Hou, Yu ing; Bello-Pin ado, Alejand o; Ga cía-Ma co, Te esa
A icle
Pay o be g een? The e ec o co po a e social
esponsibili y con ac ing on g een inno a ion
pe o mance
BRQ Business Resea ch Qua e ly
P o ided in Coope a ion wi h:
Asociación Cien í ica de Economía y Di ección de Emp esas (ACEDE), Mad id
Sugges ed Ci a ion: Hou, Yu ing; Bello-Pin ado, Alejand o; Ga cía-Ma co, Te esa (2025) : Pay o be
g een? The e ec o co po a e social esponsibili y con ac ing on g een inno a ion pe o mance,
BRQ Business Resea ch Qua e ly, ISSN 2340-9444, Sage Publishing, London, Vol. 28, Iss. 2, pp.
421-437,
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In oduc ion
Conce n abou he impac o human ac i i ies on he
en i onmen has been g owing among en e p ises and
socie y o e he las wo decades. To demons a e hei
commi men o en i onmen al and social esponsibili y,
many companies a e cu en ly inco po a ing co po a e
social esponsibili y (CSR) c i e ia in hei s a egies.
Mo eo e , many companies a e now in eg a ing CSR c i-
e ia in o execu i e compensa ion. This p ac ice is gain-
ing impo ance because i can mo i a e senio execu i es
o align en i onmen al conce ns wi h business goals
(Flamme e al., 2019; Singh e al., 2022; Yuan & Cao,
2022). This helps companies o build compe i i e ad an-
ages and enhance hei co po a e images (Flamme
e al., 2019; Focke, 2022; Peng, 2020; Radu & Smaili,
2022; Tsang e al., 2021). Fo ins ance, BP, he B i ish
mul ina ional oil and gas company, has inco po a ed
s a di e si y and heal h and sa e y in o hei di ec o ’s
emune a ion. Simila ly, ood g oup Nes lé has linked
15% o he annual bonuses o he CEO, CFO, and o he
membe s o he execu i e boa d o en i onmen al, social,
and go e nance (ESG) objec i es. Meanwhile, Schneide
Elec ic has included clima e change and ene gy usage
in o i s bonus plan. In 2020, one- i h o he o al incen-
i e sala y o Jean-Pascal T icoi e, Schneide Elec ic’s
Chai man and CEO, was due o his e o s o hi ESG
Pay o be g een? The e ec o co po a e
social esponsibili y con ac ing on g een
inno a ion pe o mance
Yu ing Hou , Alejand o Bello-Pin ado
and Te esa Ga cía-Ma co
Abs ac
This s udy examines how he in eg a ion o co po a e social esponsibili y (CSR) c i e ia in execu i e compensa ion
can imp o e g een inno a ion pe o mance in Eu opean coun ies. Using agency heo y and s akeholde heo y, and a
da abase o 5,603 i m-yea obse a ions om Eu opean companies in he pe iod 2012–2021, we ind ha CSR aligns he
in e es s o senio execu i es wi h he company’s g een inno a ion goals h ough g een compensa ion con ac s. We
also explo e he indi ec e ec in his ela ionship and e eal ha he implemen a ion o g een p ac ices media es he
impac o CSR con ac ing on g een inno a ion pe o mance. These indings indica e ha CSR con ac ing as an e ec i e
go e nance mechanism could be s eng hened by g een p ac ices, such as educing esou ce use, wa e e iciency,
ene gy euse, emission educ ion and pollu ion p e en ion. This s udy o e s aluable insigh s o senio execu i es and
policymake s who wish o manage CSR ini ia i es and g een p ac ices o imp o e hei g een inno a ion pe o mance.
JEL CLASSIFICATION: Q56 M12
Keywo ds
Co po a e social esponsibili y, g een execu i e compensa ion, g een inno a ion pe o mance, g een p ac ices, pa allel
mul iple media o model
Ins i u e o Ad anced Resea ch in Business and Economics (INARBE),
Public Uni e si y o Na a a, Pamplona, Spain
Co esponding au ho :
Yu ing Hou, Ins i u e o Ad anced Resea ch in Business and
Economics (INARBE), Public Uni e si y o Na a a, A . Ca aluña, s/n,
Pamplona 31006, Na a a, Spain.
Email: [email p o ec ed]
1189825BRQ0010.1177/23409444231189825Business Resea ch Qua e lyHou e al.
esea ch-a icle2023
Regula Pape
422 Business Resea ch Qua e ly 28(2)
a ge s. These a e only some examples o an inc easing
numbe o companies who ha e in oduced simila com-
pensa ion s uc u es.
