Advanced Natural Resources Stewardship and Environmental Advocacy

The importance of the complementarity between environmental management systems and environmental innovation capabilities: A firm level approach to environmental and business performance benefits

Javier Amores-Salvadó a,b,1, Gregorio Martin-de Castro a,b,1, José Emilio Navas-López a,1 a Departamento de Organización de Empresas, Universidad Complutense de Madrid, Campus de Somosaguas s/n, 28223 Madrid, Spain b Ikujiro Nonaka Research Centre for Knowledge and Innovation, Spain

a r t i c l e i n f o a b s t r a c t

Article history: Received 5 November 2014 Received in revised form 8 April 2015 Accepted 9 April 2015 Available online 28 April 2015

Using a firm-level approach to environmental innovation and drawing on the notion of firm environmental capabilities' complementarities as the potential advantages derived from the connection between the different environmental practices of the firm, we heed the call of environmental management scholars to analyze environmental management systems' potential moderating and indirect effects. More specifically, this work analyzes the existing complemen- tarity between environmental management systems (EMSs) and environmental innovation capabilities and the effect of this relationship on firm performance. In order to reach that goal, we test empirically a novel measure of environmental management systems that takes into account not only the certification but also the degree of development of the distinctive elements that are part of these systems. Our results show that environmental management systems positively moderate the relationship between environmental product innovation and firm market performance. The proposed theoretical model is tested on a sample of 157 firms that belong to the Spanish metal production and transformation industry (one of the most polluting) with 100 or more employees.

© 2015 Elsevier Inc. All rights reserved.

Keywords: Environmental management systems Moderation effects Environmental management systems' new measurement Environmental product innovation

1. Introduction

Although there is no doubt that improving environmental performance is one of the primary objectives of environmental management systems (Nawrocka and Parker, 2009), the imple- mentation of these systems is often also related to cost and efficiency improvements, better reputation and higher employee and management involvement (Curkovic and Sroufe, 2011). Indeed,theenvironmentalmanagementsystem(EMS)certification has become a universal tool to signal the environmental compe- tencyofthefirmanditsabilitytoachievepositiveeconomicreturns.

In the last decade environmental scholars have analyzed intensivelythe relationship betweenEMSs—business performance

(Darnall et al., 2008a; Link and Naveh, 2006; Darnall and Edwards, 2006; Melnyk et al., 2003; Florida and Davison, 2001) and EMSs—environmental performance (Horbach et al., 2012; Russo, 2009; Nawrocka and Parker, 2009). Nevertheless, the result of this academic effort has provided inconclusive evidence and the questions of whether EMSs favor or hamper efforts to obtain better business performance, or if such systems are effective in improving environmental performance or, converse- ly, limit firms' innovative capacity, remain unsolved.

These inconsistent results have been recently remarked by Albertini (2013) and Wagner (2008), raising the need of moving the focus of analysis away from considering EMSs as primary determinants of firm environmental or business performance, to take into consideration that EMSs don't operate in isolation and that their existence must be under- stood in connection with firm's environmental resources and capabilities. Therefore this study aims to highlight the

Technological Forecasting & Social Change 96 (2015) 288–297

E-mail addresses: [email protected] (J. Amores-Salvadó), [email protected] (G. Martin-de Castro), [email protected] (J.E. Navas- López).

1 Tel.: +34 91 394 26 15, +34 91 394 25 05.

http://dx.doi.org/10.1016/j.techfore.2015.04.004 0040-1625/© 2015 Elsevier Inc. All rights reserved.

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importance of environmental capabilities' complementarities (Darnall et al., 2008b), between environmental product innovation and EMSs capabilities, as the crucial element that facilitates the achievement of positive business performance derived from the implementation of such systems.

Therefore, by addressing Wagner's (2008) recommenda- tions on the need to analyze EMSs beyond certification and to thoroughly analyze the moderating effects that influence the relationship between environmental innovation and business results (Wagner, 2010), this study aims to clarify the function of EMSs as moderating elements in the environmental innovation–business performance relationship. To this end we emphasize the importance of environmental capabilities' complementarities (Darnall et al., 2008b), between environ- mental product innovation and EMSs, as the crucial element that facilitates the achievement of positive business perfor- mance derived from the implementation of such systems.

To achieve this objective, we go beyond certification and further develop Wagner's (2009) last proposal using an innovative measure of EMSs that considers not only certifica- tion but also the scope and comprehensiveness (Darnall et al., 2008a) of such systems (taking into account the degree of development of the distinctive elements that are part of these systems). In addition, to address the calls from institutions and authors that demand a stronger presence of products in the environmental management research (Rennings et al., 2006; Rehfeld et al., 2007), we investigate the environmental product innovations as a measure of environmental performance (First and Khetriwal, 2010).

