The Influence of Green Product Competitiveness On The Success of Green Product Innovation

European Journal of Innovation Management
The influence of green product competitiveness on the success of green product

innovation: Empirical evidence from the Chinese electrical and electronics industry
Stanley Kam-Sing Wong
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EJIM
15,4
The influence of green product
competitiveness on the success of
green product innovation
468 Empirical evidence from the Chinese electrical
Received 23 August 2011 and electronics industry
Revised 19 November 2011
31 January 2012 Stanley Kam-Sing Wong
21 March 2012
Accepted 9 May 2012
Faculty of Business and Law, University of Newcastle, Callaghan, Australia
Abstract
Purpose The purpose of this article is to investigate the influences of green product innovation and
product process innovation on two constructs of green innovation casual chain: green product
competitive advantage and green new product success. The impacts of green product competitive
advantage as a partial mediator in the link between green product/process innovations and green new
product success are also examined.
Design/methodology/approach A model with four constructs is presented and tested on a
sample of 203 R&D project leaders of electronics firms operating in China using quantitative methods.
Findings It is found that green product and process innovations are positively associated with
green product competitive advantage and green new product success, and green product competitive
advantage partially mediates the relationships between green product/process innovations and green
new product success. It is also found that green product innovation exerts a stronger influence on the
consequential constructs than green process innovation.
Practical implications The positive causalities among the constructs suggest that green
innovation is more than a branding support. It pays to pursue green innovation. Green product
innovation is demonstrated to have a positively stronger influence on both green product competitive
advantage and green new product success than green process innovation. The difference in impact
signals that when operating under limited resources, green product innovation should be pursued first.
Originality/value The article addresses the gap in green innovation theory concerning the
associations among the key constructs of green innovation causal chain. It is the first green innovation
research ever conducted in the e-industry in China. The causalities identified can be leveraged to
improve Chinese e-industry players innovative and competitive capabilities and to encourage them
to stay proactive in addressing challenges arising from environmental issues.
Keywords Green innovation, Green new product success, Green product competitive advantage,
Green product innovation, Green process innovation, Innovation, China
Paper type Research paper
1. Introduction
One of the most notable trends of corporate behavior in recent decades is the growing
sensitivities of businesses toward environmental issues (Lyon and Maxwell, 2004).
Two tendencies can be attributed to this phenomenon. First, environmental problems
are global problems, pollution, global warming, climate change, ozone depletion,
greenhouse effect and nuclear meltdown respect no borders. Numerous international,
European Journal of Innovation
multilateral or bilateral agreements and national laws have been enforced to regulate
Management and control environmental acts. Second, people are more aware of the environmental
Vol. 15 No. 4, 2012
pp. 468-490
r Emerald Group Publishing Limited
1460-1060 The author gratefully acknowledges the advice and suggestions of Lynn S. Chu and Tom
DOI 10.1108/14601061211272385 Wieglenda and the insightful comments made by the anonymous reviewers.
impacts of human activities and are more willing to make behavioral changes for Green product
environmental reasons. Consumers and producers have realized that, acting together, competitiveness
they can make a big difference in protecting and preserving our environment.
The past few decades have seen, on a global scale, the enhancing efforts of public
authorities and organizations to curb polluting activities by regulatory means.
The Porter Hypothesis (Porter and van der Linde, 1995) asserts that stringent
environmental regulations can spur efficiency and induce innovations that help the 469
economic performance of a firm. Stringent regulations saw the introduction of
numerous green new products and process revamps especially on the electrical
and electronics product (e-product) front. The ban on the use of chlorofluorocarbons
(CFCs) as a cleaning solvent and lead-based solders in component making are a just
few examples of industrial and entrepreneurial initiatives to combat environmental
degradation.
Nowadays, eco-production, eco-design and integration of environmental
sustainability throughout the supply chain are both a brand and identity for most
electrical and electronics industry (e-industry) players. Major markets for e-products
require that products entering their borders must be in full compliance with, inter alia,
the European Unions (EU) Waste Electronics and Electrical Equipment (WEEE)
Directive, the Restriction of Hazardous Substances (RoHS) Directive and the
Energy-using Products Directive (Directive 2009/125/EC). However, to many small
and medium manufacturers, environmental commitment and regulatory compliance,
after all, represent added costs to doing business. Their decision to play-it-green must
be spurred by strategic considerations and not by the motivation for short-term cost
savings (Haddock-Fraser and Fraser, 2008). Studies have found that firms invest in
green innovation because going green helps businesses develop new market
opportunities and increase their competitive advantage (Chen et al., 2006; Rennings
and Rammer, 2009). Successful green innovation helps firms to achieve greater
efficiency, establish and strengthen their core competences, enhance their green
image all of these may eventually combine to contribute to firm profitability
(Chen, 2008).
Innovation is costly and risky and the challenge of green innovation is even more
daunting as regulatory compliance, integration of environmental concepts such as life
cycle assessment (LCA) in business decision making and translating customer
aspirations for product greenness and functionality involve significant resources
commitment. Success in green product innovation demands change in both the design
of processes and ways of thinking about how product development, manufacturing,
distribution, consumption and disposal can evolve to ensure a more sustainable future
for our next generation.
2. The research gap and research framework

