Corporate culture, environmental innovation and financial performance

Abstract

Abstract Based on the logic of culture‐behaviour performance, this study constructs a theoretical model to examine the effect of four types of corporate culture (clan, adhocracy, hierarchy and market) on the three dimensions of a firm's environmental innovation (eco‐organizational, eco‐process and eco‐product) and whether environmental innovation affects a firm's financial performance. Three hundred and sixty‐six firms in the manufacturing and service industries are selected as a valid research sample, and a structural equation model is used for empirical analysis. The results show that adhocracy and market cultures are positively related to a firm's eco‐organizational, eco‐process and eco‐product innovation; clan culture has a positive effect, and hierarchy culture a negative effect, on eco‐organizational innovation; and the three dimensions of environmental innovation all promote a firm's financial performance. Based on these conclusions, this study discusses managerial implications and suggests future research directions.