The article is organized as follows: first, it analyzes the current perspectives on the role of EMSs, to subsequently remark the need to change the focus of analysis and consider EMSs, instead of as primary determinants of environmental and competitive performance, as contributing elements – through its moderating role – toward that end. Finally, after explaining the methodological aspects of the work, our results and conclusions are presented together with some future research lines.

2. Theoretical framework and hypothesis development

EMSs are considered as “soft” environmental policy instru- ments in contrast to less flexible instruments, such as regulation (Iraldo et al., 2009) and represent an organizational change and a self-regulation effort on the part of businesses that consist of defining a set of formal environmental policies, goals, strategies and administrative procedures aimed to improve the environmental performance of the organization (Anton et al., 2004).

Drawing upon the resource-based view postulates, the Natural Resource-Based View (Hart, 1995), argues that EMSs (in a similar way that Total Quality Management Systems) contribute to the development of tacit skills, which are hardly replicable by other firms and therefore can facilitate compet- itive advantage achievement. In this sense, they improve the organizational capital of the firm, putting in place the environmental management and administrative processes that will guide the environmental action of the company. In other words, EMSs create the necessary conditions for environmental capabilities to be more efficient, contributing this way to strengthen the environmental orientation of the

firm and facilitating that environmental considerations become an integral element of business strategy (Darnall, 2006).

Thus, from the resource-based view perspective, EMSs have the potential to enable organizations to decrease the environmental impact of their activities, and to improve the quality of firms' operations, providing coordination in the search for environmental objectives that can result in opera- tional efficiencies and competitive advantages (Bansal and Hunter, 2003).

Nevertheless, although previous arguments suggest that these systems have positive environmental and competitive effects, neither their environmental performance improve- ments nor their competitive benefits are clear for the academia. As we will show below, the empirical literature around the topic is inconclusive, revealing the need of re-examining the role of EMSs in the environmental management of the firms.

2.1. Current perspectives on the role of environmental manage- ment systems

The importance that has been granted to the EMSs in the last decade is such that many authors have signaled their mere existence as the crucial factor to be considered to explain firms' environmental and business performance improvements.

This main assumption is supported by two main streams that advance in parallel and characterize the literature on the topic. One research perspective focuses on the effects of these systems in competitive terms, whereas the other perspective analyzes the relationship between EMSs and different measures of environmental performance.

Among the studies that mention the positive effect of EMSs on firm performance, we can find contributions that associate these systems with decreased costs and improved competi- tiveness (Melnyk et al., 2003; Darnall, 2006), increased business volume and exports (Rennings et al., 2006), compet- itive advantages (Delmas, 2001) and firm reputation and image improvements (Wagner and Schaltegger, 2004; Bansal and Hunter, 2003). In addition, these systems are also associated with improved operational performance and improvements in the product quality (Delmas and Grant, 2014) and in the positioning of the business in the market (Sroufe, 2003).

Nevertheless, there are also significant contributions that do not share this positive perspective. For example, Link and Naveh (2006) find no evidence to support a positive relation- ship between ISO 14001 certification and firm performance, and Iraldo et al. (2009) consider that the adoption of an environmental management system (certified or not) on its own, does not suffice to improve firms' competitiveness. In the same vein, other scholars argue that these standardized systems can constitute a limit and an obstacle to firms' innovative capabilities (Könola and Unruh, 2007), as well as an additional source of cost (Darnall and Edwards, 2006). In addition, it is argued that EMSs are often useful instruments to reduce the pressure from the majority of stakeholders (Lannelongue and González-Benito, 2012). That is, they play primarily a legitimizing role (Bansal and Hunter, 2003) that does not necessarily translate directly into improved results.

On the other hand, a variety of contributions have also analyzed the determinant role of EMSs in their relationship with firm environmental performance.

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More specifically, authors have remarked the connection between EMS implementation and environmental product innovations as a positive sign of firm environmental progress. Thus, the requirements derived from EMSs often imply the performance of internal analyses that can result in environmental product innovations geared toward satisfy- ing the demands of more conscientious consumers (Wagner et al., 2001). EMSs have the power to involve organizations in advanced environmental strategies focused on redesigning products and reducing the environmental impact of such products throughout their life cycle (Darnall and Edwards, 2006).

Some evidence of the relationship between these sys- tems and the environmental product innovations can be found in Cleff and Rennings (1999) and Rennings et al. (2006). The former relate “soft” environmental policy instruments with product innovations. The latter demon- strate how the different characteristics of a particular environmental management system have different effects on these types of innovation. More specifically, the learning processes derived from these systems show significant positive effects on environmental product innovations.