Compared to conventional innovation and new product development, the study of
green innovation is a relative newcomer to the academia. Majority of the early studies
on green innovation focussed primarily on definitional issues, theoretical explanations
for the emergence of green innovation (e.g. Chen, 2011; Foster and Green, 2000; Noci
and Verganti, 1999) and the link between green performance and financial
performance (e.g. Huang and Wu, 2010). This has changed recently as researchers
extend their studies beyond the business level and look to explore the policy
implications of environmental innovations, particularly in the energy and resources
efficiency arenas (Beise and Rennings, 2005; Rennings and Rammer, 2009).
EJIM Building on prior studies and drawing strength from theoretical models on
15,4 conventional innovation and new product development research, this study delved
deeper into the relationship between green product/process innovations and green
product success. Green product competitive advantage was introduced as a new
construct, both as a consequent of green product and process innovations and as a
partial mediator in the link between green innovation and green new product success.
470 The relative strength of the influence of green product and green process innovations
on green new product success was examined and the partially mediating role of green
product competitive advantage in the green innovation and green new product
success link was investigated. The proposed model, which is believed to be the first to
examine the respective impacts of green product and process innovations on green
new product success and the partially mediating role of green product competitive
advantage in the e-products arena, could make a useful contribution to green
innovation research.
3. Literature review
3.1 Green innovation
Before a definition can be given to green innovation, it is necessary to first define what
is meant by innovation. Innovation can be understood as putting innovative ideas into
practice an activity which possibly involves the development of a new product,
the introduction of a new service or the use of a new process and/or the establishment
of a new venture (Schumpeter, 1934). Innovation can be broadly classified into
administrative and technological innovations (Daft, 1978; Damanpour and Evan, 1984;
Han et al., 1998; OECD, 2005). Technological innovation refers to technical
advancement in either product or process (Akgun et al., 2009; Mavondo et al., 2005;
Rennings and Rammer, 2009; Tushman and Nadler, 1986; Utterback and Abernathy,
1975). While product innovation suggests, by name and nature, positive changes in
a product or service a firm provides; process innovation refers to positive changes in
the way a product is manufactured or a service is provided (Tushman and Nadler,
1986). The ultimate aim of product innovation is to improve product performance in
return for new customers and new markets, while that for process innovation is to
enhance productivity, cost efficiency and flexibility (Adner and Levinthal, 2001;
Rennings and Rammer, 2009).
An innovative product or process is defined by its newness Garcia and Calantone
(2002) acknowledged that this newness can be assessed from the three dimensions of
new to the industry, new to the firm initiating the innovation and new to customers.
Innovation must create value (Linder et al., 2003) and value creation through product or
process innovation may mean the introduction of a new product or process which
generates higher margins, greater revenue, enhanced stakeholder value, greater
market share, better corporate image or improved performance in terms of greenness
(Baker and Sinkula, 2005; Foster and Green, 2000; Paladino, 2007; Song et al., 2000).
A green innovation is distinguished from a conventional innovation in that while
the latter is developed not particularly to address environmental challenges, the former
is initiated to meet the green requirements of a regulatory body or the green concerns
of the target customers (Porter, 1991; Porter and van der Linde, 1995). Conventional
innovation, as defined by the Oslo Manual, is neutral and open to all kind of changes
while green innovation, as argued by Rennings (2000, p. 322), is putting emphasis on
innovation toward sustainable development. For this reason, green innovation can be
viewed as a subset of all innovations. This subset of green innovation is expanding,
breaking new grounds by introducing radically new products and encroaching into the Green product
territory of conventional innovation by taking away the markets of non-green competitiveness
alternatives or completely phasing-out the environmentally unfriendly products and
processes. The speed of expansion, however, is slow as the processes involved in
materializing a green innovation are complex and fraught with multiple difficulties
and uncertainties. A green new product development team is tasked not only to ensure
that the product to be developed is new enough to distinguish it from the competing 471
alternatives in the market, but also green enough to meet the local environmental
laws where the product is designed, fabricated and packaged; green enough to
address the environmental concerns of stakeholders along the product value chain;
green enough to become an influential or, better, dominant force in the green-
standards battle (Unruh and Ettenson, 2010, p. 112); and green enough to achieve
no or minimized environmental impact from the extraction of the products raw
material to its final disposal after use (Gehin et al., 2008; Huang and Wu, 2010). To
many conventional product innovators, initiating a new product is a test of

commitment and a game of conquering uncertainty. A green product innovator no
doubt faces the same challenge but with the additional and more onerous task of
innovating and operating under heightening green awareness, tightening
environmental regulations (Groot and Boren, 2010), increasing market competition
and thinner profit margins.
Green innovation may arise in two ways the responsive way or the proactive way.
The responsive way may arise in response to environmental requirements ( Johnstone
et al., 2010; Popp, 2003; Porter, 1991; Porter and van der Linde, 1995) or rising consumer
and corporate environmentalism (Chen, 2011; Martinsons et al., 1997), whereas the
proactive way may be driven by goals of higher profitability, cost efficiency (Rennings
and Rammer, 2009) or from the drive to spearhead green development and green
technology since developing environmental-friendly products, after all, represents
a shared goal and priority for all innovative activities (OECD, 2005). Conventional
innovation creates value through the consequent efficiency, productivity or product
market performance improvements, green innovation, however, creates value by
addressing the green concerns of the market, industry, firm and/or individual
customers that a product or process is targeted to serve (Linder et al., 2003; Porter and
van der Linde, 1995).
3.1.1 Green product innovation. Green innovations can be categorized into green
product innovation and green process innovation (Chen et al., 2006; Rennings and
Rammer, 2009). Green product innovation refers to the application of innovative ideas
leading to the design, manufacturing and marketing of new products whose newness
and greenness significantly outperform conventional or competing products (Baumann
et al., 2002; Soylu and Dumville, 2011; Wagner, 2009). Similar to the term newness
defined above, the greenness of a product is a relative concept which may change
over time and subject to the influences of context and expectations similar to any other
perceptual or evaluative phenomena. Over the years, many authorities and agencies,
both national and international, have attempted to establish standards for product
greenness through treaties, regulations, practices and guidelines. Though the
standards may vary, they are generally concerned with the ecological, human health as
well as social, cultural, and economic impacts of a product. A product is considered
outperforming a conventional or competing product in greenness if it imposes less
burden on the environment in terms of energy and raw materials requirements, air
emissions, waterborne effluents, solid waste and other environmental releases incurred
EJIM throughout its product life cycle (Greenpeace International, 2011). A green and
15,4 innovative product is a product characterized by its taking into account of the
recyclability and disposal issues throughout its life cycle; usage of materials which
are recycled and recyclable and which are less polluting, non-polluting or non-toxic;
due consideration to energy use, human toxicity, ecological impact and sustainability
issues at every stage of its life cycle; and incorporation of a continual impact
472 assessment and improvement mechanism in the product development cycle (Chiou
et al., 2011; Groot and Boren, 2010).
3.1.2 Green process innovation. In a similar vein, green process innovation is
defined as the application of innovative ideas leading to the adoption of production
processes and/or management practices that create less or no negative ecological,
human health, social, cultural and economic impacts (Chen, 2011). A green and
innovative process is a process or activity characterized by its meeting of the
environmental criteria set by the industry and social contexts where the firm operates
as well as those set by the markets and customers that it intends to serve; full
consideration of energy and resources use, human toxicity, ecological impact and
sustainability issues in the design and implementation of the process/activity;
and incorporation of a continual impact assessment and improvement mechanism
within the process/activity (Chiou et al., 2011).
Green product innovations and green process innovations share many common
attributes. In fact, many scholars have argued that there is no such thing as a pure
innovation in product or process as every product innovation involves some degree
of process innovation and vice versa (Chiou et al., 2011; Nielsen, 2006; Verona, 1999).
While an innovative product idea may trigger an overhaul of the management and/or
production process, a small change in business or production process may also lead to
the evolvement of a new or series of new products (Nielsen, 2006). In the development
of any new green product/process, the characteristics of greenness and newness
are operationalized as continuous variables throughout its life cycle. If these
characteristics are valued by the customers/users intended, and if the product/process
outperforms an alternative product/process on one or both of the characteristics,
a competitive advantage can be formed (Driessen and Hillebrand, 2002).
3.2 Green product competitive advantage

