The Impact of Technological Green New Product Introductions on Firm Profitability

- We used data on 1020 technological green product introductions to investigate if they are related to a firm's profitability
- Our results show that the relationship between technological green product introduction and firm profitability is positive
- Firms have financial incentives to leverage on green technologies to limit the environmental impact of their new products

With changing customer preferences and volatile economic-technological environments, firms have accelerated the rate of new product introductions (NPIs) to sustain corporate growth. However, NPIs have adverse impacts on the environment. But what do we know about the impact of technological green NPIs on firm profitability? Can technological green products help limit or off-set the negative impact of NPIs on the environment? Accelerating the number of NPIs imposes additional costs for firms as well as environmental costs, particularly with greater resource depletion and waste generation. A well-supported solution to reconcile the economic-environmental preservation imperative is to create incentives for firms to use green technologies to offset the negative impact of new products on the environment. Using data on 1020 technological green products which were introduced between 2007 and 2012 by 79 global firms, we investigate whether there are any win-win situations in terms of financial advantages for firms, while reducing the adverse impacts of NPIs on the environment. The results show that the relationship between technological green NPIs and firm profitability is positive. The findings point to the financial incentives for firms to leverage on green technologies to limit the environmental impact of new product introductions.