The li e a u e has poin ed ou ha CSR con ac ing
mainly p omo es he long- e m de elopmen o a i m
h ough wo mechanisms. Fi s , inco po a ing CSR con-
ac ing can educe agency p oblems be ween execu i es
and sha eholde s. CSR con ac ing p omo es manage s o
make long- e m in es men s ha bene i he sha eholde s’
in e es s (Ca aco e al., 2020; Focke, 2022; Tsang e al.,
2021). Second, CSR execu i e compensa ion is a go e n-
ance ool ha encou ages manage s o manage wi h he
needs and expec a ions o di e en s akeholde s in mind
(e.g., cus ome s, employees, go e nmen s, and communi-
ies), which ensu es ha companies will imp o e hei
social and en i onmen al pe o mance o c ea e long- e m
alue (Flamme e al., 2019; Flamme & Kacpe czyk,
2016; Singh e al., 2022).
A ew s udies ha e explo ed he impac o in eg a ing
CSR goals in o execu i e compensa ion (he eina e
e e ed o as CSR con ac ing) on co po a e pe o mance.
Flamme and Luo (2017) ound ha CSR incen i es a he
employee le el p omo e a mo e engaged and p oduc i e
wo k o ce, while Flamme e al. (2019) ound ha CSR
c i e ia in execu i e compensa ion p oduces posi i e
e ec s on long- e m o ien a ion, social and en i onmen al
ini ia i es, and g een inno a ions.
This a icle aims o analyze he impac o CSR con-
ac ing on g een inno a ion pe o mance. To do so, i
builds upon he esea ch o Flamme e al. (2019) and
Flamme and Luo (2017) by analyzing he media ing
e ec o g een p ac ices on he ela ionship be ween
CSR con ac ing and g een inno a ion pe o mance. By
adop ing g een ini ia i es ha aim o educe esou ces
use and emissions, companies can ake an in e media e
s ep owa d enhancing hei g een inno a ion pe o -
mance and ad ance he b oade goal o p omo ing co -
po a e sus ainabili y.
G een inno a ion pe o mance e e s o he abili y o
an o ganiza ion o indus y o de elop and implemen
new echnologies, p ocesses and p oduc s ha a e en i-
onmen ally sus ainable and which con ibu e o he
educ ion o nega i e en i onmen al impac s (Nadeem
e al., 2020; Shahzad e al., 2021). Howe e , in es ing in
g een inno a ion ac i i ies is associa ed wi h high le els
o unce ain y because i o en akes a long ime un il i s
ou comes ealize hei ull alue (Be one & Gomez-
Mejia, 2009). Resea ch has shown ha inco po a ing
CSR c i e ia in o execu i e compensa ion can help mo i-
a e execu i es o ocus mo e on long- e m alues and
sus ainabili y goals, which can posi i ely in luence
g een inno a ion pe o mance (Flamme e al., 2017;
Focke, 2022; Tsang e al., 2021). This app oach can
align he in e es s o execu i es wi h hose o sha ehold-
e s and o he s akeholde s, which leads o a s onge
commi men o sus ainabili y and en i onmen al pe o -
mance. Mo eo e , companies ha p io i ize g een inno-
a ion and en i onmen al sus ainabili y can bene i om
inc eased ope a ional e iciency, cos sa ings and a
s onge epu a ion o esponsible business p ac ices
(Chiou e al., 2011; Schiede ig e al., 2012). Ne e heless,
despi e he po en ial bene i s o g een inno a ion pe o -
mance, he speci ic p ac ices ha execu i e can use o
achie e be e g een inno a ion pe o mance a e no ye
widely demons a ed in he li e a u e (Che a i e al.,
2018; Shahzad e al., 2021; Su e al., 2020).
F om he heo e ical pe spec i e, using bo h agency
heo y and s akeholde heo y, we p opose ha CSR con-
ac ing has bo h di ec and indi ec e ec s on g een inno-
a ion pe o mance, wi h g een p ac ices playing he ole
o media o in he ela ionship. Empi ically, we cons uc a
longi udinal da abase om Thomson Reu e s’ Re ini i
Eikon ( o me ly Asse 4), which consis s o 5,603 i m-
yea obse a ions om 28 Eu opean coun ies in he pe iod
o 2012–2021. Al hough ecen s udies ha e employed
ou pu -o ien ed measu es, such as pa en s, o assess g een
inno a ion pe o mance (Flamme e al., 2019 and Tsang
e al., 2021), in his s udy, g een inno a ion is a complex
and mul i ace ed concep ha in ol es a ange o eco-
nomic, en i onmen al, and social conside a ions. To
add ess his challenge, we employ a holis ic g een inno a-
ion me ic ha co e s bo h inpu -o ien ed and ou pu -o i-
en ed indica o s (e.g., g een inno a ion a ge s, g een
inno a ion ini ia i es, g een inno a ion p oduc s, g een
inno a ion p ocess, and g een inno a ion asse s), which
p o ides a comp ehensi e iew o he economic, en i on-
men al, and social impac o a company’s g een inno a ion
ac i i ies.
