THE INFLUENCE OF THE GREEN INNOVATION IN THE SEARCH OF COMPETITIVE ADVANTAGE OF ENTERPRISES OF THE ELECTRICAL AND ELECTRONIC BRAZILIAN SECTORS

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1 International Journal of Innovation Management Vol. 20, No. 1 (January 2016) (21 pages) Imperial College Press DOI: /S THE INFLUENCE OF THE GREEN INNOVATION IN THE SEARCH OF COMPETITIVE ADVANTAGE OF ENTERPRISES OF THE ELECTRICAL AND ELECTRONIC BRAZILIAN SECTORS DANIEL LUIS ARENHARDT *, LUCIANA FLORES BATTISTELLA and MARCIA ZAMPIERI GROHMANN Administrative Sciences Department Santa Maria Federal University Predio 74C, Bairro Camobi, Km 9 Cidade Universitária Santa Maria, , Brazil * daniel.arenhandt@ufsm.br lutti@ufsm.br marciagz@gmail.com Published 25 June 2015 This study aimed to verify how the adoption of green innovations influences in the obtention of competitive advantage of companies in the electrical and electronic Brazilian sectors. Quantitative in nature, the study adopted the conceptual model proposed by [Chen et al. (2006). The influence of green innovation performance on corporate advantage in Taiwan. Journal of Business Ethics, 67(4), ]. Using as target population companies linked to the Brazilian Association of Electrical and Electronics Industry (ABINEE), the sample consisted of 113 organisations representing 20.62% of this population. The results showed that the level of adoption of innovative green practices among the participating companies is high and that the relationship between products innovation and green processes and the achievement of competitive advantage is significant, but at a moderate level. Keywords: Green product innovation; green process innovation; competitive advantage. Introduction Companies seek to overcome their competitors by developing advantages that are difficult to be imitated. It is said that an organisation creates a competitive advantage over its rivals if it creates a greater distance than its competitors between

2 D. L. Arenhardt, L. F. Battistella & M. Z. Grohmann the willingness to pay off the clients and their cost of production (Ghemawat, 2007; Porter, 1989). An important factor to achieve competitive advantage refers to innovation. According to (Porter, 1989), companies create competitive advantage realising (or discovering) new and better ways to compete in an industry and bring them to the market, which in ultimate analysis, constitutes an act of innovation. According to Davila et al. (2006), at long term, the only factor able to really guarantee the future of any firm, it is the ability to innovate. Quality innovation gives the company the opportunity to grow faster, better and with more wit than its competitors and as a reward, it ends up dictating the direction of its industry. To Freeman and Soete (2008), innovations are important not only to increase the wealth of nations in the strict sense of increasing prosperity, but also in the most fundamental sense of enabling people to do things that had never been done before. They make it possible to change the whole quality of life for better or for worse. As far as the willingness to innovate, concerns about the environment have also become fundamental to the achievement of competitive advantage between organisations. This is because of the increasing occurrence of legal restrictions involving the use of natural resources, as well as the liability for damages caused to the planet. Moreover, consumers started to require an environmentally friendly position from the companies. There is an increasing and most interesting debate among the academy, industry, non-governmental organisations (NGOs) and institutions of public policies on practices involving environmental and sustainable issues (Pujari, 2006). Actions aimed at environmental protection are a growing reality because more people are concerned with the sustainability. Reflecting an awareness that has been built over the past 20 years, the public, in general, is beginning to understand the impact that these issues will have on their lives now and in the following years and are beginning to require an environmentally friendly attitude from the organisations (Ottman, 2011). According to Green et al. (2000), any attempt to reduce levels of consumption of natural resources as part of a programme of global environmental improvement, should consider two things: the consumption by organisations and the innovative activities of the organisations, particularly their ability to develop new products and processes. According to the authors, the consumption of enterprises are significant in relation to resources depletion and to impacts of the production (including incidence of pollution and wastes). In Brazil, two major industrial sectors with a high rate of innovation deserve attention due to the strong environmental impact of their activities. These are the electric and the electronic sectors