Prior studies have found that product and process innovations contribute to a firms
competitive advantages (Chiou et al., 2011). These advantages, as postulated by
Michael Porter, can be gained by way of differentiation and cost leadership strategies
(Porter, 1985). Greenness is a differentiator because waste and pollution represent
an inefficient and incomplete use of resources, so preventing or reducing waste and
pollution entails better resources utilization, lesser burden to the environment
and better value to customers (Porter and van der Linde, 1995). While innovative
processes which are green confer cost advantage on a firm over its competitors,
innovative products which are also green enhance firm profitability as products
marketed under the green and innovative concept may bring in new customers and
fresh revenue (Chiou et al., 2011, Kash and Rycoft, 2000; Lieberman and Montgomery,
1988; Nassimbeni, 2003).
Studies have found that to embark on green innovation early enables a firm to
gain first-mover advantage (Porter and van der Linde, 1995). When Sony launched
its Green Partner program in 2001 to restrict the use of hazardous substances
by suppliers, only a few component manufacturers could meet this requirement.
Those that met the requirement became Sonys preferred suppliers and partners in Green product
developing the new green electronics market. This partnership enabled the chosen competitiveness
suppliers to gain first-mover advantages and to grow and develop with Sony in the
flourishing green electronics arena. Many of the selected suppliers won orders from
other green innovative companies such as Apple and Cisco by leveraging on the
partnership status conferred on them by Sony. In the past ten years, the number of
green electronic component manufacturers eligible to become Sonys Green Partners 473
continues to expand, yet the late-movers face an uphill battle competing against the
first- and fast-movers.
Competitive advantage is the result of matching the core competencies of a firm to
market opportunities (Porter, 1985). Most firms, after identifying a market
opportunity, take their first steps in building up green core competences by
initiating green process innovation alongside with product development. These steps
may typically include activities such as promoting firm-wide learning about green
innovation and environmental management trends and regulations, translating

green opportunities into green product features and building up new capabilities
and aligning both new and existing capabilities with opportunities (Chen, 2008;
Chiou et al., 2011).
Green innovation entails changes in technology and raw materials. Before the turn
of the century, solder alloys with 40 percent lead were a primary choice for assembling
electronics. Due to the relatively high toxicity of lead to human health and
environment, European countries moved to ban the use of lead in electronic assemblies
in 2001. The leading component manufacturers responded by realigning their
capabilities to facilitate a phased replacement of lead-based with lead-free solders in
full compliance with the European requirements (United States Environmental
Protection Agency, 2011). For manufacturers which were less capable of mastering
the use of lead-free solder, it took them quite a long time to make the process and
materials change to catch up with the market. While for those which had failed to
realize that rules of competition were set to be altered completely, they were forced to
fade away with the phased-out product. Therefore, the first two hypotheses of this
study were:
H1. Green product innovation positively affects green product competitive

advantage.
H2. Green process innovation positively affects green product competitive

