Does Green Innovation Raise Labour Productivity?

Chungwon Woo, Yanghon Chung, Dongphil Chun, Seunghun Han, Dukhee Lee (First author: Chung-Won Woo)
Business Strategy and the Environment, 23(8), 567-576, 2014 · DOI: 10.1002/bse.1807

TL;DR — Using the Korea Innovation Survey, green innovation aimed at both firm and customer benefit raises labour productivity — firms need both orientations, not one. Environmental activity also differs systematically by firm size and industry: large firms do more than small ones, and pollution-intensive industries invest more.

Key findings

1. Green innovation pays in productivity terms. Green innovation intended for both firm benefit and customer benefit has a positive effect on labour productivity.
2. One orientation is not enough. Firms need to implement firm-oriented and customer-oriented green innovation together to increase performance.
3. Who actually does it. Aggregate green innovation differs significantly by firm size and industry — large firms implement environmental activities more than small firms, and pollution-intensive industries invest more in environmental technology.

Method in one line

Empirical analysis of a Korea Innovation Survey data set covering environmental activities in 2010.

국문 요약

전 세계적 환경 악화에 대응해 기업들은 녹색기술에 상당한 투자를 해 왔다. 본 연구는 한국기업혁신조사 자료로 녹색혁신이 노동생산성에 미치는 영향과 2010년 환경활동의 결정요인을 분석했다. 실증 결과 기업 편익과 고객 편익을 동시에 겨냥한 녹색혁신이 노동생산성에 양(+)의 영향을 미쳤다. 이는 성과 제고를 위해 자사 지향 녹색혁신과 고객 지향 녹색혁신을 함께 추진해야 함을 뜻한다. 또한 기업 규모와 산업에 따라 녹색혁신 수준에 유의한 차이가 있어, 대기업이 중소기업보다 환경활동을 더 많이 수행하고 오염집약 산업일수록 환경기술 관련 투자를 더 많이 했다.

FAQ

Q. Is green innovation a cost or a return?
In this data it is a return: green innovation aimed at both firm and customer benefit is positively associated with labour productivity, so environmental investment is not purely a compliance cost.

Q. Does the type of green innovation matter?
Yes. The productivity gain appears when firm-oriented and customer-oriented green innovation are pursued together rather than either alone.

Q. Which firms invest most in environmental technology?
Large firms more than small ones, and pollution-intensive industries more than others.

Full abstract

Due to worsening environmental conditions around the globe, firms have been investing a great deal of money in green technologies as a way of coping with the environmental crisis. This paper uses a unique data set based on the Korea Innovation Survey to examine the impact of green innovation on labor productivity, and the determinants of environmental activities in 2010. The empirical results show that green innovation intended for both firm and customer benefits has a positive effect on labor productivity. This finding means that firms need to implement firm‐oriented green innovation as well as customer‐oriented green innovation in order to increase their performance. Our findings also show that there are significant differences in aggregate green innovations depending on different firm sizes and industries. Specifically, large firms implement environmental activities more than small ones, and pollution‐intensive industries tend to invest more in activities related to environmental technology. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.

How to cite

APA: Chungwon Woo, Yanghon Chung, Dongphil Chun, Seunghun Han, Dukhee Lee (2014). Impact of Green Innovation on Labor Productivity and its Determinants: an Analysis of the Korean Manufacturing Industry. Business Strategy and the Environment, 23(8), 567-576. https://doi.org/10.1002/bse.1807

BibTeX:
@article{woogreeninnovationlaborproduc,
  title={Impact of Green Innovation on Labor Productivity and its Determinants: an Analysis of the Korean Manufacturing Industry},
  author={Chungwon Woo and Yanghon Chung and Dongphil Chun and Seunghun Han and Dukhee Lee},
  journal={Business Strategy and the Environment},
  volume={23}, number={8}, pages={567--576},
  year={2014},
  doi={10.1002/bse.1807}}

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