3 The Influence of the Green Innovation Products manufactured by electric and electronic sectors demands great quantity of inputs, many of them heavy and toxic metals. Furthermore, the disposal of electronic products has been a major problem worldwide. Brazilian law stipulates that a company that generates waste remains criminally responsible for them until the final disposal, which means an increase in the costs of the organisations of these sectors. Inserted in this context and based on the research of Chen et al. (2006), this study aimed to verify how the adoption of green innovations influence in the obtention of competitive advantage of companies in the electric and electronic sectors of the country, deepening the level of adoption of environmental practices and their relationship with the competitive advantage of the companies. The work is divided as follows: literature discussing competitive advantage, innovation and green innovation. Below is detailed the method used in research. Following, the results of the survey are presented and, finally, there are the conclusions and recommendations for future studies. Theoretical Background Competitive advantage The concept of competitive advantage has taken a central role in discussions about strategy. Statements about competitive advantage abound, but it is difficult to describe a precise definition (Barney, 1991; Rumelt, 2003). Companies are able to build competitive advantage based on many sources, such as quality, speed, safety, design and reliability, apart from low cost and low price. Almost always, the competitive advantage is a unique combination of these factors (Kotler, 2003). According to Porter (1989), the competitive strategy must be born from a detailed knowledge of the industry structure to which the company belongs. In any industry, the nature of competition is embodied in five competitive forces: (1) the threat of new companies, (2) the threat of new products or services, (3) the bargaining power of suppliers, (4) the bargaining power of buyers and (5) the rivalry among existing competitors. The five competitive forces determine the industry profitability because they set prices that companies can charge, the costs that they must support and the investment required to compete. The threat of new companies limits the overall profit potential in the industry because these new companies bring new capacity and seek new market share, reducing the margins. The presence of close substitutes limits the price that competitors can charge without causing the replacement and erode the volume of the industry (Porter, 1989). When a company (or business unit within a company with multiple activities) gets a higher rate of

4 D. L. Arenhardt, L. F. Battistella & M. Z. Grohmann economic profit than the average rate of economic profit of other companies competing in the same market, the company has a competitive advantage in the market (Besanko et al., 2004). Barney (2003) describes that, besides the analysis of competitive forces, managers should also consider four important questions about their resources and skills to develop competitive advantage. The first question refers to the value. According to Barney (2003), to begin to assess the competitive implications of the resources and of the capabilities of a company, executives must first answer a question about value: do the features and capabilities of the company add value, allowing it to exploit opportunities and/or to neutralise threats? Although the resources and capabilities of a company may have added value in the past, changes in the preferences of customers in the sector structure or in the technology may make them less valuable in the future. The second question is related to the rarity. If a particular resource or skill is controlled by several competing companies, then this feature is unlikely to be a source of competitive advantage for any of them. Instead, more common valuable resources (that is, not rare) are sources of competitive parity. Another question is the imitability. To Barney (2003), a company that has rare resources and capabilities can get at least a temporary competitive advantage. If, in addition, competitors face a cost disadvantage to imitate these resources and capabilities, companies with these special abilities can achieve sustained competitive advantage. Imitation may occur at least in two ways: duplication and replacement. Duplication occurs when an imitator company builds the same kind of resources that the company is imitating. In addition, companies may be able to replace some other resources. The last question concerns the organisation. The potential competitive advantage of a company depends on the value, on the rarity and on the imitability of its resources and capabilities. However, to fully realise this potential, the company must also be organised to exploit its resources and capabilities. Anyway, through strategic adjustment or extension, an important concept to keep in mind is that if an organisation wants to achieve competitive advantage over others, it will have to do it because it has capabilities that others do not have or have difficulty to obtain. These capabilities can be the resources that the organisation owns. They may also be the way of how these resources are used or disposed, and this is known as competencies of the organisation. This explanation of competitive advantage in terms of strategic capabilities is sometimes called as the vision of the strategy based in resources, that is, the competitive advantage of an organisation is explained by the differentiation of its capabilities (Besanko et al., 2004; Johnson et al., 2008)

5 The Influence of the Green Innovation Innovation The definition of innovation is itself a difficult problem. The reason is that the term is often used in a variety of forms and contexts, many of which overlap and some are quite contradictory (Gordon and McCann, 2005). According to Freeman and Soete (2008), it is due to Schumpeter, the distinction of extremely importance between inventions and innovations, as it was widely accepted and incorporated into economic theory. According to Schumpeter (1985), the concept of innovation includes five aspects:. Introduction of a new asset or of a new quality of an asset;. Introduction of a new production method, that is, a method that has not yet been tested by the experience in the own area of the processing industry, which in no way needs to be based upon a new discovery and may also consist in a new way to commercially handle a commodity;. Opening of a new market, that is, a market in which the particular branch of processing industry of the country in question has not yet entered, whether that market has existed before or not;. Achievement of a new source of supply of raw materials or of semimanufactured goods, again irrespective of the fact that this source already existed or had to be created;. Establishment of a new organisation for the business, such as the introduction of department stores. Thus, Schumpeter emphasised that innovation is not a synonymous of invention. Although sometimes may result from an invention, innovation is possible without the creation of something new (invention). But that innovation is associated with the process of technological competition. This process is characterised by the entry (and exit) of companies, by continuous innovation, by the gradual development of standards and by the adaptation or the creation of institutions. It also points out that the invention itself produces no economically important effect. According to Drucker (2002), there are innovations that do not come from the sources of innovative opportunities, but from the result of a brilliant idea, where there is no hard, organized and deliberate work. However, when discussing the practice of innovation, one should talk about purposeful innovation that result from the hard and systemic analysis work, which covers 90% of all the effective innovations. The extraordinary groundbreaking will be effective only if he works with discipline. As per Drucker (2002), the successful innovators are conservative. They do not seek risks, but opportunities