advantage.
3.3 Green new product success

The ultimate aim of new product innovation is to commercialize a new product so that
it can contribute to corporate bottom line (Veldhuizen et al., 2006). As such, new
product success is not defined solely by the successful translation of innovative ideas
into product features, but also by the performance of the product in its post-production
stage (Wong and Tong, 2012). Though there are a multitude of measures to gauge
new product performance, managers do not attribute the same level of importance
to different performance indicators. Financial indicators such as product
profitability and revenue still prevail over other indicators as the most common
measures for product performance (Paladino, 2007; Wong and Tong, 2012).
Nevertheless, when green concerns are factored into product development, both
EJIM financial and environmental performances have to be accounted for in measuring
15,4 product success.
In this study, the measure of green new product success was assessed from three
perspectives the greenness of the product in terms of its compliance with
environmental directives and in addressing stakeholder environmental concerns;
the financial performance of the product in comparison with competitive
474 products as perceived by respondents (Atuahene-Gima et al., 2005; Calantone et al.,
2006; Matsuno et al., 2002; Paladino, 2007; Song et al., 2006); and the respondents
general perception of green new product success (Baker and Sinkula, 2005; Paladino,
2007; Song et al., 2000).
Studies have confirmed the positive influence of competitive advantage
on the performance of conventional innovative new products (Gatignon and Xuereb,
1997; Swink and Song, 2007; Veldhuizen et al., 2006). It was anticipated that a
similar causal relationship might also exist between green product competitive
advantage and green new product success. Therefore, the third hypothesis of this
study was:
H3. Green product competitive advantage positively affects green new product
success.
It has been established that customer orientation is the antecedent of new product
success (Wong and Tong, 2012). A customer-oriented product is a product which
customers need and prefer and which meets their financial goal. With the growing
public concern over environmental issues, how green is a product has become a
meaningful and relevant issue for consumers at both retail and corporate levels
(Banerjee et al., 2003). However, to succeed in green innovation is more challenging
than to succeed in traditional innovation as investing in green innovation not only
requires a good understanding of the market and statutory requirements but also
environmental ethics, a paradigm which is expanding and evolving and which is
expected to exert growing influence on consumer buying behavior (Wong et al., 1996).
Prior studies have found that customers have greater intention to buy products
which are superior to competing offers (Veldhuizen et al., 2006). To many e-industry
players, environmentally desirable products or processes are superior as they
enhance resource efficiency and regulatory compliance (Rennings and Rammer,
2009); to the eco-conscious consumers, product greenness is a purchasing
prerequisite and a contributor to product superiority. Therefore, the fourth and fifth
hypotheses were:
H4. Green product innovation positively affects green new product success.
H5. Green process innovation positively affects green new product success.
3.4 Mediating effects

Green innovation contributes to firm competitiveness by providing green solutions to
changing market needs emanating from rising consumer and corporate
environmentalism. These solutions, either in the form of a product or process
revamp, may strengthen a firms competitive competence. Incorporating green
aspirations into corporate process and product development yields multiple
competitive advantages (Chiou et al., 2011; Porter, 1985) and the advantages
combined may increase a firms chances of green product success. Therefore, it was Green product
hypothesized that: competitiveness
H6. Green product competitive advantage partially mediates the relationship
between green product innovation and green new product success.
H7. Green product competitive advantage partially mediates the relationship 475
between green process innovation and green new product success.
3.5 Research model

Based on the literature reviewed and the seven hypotheses formulated, a research
model (Figure 1) with four constructs was developed by adapting sets of core elements
from prior research: green product innovation and green process innovation elements
were from Chen (2008); green product competitive advantage elements were from
Cooper and Kleinschmidt (1987) and Song and Montoya-Weiss (2001); and finally,
green new product success elements, which assessed the three aspects of project
leaders perceptions of their products environmental success, financial success as well
as their subjective judgments of product success were from Paladino (2007) and Wong
and Tong (2012). Environmental performance of a new green product was measured
by asking the project leaders whether their products were in compliance with the
environmental requirements set by the places of production, markets and customers.
Financial performance was measured by asking them to evaluate the profitability
and revenue of their products relative to competitors. Finally, subjective judgment was
measured by asking the project leaders to indicate their perceived level of product
success in general.
4. Research setting
Most previous green innovation studies were conducted in the west (e.g. Foster and
Green, 2000; Hillestad et al., 2010; Porter, 1991) and developed economies in the east
such as South Korea, Japan and Taiwan (e.g. Chiang et al., 2011; Chiou et al., 2011; Jang
and Kim, 2010), but not in China, the leading e-product manufacturing house of the
world. According to the latest status report issued by the Ministry of Industry and
Information Technology of the Peoples Republic of China (MIIT, 2011), as at the end of
September 2011, the country was the worlds biggest producer of TV sets, mobile
phones, PCs and digital cameras. The total export of electronic items accounted for
34.5 percent of her national exports. The domestic retail market for electronic
goods was also growing strongly, with a projected average annual growth rate of not
Green innovation
Green product
innovation
Green product Green new

competitive product success
advantage
Green process Figure 1.

innovation
Research model
EJIM o20 percent in the coming five years. The growth of LED production was especially
15,4 robust. Over 65 billion LEDs were produced in the first nine months of 2011, an
increase of 33 percent over the same period last year.
However, that rapid expansion of e-production comes with a high environmental
price. According to a report published by the United Nations Environment Programme
(UNEP), China was the second largest producer of electronic waste (e-waste) and also
476 one of the largest e-waste dumping grounds for developed countries (Schluep et al.,
2009). The particular context of China makes the study of green innovation, LCA and
other environmental initiatives in e-production even more relevant and meaningful.
This study, which based on data emanating from China, not only provides a good
opportunity for both academics and practitioners to understand how the e-industry
players operating in China integrated concepts of greenness into innovation but
also sheds light on the viability of green innovation in the major e-production house
of the world.
5. Methodology
Quantitative methods were used to examine the links between green product/process
innovations and green new product success. An interviewer assisted pen-and-paper
questionnaire was developed and used as the research instrument for data
collection. All items, except those for demographic information, were measured
using a seven-point Likert scale ranging from 1 for strongly disagree to 7 for
strongly agree.
As the questionnaire items for each construct were adapted from prior research,
their validity therefore should have been established. However, since the wording of the
measuring items had been modified to meet the needs of the current research, pre-test,
pilot test, exploratory factor analysis (EFA) and Cronbachs a test were used to ensure
the reliability of the scales.
5.1 Pre-test and pilot test