In the same line, Rehfeld et al. (2007) demonstrate that the ISO 14001 certification or the Eco-Management and Audit Scheme (EMAS) verification are related to environ- mental product innovations because they stimulate busi- nesses to review their current procedures to find ways to improve their products. Similarly, Horbach (2008) demon- strates that environmental management tools are important for introducing environmental product innovations, and Kammerer (2009) finds a positive relationship between green capabilities (derived from, e.g., EMSs) and these types of innovation.

However, from another perspective, Wagner (2008) dem- onstrates that environmental product innovations are more related with particular activities in environmental manage- ment (market research on “green” products, environmental labeling or the provision of information to consumers on the environmental effects of products) than with the implementa- tion of EMSs. Frondel et al. (2008) find no evidence that associates EMS with technological environmental innovations and in the same vein Horbach et al. (2012) emphasize the less important role that organizational innovations such as EMSs play in the creation of environmental product innovations.

In the light of these results, and as stated by Del Río González (2009) and Demirel and Kesidou (2011), the evidence of a direct relationship between EMSs and the environmental performance of firms is not conclusive.

In sum, one main conclusion can be drawn from previous analyses: Despite their worldwide popularity, the empirical evidence suggests that the mere existence of EMSs does not guarantee better competitive results (Albertini, 2013) or improved environmental performance (Del Río González, 2009; Demirel and Kesidou, 2011). This means that, by themselves, these systems cannot be considered as primary determinants of environmental and competitive success.

Therefore, as we have previously remarked, we argue that it is necessary to change the focus of analysis and consider EMSs, instead of isolated, in connection with firms' environmental resources and capabilities; instead of as primary determinants of environmental and competitive performance, as contributing

elements toward that end. To the development of these arguments, we will devote the next section.

2.2. Connecting environmental management systems and envi- ronmental innovation capabilities: Toward an integrative per- spective on environmental and firm performance

As noted, in the last decade the environmental and competitive implications of EMSs' have been the focus of great interest among environmental scholars. Nevertheless, maybe because of their great popularity, worldwide impor- tance or market penetration, most contributions have ignored the importance of firms' resources and capabilities for EMS environmental and competitive success. In this sense, we argue that the economic success of EMS implementations lies in the complementary relationship between these systems and firms' environmental innovation capabilities so that, when EMSs are present, the strength of the relationship between environmen- tal innovation and firm performance depends on the comple- mentarities between these systems and the environmental innovation capabilities of the firm.

As environmental policy instruments, EMSs are supposed to have a great impact in the environmental performance– business performance relationship. In fact, the influence of these systems (which is a primary point in our analysis) cannot only be limited to environmental performance or economic performance as two isolated concepts. A broader view of the phenomenon is necessary, which analyzes its role as a moderating element (Melnyk et al., 2003) and helps clarify its true nature.

This approach finds a good fit with the resource-based view logic and more specifically with the Natural Resource-Based View (Hart, 1995). According to the Natural Resource-Based View, EMSs not only influence and drive innovative capabilities but also create competitive advantages for businesses that implement them. The theoretical background of this argument is based on the fact that the means invested by a company to implement and correctly conduct these systems are closely linked to a series of pre-existing resources and capabilities (Darnall, 2006), that are difficult to imitate by competitors because they depend on a particular path and incorporate an important component of tacit knowledge (Florida, 1996; Rugman and Berbeke, 1998).

Therefore, the achievement of improvements in the environmental field and in the economic arena will be based to a large degree on the connection between these manage- ment systems and firms' existing resources and capabilities (Melnyk et al., 2003; González-Benito and González-Benito, 2008; Khanna et al., 2009). While EMSs constitute the guiding environmental organizational capital (environmental proce- dures and norms), environmental innovations are environ- mental technological capital that result from firms' technological efforts in this field, and the connection between these two will lead to improved economic performance.

This perspective of integration between environmental and economic performance is used by Rennings et al. (2006), who emphasize the importance of the bond between environ- mental management and innovation to improved business competitiveness, and by Iraldo et al. (2009) that also remark the competitive relevance of the indirect effect that manage- ment systems have on environmental performance.

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Similarly, and from a perspective focused on products, Darnall and Edwards (2006) emphasize how the joint effects of the capabilities for redesigning and developing new products with a smaller environmental impact and the EMSs are associated with improved efficiency and competitive advan- tage. Likewise, Kammerer (2009) and Darnall et al. (2008a,b) highlight that EMSs facilitate the management of environmen- tal product innovations that in turn enable the recovery of investments made through the increase in the demand for “green” products.