Using a Tobi model, ou empi ical indings con i m
ha CSR con ac ing has a posi i e impac on g een inno-
a ion pe o mance. Ou mul iple media o analysis also
demons a es ha g een p ac ices, as measu ed by esou ce
use p ac ices and emissions p ac ices, media e he impac
o CSR con ac ing on g een inno a ion pe o mance.
These indings suppo ou heo e ical a gumen s ha CSR
con ac ing enhances g een inno a ion pe o mance by
incen i izing manage s o adop long- e m ho izons and
engage in g een p ac ices.
This s udy con ibu es o he li e a u e in se e al ways.
Fi s , we used a la ge sample o small-, medium-, and
la ge-sized companies ope a ing in di e en Eu opean
Union (EU) coun ies. Al hough he EU emains he la g-
es economic bloc and he mos pollu ing economy in he
wo ld, he exis ing s udies ha e mos ly ocused on he
Uni ed S a es (De chi e al., 2021; Flamme e al., 2019),
India (Sugan hi, 2019), and China (Waheed & Zhang,
2022; Yuan & Cao, 2022). Fu he mo e, Eu opean coun-
ies play a c i ical ole in suppo ing he implemen a ion
o he Uni ed Na ions (UN) 2030 Agenda in i s membe
s a es h ough policy coo dina ion, unding, and echnical
Hou e al. 423
assis ance. P e ious s udies ha e ocused solely on la ge
companies, such as hose in he SandP 500 (Flamme e al.,
2019; Qin & Yang, 2022). Mo eo e , ou sample co e s
he pe iod om 2012 o 2021, which p o ides a mo e cu -
en and obus analysis o he CSR con ac ing–g een
inno a ion pe o mance ela ionship.
Second, his s udy con ibu es by in oducing CSR con-
ac ing as a c i ical an eceden o g een inno a ion pe o -
mance. Despi e he g owing impo ance o g een
inno a ion, he e emains a lack o esea ch on he an e-
ceden s o g een inno a ion a he execu i e le el (Ka imi
Takalo e al., 2021). This s udy p o ides aluable insigh s
in o he ac o s ha d i e g een inno a ion pe o mance a
he execu i e le el. I also in oduces a new cons uc o
CSR con ac ing ha de ines he ex en o CSR c i e ia in
ela ion o execu i e compensa ion as a con inuum. This
app oach acknowledges ha di e en le els o CSR-
con ingen execu i e compensa ion may lead o a ying
deg ees o g een inno a ion ou comes, which is in con as
o p e ious s udies ha ea CSR con ac ing as a bina y
cons uc (e.g., Abdelmo aal & Abdel-Kade , 2016;
Flamme e al., 2019; Focke, 2022).
Thi d, his s udy sheds ligh on he mechanisms h ough
which CSR con ac ing can lead o be e g een inno a ion
pe o mance. While he e is a clea end owa d including
CSR componen s in execu i e compensa ion (Focke,
2022; Haque & N im, 2020), li le is known abou he
p ac ices h ough which hese execu i es can achie e
g een inno a ion goals. By examining he media ing ole
o g een p ac ices, speci ically esou ce use p ac ices and
emissions p ac ices, ou indings emphasize he need o
o ganiza ions o adop sus ainable and eco- iendly busi-
ness p ac ices. This adds o he highly ele an li e a u e
on he ela ionship be ween CSR con ac ing and g een
inno a ion pe o mance.
Finally, his s udy employs Tobi pos -es ima ion ech-
niques o ob ain he ma ginal e ec o independen a ia-
bles on he obse ed dependen a iable. This p o ides
mo e accu a e es ima es ega ding he e ec o CSR con-
ac ing on g een inno a ion pe o mance. Fu he mo e,
mos p e ious s udies ha ha e in es iga ed he media ion
e ec ha e elied on c oss-sec ional designs (Aguinis
e al., 2017; Radu & Smaili, 2022). Howe e , some schol-
a s ha e sugges ed ha media o models wi h panel da a
can p oduce mo e unbiased es ima es han c oss-sec ional
da a because hey in ol e he passage o ime (Maxwell &
Cole, 2007).
The emainde o his a icle p oceeds as ollows.
