In recent years, firms have been increasingly scrutinized for wrongdoing concerning the environment.
Investors discount share prices of polluting companies, governments introduce policies that place a cost on emissions, and consumers consider a company's environmental philosophy when purchasing products and services.
A possible response to these mounting pressures is environmental innovation - the development of products, processes and services aimed at reducing environmental harm.
In comparison with other practices, environmental innovation is riskier and requires greater financial commitment. But in the long term it usually accrues returns.
IESE Professor Pascual Berrone, along with Andrea Fosfuri, Liliana Gelabert and Luis R. Gomez-Mejia, studied the impact of institutional pressures on firms' environmental innovation in the paper "Necessity as the Mother of 'Green' Inventions: Institutional Pressures and Environmental Innovations," which was published in the Strategic Management Journal.
Read full article on the IESE Insight website.