Therefore, as Horbach et al. (2012) have recently noted, EMSs play a relevant role in obtaining economic benefits based on environmental product innovations because they help overcome coordination problems that hamper the economic exploitation of these types of innovations. Thus, the relation- ship between environmental product innovation and firm performance is facilitated by the existence of EMSs, which help to fully exploit the potential economic returns of these kinds of innovations.

All these previous arguments constitute the central theme of our proposal and lead us to formulate our unique and main hypothesis:

H1. Environmental management systems positively mod- erate the relationship between environmental product inno- vations and firm performance.

That means, following Muller et al. (2005), that the magnitude of the casual effect of environmental product innovation on firm performance depends on the EMS value.

According to this approach, to demonstrate moderation, we will estimate the following abbreviated model:

Y ¼ β10 þ β11X þ β12EMS þ β13XEMS þ ε1:

where Y = firm performance; X = environmental product innovation; EMS = environmental management systems; XEMS = environmental product innovation EMS interaction.

And the significance of ß13 shows that the magnitude of Environmental Product Innovation on Firm Performance varies as a function of the value of the moderator (Environmental Management Systems).

3. Sample and data collection

We have developed our empirical analysis on firms that belong to the metal production and transformation industry (one of the most polluting and more inclined to implement environmental innovations), with 100 or more employees (with enough resources to manage and develop environmental technologies). Specifically, the target companies of this research are those that belong to the sectors mentioned by Law 16/2002 of July 1st and denominated Integrated Pollution Prevention and Control (IPPC). Of the industrial categories referred to in that law, our empirical study is focused on the category that corresponds to the production and processing of metals (2007 NACE classification codes from 24 to 32), which includes metallurgy, iron fabrication, steel, ferroalloy products and metallic products. These companies operate facilities or smelters of large capacity that are potential sources of significant pollution, as recently noted by Demirel and Kesidou (2011).

In this sense, we have focused on an interesting and frequently ignored aspect of this sector. Although the produc- tion and processing of metals are known to generate more process than product innovations, we believe, following Moors et al. (2005), that the iron and steel industry also offers interesting ecological alternatives for product innovations, such as the use of materials with a lower proportion of iron during zinc production, the smelting of recycled aluminum during aluminum production and lengthening the useful life of compounds by re-using zinc and aluminum in the production of iron and steel. Therefore, in order to analyze this less well known reality, we have focused on product innovations.

The target population consists of 733 companies of 100 or more employees, and was studied and selected using the Iberian Balance Sheet Analysis System (SABI, using its initials in Spanish) and the Amadeus databases. The first version of the questionnaire was sent to three well-regarded researchers in the environmental management field, which enabled us to evaluate the relevance of the questions. Then, we ran pilot test with 10 companies to determine if the questions were clearly written and understandable. Finally, data collection was begun during the first half of 2011 through a telephone questionnaire directed toward two qualified informants. One informant was responsible for environmental innovation or innovation in general and answered the questions related to the environ- mental product innovations and EMSs. The other informant was responsible for finances and answered the questions related to firm performance. Thus, the opinions of two types of informants in each company were obtained, with the goal of avoiding the common method variance bias (Chang et al., 2010).

In this way, 157 valid questionnaires were obtained, which represent a response rate of 21.3% and a sample error of +/−6.9% at a 95% confidence level. We contrasted the representativeness of the sample by a comparative analysis of the size and age of the companies that constitute the sample and the population. Thus, we calculated a variety of statistical measures of central tendency and variability (Table 1). After that, we run a t-test (Zenger and Lawrence, 1989) and analyzed the presence of differences between arithmetic means in the companies in the sample and the population with respect to their size and age.

As a result of this test, we obtained a p-value of p = 0.316 for firm size and p = 0.442 for firm age at a 95% confidence level. Because both values are greater than 0.05, we reject the null hypothesis of there being a significant difference between the means of the sample and those of the study's target population.

Table 1 Sample statistical representativity.

Statistic Age Size

Sample mean (Population mean)

27.03 (28.01)

274.19 (247.80)

Sample median (Population median)

24 (25)

175 (154)

Sample mode (Population mode)

18 (14)

110 (102)

Sample standard deviation (Population standard deviation)

15.78 (16.10)

328.88 (310.30)

Source: own-elaboration.

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Following the same procedure, the presence of non- response bias was analyzed based on size (Armstrong and Overton, 1977), obtaining a p-value of p = 0.220 at a 95% confidence level. The fact that the p-value is greater than 0.05 confirms that there is no non-response bias between the companies that cooperated with the study and those that did not cooperate.