6 D. L. Arenhardt, L. F. Battistella & M. Z. Grohmann According to Bessant and Tidd (2009) and Tidd et al. (2005), the innovation can take many different forms, being that the four dimensions of change also characterised as the 4Ps of innovation, are the following:. Product innovation: Changes in the things (products/services) that a company offers;. Process innovation: Changing the ways in which things (products and services) are created and offered or displayed to the consumer;. Position innovation: Changes in the context in which products/services are introduced;. Paradigm innovation: Changes in basic mental models that guide what the company does. The distinction between product and process innovations is also an issue within organisations, since new products may lead to new processes. New processes may allow new products to be developed, while the mass production of successful new products often requires a process innovation. Moreover, new products, when consumed as inputs or as intermediate goods, can contribute to changes in how products are produced. Both sets of interactions of value can be defined as innovations (Gordon and McCann, 2005; Hayes et al., 2005). Green innovation To Dangelico and Pujari (2010), although no product has a zero impact on the environment, in green products businesses, the term is commonly used to describe those who strive to protect or enhance the natural environment, conserve energy and/or resources, and reduce or eliminate the use of toxic agents, pollution and wastes. Still, that the green products innovation is a multi-faceted process where three main types of environmental focus (material, energy and pollution) are highlighted on the basis of its great impact on the environment at different stages of the life cycle of the product: Manufacturing process of, product use and disposal. It is important to note that not all products have a significant environmental impact at every stage of product life cycle, but almost all products have significant environmental impact in at least one of the stages (Dangelico and Pujari, 2010). The definition of green innovation can take many forms or appearances. It may be a tangible product such as an energy saving of a compact fluorescent light bulb, but can also be intangible, as a service or a pattern of behaviour (Driessen and Hillebrand, 2002). To Mulvaney and Robbins (2011), product innovation inevitably involves process innovation such as the use of clean technologies, renewable energy sources, use of non-hazardous substances and use of biodegradable materials. The authors also describe that environmental management systems help

7 The Influence of the Green Innovation companies to systematically reduce the environmental impact of products during the production and consumption. According to Driessen and Hillebrand (2002), the influences of the relative advantage and of the compatibility are important issues to understand the adoption of green innovations. According to the authors, the client will only adopt an innovation if he realises that it has a relative advantage over other alternatives. This is why the relative advantage is one of the most important determinants of adoption. It refers to the degree to which the innovation is higher than the replacing product or to which it will compete. The advantage can be of any nature, price, ease of use, quality, lifetime, but also of attributes that are much less concrete, such as the status that an innovation is likely to give to the user. In this sense, the degree to which a product is perceived as green can be a form of relative advantage, especially if related to energy saving innovation. Thus, the savings realised by means of an alternative efficient energy are important to determine the decision to innovate. In relation to compatibility, it refers to the degree to which an innovation is compatible with the existing values, experiences and needs. If an innovation is not compatible, there are major barriers to adopt. Green innovations that are highly discontinuous require a change in behaviour, which often translates into a change in normal behaviour deeply rooted in the daily routine. Some green innovations have a setting so close with these values standards and behaviours that lead to adoption, even if the performance in the characteristics of innovation, such as relative advantage, is not so important (Driessen and Hillebrand, 2002). To Dangelico (2009), the development of innovative green products is beneficial not only for the natural environment, but also for the companies. In fact, the integration of environmental concerns in the development of products can be an important source of competitive advantage, since it provides product differentiation, increase reputation of the company and low cost of production (through increased efficiency in the use of resources, reduction of pollution and wastes coming from production processes). However, several challenges are associated with the development and diffusion of green product innovations. First, the development process requires a high level of integration of skills and knowledges about the environmental impacts of products and processes between different functional areas within the company, investments in eco-design skills and the adoption of life cycle thinking. Secondly, one of the biggest barriers for the diffusion of these innovations is the lack of customer awareness about the benefits of such innovations. As per Mulvaney and Robbins (2011), once the green products are produced in large scale, they fail to be more expensive than nonenvironmental substitutes, particularly where the life and maintenance costs of green product are taken into account

