Sustainable corporate governance for environmental innovation: A configurational analysis on board capital, CEO power and ownership structure

Abstract

CEOs, boards of directors, and owners are believed to be important actors in affecting environmental innovation. Yet, there is a lack of combined view on the three actors in the literature. This study aims to explore the sources of environmental innovation from the perspective of corporate governance bundles. Considering the interdependent nature of the three, this study proposes a configurational model consisting of CEO (formal and informal) power, board capital (breadth and depth), and ownership (institutional and insider). We undertake a qualitative comparative analysis (QCA) on a sample of 250 dirty firms and discover six sufficient configurations for high environmental innovation. These configurations suggest that there are multiple paths for achieving high environmental innovation. Furthermore, both powerful and weak CEOs can be environmental innovation facilitators if they are accompanied by suitable board archetypes and ownership structure.