4. Measurement of the variables

The variables were measured using the subjective percep- tions of the different groups of managers consulted on a seven- point Likert scale (Aragón-Correa et al., 2008; Christmann, 2000).

To measure the variable environmental product innovation, and following other authors that have focused on the environmental characteristics of the products as a manifesta- tion of environmental performance (First and Khetriwal, 2010), we used an approach that considers the optimization advan- tages derived from the environmental improvements in product design. Specifically, the indicators refer to design modifications in the products that are geared toward reducing the quantity of material used (Chen et al., 2006; Dangelico and Pujari, 2010), using recyclable components (González-Benito and González-Benito, 2008) and increasing the product's useful lifetime (Kammerer, 2009). Thus, those individuals who were responsible for innovation/environment in the sampled companies were asked to evaluate whether their companies had implemented changes in product design such as those mentioned previously according to a seven-point Likert scale (1: “we have never thought of implementing this type of change/modification to our products”; 7: “this type of change/ modification of products is vital for us”).

With respect to EMS measurement, we adopted a novel perspective that goes beyond ISO 14001 certification or EMAS validation. Instead, and considering that these systems can vary considerably between companies, which can be certified or not (Darnall and Edwards, 2006), we evaluate the implementation of an environmental management system based on its constituent elements, not only as a function of certifications. Evaluation based only on certifications has been criticized (Wagner, 2008; Lannelongue and González-Benito, 2012) for limiting the real effects of EMSs on environmental product and process innovations and because implementing these systems can be motivated by opportunistic behaviors rather than environmental performance improvements.

Therefore, in addition to the certification and to further investigate EMSs, we follow Wagner (2008), Darnall and Edwards (2008), and Darnall et al. (2008a,b) and also consider the existence of these specific elements in EMSs: a) a written environmental policy, b) identified and documented environ- mental impacts, c) measureable and contrastable environmental objectives, d) the definition of environmental responsibilities, e) environmental learning programs for employees, f) the improvement of communication structures for environmental information and g) procedures for the periodical evaluation of environmental compliance. Thus, those individuals responsible for innovations/environment in the companies surveyed were asked to evaluate whether their companies had implemented the previously mentioned environmental practices using a seven-point Likert scale (1: “we have never thought of

implementing this type of practice”; 7: “this type of practice is vital for us”).

Firm performance manifests itself in a large number of ways (Venkatraman and Ramanukan, 1986; González-Benito et al., 2012). Specifically, in our research we can verify whether environmental improvements of products have resulted in sales growth for businesses located at the intermediate points of the value system, such as business focused on metal production and transformation, which have their primary markets in automotive, construction and naval construction companies (Dahlström and Ekins, 2006). Therefore, we have adopted market results as our firm performance measure for the companies in the sector. We emphasize growth in market share (Judge and Douglas, 1998; Karagozoglu and Lindell, 2000; Triebswetter and Wackerbauer, 2008; Iraldo et al., 2009), sales growth (Newbert, 2008; Menguc et al., 2010) and sales per employee (Link and Naveh, 2006) related to competitors (Christmann, 2000) during the preceding two years. This approach is justified by the fact that the effects of environmen- tal innovation activities described here translate into results a minimum of two years after they are implemented (Hart and Ahuja, 1996).

Finally, because firm size and firm age can influence the development of environmental innovations (bigger and more experienced firms are supposed to have more resources and capabilities to implement these kind of innovations), firm size and firm age were considered as control variables. Based on the research of other authors in the environmental field, such as Cleff and Rennings (1999), Delmas (2001), Wagner (2009) and Ziegler and Nogareda (2009), Rehfeld et al. (2007), firm size and firm age were measured using the number of employees and the years since the foundation of the company respectively.

5. Measurement properties

The most prominent aspect of our measurement approach is the utilization of a comprehensive EMS's measure. Beside the certification (yes/no), the indicators that constitute the scale of elements inherent in EMSs are also transformed into categorical values. In this sense, the new EMS measure that we are empirically testing in our research takes into account two main considerations: 1) the existence or lack of ISO 14001 certification or EMAS verification (taking the value of 1 when the company has the certification and 0 when it does not) and 2) the mean evaluation of the presence of the elements of an environmental management system as detailed in Section 4. The presence of such elements is represented by Likert scales 1–7. When the mean in the compliance of these elements is equal to or greater than 4, we assume that the company has undergone a large degree of development in the measures that constitute an environmental management system (granting the value of 1 to that company). When the opposite is true, we assume that the degree of development of these elements is reduced (granting the value of 0).

In addition, an aiming to measure the environmental product innovation and firm performance variables, an explor- atory factor analysis was performed. In this analysis, the respective factor weights and their reliability were examined using Cronbach's alpha and the composite reliability index (Table 2).