Sec ion “Theo e ical amewo k and hypo heses de elop-
men ” ou lines he heo y and hypo heses de elopmen .
Sec ion “Da a and me hodology” p esen s he da a and
me hodology. Sec ion “Supplemen a y analyses and
obus ness es ” desc ibes he supplemen a y analyses and
obus ness es s. Finally, he discussion and conclusion a e
p o ided in sec ion “Discussion and conclusion.”
Theo e ical amewo k and
hypo heses de elopmen
CSR con ac ing and g een inno a ion
pe o mance
Unlike adi ional execu i e compensa ion, which p ima -
ily ocuses on inancial goals and pe quisi es (Mu phy,
1999), CSR con ac ing p o ides a holis ic unde s anding
o execu i e compensa ion by linking execu i e compen-
sa ion o en i onmen al and social pe o mance (Flamme
e al., 2017; Hong e al., 2016; Tsang e al., 2021). I con-
ends ha execu i e compensa ion should con ibu e no
only o he achie emen o economic goals bu also o he
long- e m in e es s and sus ainabili y o he company
(Ca aco e al., 2020; Flamme e al., 2019; Focke, 2022).
In addi ion, due o he sepa a ion o owne ship and man-
agemen , he in e es s o sha eholde s may di e om
hose o a company’s senio execu i es, who may be
inclined o p io i ize sho - e m p o i s o e long- e m
sha eholde alue. Fu he mo e, he in eg a ion o CSR
c i e ia in o execu i e compensa ion can align he in e es s
o companies and hei manage s (Adu e al., 2022;
Flamme , 2013; Focke, 2022). CSR con ac ing can also
aise en i onmen al and social awa eness and can p omo e
senio execu i e esponsi eness o a wide ange o s ake-
holde s, he eby es ablishing legi imacy and co po a e
epu a ion (Flamme e al., 2019; Singh e al., 2022). In
his sense, execu i e pe o mance should be assessed
based on bo h inancial and non- inancial pe o mance c i-
e ia, such as CSR me ics.
G een inno a ion e e s o a se o measu es ha aim o
mi iga e he nega i e impac o p oduc ion and ope a ions
on he en i onmen . These measu es can ake he o m o
imp o emen s in echnologies, p oduc s, se ices, o gani-
za ional s uc u es o managemen models and a e c ucial
o gaining a compe i i e ad an age and achie ing long-
e m g ow h (Asadi e al., 2020; Ka imi Takalo e al., 2021;
Nadeem e al., 2020). As a ela i ely new a ea o esea ch
wi hin he ield o co po a e inno a ion, g een inno a ion
pe o mance has a ac ed inc easing esea ch in e es
(K aus e al., 2020; Phung e al., 2023; Rehman e al.,
2021). Fo ins ance, schola s ha e analyzed how en i on-
men al s a egies (Song & Yu, 2018), dynamic capabili ies
(Yousa , 2021; Yuan & Cao, 2022) o s akeholde p essu e
(Singh e al., 2022) a ec g een inno a ion. Howe e , a
ew esea che s ha e explo ed how a g een incen i e can
a ec g een inno a ion pe o mance. The e o e, he main
objec i e o his esea ch is o examine and analyze he
ela ionship be ween CSR con ac ing and g een inno a-
ion pe o mance.
P e ious esea ch on he ela ionship be ween execu-
i e compensa ion and co po a e pe o mance has been
i mly oo ed in agency heo y (Jensen & Meckling, 1976)
and s akeholde heo y (F eeman, 1984). Acco ding o
424 Business Resea ch Qua e ly 28(2)
agency heo y, CSR con ac ing is expec ed o mi iga e
agency con lic s be ween sha eholde s and execu i es
ela ed o social and en i onmen al issues. In o he wo ds,
g een inno a ion is cha ac e ized by high capi al in es -
men , long p o i abili y cycles, high isk, and unce ain y,
all o which may discou age manage s om unde aking
his ac i i y due o hei isk-a e se na u e and p e e ence
o sho - e m in e es s o e long- e m bene i s (Flamme
e al., 2017). Howe e , sha eholde s a e gene ally consid-
e ed o be isk neu al because hey can a oid isk by
di e si ying in es men s and hey ea ha execu i es may
p io i ize isks educ ion o e he company’s long- e m
bene i (Meh an, 1995). The e o e, a well-s uc u ed exec-
u i e compensa ion con ac ha in eg a es CSR c i e ia
can shi he manage s’ a en ion owa d a long- un o ien-
a ion and imp o e he i m’s p o i abili y by adop ing
inno a i e p oduc ion me hods and e icien use o
esou ces (De chi e al., 2021; Nadeem e al., 2020; Phung
e al., 2023).