8 D. L. Arenhardt, L. F. Battistella & M. Z. Grohmann According to Esty and Simmons (2011), innovative companies can modify products and existing services to reduce wastes and costs while meeting consumer demand, by healthy products, in line with the calls of the environment. The systemic innovation within a company can also be used to get rid of old ways of thinking which allows the company to reposition itself to enter new sectors and markets. The path pointed out by Holt (2002) is to strengthen the awareness of users and producers of environmental problems. For many users this requires a change in values, priorities and lifestyle. According to the author, even more challenging is the new way of thinking for the participants in the processes of product innovation. The concept of life cycle, with its concern for the environment from conception to final disposal, requires a dramatic change in attitude and behaviour of the involved people, since the traditional view should be replaced by the environment conscious. At each step, throughout the process, the efficient use of scarce resources and environmental protection should be in the foreground. Research Method This work is characterised as a quantitative research and it has descriptive nature. Regarding the model, was used the presented by Chen et al. (2006). They analysed the performance of green products innovation and green processes innovation on the competitive advantage of companies from the information and electronic industry of Taiwan as shown in Fig. 1. Their results suggest that the greater the investment in green products innovation and green processes innovation, the stronger the competitive advantage of the companies. Given these findings, the hypotheses for the present study were as follows: Hypothesis 1: The adoption of green product innovation positively affects the search for competitive advantage of the organisations. Hypothesis 2: The adoption of green processes innovations positively affects the search for competitive advantage of the organisations. According to Hair et al. (2007), constructs are the basis for the formation of causal relationships and the purest possible representation of a concept. However, although they are defined at different levels of specificity, a construct cannot be measured directly and completely, but should be measured by indicators. Variables are observed values of a specific item or issue, obtained from respondents on issues (such as a questionnaire) or from observations made by the observer. The variables are used as indicators of constructs

9 The Influence of the Green Innovation Source: Adapted from Chen et al. (2006). This work adopted as constructs: the innovation of green products (with four variables), the green processes innovation (with four variables), and the competitive advantage of organisations (for which were used eight variables). The constructs and their respective variables are described in Table 1. Construct Innovation of green products Innovation of green processes Competitive advantage of the organisations Fig. 1. Hypotheses of the research. Table 1. Research variables. Variables (1) Choice of materials that produce lower levels of pollution. (2) Choice of materials using less energy. (3) Use of lower amount of materials for manufacturing of the product. (4) Choice of materials that are easier to recycle, reuse and decompose. (1) Adoption of processes that reduce the emission of hazardous substances or wastes. (2) Adoption of processes that allow recycling, reusing of materials and the treatment of emissions of hazardous substances. (3) Adoption of processes that reduce water consumption, electricity, coal or petroleum. (4) Adoption of processes that reduce the use of raw materials. (1) Competitive advantage of low cost compared to competitors. (2) Quality of the products or services better offered than those from competitors. (3) Ability of R&D and of greater innovation than those of competitors. (4) Greater management capacity than that of competitors. (5) Better profitability of the company than that of competitors. (6) Company s growth exceeds that of competitors. (7) The enterprise corporate image better than its competitors. (8) Pioneering and leading position in important fields. Source: Adapted from Chen et al. (2006)

10 D. L. Arenhardt, L. F. Battistella & M. Z. Grohmann Based on the standard regulation ISO 14031, the authors conceptualize the innovation of green products as those related to energy conservation, pollution prevention, waste recycling, absence of toxicity, or of designs of green products. The target population of this study were Brazilian companies from the electric and electronic sectors linked to the Brazilian Association of Electrical and Electronics Industry (ABINEE), totalling 548 organisations. The choice of this population occurred for the following reasons: large number of organisations associated to ABINEE; geographical distribution of companies in several states of the country; participation of enterprises from domestic and foreign capital, participation of companies of varying sizes and a high rate of innovation involved in products and processes of this industry. Furthermore, the manufacturing of products related to electrical and electronic industry requires several types of inputs and raw materials, many of them heavy and highly toxic metals, which increases the business concern as to its environmental responsibility and the need for innovations aimed at minimising the impacts of their activities on the environment. For data collection, it was used a structured questionnaire to collect data. The questionnaire presented multiple choice options with single answer, being used the Likert scale of five-points with the following alternatives: strongly agree, agree, neutral, disagree and strongly disagree. Data for transmission were removed from the site of the ABINEE and following the guidance from Malhotra (2006), the questionnaire was accompanied by an explanatory letter and a stamped envelope for return. The letters were sent to directors and managers of companies in order to obtain more reliable data on the adoption of innovative green practices in organisations, as well as the influence of such practices in achieving competitive advantage. The transmission occurred in the first week of October of 2011 and it was waited to return until December. 115 questionnaires returned within the stipulated time, from these, two were invalidated. Thus, there were considered 113 questionnaires (20.62% of the population) as valid. Data analysis was performed with the help of the SPSS software (version PASW Statistics 17.0). There were performed descriptive statistics procedures to verify the profile of companies and of respondents and analyse the level of adoption of innovation in green products and processes, as well as the level of adoption of the factors that lead to competitive advantage, such as frequency distribution, mean and standard deviation. To measure the relationship between independent variables and the dependent variable, there were carried out analyses of Correlation and Regression. It should be noted that the independent variables of the study are the green products innovation and the green processes innovation. Now, the dependent variable is the competitive advantage of the organisations

