, future research might
use a sample more representative of a population and also extend into different markets or countries. Second, this
result does not focus on sectorial differences. By choosing a few specific sectors, it is able to detected context-
specific moderating effects, but additional research might also explore the influence of moderator variables by using
cross-sectional data. Third, future studies should extend the model to gain a more comprehensive picture of the
development of environmental innovation. It is possible that innovation types as process, organizational, and
marketing may interact with each other, affecting the firm performance and competitive capability. Fourth, further
research also could incorporate additional moderator variables such as environmental regulation or environmental
policy.

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Appendix
Green Product Innovation (GPI)
lowing actions
GPI1.Using less or non-polluting/toxic materials (Using environmentally friendly material)
GPI2.Improving and designing environmentally friendly packaging (e.g.: less paper and plastic material used) for existing and new products.
GPI3. -of-life products and recycling
GPI4.Using eco-labeling.
Firm Performance (FP)
affect your environmental product innovation practices have had on these negative effect (1) and strongly
positive effect(7)]
FP1.Sales growth
FP2.Market share
FP3.Return on investment
Competitive Capability (CC)
Which competitive environment that impact your firm gly agree (7)]
CC1. My clients can easily substitute my products for the products of competitors
CC2. The arrival of new competing products is a constant threat
CC3. My products quickly become obsolete
Managerial Environmental Concern (MEC)
Indicate the interest in environmental innovation in your firm?
MEC1. Environmental innovation is not necessary to achieve high levels (reverse code)
MEC2. Environmental innovation is an important component of strategy
MEC3. Most environmental innovations are worthwhile
MEC4. Environmental innovation is an effective strategy