S akeholde heo y sugges ha companies ha e a
esponsibili y o mee he needs o hei s akeholde s and
CSR con ac ing can mo i a e senio execu i es o be
esponsi e o a b oad ange o s akeholde s, which is c u-
cial o long- e m success (Waheed e al., 2020; Waheed &
Zhang, 2022). Inc easingly, cus ome s a e becoming mo e
en i onmen ally and socially conscious. They also end o
p e e eco- iendly p oduc s, e en i hey a e mo e expen-
si e (Cos a & Menichini, 2013; Kuma e al., 2017). By
in es ing in g een inno a ion, i ms ha in eg a e CSR
in o execu i e compensa ion can a ac and e ain cus om-
e s, enhance hei co po a e image and b and loyal y, and
ul ima ely imp o e p o i abili y (De chi e al., 2021;
Flamme & Kacpe czyk, 2016).
Go e nmen egula ions on en i onmen al issues a e
g owing, and companies mus comply wi h exis ing egu-
la ions while also an icipa ing new ends and changes in
egula ions ha may a ec hei co po a e s a egies and
ac ions (Shao e al., 2020; Wu e al., 2020). En i onmen al
and local communi y p essu es a e also di ec ing compa-
nies o ocus on sus ainabili y and long- e m de elopmen ,
which may be less salien bu inancially signi ican o
i m ou comes in he long e m (Flamme e al., 2019).
CSR can also be used as a go e nance ool o employ-
ees, which p omo es hei in ol emen in eco- iendly
ac i i ies and educes ad e se beha io in he wo kplace
(Flamme & Luo, 2017; Gue ci e al., 2015). When a
company is pe cei ed o be commi ed o CSR engage-
men , i can a ac and e ain good employees and p o-
mo e hei job sa is ac ion, he eby inc easing success in
g een inno a ion (Sugan hi, 2019; Tan & Zhu, 2022;
Tsang e al., 2021). The e o e, we a gue ha in eg a ing
CSR c i e ia in o execu i e compensa ion incen i izes
senio execu i es o adop a long- e m o ien a ion and
gene a es be e g een inno a ion pe o mance o he
company. Acco dingly, we p opose ha :
Hypo hesis 1. CSR con ac ing has a posi i e e ec on
g een inno a ion pe o mance.
The indi ec e ec be ween CSR con ac ing
and g een inno a ion pe o mance
The emune a i e consump ion o na u al esou ces and
elease o ha m ul emissions esul ing om economic
de elopmen place an eno mous and g owing bu den on
he clima e and en i onmen (Sugan hi, 2019; Uni ed
Na ions, 2018; Yousa , 2021). To add ess his challenge,
g een inno a ion has gained signi ican a en ion in ecen
yea s. Howe e , o ganiza ions s ill ace a signi ican chal-
lenge in achie ing g een inno a ion goals due o a lack o
implemen a ion o g een p ac ices (Che a i e al., 2018;
Shahzad e al., 2021).
G een p ac ice e e s o he ac ions and s a egies ha
o ganiza ions unde ake o educe hei en i onmen al
impac (Ryoo & Koo, 2013). In addi ion, he impo ance o
senio execu i es in se ing and implemen ing g een p ac-
ices has been widely ecognized in he li e a u e. S udies
by Adu e al. (2022), Phung e al. (2023), and Tsang e al.
(2021) ha e shown ha he conce ns and engagemen s o
senio execu i es a e posi i ely ela ed o he speed and
scope o hei i m’s en i onmen al esponses. As leade s
o hei o ganiza ions, senio execu i es hold he powe o
alloca e esou ces, se p io i ies and mo i a e employees,
as well as in luence s akeholde s and pa ne s o adop sus-
ainable p ac ices (Sha ma & Hen iques, 2005). Th ough
he adop ion o CSR con ac ing, senio execu i es can
os e a cul u e o en i onmen al esponsibili y wi hin
hei o ganiza ions. This can lead o inc eased employee
engagemen and mo i a ion o emb ace g een p ac ices,
which ul ima ely d i es p og ess owa d co po a e sus ain-
abili y (Flamme & Luo, 2017). In addi ion, senio execu-
i es can le e age hei in luence o encou age pa ne s
and he o he s akeholde s o adop sus ainable p ac ices,
which leads o a ipple e ec h oughou hei indus ies
(Ho e al., 2022; Sha ma, 2000).
