How Green Management Influences Product Innovation in China: The Role of Institutional Benefits

Abstract

Does being green facilitate product innovation? This study examines whether green management in firms operating in China fosters radical product innovation to a greater extent than it does incremental product innovation and investigates the underlying institutional mechanisms involved in the relationship between green management and product innovation. The findings show that green management is more likely to lead to radical product innovation than to incremental product innovation. Moreover, government support as a formal institutional benefit more strongly mediates the effect of green management on radical product innovation than its effect on incremental product innovation; whereas social legitimacy as an informal institutional benefit more strongly mediates the effect of green management on incremental product innovation than its effect on radical product innovation. These findings provide important implications for explaining how firms employ green management to facilitate product innovation.