In a pre-test, five R&D managers were invited to fill out the questionnaire and were
interviewed by the researcher for about 15 minutes each to collect their comments on
the questionnaire. Based on the comments collected, the wording of the questions was
refined. The refined questionnaire was pilot-tested on 25 R&D project leaders and was
found satisfactory.
5.2 Samples
The target population of this study was R&D project leaders of electronics
firms operating in China. This sample covered all electronics firms with operational
set-ups in China, including indigenous firms, Sino-foreign joint ventures, firms
operated under multi-national corporations (MNCs), etc. The units of analysis
were set as individual firms and the units of data collection were R&D project
leaders who participated in green new product development projects during the 12
months before the survey. The survey took place from March 1 to 4, 2011 at LED
China 2011, the biggest green lighting trade show in China. Although the theme
of the show was LED lighting and technology, LED-related technologies such as
power conversion, solar energy, as well as different types of energy harvesting
systems were also included (LED China, 2011). The diversity of the show was
therefore expected to attract visitors from diverse backgrounds due to the wide
application of the LED technology across various sectors of the e-industry
such as computing, consumer electronics, display, lighting, automotives, energy, Green product
communications, etc. competitiveness
Three research assistants were recruited and trained to conduct the questionnaire
survey. The research assistants were fully briefed of the purpose and rationale of the
study and were requested to approach visitors to the show. A total of 1,216 visitors
were approached and 261 of them agreed to participate in the survey. Of those who
indicated agreement to participate in the survey, 203 who met the above sample 477
selection criteria filled out the survey questionnaire. The overall response rate was
21.5 percent and the valid response rate was 16.7 percent, slightly higher than the
figures of similar surveys on new product development studies (Nakata et al., 2006;
Veldhuizen et al., 2006).
5.3 Respondent characteristics

Characteristics of respondents are shown in Table I. R&D departments led 69 percent
(140 out of 203) of the total number of green innovation projects, the rest (31 percent or
63 out of 203) were led by marketing departments. The majority of respondents worked
for local Chinese firms (57 percent or 116 out of 203), while the rest (43 percent or 87 out
of 203) worked for Chinese subsidiaries of MNCs. Of the MNCs, 39 percent (34 out of 87)
were from the USA, 33 percent from Japan (29 out of 87) and the rest from other regions
and countries. As regards to the make-up of engineers in the firms surveyed, the
majority of the firms had a size of engineers ranging from 51 to 100 (36 percent or
73 out of 203), those with 21 to 50 engineers (31 percent or 63 out of 203) and 100 to 200
Frequency %
Main role of respondent:

R&D 140 69
Marketing 63 31
Type of company:
Local Chinese 116 57
Subsidiary of MNC 87 43
Number of engineers in China
20 or less 14 7
21 to 50 63 31
51 to 100 73 36
100 to 200 43 21
4200 10 5
NPD team size (headcount)
5 or less 21 10
6-10 83 41
11-15 75 37
16-20 18 9
21 or above 7 3
Headquarter of MNC (n 87)
USA 34 39
Japan 29 33
Europe 11 13
Asia 5 6
Others 8 9 Table I.
Demographic profile of
Note: n 203 respondents
EJIM engineers (21 percent or 43 out of 203) came second and third. The majority of projects
15,4 took six months to two years to complete (91 percent of 185 out of 203). The majority of
the new green product development teams comprised six to ten members (41 percent or
83 out of 203) or 11 to 15 members (37 percent or 75 out of 203).
6. Data analysis
478 Data analysis in this study was conducted in three steps. First, EFA using IBM SPSS
19 was conducted to explore the underlying factors of the observable items and to
assess the construct reliability. Second, confirmatory factor analysis (CFA) using
AMOS 18 was performed to examine the model fit and to further evaluate the validity
and reliability of the constructs. Finally, structural equation modeling (SEM) was used
to test the hypotheses. Reliability was evaluated using Cronbachs a, composite
reliability (CR) and average variance extracted (AVE) values.
6.1 EFA
An EFA extraction with varimax rotation and Kaiser Normalization was conducted to
extract factors with eigenvalues 41 and to suppress the factor loading values o0.5.
The data had a Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy (MSA) test
result of 0.95, which was well above the acceptable limit of 0.8 (Kaiser and Rice, 1974;
Kaiser, 1970). Bartletts test of sphericity result revealed an approximate w2-value of
4,156.480 with 190 degree of freedom ( p 0.000), indicating that the data were suitable
for factor analysis. Table II shows the factor loadings of questionnaire items on
the four factors extracted by EFA. The EFA result showed that the observable items
were loaded onto the underlying constructs as predicted. The four factors extracted
were named green product innovation, green process innovation, green product
competitive advantage and green new product success. The four factors explained a
total of 75.985 percent of the variance.
Cronbachs a test was used to test the reliability of data and the internal consistency
of the items loaded onto the underlying constructs. Table III shows the summary of
statistics of the four underlying constructs. The mean of green product innovation was
5.08, much higher than those of other constructs, indicating that most of the firms
surveyed were highly involved in the development of green new products. The mean of
green new product success was 4.62, slightly higher than those of other constructs,
indicating that the respondents perceived that their green new products were
successful. The Cronbachs a coefficients of the four constructs were in the range
between 0.896 and 0.928, which were all higher than the 0.7 desirability level of further
analysis (Coakes et al., 2008; Nunnally, 1978).
6.2 The measurement model

A measurement model was established according to the EFA result to check for model
fit, to discover the correlations among the four constructs (Table IV) as well as the
standardized loading among each construct and its corresponding questionnaire items
(Table V). The correlations between each pair of constructs were in the range between
0.468 and 0.708. The factor loadings were in the range between 0.752 and 0.882
(significant at po0.001), all were in excess of the acceptable limit of 0.7, indicating that
all constructs were having a high individual item reliability (Hair et al., 2005). The CR
values were in the range between 0.897 and 0.928, all were 40.8 as suggested by Hair
et al. (2005), indicating that all questionnaire items were loaded correctly to the
underlying constructs concerned. The AVE values were in the range between 0.635 and
Factor
Green product
Questionnaire Green product Green process Green product Green new competitiveness
items innovation innovation competitive advantage product success
Green product innovation

