The Relevance of Complementarities in the Study of the Economic Consequences of Environmental Proactivity: Analysis of the Moderating Effect of Innovation Efforts

In this paper, we present arguments and empirical evidence that highlights one key aspect of the study of the relationship between environmental proactivity and economic performance in firms: The effect of complementarities with other innovation-related resources. According to the literature, environmental proactivity-defined as the tendency to go beyond compliance with basic requirements established by law or institutionalized adoption of environmental practices in industry-enables firms to improve both economic and environmental outcomes. Within the framework of the resource-based view and the dynamic capabilities approach, we find that this win-win situation is far more likely when environmental proactivity is adopted in conjunction with a proactive innovation strategy. By analyzing panel data with 336 observations (42 Spanish industrial firms over an eight-year period), we demonstrate that environmental proactivity generates complementarities with technological proactivity that are sustainable and especially profitable in dynamic environments. More precisely, empirical evidence reveals that complementarities between environmental and technological proactivity are sustainable in groups of firms subject to high external pressure (such as that generated in the European Union Emissions Trading System context). Complementarities are also greater for companies during a financial crisis, a period characterized by high uncertainty and dynamism of the environment. This particularly advantageous win-win situation generated by environmental proactivity justifies its interpretation as a dynamic capability.