The impact of eco-innovation on the stock returns of technology-based KIBS: role of eco-innovation type and its degree of novelty

Abstract

Purpose The purpose of this paper is to determine the role of eco-innovation type and its degree of novelty in increasing the stock returns of technology-based knowledge-intensive business service companies (T-KIBS), to advance the development of the concept of eco-innovation within the literature on the effects of innovation. Design/methodology/approach The effects of four eco-innovation types were examined across three degrees of novelty involved. The event study methodology was applied to the sample of 238 eco-innovation announcements released during the period of January 2016–June 2019 (inclusive) by European T-KIBS. Findings While the implementation of product and organisational eco-innovation was the most beneficial, the results indicated that a high degree of novelty resulted in larger increase of stock returns in the case of all the four eco-innovation types. Research limitations/implications The eco-innovation announcements were gathered from specialised databases. However, it could be the case that companies may have used different communication channels (e.g. social media) to communicate innovation. Furthermore, a certain amount of bias undoubtedly exists, as the data came only from the European Union. Expanding the spatial scope to include the North American (especially the USA) and Asian economies appears necessary. Practical implications The practical insights into the role that the degree of novelty plays in eco-innovation announcements were formulated, which may be used to increase the market valuation of the firm. Social implications Strategies supporting eco-innovation are crucial for business development as the value created for the stakeholders involved transmits in time into the enterprise value. Originality/value The paper attempts to fill the research gap concerning the impact of eco-innovation on the stock returns of T-KIBS.