GProd1 0.789
GProd2 0.757 479
GProd3 0.835
GProd4 0.781
GProd5 0.781
Green process innovation
GProc1 0.844
GProc2 0.850
GProc3 0.858
GProc4 0.822
GProc5 0.809
Green product competitive advantage
GIA1 0.772
GIA2 0.786
GIA3 0.779
GIA4 0.723
GIA5 0.796
Green new product success
GNPS1 0.784
GNPS2 0.667
GNPS3 0.758
GNPS4 0.732 Table II.
GNPS5 0.718 Exploratory
factor loadings of
Note: n 203 questionnaire items
0.722, all were in excess of the acceptable limit of 0.5, indicating the variances captured
by the questionnaire items were much higher than the variance caused by
measurement error (Fornell and Larker, 1981; Hair et al., 2005).
The measurement model was estimated by using the maximum likelihood method.
The fit indices showed a good fit to the data (CFI 0.958; RMSEA 0.064). The
w2-statistic was 298.706 with 164 df (p 0.000), giving a normal w2 ratio of 1.821, which
was well below the limit of 2, indicating a good model fit. In conclusion, the results
from all of the above tests showed adequate reliability and validity of the questionnaire
items and also the constructs.
6.3 The structural model

The research model and seven hypotheses were then tested by SEM using AMOS 18
(Figure 2). Table VI shows the structural path estimations generated by SEM. The
predicted positive impact of green product innovation (H1) on green product
competitive advantage was supported by the significant ( po0.001) standardized
estimates of 0.623. The predicted positive impact of green process innovation (H2) on
green product competitive advantage was supported by the significant ( po0.01)
standardized estimates of 0.177. The predicted positive impacts of green product
competitive advantage (H3), green product innovation (H4) and green process
innovation (H5) on green new product success were supported by the significant
(po0.001) standardized estimates of 0.374, 0.297 and 0.267, respectively.
EJIM Item mean SD Construct mean Cronbachs a
15,4
Green product innovation 5.08 0.926
GProd1 5.13 1.217
GProd2 5.16 1.322
GProd3 5.08 1.176
480 GProd4 4.96 1.168
GProd5 5.06 1.209
Green process innovation 4.24 0.928
GProc1 4.23 1.357
GProc2 4.22 1.288
GProc3 4.21 1.378
GProc4 4.26 1.296
GProc5 4.26 1.306
Green product competitive advantage 4.36 0.920
GIA1 4.40 1.200

GIA2 4.39 1.252
GIA3 4.41 1.159
GIA4 4.30 1.182
GIA5 4.30 1.179
Green new product success 4.62 0.896
GNPS1 4.62 1.067
GNPS2 4.63 1.052
Table III. GNPS3 4.63 1.052
Summary statistics of GNPS4 4.59 0.978
constructs GNPS5 4.63 1.070
Estimate
Green product innovation 2 Green process innovation 0.468

Green product innovation 2 Green product competitive advantage 0.706
Green process innovation 2 Green product competitive advantage 0.469
Table IV. Green product competitive advantage 2 Green new product success 0.708
Correlations among Green process innovation 2 Green new product success 0.581
constructs Green product innovation 2 Green new product success 0.685
6.4 Mediating effects

As there was more than one mediating effect in the structural model, in order to
separate the indirect effects and test the significance of each of the mediating effects,
phantom variables and bias-corrected bootstrap method were used. The researcher
requested AMOS to generate 1,000 bootstrap samples and selected bias-corrected
bootstrap method with 95 percent confidence intervals (Mallinckrodt et al., 2006).
Table VII shows the mediating effects of green product competitive advantage on the
relationship between green product innovation and green new product success as well
as that between green process innovation and green new product success.
From the bias-corrected bootstrap test result, it was confirmed that green product
competitive advantage significantly and partially mediated the influences of green
product innovation and green process innovation on green new product success.
Green product competitive advantage was found to play a significant, but partial,
mediating role on the green product innovation-green new product success relationship
Item Description Standardize loading CR AVE
Green product
competitiveness
Green product innovation 0.927 0.719
GProd1 0.856
GProd2 0.845
GProd3 0.868
GProd4 0.817 481
GProd5 0.852
Green process innovation 0.928 0.722
GProc1 0.811
GProc2 0.860
GProc3 0.835
GProc4 0.870
GProc5 0.871
Green product competitive advantage 0.921 0.699
GIA1 0.792
GIA2 0.835
GIA3 0.882
GIA4 0.809
GIA5 0.860
Green new product success 0.897 0.635
GNPS1 0.844
GNPS2 0.752
GNPS3 0.822
GNPS4 0.790
GNPS5 0.773 Table V.
Standardized
Notes: CR, composite reliability; AVE, average variance extracted. All standardized loadings are factor loading of
significant at 0.000 level measuring model
0.73
e31 e32 e33 e34 e35
e15 GProd5
0.67 0.8
5 0.63 0.70 0.78 0.65 0.74
e14 GProd4 0.82 GIA1 GIA2 GIA3 GIA4 GIA5
0.75
Green
0.88
0.87
0.8
product 0.
1
e13 GProd3 79
86
0.8
4
5
innovation 0.62 0.
0.71 0.8 0.52
e12 GProd2 Green
86
0. product
0.73 competitive e01
advantage
e11 GProd1 0.3
0
0.47
0.37
0.66
8
e21 GProc1 0.1 0.62
0.
0.74 81
Green
e22 GProc2 0.8 product e02
6
0.27 success
0.70 Green
0.83 0.
process 4 77
e23 GProc3
0.
0.8
0.82
5
79
0.7
innovation
7
0.76 0.8
0.71 0.57 0.68 0.62 0.60
e24 GProc4 87
0. GPS1 GPS2 GPS3 GPS4 GPS5
0.76
e25 GProc5 Figure 2.
e41 e42 e43 e44 e45
Structure model
EJIM Standardized
15,4 Path From Path to H0 Result estimation Significance
Green product Green product