11 The Influence of the Green Innovation Analysis of the Results Sample characterisation Regarding the profile of the companies, there were asked informations about the time of existence, number of employees and geographic location. As for the existence time, the majority of participating companies has more than 20 years on the market, being these, 33 companies (29.5%) between years and 46 companies (41.1%) aged 30 years or more. Regarding the number of employees, the extract of greater representation in the research was of companies with employees (34.9%), followed by companies with employees (30.2%). However, it is also the high number of companies with 500 employees or more, totalling 26 companies, or 24.5% of the sample. The data suggest that most companies are of large scale, since 59.4% have 100 employees or more. As regards to the geographical spread of participating companies, more than 50% are located in the State of Sao Paulo, confirming the importance of this state as great national economic centre. In the block on the profile of the respondents, there were asked informations regarding sex, age and time of service of the participants. Regarding gender, 97 participants were males and 14 females, totalling 111 valid responses. In percentage terms, the numbers correspond to 87.4% of men and 12.6% of women. Concerning the age of the respondents, most had at the time of research between 46 to 55 years of age, represented by 38 persons (33.6% of total), followed by 34 respondents in the range between 36 and 45 years (30.1% the total), 23 respondents aged 56 years or more (20.4% of total) and 18 respondents from 26 to 35 years of age (15.9% of total). There were no respondents with 25 years of age or younger, demonstrating that the positions of leadership and management of the companies surveyed are occupied by professionals with more experience. As regards to the time of the respondents working at the company, the survey data show that 66.0% work in the company for 11 years or more, being these, 32.1% (36 respondents) between 11 to 20 years and 33.9% (38 respondents) with 21 or more years of work. Level of adoption of innovative green practices and of factors that contribute to the achievement of competitive advantage of the organisations In this topic, there are presented the means and deviations of the variables related to each construct (Table 2), which had as options a five-points Likert scale, being the higher the average, the greater the degree of agreement of the participating companies regarding the proposed affirmative. Considering a value ¼ 3:00 as an intermediate point, it can be perceived that all four variables of the construct. Innovation of green products (variables 1 to 4)

12 D. L. Arenhardt, L. F. Battistella & M. Z. Grohmann Table 2. Mean of variables that measure innovation of green products, innovation of green processes and competitive advantage of the organisation. Var. Description Average V1 The company chooses the materials of the product that produce the least amount of pollution for conducting the product development or design V2 When developing its products or processes, the company usually chooses materials that consume less energy V3 The company seeks to use the least amount of materials in the development of new products or processes V4 The company would circumspectly deliberate whether the product is easy to recycle, reuse, and decompose for conducting the product development or design V5 The manufacturing processes of the company, mostly effectively reduce the emission of hazardous substances or wastes V6 The company s manufacturing processes, mostly recycle wastes and emissions that allow them to be treated and reused V7 The manufacturing process of the company reduces the consumption of water, electricity, coal, or oil V8 The manufacturing process of the company reduces the use of raw materials V9 The company has the competitive advantage of low cost compared to other competitors V10 The quality of most products or services that the company offers is better than competitors products or services V11 The company is more capable of R&D and innovation than the competitors V12 The company has better managerial capability than the competitors V13 The company s profitability is better V14 The growth of the company exceeds that of the competitors V15 The company is a pioneer in some important fields and occupies a prominent position V16 The corporate image is better than that from its competitors achieved a high average. The variable V3 The company seeks to use the least amount of materials in the development of new products or processes received the highest average (4.40), followed by variable V2 When developing its products or processes, the company usually chooses materials that consume less energy (4.19). It is verified that the quantity of materials used in the manufacturing processes as well as power consumption reduction are the main concerns of the surveyed companies. A possible explanation may be the fact that the two variables are related to cost reduction, whether of the companies (which reduce costs while decreasing the amount of material used in their products or processes) or of the consumers (who increasingly seek products that consume less power). According