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Thus, two factors were generated using Varimax rotations that correspond to the items of environmental product innovation and firm market performance, respectively. The main indexes obtained reveal the convenience of this factor analysis (Hair et al., 2004). The Kaiser–Meyer–Olkin (KMO) index (with values that oscillate between 0 and 1) exhibits values greater than 0.7 (0.724), which indicate the presence of partial correlations between items. Similarly, all of the items in both factors display weights greater than 0.8, and the Cronbach's alpha values exhibit scores greater than 0.8 for each of the factors, which is in accordance with generally accepted standards as a sign of reliability. In addition, we have also calculated the composite reliability of the constructs, which has been suggested by the academy as a better measure of reliability (Table 2). Therefore, composite reliability values were above the generally accepted threshold of 0.70 (Fornell and Larcker, 1981) with 0.920 for environmental product innovation and 0.931 for firm market results. Finally, the percentage of accumulated explained variance for these two factors was 81. 145, being higher than the proposed value for social science: 60%.

6. Results

In this section, to assess the nature of the relationship between our main independent variables (environmental product innovation, EMSs) and our dependent variable (firm market performance) we will test our main hypothesis previously detailed in Section 2 through a moderation model

(M1) that corresponds to the relationships depicted in Fig. 1. Firm's size and firms' age will be used as control variables.

As Table 3 shows, model M0 reports the regression with only the control variables (firm size and firm age). In this model, statistical F value does not show the existence of any significant linear relation, so firm size and firm age don't have any statistical significance effect on firm market performance. Our main assumption is reported in Model M1 which corresponds to hypothesis H1, and reports the relationship between environmental product innovation and firm market performance using the environmental management system variable as moderator (interaction effect) and firm size and age as control variables. In this case, as we can see in Table 3, model M1 shows the existence of a positive and significant interaction effect of the environmental management system variable on the relationship between environmental product innovation and firm performance and also a positive and significant (although less significant) effect of environmental product innovation on firm market performance. Furthermore, Durbin– Watson's values for model M1 indicate that the residuals are independent, and statistical F values show a significant linear relation for the proposed interaction effect, proving the existence of statistical validity.

Our results give support to the main argument of this work, as model M1 and hypothesis H1 shows. Thus, the interaction effect of EMSs on the relationship between environmental

Table 2 Factor analysis and reliability.

Factor loads

Environmental product innovation items EPI (EPI_1)—We have modified our products' design to use fewer material in their elaboration 0.889 EPI (EPI _2)—We have modified our products' design to extend its useful life 0.923 EPI (EPI _3)—We have modified our products' design by using recyclable components 0.857

Market performance items RES (MK_1)—In relation to our main competitors we are satisfied with company's market share growth in the last two years

0.924

RES (MK_2)—In relation to our main competitors we are satisfied with company's sales growth in the last two years

0.919

RES (MK_3)—In relation to our main competitors we are satisfied with company's sales per employee rate growth in the last two years

0.871

KMO 0.724 Explained variance (%) 41.245 39.900 Accumulated variance (%) 41.245 81.145 Cronbach's alpha 0.894 0.872 Composite reliability 0.931 0.920

Fig. 1. The moderating role of environmental management systems.

Table 3 Regression results.

M0 Ml

Firm market performance Firm sizea −.119 −.103 Firm ageb .026 .018 EMS wide .114 EProduct innovation .153* EMS Widex EProduct innovation .165**

Model resume R .123 .278 R2 .015 .077 Corrected R2 .002 .047 Typical error .998 .976 Durbin–Watson 1.880 1.952 F 1.179 2.534

***Significant at p b .01, **Significant at p b .05, and *Significant at p b .10. a Reciprocal transformation to ensure variable normality (Rehfeld et al., 2007). b Logarithmic transformation to ensure variable normality (Wagner, 2008).

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product innovation and firm market performance is positive and statistically significant. This means that, as suggested previously in our theoretical analysis, EMSs play a moderating role (Fig. 2) in the relationship between environmental product innovation and firm market performance, acting as supporting factors that enable the achievement of positive business results from environmental product innovations. Nevertheless, these results must be interpreted cautiously since the R^2 value is only 0.077, thus limiting the explanatory power of the model.

This means that in addition to the independent variables that we have taken into consideration there must be a number of additional factors not included in our model that may explain also the variation of firms' market performance. Among these factors we can find the environmental orientation of the firm perceived by the customers (Menguc and Ozanne, 2005), or the environmental marketing policies of the organization (Menon and Menon, 1997), to mention just a few.