innovation competitive advantage H1 Supported 0.623 ***
Green process Green product
482 innovation competitive advantage H2 Supported 0.177 0.007
Green product
competitive Green new product
advantage success H3 Supported 0.374 ***
Green product Green new product
innovation success H4 Supported 0.297 ***
Green process Green new product
Table VI. innovation success H5 Supported 0.267 ***
Structural path
estimations Note: ***po0.001
Hypothesis Independent variable(s) Result Effect Significance*
H6 Green product innovation Supported 0.233 0.001

H7 Green process innovation Supported 0.066 0.01
Table VII. Notes: Mediator green product competitive advantage; dependent variable green new product
Mediating effects success; *significant levels based on phantom variables and bootstrapping techniques
(mediating effect 0.233; p 0.001), giving support to H6. The mediating effect of
green product competitive advantage on the green process innovation-green new
product success relationship was weak (mediating effect 0.066) but significant
( p 0.01), giving support to H7.
7. Discussion and conclusion

This study contributes to multiple areas of green innovation research. Building on the
literature on green innovation, conventional innovation and new product development,
a new research model that portrayed and projected the causal relationships between
green product and green process innovations, green product competitive advantage
and green new product success in the context of Chinas e-industry was developed
and empirically tested. This study contributes to green innovation research and
practice in the following aspects.
The findings of this study demonstrated that green product and green process
innovations contribute to green new product success. This sends a clear signal to
management practitioners that, even green innovations might involve substantial
financial and resources commitment, the investment is worthwhile as green
innovations, if managed well, are capable of bringing forth product success just as
conventional innovations. In this study, the success of a green new product was
measured in terms of its perceived environmental and financial performances and
respondent subjective assessment. The results showed that the case for pursuing
green innovation was well justified by its capacity to meet environmental requirements
and generate financial benefits at the same time. This finding is important because Green product
decisions to invest in green innovation have not always been based on economic or competitiveness
compliance reasons. A mixture of arguments such as fulfillment of corporate social
responsibility and shoring up corporate image (Hillestad et al., 2010) has often been
cited. As these arguments may not always prove effective in convincing key
stakeholders, in particular the shareholders, the primacy of economic and
environmental benefits of green innovation as revealed by this study may provide 483
enough incentive to convince shareholders to take the risk of investing in green
innovation.
The findings of the study also confirmed the positive direct influences of green
innovation on green product competitive advantage and green new product success.
But by exploring the effects of green innovation under two separate constructs of
green product innovation and green process innovation, the study provided further
insight by showing the varying levels of influence exerted by the two types of
innovations on the consequential constructs. While the findings showed that both
innovations exerted a positive influence on green product competitive advantage and
green product success, the influence exerted by green process innovation was weaker.
The finding has resources allocation implications as the weaker but significant
influence of green process innovation signals that, under resource constraints, a firm
should invest in green product innovation first. Once green product innovative
capability has been established, the firm may then allocate some resources to enhance
its green process innovative capability. As for theoretical implication, this finding may
stoke up debate and further research should be carried out to determine the
contribution of green process innovation vis-a-vis green product innovation.
This study revealed that green innovations enhance a companys competitive
advantage which, in turn, contributes to green product success. Management
practitioners should, therefore, foster green innovation as this leads to both positive
direct and indirect effects. Further, green products have features that distinguish and
enhance product competitiveness. This competitiveness propagates future product
success which can be expressed in multiple ways, depending on the specific
product position in the supply chain. For example, a green e-component may have
greater appeal to e-producers who would use these products to meet company
environmental standards and drive corporate sustainability goals. Green retail
products also have greater appeal to the growing number of eco-conscious consumers
and in markets with stringent environmental laws.
This study revealed that both H5 and H7 were supported even though the level
of influence exerted by green process innovation on green new product success was not
as big as that of green product innovation. The significantly positive direct influences
of green process innovation on green product competitive advantage as well as on
green new product success suggest that while managers should give green product
innovation the priority, considerable attention should also be given to promote
green process innovation. As pointed out in Section 3.1.2, a pure innovation in
product or process is basically non-existent. Every product innovation involves some
degree of process innovation and vice versa (Chiou et al., 2011; Nielsen, 2006; Verona,
1999). Launches of countless environmental-friendly e-products borne from the
banning of CFC-based cleaning solvents and lead alloys in e-production are just a few
examples of the successful crossing of process and product innovations. Managers
should be reminded that innovation is a process in which insight inspires change, and
the change may be initiated either in product or process. It is, therefore, important for
EJIM managers to keep an open mind and encourage their process and product engineers
15,4 to dream, to think and to try out their new ideas as long as resources permit as this is
the best way to foster innovation and corporate sustainability.
One major implication of this study was the confirmation of the significant and
partially mediating role of green product competitive advantage in the green
innovation and green new product success relationship. This finding implies that firms
484 which embrace green product and process innovations can gain considerable
superiority over their competitors in terms of product functionality and quality.
Products that meet customer expectations in greenness and newness generate
greater customer satisfaction, which in turn, may enable the firm to encounter less
difficulty in entering a market, gaining market share and generating financial returns.
In the arena of e-products, greenness is a market entry barrier. E-products which are
non-RoHS or non-WEEE compliant are simply impossible to get any order from
leading e-product giants such as Sony and Samsung. In addition, greenness is also a
major differentiator in market competition because an e-product with higher