13 The Influence of the Green Innovation to Mulvaney and Robbins (2011), once the green products are produced on a large scale, their price has not tended to be larger than their non-ecological substitutes, particularly where the costs of maintenance of life of the green product are taken into consideration. This is because the responsible use of materials results in durable products that require less maintenance and/or repair and that often outlive their competitors. However, customers tend to base their investment decisions in the initial capital cost and not in the return on investment for a long time, which explains the continuing competition between green and non-green products. The four statements of the construct related to green processes innovation (variables 5 to 8) also had high scores, being that the largest was the variable V6 The company s manufacturing processes, mostly recycle wastes and emissions that allow them to be treated and reused (4.16), followed by the variable V5 The manufacturing processes of the company, mostly effectively reduce the emission of hazardous substances or wastes (4.14). Unlike the construct related to the innovation of green products, in which the variable related to recycling, reuse and decomposition of the manufactured products had the lowest average in the construct of green processes innovation, the statement about the concern of companies in relation to treatment and reuse of wastes and emissions produced during manufacturing processes had the highest average. This suggests that the responsibility for wastes is more pronounced in the aspects related to the processes than in the aspects related to the manufactured products, although the data deserves to be analysed with caution, since the average of the three statements with higher scores showed no significant variation. In an attempt to eliminate polluting wastes (and reduce the use of virgin raw materials in production processes), companies can go through several steps, starting from the incineration of wastes, passing through recycling, reaching the reuse and, finally, to a new process that does not generates (or generates much less) waste and requires less input per unit of product (Lemme, 2010). The found averages on the construct related to competitive advantage of the organisations (variables 9 to 16) did not reach as high values as those found in the constructs of green products innovation and green processes innovation. In the first two constructs, only one variable in each group had an average of less than 4.00, while the construct that measures competitive advantage, only one affirmative reached an average above this value. However, all means presented values above the midpoint. Higher means are referred to the V10 variables The quality of most products or services that the company offers is better than competitors products or services (4.11), followed by the V15 The company is a pioneer in some important fields and occupies a prominent position (3.93) and V16 The corporate image is better than that from its competitors (3.81)

14 D. L. Arenhardt, L. F. Battistella & M. Z. Grohmann The three variables suggest that companies believe offering to the market superior quality products, which are distinguished from their competitors by delivering products to market that their rivals do not yet offer, and that maybe for this reason the image of the company is recognised by consumers. To stay ahead, companies must achieve a competitive advantage more sophisticated over time, offering products and services of better quality or producing more efficiently. This is translated directly into productivity growth (Porter, 1989). The relationship between products innovation, green processes innovation and the pursuit of competitive advantage Correlation and regression analysis In order to synthesise the data and summarise the informations of the used model, it was originally performed a Factor Analysis, where it was found by analysing the commonalities that four variables did not present significant values, because they did not share at least 50% of variance with the other variables in the model. Thus, there were not considered for the analysis of correlation and regression. They were: V3, V8, V12 and V16. As each construct of the model (Green Products Innovation, Processes Innovation, and Competitive Advantage of organisations) were represented by three or more variables, it was necessary to initially transform each group of statements in a single variable, so that this single variable represents the group. The process of unification of the statements transforming them into a single variable, took into account the results of factor analysis. In this sense, to represent the construct of green products innovation there were considered only the variables: V1, V2 and V4; for the representation of the construct green processes innovation there were considered the variables: V5, V6 and V7 and for the competitive advantage of organisations, the variables: V9, V10, V11, V13, V14 and V16. Thus, after the creation of new variables, it was carried out the calculation of averages for each of them, as shown in Table 3. As can be seen in Table 3, the construct green products innovation received the mean ¼ 3:99; the construct innovation of green processes obtained the mean ¼ 4:15 and the construct competitive advantage gained 3.56 average. Thus, it is verified that the environmental attitude of the surveyed companies is more evident in activities related to manufacturing processes than in activities related to the product. According to Hayes et al. (2005), the major contribution of the innovations of the process within organisations relates to how they help to achieve a time of product release to market faster. However, the two means (of products innovation and of processes innovation) can be considered satisfactory, since they are above