P e ious s udies sugges ha o ganiza ions ha p io -
i ize CSR and adop g een p ac ices end o be mo e e ec-
i e in c ea ing and sus aining inno a i e beha io s, o
he ollowing easons. Fi s , g een p ac ices such as ene gy
e iciency, esou ce educ ion, and sus ainable sou cing
can help companies sa e cos s and imp o e hei bo om
line, which can ee up esou ces o in es men in g een
inno a ion (Yousa , 2021; Yuan & Cao, 2022). Second,
companies ha p io i ize g een p ac ices end o ha e a
cul u e ha alues sus ainabili y and en i onmen al
esponsibili y, which can os e c ea i i y and inno a ion
in his a ea (Ghise i & Rennings, 2014). Thi d, consume s
and o he s akeholde s a e inc easingly demanding en i-
onmen ally sus ainable p oduc s and se ices, which can
c ea e a ma ke incen i e o companies o inno a e in his
a ea (Waheed e al., 2020). Finally, go e nmen policies
Hou e al. 425
and egula ions ha aim o educe en i onmen al impac
can also encou age g een inno a ion by p o iding incen-
i es and suppo o companies ha in es in sus ainable
p ac ices (Wu e al., 2020).
In summa y, we con end ha CSR con ac ing is an
impo an mo i a o o senio execu i es o engage in g een
p ac ices and achie e g ea e g een inno a ion pe o mance.
The e o e, he ollowing hypo hesis is p oposed:
Hypo hesis 2. CSR con ac ing imp o es g een inno a-
ion pe o mance h ough he adop ion o g een p ac ices
( esou ce use p ac ices and emissions p ac ices).
Based on he hypo heses, he heo e ical model o his
s udy is shown in Figu e 1.
Da a and me hodology
Sample and da a collec ion
We cons uc ed ou sample using he in o ma ion om
Thomson Reu e s’s Re ini i Eikon ( o me ly Asse 4),
which o e s one o he mos comp ehensi e ESG da a-
bases in he indus y and co e s o e 80% o he global
ma ke cap ac oss mo e han 450 di e en ESG me ics.
Re ini i has ESG da a co e age o mo e han 10,000
global companies ac oss 76 coun ies, and i spans majo
global and egional indices. ESG Sco es om Re ini i a e
designed o anspa en ly and objec i ely measu e he ela-
i e ESG pe o mance, commi men , and e ec i eness o
a company ac oss 10 main hemes (e.g., esou ce use,
emissions, en i onmen al p oduc inno a ion, human
igh s, and sha eholde s) based on publicly epo ed da a.
This da abase iden i ies companies ha demons a e an
ac i e and posi i e con ibu ion o sus ainable de elop-
men , and i has been widely used in p e ious s udies
(Basse i e al., 2021; O azalin & Baydaule o , 2020;
Papagiannakis e al., 2019).
Ou ini ial sample consis ed o 963 i ms om 28
Eu opean coun ies. A e conside ing missing da a
equi ed o model design, we cons uc ed a panel o 909
i ms om Eu ope. The inal sample o hypo heses es -
ing consis ed o 5,603 i m-yea obse a ions o i ms
ope a ing in 11 di e en indus ies in 28 Eu opean coun-
ies om 2012 o 2021. Table 1 shows he dis ibu ion
o he companies in he sample among coun ies. The
Uni ed Kingdom (33%) had he mos obse a ions, ol-
lowed by F ance (13%), Ge many (9%), and Swi ze land
(7%). In addi ion, he sample consis ed o companies
om 11 di e en sec o s ha p ima ily belong o he ol-
lowing indus ies: (1) indus ials, (2) consume disc e-
iona y, (3) inancials, (4) basic ma e ials, and (5)
consume s aples. Table 2 shows he dis ibu ion o he
sample by sec o ype.
Va iable measu emen
Dependen a iable
G een inno a ion pe o mance (GIPe ). Da a on g een
inno a ion pe o mance we e ex ac ed om he Re ini i
Eikon da abase, which p o ides a eliable and comp ehen-
si e measu e o a company’s en i onmen al inno a ion
pe o mance. The a iable “en i onmen al inno a ion
sco e,” which is widely adop ed in p e ious s udies, is a
c ucial indica o o a company’s g een inno a ion pe o -
mance (Nadeem e al., 2020; Phung e al., 2023). I anges
om 0 o 100 and e lec s a company’s abili y o de elop
and implemen new echnologies, p ocesses, and p oduc s
ha a e en i onmen ally sus ainable and con ibu e o he
educ ion o nega i e en i onmen al impac s. This sco e
is essen ial in e alua ing a company’s commi men o sus-
ainabili y, which is inc easingly becoming a c i ical con-
side a ion o in es o s, cus ome s, and o he s akeholde s.
