result in different outcomes (Dixon-Fowler et al., 2013). There is no consensus on the exact amount of time delay, as it is not yet thoroughly understood how long it takes for the implementation of green innovations to lead to financial benefits.
The second hypothesis stated that the relationship between green innovation and financial performance would be negatively moderated by environmental regulations, which was operationalized by the ESI score. An insignificant negative effect was found, so this hypothesis was also rejected. We followed other scholars (Aguilera-Caracuel & Ortiz-de-Mandojana, 2013) by using the ESI score here, representing several components which address the different aspects of environmental regulations for each country. To our knowledge, this is the first study using this score in this specific field in the agri-food industry. For that reason, together with the fact that our results were contradictive to what we expected to find based on prior research, we argue that these conflicting results could be the result of using a proxy that is less applicable to businesses in agri-food industry. Some environmental regulations could be less of interest for these types of business operations when compared to business operations in other industries.
The third and last hypothesis stated that the relationship between green innovation and financial performance would be positively moderated by environmental norms, which was operationalized by the number of signed environmental agreements by a country. However, the results showed no significant moderating effect, which also leads to the rejection of this hypothesis. A possible explanation for this could be that this study mainly involves Business To Business firms (B2B). This means that the business activities are largely related to the first stages of the Food Supply Chain, where Business to Consumers (B2C) firms are more concerned with the last stages of this process, retailing the end product to the consumer. As B2B companies experience less market visibility than B2C firms, they are often found to be out of the range of end-consumer scrutiny (Johnson et al., 2018). Based on this reasoning, the
environmental norms present in society are less relevant for these organizations, and barely impact the relationship between GI and FP here.
It is also worth mentioning, as can be seen in the second model in Table 4, that the variables environmental regulations and environmental norms both have a significant and positive direct effect on the FP of a firm. It should be noted that these significant effects cannot have suppressed the studied relationship between green innovation and firm performance as we controlled for these in the different models.
6.2 Implications
6.2.1 Academic implications
This study offers several theoretical contributions to the existing literature in the field of green innovation. First, the main goal of this study was to examine the influence of levels of green innovation on financial performance in a specific industry. Previous studies have shown inconclusive and contrasting results when examining this relationship. Most studies on GI and firm performance looked at different industries, and therefore it is essential to find out more about this relationship in a particular industry (Horváthová, 2010). Moreover, only a handful of scholars that focused on one industry looked into the agri-food industry (Dangelico et al., 2019; Rabadán et al., 2019). Adding, the focus of these papers was limited to one country, so the institutional dimensions were ignored. This study extends the existing literature, as it focuses on the agri-food industry while including multiple countries instead of only one. This study hypothesized that GI would positively impact FP but no significant effect was found, which contradicted the common theories in this field. Because the relationship is not as self-evident as previously assumed, there are many interesting opportunities for academia to delve deeper into drivers and effects of these concepts in this particular industry.
Second, this thesis advances prior research by studying the environmental institutional dimensions. Although the author has not found any significant results of the moderators on the relationship, our study provides possible explanations. This results in many opportunities for future research. As previously discussed, we are the first study using these proxies for firms in the agri-food industry. Therefore, these may not be applicable to firms in this industry.
Opportunities for academia include performing research on the interplay of these constructs and shedding light on the applicability of these proxies in this particular industry.
6.2.2 Managerial and policy implications
In addition to the academic implications, this study raises practical implications for business managers and policymakers. The agri-food industry is known for playing a big role in the climate change problem. Therefore, it is important for managers in this industry to reduce their negative contributions to this issue, but at the same time keep improving their financial performance. The insignificant results show that higher levels of green innovation do not necessarily lead to a better financial performance. For that reason, it is suggested to managers in agri-food business to identify a green innovation strategy that is beneficial for the financial performance and suits the enterprise.
Moreover, the results of this study imply that the environmental institutional context does not have a moderating effect on the relationship between GI and FP. Therefore, we advise policymakers to create environmental regulations that positively support all firms who participate in green innovation. Apart from that it is favourable for firms when this leads to having a better performance, it will hopefully encourage more firms to engage in GI. A growth in environmentally friendly acting firms will eventually help to combat the issue of climate change.
6.3 Limitations and future research
This study has various limitations, which should be considered when doing future research.
First, as previously discussed, a significant result of GI on FP was not found. Although we followed multiple other scholars by adding a 1-year time lag between the innovation and financial outcome, it is possible that this time lag should consist of a longer period for firms in the agri-food industry, which could partially account for the missing relationship here.
Therefore, it is suggested to examine the actual and exact pay-out time in future research.
Second, we followed prior research and measured green innovation by counting green patents (Haščič & Migottoi, 2015). Although patents are an important and reliable indicator for innovation due to the standardized information, there are also some limitations here. To start with, not every type of innovation is patented or even patentable. Also, the number of patents a firm has, does not imply the quality of these patents. Lastly, the impact of an innovation on the performance of a firm deviates a lot among patents (Burhan et al., 2017). Therefore, we suggest that future research incorporates different techniques to measure green innovation, e.g., using more qualitative methods like managerial surveys and interviews with CEOs. By doing this, other environmental innovativeness could be grasped and therefore a more precise overview of the existing innovations inside a firm could be captured.
Third, the collected data on environmental norms and environmental regulations solely considered the country that the firm is headquartered in. Also incorporating the institutional context of the other countries the firm is operative in when measuring the norms and regulations could be suggested for future research as this would ensure that the entire dimension of institutional context is considered.
Fourth, as previously discussed, this was, to the author’s knowledge, the first time that the method of ESI score was used in this specific industry to proxy the stringency of
this indicator when used in the agri-food industry and thereby considering other possible measurements for this construct. This could be done by qualitative research to find a more valid measurement method.
As mentioned in chapter 6.1, it was found that the environmental regulations and environmental norms, independent of each other, show significant direct effects on the firms’
financial performance. In this paper, there is no room to elaborate on these effects. Therefore, it is suggested that researchers delve deeper into these relationships when studying the same context.
Lastly, the COVID-19 pandemic has had a major impact on the global economy. The agri-food industry has encountered serious adverse effects from the pandemic because of changes in consumer demands, restrictions on food trade policies and food production facilities, and financial pressures in the food supply chain (Aday & Aday, 2020). A recommendation for future research could be to shed light on the role of the crisis in the relationship between green innovation and financial performance.