As Fig. 2 shows, at low levels of environmental product innovation, firm market performance does not improve even when the environmental management system indicator is high. Conversely, when the level of environmental product innova- tion gets higher, a higher value of the indicator of environmental management system improves substantially firm market per- formance. This evidence is in line with our main theoretical assumptions and corroborates that EMSs can play a key role in firms' performance improvements if they are complemented by strong environmental innovation capabilities.

Nevertheless, such successful combination is a difficult one and is not available for all the firms in our sample (please see Fig. 3 where each firm combination of EMS performance and environmental product innovation performance is represented by a circle).

As Fig. 3 shows, the EMS performance level remains high for most firms in the sample (see quadrants Q1 and Q2), while the environmental product innovation performance level is subject to more variations and nearly half of all sampled firms show a poor performance (see quadrant Q1). That means that reaching high levels of compliance in environmental product innovation is much more complicated for the sampled firms. Therefore, at the light of the results, the big challenge for most firms in the

1

2

3

4

5

6

7

Low Env. Product Innovation

High Env. Product Innovation

F ir

m M

ar k

et P

er fo

rm an

ce Low EMSWide

High EMSWide

1 2 3 4 5 6 7

Source: Own elaboration from Dawson (2013)

Fig. 2. Environmental management systems. Moderation effects. Source: Own elaboration from Dawson (2013).

Source: Own elaboration

Fig. 3. Sampled firms' environmental management systems and environmental product innovation performance levels. Source: Own elaboration.

294 J. Amores-Salvadó et al. / Technological Forecasting & Social Change 96 (2015) 288–297

production and processing of metals sector seems to be the improvement of their product innovation capabilities.

7. Discussion and conclusions

Our main goal was to analyze the complementarity between EMSs and environmental innovation capabilities and contribute to the clarification of the role played by these systems. As we have highlighted before, the literature about the topic shows a lack of consensus regarding the real contribution of these systems and it is not clear whether they foster or inhibit firm's environmental innovations or whether they contribute or not to enhance firm performance.

We have argued that behind this lack of consensus there is one main arising question that we have tried to answer in our research.

This question has to do with the general approach to the problem. Although the existence of direct relationships between EMSs and innovation or performance outputs would be very interesting and appealing for firms (since innovation and performance outcomes would appear with the sole implementation of these systems) the inconclusive results derived from our literature review suggest that the mere existence of EMSs does not guarantee improved environmental innovation or firm performance outcomes. Therefore, it is necessary to change the focus of analysis and consider EMSs, instead of isolated, in connection with firms' environmental resources and capabilities.

Thus, EMS contribution to firm innovation and business performance is more subtle and complex as Wagner (2010) suggests. Therefore, we claim, in the same line than other environmental scholars (Aragón-Correa and Rubio-López, 2007; Ziegler and Nogareda, 2009; Darnall and Edwards, 2006) that these standards are beneficial and really contribute to improve firm performance when they are complemented with environmental innovation capabilities. This means, ac- cording to our results, that EMSs play an important role facilitating the management of the environmental product innovations, helping to coordinate better the process and solve the potential problems that may arise (Horbach et al., 2012), they are, as Bansal and Hunter (2003) argue, reinforcing elements.

Therefore, through the adequate combination of these systems with the environmental product innovation capabili- ties, firms will be able to exploit very valuable complementar- ities (Darnall et al., 2008b) and put into practice an efficient guided creativity that, aided by the appropriated managerial support, will lead them to improved market performance results. In other words, our empirical evidence gives support to the assumption that the EMSs play a moderating role (interaction effect) in the relationship between environmental product innovation and market performance results, as our hypothesis H1 suggests. In this sense, as the main implication to business practice we can highlight that firm managers, in order to exploit the full potential of EMSs – beyond the “certification effect” –, have to develop those pre existing environmental innovation capabilities which, appropriately guided and reinforced by EMSs' elements, will lead to firm performance improvements.

In addition, we have tested empirically a novel measure of environmental management systems. As Wagner (2008)

suggests, EMSs have to be analyzed taking into account not only the certification but also the main elements that conform these systems in order to detect firms' opportunistic behaviors and to reflect the reality that many firms have implemented their own systems without being certificated.

Therefore, we have empirically tested a new environmental management system indicator that takes into account all these aspects at the same time (certification and main environmental management system elements), hoping to contribute to clarify the real scope and function of these systems.