Independen a iables
CSR con ac ing. Consis en wi h p e ious esea ch
(Abdelmo aal & Abdel-Kade , 2016; Ba aiba -Diez
e al., 2019; De chi e al., 2021; Focke, 2022), we
employed he “Sus ainabili y Compensa ion Incen i e”
om he Re ini i Eikon da abase ha e lec s he in e-
g a ion o CSR c i e ia in o senio execu i e compensa-
ion packages. A con inuous a iable is used o cap u e
he p esence o execu i e compensa ion associa ed wi h
CSR c i e ia, which measu es he ex en o which senio
execu i e compensa ion is linked o CSR and sus ain-
abili y goals. I anges om 0 o 100, wi h highe sco es
ep esen ing highe le els o implemen a ion o CSR
con ac ing. To assess a i m’s g een p ac ices, we u i-
lized wo subdimensional scales: esou ce use p ac ices
and emissions p ac ices.
Resou ce use p ac ices (RUP a). I measu es a i m’s
implemen a ion o g een p ac ices o educe hei con-
sump ion o ma e ials, ene gy, and wa e , while seek-
ing mo e sus ainable solu ions h ough be e supply
Figu e 1. Concep ual esea ch amewo k.
426 Business Resea ch Qua e ly 28(2)
chain managemen . This index is de e mined by six key
p ac ices: esou ce educ ion, wa e e iciency, ene gy
e iciency, en i onmen al supply chain, en i onmen al
ma e ial sou cing, and en i onmen al managemen c i e-
ia. Each i m is assigned a sco e o 1 i hey ha e engaged
in each esou ce use p ac ice du ing he gi en yea and is 0
o he wise. The ange o sco es o esou ce use p ac ices is
0–6, wi h highe sco es indica ing a highe le el o adop-
ion o g een p ac ices ela ed o esou ce use.
Emissions p ac ices (EP a). I measu es a i m’s imple-
men a ion o g een p ac ices o educe en i onmen al
emissions du ing p oduc ion and ope a ions. This index
is calcula ed by adding sco es o six i ems: emission
educ ion, clima e change oppo uni ies, was e educ ion,
en i onmen al es o a ion, ISO 14000, and en i onmen al
in es men ini ia i e. A i m’s absolu e sco e o emissions
p ac ices can ange om 0 (poo adop ion o emissions
p ac ices) o 6 (good adop ion o emissions p ac ices).
We calcula ed he C onbach’s alpha o ensu e he
alidi y o he esou ce use p ac ices and emissions p ac-
ices cons uc . The alpha alues o each subdimension
we e ound o be 0.789 and 0.665, espec i ely. These
alues indica e ha he i ems wi hin each subdimension
a e consis en wi h each o he , which sugges s ha he
measu e is eliable. Appendix 1 p o ides u he de ails
abou each i em o esou ce use p ac ices and emissions
p ac ices.
Con ol a iables. In acco dance wi h p e ious s udies, we
in oduced se e al i m cha ac e is ics ha a e known o
be associa ed wi h CSR con ac ing and he dependen
a iable o in e es (Flamme e al., 2019; Focke, 2022;
Shahzad e al., 2021).
Fi s , we included i m size as ou con ol a iable,
which was measu ed by he na u al loga i hm o he o al
numbe o ull- ime employees. P e ious s udies ha e
p o ed ha la ge i ms ace mo e p essu e om s akehold-
e s and ha e mo e esou ce a ailabili y o de elop sus ain-
abili y (O azalin & Baydaule o , 2020; Papagiannakis
e al., 2019). Second, we included inancial p o i abili y as
a con ol a iable because a company’s inancial capaci y is
di ec ly p opo ional o i s en i onmen al in es men s,
which a e undamen al o imp o ing g een inno a ion pe -
o mance (Flamme e al., 2019; Focke, 2022; Peng, 2020;
Radu & Smaili, 2022; Tsang e al., 2021). We used e u n
on asse s (ROA) as a inancial p o i abili y indica o and
calcula ed i by di iding income a e axes by a e age o al
asse s, exp essed as a pe cen age (Maas, 2018; Phung e al.,
2023). Thi d, we con olled he inancial le e age
(Le e age) o cap u e he abili y o a company o make p o-
ac i e en i onmen al in es men s and inc ease en i on-
men al engagemen . Following p e ious s udies (Aslam
e al., 2021; Flamme e al., 2019), we measu ed le e age
as he a io o o al deb o o al asse s (Tsang e al., 2021).
To mi iga e he impac o ou lie s, all o he a ios a e win-
so ized a 5 h and 95 h pe cen iles o hei empi ical dis i-
bu ion. Finally, we included yea ixed e ec s in he model
because he e a e di e ences in he implemen a ion o sus-
ainable de elopmen s a egies and p ac ices ac oss ime
(Flamme e al., 2019; Tsang e al., 2021). Table 3 summa-
izes he de ini ions o key esea ch a iables.
