Measuring the impact of transboundary disruptive crises on eco-innovation and firm performance through advanced composite indicator construction techniques

Abstract

The growing concern for the environment and the future of upcoming generations has driven a shift in consumer preferences and pressure groups, emphasizing the need to invest in sustainable economic growth strategies. Traditionally, a linear production model has been followed, where natural resources are transformed into economic products without considering their reuse or recycling. However, in light of environmental challenges and resource scarcity, companies are adopting corporate social responsibility strategies, which has led to the emergence of the circular economy. This model aims for sustainable social and economic growth through the efficient and continuous use of resources. The circular economy requires innovations in production, consumption, and policy-making. In this context, a multidimensional concept emerges, encompassing product, process, organizational, and marketing dimensions, and is constantly evolving: eco-innovation. In addition to reducing polluting practices, eco-innovations can improve companies' economic performance, leading to increased adoption, driven by initiatives such as the Eco-innovation Plan and the Kyoto Protocol. However, previous studies on the impact of eco-innovation on business performance have been inconclusive. Some researchers argue that sustainable strategies improve companies' reputation, customer satisfaction, and reduce costs, thus enhancing financial results. In contrast, others argue that high initial investments and potential employee turnover may deteriorate corporate performance. Additionally, recent global events such as the COVID-19 pandemic and the Russia-Ukraine conflict have posed additional challenges, particularly affecting multinational companies by increasing their vulnerability to environmental, economic, and geopolitical risks. In this regard, this Doctoral Thesis is structured into several chapters, each addressing specific objectives to explore the relationship between eco-innovation and business performance, as well as to develop new methodologies in this field. First, the relationship between eco-innovation and business outcomes is investigated through a systematic literature review and bibliometric analysis, observing a growing interest in sustainability strategies among academics, governments, and companies. Although there is no consensus, most studies suggest that eco-innovation has a positive effect on profitability and market value in the short and long term. Secondly, this thesis focuses on the creation of an innovative ranking system to assess eco-innovation in multiple dimensions: products, processes, and organization. Using a sample of 4,761 publicly traded companies globally and applying the Pareto dominance approach, a multilevel ranking is developed, allowing for comprehensive and flexible comparisons of the environmental performance of companies, countries, and sectors. The results highlight France, Finland, Uruguay, Thailand, and Spain as global leaders in eco-innovation, with a strong European and Asian presence across different dimensions. The best-performing sectors include utilities, non-cyclical consumer goods, and industrials. Finally, the relationship between eco-innovation and business performance is analyzed in the context of cross-border crises such as the COVID-19 pandemic and the war in Ukraine. Using a sample of 3,606 publicly traded international companies and panel data for the period 2018-2022, this study examines how these events have boosted investment in environmental innovations and what their impact has been on business outcomes. The Benefit of the Doubt (BoD) methodology is used to create an eco-innovation variable based on 19 environmental performance indicators, and specific regression models for panel data are employed. The analysis reveals that both the pandemic and the Ukraine conflict have fostered the adoption of eco-innovations, improving companies' resilience and adaptability. Additionally, it confirms that eco-innovation has a positive and significant effect on business performance. This Doctoral Thesis contributes significant methodological innovations, such as a ranking system based on dominance indices and the creation of a new eco-innovation variable using the BoD methodology. These tools allow for more accurate and flexible evaluation of environmental performance, enabling comparisons between companies, countries, and sectors without the need for arbitrary weightings. Moreover, the robustness of the results is validated through various statistical tests, ensuring the consistency and reliability of the conclusions. Thus, this research not only introduces new statistical tools for eco-innovation analysis but also demonstrates, through a rigorous methodology, that eco-innovation contributes positively to business performance, especially in the context of global crises. These findings provide a solid foundation for future research and practical applications in the field of sustainability, helping organizations implement more resilient and adaptive strategies in increasingly challenging environments.