Our work also helped us to analyze the role of firm size and firm age in the previously considered relationships. In this sense, we have found that firm size and firm age don't show any significant effect (Horbach, 2008; Demirel and Kesidou, 2011; Wagner, 2007). This evidence suggests that the potential connections and complementarities between EMSs' norms and procedures and environmental innovation depend primarily and critically on the organizational capabilities and coordina- tion mechanisms that firms are able to implement instead of on the size or age of the organizations. Therefore, the results are in line with the Natural Resource-Based view postulates (Hart, 1995; Aragón-Correa et al., 2008) and complements other contributions that using also a firm-level approach to environ- mental innovation analyze the determinants of environmental innovation activities (Chassagnon and Haned, 2015). In this sense, our work, instead of analyzing the determinants of the environmental innovations, takes a complementary perspec- tive and a closer look to the inner mechanisms of the firm that explain the environmental innovation success.

Nevertheless, this work is not exempt from limitations. In this sense, our perspective is restricted to the internal analysis of the firm, in particular to firms' resources and capabilities, without taking into consideration the key role that the stakeholders, in terms of social demand articulation (Lee et al., 2006), play in the development of environmental product innovations. In addition, our results are largely derived from the managers' subjective perceptions (two different groups of managers were consulted in our questionnaire in order to avoid the common method bias) because of the lack of firm- level environmental databases of public access (López-Gamero et al., 2010). And lastly, these and cannot be generalized, since our evidence is limited to a small number of firms belonging to similar industries in a particular moment in time.

Some future research directions can be drawn from our work. Using this somehow narrow and limited perspective, our evidence shows that the EMSs, as expressions of the “green formalization” of the firm, play an interaction (moderation) role and contribute to the development of environmental innovation capabilities. In this sense, the congruence between what we can call “green formalization” and green social capital –that we don't explore in this paper – can be interpreted as equivalent to the tight and loose organizational designs (Russo and Harrison, 2005) and could be explained through the ambidextrous organization theory, which constitutes another persuasive perspective that has not received great attention in the green management literature.

In addition, other organizational capabilities also have to be taken into consideration. For example, recent contributions on the topic of absorptive capacity (Delmas et al., 2011) and intellectual capital (Delmas and Pekovic, 2013) can also be applied to the EMS literature.

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Acknowledgments

We would like to thank all the institutions whose support has made this investigation possible, particularly the Spanish Ministry of Science and Innovation (Project ECO2009-12405) and the Ikujiro Nonaka Research Centre for Knowledge and Innovation at CUNEF (Colegio Universitario de Estudios Financieros).

Appendix A. Measurement items (1–7 Likert scales)

A.1. Environmental product innovation

EPI_1: Has your company implemented products design modifications geared toward reducing the quantity of material used in their elaboration?

EPI_2: Has your company implemented products design modifications geared toward increasing the product's useful lifetime?

EPI_3: Has your company implemented products design modifications by using recyclable components?

A.2. Environmental management systems

EMS_1: Does your company have a written environmental policy?

EMS_2: Are your company's environmental impacts clearly defined and documented?

EMS_3: Does your company have measurable environmental targets?

EMS_4: Are your company's environmental responsibilities well defined?

EMS_5: Does your company organize environmental learning sessions for employees?

EMS_6: Does your company have improved its environmental information communication structures?

EMS_7: Does your company have its own periodical proce- dures for environmental assessment?

A.3. Firm market performance

In the last two years, has your company reached satisfactory results (compared to competitors) in relation to…

RES (MK_1): Market share growth? RES (MK_2): Sales growth? RES (MK_3): Sales per employee?

A.4. Control variables

FirmSize Number of employees (reciprocal transformation) FirmAge Number of years since the foundation of the company

(logarithmic transformation)

Appendix B. Supplementary data

Supplementary data to this article can be found online at http://dx.doi.org/10.1016/j.techfore.2015.04.004.

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Javier Amores Salvadó, Ph.D., is Assistant Professor at the Business Administration Department in University Complutense de Madrid (Spain) and member of its Strategy, Knowledge and Innovation Research Group (ECI). He has been Research Fellow at UCLA University (Institute of the Environment and Sustainability-Los Angeles, USA) (2013). His main research areas are innovation, environmental innovation and sustainable development.

Gregorio Martín de Castro, Ph.D., is Associate Professor at the Business Administration Department in University Complutense de Madrid (Spain) and member of its Strategy, Knowledge and Innovation Research Group (ECI). He has been Research Fellow at Harvard University (2004–2005), at the University of Manchester (2009), and at the University of Southern California, USA (2011). He is author and co-author of several books and articles concerning intellectual capital and knowledge management.

Jose Emilio Navas López, Ph.D., is Professor at the Business Administration Department in University Complutense de Madrid (Spain) and Chairman of its Strategy, Knowledge and Innovation Research Group (ECI). He is author and co-author of several books and articles concerning technology management, strategy, and knowledge management. He has held the first Knowledge Management Chair in Spain at I.U. Euroforum Escorial.

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