15 Table 3. Means of the constructs of the model. The Influence of the Green Innovation Constructs Variables Means Innovation of green products V1, V2, V Innovation of green processes V5, V6, V Competitive advantage of the organisations V9, V10, V11, V13, V14, V the midpoint of the five-point scale, and therefore represent positive perceptions of what it was presented. The mean for the construct competitive advantage of organisations was which had the lowest value between the groups (3.56). Having drawn up the three new variables representing the constructs of the model, it was proceeded to the correlation between the groups. The method used was that of Pearson, which measures the linear association between two metric variables. The number that represents the correlation of Pearson is called correlation coefficient. It ranges from 1.00 to þ 1.00, with the zero not representing any association between the two metric variables (Hair et al., 2005). The correlation among the innovation of green products, innovation of green processes and competitive advantage of organisations is presented in Table 4. Examining, initially, the relationship between innovation of green products and innovation of green processes, it is verified that the found correlation was of This value shows that the attitude of companies to environmentally innovate in the manufacture of their products is significantly related to their willingness to environmentally innovate also in the manufacturing processes. Product innovation inevitably involves process innovation, such as the use of clean technologies, renewable energy sources, non-hazardous substances and biodegradable materials (Mulvaney and Robbins, 2011). That is, the green innovation of products and green innovation of processes go together in what is related to the attitudes of the companies in relation to their environment position. As for the relationship of green innovation to competitive advantage, it is observed that the lowest correlation was found between green products innovation and competitive advantage, with a value of However, the relationship between green processes Table 4. Correlation matrix innovation of green products, innovation of green processes and competitive advantage of the organisations. (C1) (C2) (C3) Innovation of green products (C1) 1 Innovation of green processes (C2) 0.638* 1 Competitive advantage of the organisations (C3) 0.410* 0.511* 1 *The correlation is significant at the level of 0.01 (two-tailed)

16 D. L. Arenhardt, L. F. Battistella & M. Z. Grohmann innovation and competitive advantage gained greater value, presenting Thus, it is possible to conclude that the relationship between green processes innovation and the obtention of competitive advantage is more significant than the relationship between green products innovation and the obtention of competitive advantage, although the two correlations have submitted an acceptable intensity, at a moderate level. According to Driessen and Hillebrand (2002), the main green innovations in the 1970s and 1980s can be characterised as process innovations. To ratify the results found in the correlation analysis and check how much of variance in the dependent variable is explained by the independent variables, it was used the Multiple Regression. It becomes important to remember that, based on depth theoretical referential as well as the adopted model, this study defined as the dependent variable the competitive advantage of organisations and as independent variables the innovation of green products and the innovation of green processes. Table 5 specifies the percentage of the explained variance. The informations of the Table 5 indicate that R 2 for the regression model is 0.274, which means that 27.4% of the variation of the competitive advantage can be explained from the independent variables. Furthermore, the F test of the ANOVA table of regression (used to compare the explained variance by regression for the unexplained or residual variance) showed a value of at a level of significance of The higher the F index, the more competitive variance is explained by the green innovation. The significance level of means that the chances are zero that the results of the regression model may be due to random events instead, due to a true relationship (Hair et al., 2005). However, analysing the sum of the squares of the model, it is verified that there is many unexplained variance (residual) in the dependent variable. The sum of the squares found in the regression was of and the sum of the residual squares was of , with a total variance of Thus, the percentage of unexplained variance was of 72.63% (29.57/40.71). Table 6 presents additional information on the regression analysis applied to the data collected in the survey. The data of Table 6 show with greater details which independent variable is a significant factor for predicting the probability of obtaining competitive advantage. As can be seen in the column of significance, the beta coefficient for the green Table 5. Summary of the regression model. Model R R 2 Adjusted R 2 Standard error of estimate * *Indicators: (constant), Innovation of green processes, Innovation of green products

17 Table 6. Regression coefficients of the research model. The Influence of the Green Innovation Non-standardised coefficients Standardised coefficients Model B Standard error Beta t Sig. (Constant) Innovation of Green products Innovation of Green processes Dependent variable: Competitive advantage of the organisations. processes innovation is significant (0.000) while the value for the innovation of green products was high (0.176). Furthermore, when analysing the column of standardised beta coefficient, it is verified that the green processes innovation (0.418) is more closely associated with the competitive advantage than the green products innovation (0.146). The result is consistent with the average value of for the green process innovation compared to for innovation in green products. Using the beta coefficient for the green processes innovation, it can be concluded that every time that the innovation of green processes increases by one unit, the competitive advantage of the companies increasing average units, assuming that the innovation of green products is kept constant. Thus, the results of the regression analysis confirm the results obtained in the correlation analysis. Comparison between Chen et al. (2006) and the results of this research Chen et al. (2006) whose research is used as the basis for this study, applied their survey in 232 companies in the information and electronics industries in Taiwan. Their results suggest that green product innovation and green process innovation affects positively the competitive advantage of organisations. It is found that the authors obtained confidence index greater only for green innovation processes. Cronbach s alphas calculated by the authors were: ¼ 0:701 for the performance of green product innovation, ¼ 0:714 for the performance of green process innovation and ¼ 0:800 for the competitive advantage of organisations. Already the coefficients in this study were: ¼ 0:717, ¼ 0:663 and ¼ 0:804, respectively. In general, confidence indices achieved are satisfactory and tend to improve when excluding at least one variable for each construct. Chen, Lai and Wen study also found that the size of enterprises has positive correlation with its competitive advantage, because large organisations have greater economies of scale. Regarding the regression analysis, has been found in the present study an adjusted R 2 of with a beta coefficient of for the independent variable green product innovation and for the independent variable green process

