How Are a Firm’s Strategic Motives for Environmental Innovation Impeded? The Negative Influences of Institutional Pressures

Abstract

In recent years, firms are intensively being asked to build up the capabilities of dealing with environmental issues. While most firms are proactively inspired by their strategic motives for the environmental innovations, they are also exposed to the external pressures for environmental innovations that are institutionally established. This study is an early attempt to theoretically examine how firms’ strategic motives for environmental innovation are affected by the institutional pressures of environmental issues in a single empirical setting. Based on the institutional theory, this study suggests two types of institutional pressures — regulative and normative pressures— and proposes the conflicting effects of the strategic motive and the institutional pressures in the firms’ activities concerning environmental innovation. In addition to the test of the interrelated effects of strategic motives and institutional pressures, this study also investigates how small and medium-sized enterprises (SMEs) differ in their efforts to realize the strategic motives for environmental innovation, in contrast to large companies. The Korean Innovation Survey was used to test the proposed hypotheses. The findings of the analysis support all the hypotheses about the negative influences of institutional pressures on the effect of strategic motives on environmental innovation actions. Finally, the theoretical contributions and managerial implications are discussed.