eco-efficiency yields greater savings and greater value to customers. A LED light bulb
is ten times more efficient and has a product life cycle 40 times longer than a traditional
incandescent light bulb. The greenness of the product has won over customers
because the efficiency gains not only yield impressive reductions in individual
electricity bills but also in global carbon emissions.
To the best knowledge of the researcher, this study is the first study ever conducted
to explore the partial mediating effects of green product competitive advantage in
the e-product arena in China. China is both the cradle and graveyard for a big share of
e-products of the world. Growing affluence and technological advancement mean
that e-products will be phased-out at an increasingly faster pace. This inevitable trend
may cause more obsolete e-products to be landfilled, more hazards to be released
and more non-renewable resources to be lost if LCA or other sustainability concepts are
not adopted and properly integrated in the e-products produced. Although
environmental issues affect every nation, China stands to suffer the most if this
vicious circle of unsustainability persists. The confirmed causal relationships among
green product and process innovations, green product competitive advantage and
green new product success suggest that it pays to pursue green innovation. However,
similar to any conventional innovation, it takes time for green innovation to bear fruit
and for every green e-product that succeeds, many others fail. The different levels of
positive influence exerted by product and process innovations as revealed by this
study underline the importance for a firm to understand its own competitive
capabilities, to know where it is constrained and to focus its resources and efforts at the
leverage point.
8. Limitations and future research

While the research is expected to contribute to both academic research and
management practice in green innovation in the e-industry in China, its findings may
be limited in several ways. First, given the quantitative and cross-sectional nature of
this study, it only captured and analyzed a snapshot of the influence of green product
and process innovations on their consequential constructs. A mix method longitudinal
study should be conducted to gain better understanding of the patterns, determinants
and dynamics of change among the constructs (Bryman, 2008). Furthermore, the
findings indicated that green product innovation exerted a stronger influence on the
consequential constructs than green process innovation. Further research should be Green product
conducted to verify and explain the phenomenon. competitiveness
Other limitations of this study stem from its relatively small sample size (203 valid
responses) and the fact that the constructs of green product competitive advantage and
green new product success were measured by subjective assessments. As having
a small sample size may give rise to reliability issues and caution in interpreting
the research findings, it is critical that further studies in a wider context be conducted 485
to verify how far the analysis provided works in other samples. Regarding to the
problem arising from subjective assessments, while subjective assessment highlights
a respondents perception, it may also give rise to the possibility of subjective
evaluations that are diametrically opposed to each other. A follow-up study using
qualitative methods can be conducted to address this problem and to gain additional
insights.
Finally, the target population of the study was R&D project leaders of electronics
firms operating in China. Although deliberate effort has been made to avoid any
criteria to include or exclude respondents from any specific types of e-product projects,
there was a possibility that leaders from LED-related projects made up the majority of
the respondents given that the questionnaire survey was conducted at a LED
lighting show. The findings may be of strong relevance to LED-related applications,
but not so much so to other segments of the e-industry as market demands for LED
solutions had been on an upward trend throughout China since the magnificent
LED extravaganza at the opening ceremony of the 2008 Beijing Olympics. It will be
important to carry out studies in a wider scope to further examine and verify the
correlations among different constructs and enhance the generalizability of
the findings. Having said that, a follow-up study on a segment similar to this
research may prove worthwhile a few years from now as after a prolonged period
of boom, the LED industry in China has shown signs of overinvestment
and oversupply. Some LED brands in China have found their profit margins
diminishing as cost pressures mount and competitions, notably from imports,
increase (China Times, 2011). It would be interesting to see how the project leaders will
handle the rough times and how their innovative decisions will change with new
situations.
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Appendix
Scale Items
Green product innovation Our new products use less or non-polluting/toxic materials
Our new products use environmentally friendly packing
When designing new product, we take recycling and disposal at end of
life into account
Our new products use recycled materials
Our new products use recyclable materials
Green process innovation Our production processes consume less resource (e.g. water, electricity,
etc.) than those of our competitors
Our production processes recycle, reuse and remanufacture materials or
parts
Our production processes use cleaner or renewable technology to make
savings (such as energy, water and waste)
We redesign our production and operation processes to improve
environmental efficiency
We redesign and improve our products or services to meet new
environmental criteria or directives (such as WEEE directive, RoHS
directive, etc.)
Table AI.
(continued) Measuring items
EJIM Scale Items
15,4
Green product competitive Our green new products offer unique features/attributes to customers
advantage Our green new products are superior to competing products
Our green new products offer benefits that are not found in competing
products
Our green new products are of higher quality than competing products
490 Our green new products are superior in technical performance than
competing products
Green new product success Our green new products are in compliance with environmental directives
Our green new products meet the environmental requirements set by
stakeholders
Our green new products bring in more revenue than competing products
Our green new products are more profitable than the competing products
Table AI. Our green new products are successful
Corresponding author
Stanley Kam-Sing Wong can be contacted at: [email protected]
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2. The research gap and research framework

many conventional product innovators, initiating a new product is a test of

3.2 Green product competitive advantage

innovation and environmental management trends and regulations, translating

H1. Green product innovation positively affects green product competitive

H2. Green process innovation positively affects green product competitive

3.3 Green new product success

3.4 Mediating effects

3.5 Research model

Green product Green new

Green process Figure 1.

5.1 Pre-test and pilot test

5.3 Respondent characteristics

Main role of respondent:

6.2 The measurement model

Green product innovation

6.3 The structural model

GIA1 4.40 1.200

Green product innovation 2 Green process innovation 0.468

6.4 Mediating effects

Green product Green product

estimations Note: ***po0.001

Hypothesis Independent variable(s) Result Effect Significance*

H6 Green product innovation Supported 0.233 0.001

7. Discussion and conclusion

major differentiator in market competition because an e-product with higher

8. Limitations and future research

Decision, Vol. 49 No. 3, pp. 384-404.

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