18 D. L. Arenhardt, L. F. Battistella & M. Z. Grohmann Table 7. Comparison of regression analyses using all variables of the model. Chen et al. (2006) This research Model Innovation of Green products Innovation of Green processes Standardised coefficients t Adjusted R 2 Standardised coefficients t Adjusted R * ** *p < 0:05, **p < 0:01. innovation (using all variables of the model). Already the results obtained in the search of Chen et al. (2006) was 0.346, and respectively, as shown in Table 7. Chen et al. (2006) concludes by saying that the investment in innovation in green product innovation and green process innovation not only avoids protests of environmentalists and sanctions provided by law, but also helps organisations to develop new market opportunities and increase their competitive advantage; thus being beneficial investment in green innovation for businesses. Conclusions This study aimed to verify how the adoption of green innovations influences in the obtention of competitive advantage of the companies in the electrical and electronic Brazilian sectors. The results showed that the biggest concern regarding green products innovation refers to the use of less material at the time of manufacturing, while in the innovation of green processes waste recycling and emissions that allow treatment and reuse were the items with the highest average. It is perceived that in both cases, besides environmental concerns, there is also the economic factor in practices with the highest means, since reducing the use of materials at the time of manufacturing and adopting processes that allow the recycling, the treatment and the reuse, the company will be also reducing its costs. This finding is in agreement with the defending of Savitz (2007) when he describes that the company s management includes reduction of costs, improvement of productivity, elimination of wastes and guarantee of access to sources of capital and to lower costs. According to the author, successful companies are those that have already assimilated the concept of eco-efficiency, which means the reduction of the amount of resources used for the production of goods and services, which increases the

19 The Influence of the Green Innovation company s profits while reducing its environmental impact. Also it was found during the analysis of the results, that higher levels of adoption of innovative green practices are checked in already established companies in the market (with 20 or more years of existence and with 500 employees or more). Large companies usually have specific sectors responsible for the environmental management of their activities, apart from certifications that attest its environmental and social concerns as a way to open markets for their products. This is the case of ISO and OHSAS Still, large companies tend to suffer higher pressures from society and from the media regarding the preservation of natural resources than small and medium companies, which contributes to the adoption of green practices to be incorporated into the day-to-day of these organisations. The existing laws governing the environmental practices can also be considered fundamental in industry decisions regarding their innovative activities. While the concern for the preservation of natural resources has been identified by companies as the major motivation for the adoption of green practices, legal restrictions also influence for environmental business practices. In this regard, it is cited in Brazil, the National Solid Waste Policy, which makes the companies responsible for the generated waste, and in Europe the Waste Electrical and Electronic Equipment (WEEE), which provides, among other measures, the collection and reverse logistics for the consumer to return its e-waste free of charge to manufacturers. These restrictions forced Brazilian companies to adapt themselves and to innovate in an environment form so they can participate in global markets. The found results were similar to the findings by Chen et al. (2006), in the companies of the information and electronics sectors in Taiwan, since they demonstrated that investment in environmental innovations impacts positively on the results of organisations compared to their competitors. Brazil and Taiwan are growing countries that need to adapt their processes and products to the legal and environmental requirements in order to expand their markets. It follows therefore that both the green product innovation (H1) and the green process innovation (H2) positively affect the search for competitive advantage of companies in the electrical and electronic Brazilian sectors, albeit in a moderate way. It was also found that green process innovations are more significant to achieve competitive advantage than the innovations of green products. During the research, there were identified a number of suggestions for future studies: (1) although it has been found that the adoption of green processes innovations influence more significantly the search for competitive advantage than green products innovations, the collected data did not allow the identification of which processes of the organisation have highest incidence of environmental innovations, (2) further discussion on the used model and development of new models on the subject, and (3) the extension of the research into other sectors of