Table 1. Coun y dis ibu ion o sample.
Coun y F equency Pe cen age Cumula i e
Aus ia 62 1.11 1.11
Belgium 120 2.14 3.25
Cyp us 13 0.23 3.48
The Czech Republic 6 0.11 3.59
Denma k 106 1.89 5.48
Finland 123 2.20 7.67
F ance 749 13.37 21.04
Ge many 492 8.78 29.82
G eece 15 0.27 30.09
Gue nsey 7 0.12 30.22
The Republic o I eland 180 3.21 33.43
Isle o Man 15 0.27 33.70
I aly 259 4.62 38.32
Je sey 28 0.50 38.82
Liech ens ein 3 0.05 38.87
Luxembou g 22 0.39 39.26
Mal a 5 0.09 39.35
The Ne he lands 209 3.73 43.08
No way 96 1.71 44.80
Poland 58 1.04 45.83
Po ugal 38 0.68 46.51
Romania 10 0.18 46.69
Russia 101 1.80 48.49
Slo ak Republic 1 0.02 48.51
Spain 286 5.10 53.61
Sweden 366 6.53 60.15
Swi ze land 381 6.80 66.95
The Uni ed Kingdom 1,852 33.05 100.00
To al 5,603 100.00
Table 2. Sec o dis ibu ion o sample.
ICB F equency Pe cen age Cumula i e
Basic ma e ials 513 9.16 9.16
Consume disc e iona y 950 16.96 26.11
Consume s aples 368 6.57 32.68
Ene gy 310 5.53 38.21
Financials 856 15.28 53.49
Heal h ca e 316 5.64 59.13
Indus ials 1,253 22.36 81.49
Real es a e 332 5.93 87.42
Technology 283 5.05 92.47
Telecommunica ions 143 2.55 95.02
U ili ies 279 4.98 100.00
To al 5,603 100.00
ICB: Indus y Classi ica ion Benchma k.
Hou e al. 427
Desc ip i e s a is ics and co ela ions
Table 4 p esen s he desc ip i e s a is ics o he s udied
a iables. The sample companies achie ed an a e age
sco e o 36 ou o 100 o g een inno a ion pe o mance,
which indica es ha he e is signi ican po en ial o
imp o emen . Al hough he companies sco ed sligh ly
be e in de eloping CSR- ela ed execu i e compensa-
ion, wi h an a e age sco e o 41, he e is s ill signi ican
oom o imp o emen he e. On a e age, he companies
implemen ed ou esou ce use p ac ices and h ee g een
emissions p ac ices, which unde sco e he need o adop
mo e sus ainable p ac ices o enhance hei en i onmen al
pe o mance.
Table 5 p o ides he co ela ion esul s o he esea ch
a iables. The esul s show ha CSR con ac ing is posi-
i ely co ela ed wi h g een p ac ices ( esou ce use p ac ices
and emissions p ac ices) and g een inno a ion pe o mance
a a 1% signi icance le el. Simila ly, g een p ac ices
( esou ce use p ac ices and emissions p ac ices) a e posi-
i ely co ela ed wi h g een inno a ion pe o mance a a 1%
signi icance le el. These esul s a e consis en wi h ou
hypo heses. In addi ion, all o he co ela ion coe icien s
a e less han 0.7 and he a e age a iance in la ion ac o
(VIF) o all cases is well below 10 a a ound 1.37. This
means ha ou eg ession model does no su e om
mul icollinea i y.
Empi ical model
The Tobi model is a well-es ablished econome ic ool
ha is pa icula ly app op ia e o analyzing limi ed
dependen a iables cha ac e ized by bounded o speci ic
anges. In his s udy, he dependen a iables o in e es ,
namely, G een Inno a ion Pe o mance is cons ained
wi hin he ange o 0–100. Howe e , a la ge p opo ion
(38%) o i ms epo ing ze o commi men o G een
Inno a ion Pe o mance, leading o a sha p lowe bound
in he dis ibu ion a he minimum possible alue.
Simila ly, o media ion analysis wi h Resou ce Use
P ac ices and Emissions P ac ices, bo h a iables a e sub-
jec o an uppe bound cons ain o 6. These bounded
Table 3. De ini ions o esea ch a iables.
Va iables Va iable de ini ion
Dependen a iable
G een inno a ion pe o mance I e lec s a companies’ abili y o de elop and implemen new echnologies, p ocesses, and
p oduc s ha a e en i onmen ally sus ainable and con ibu e o he educ ion o nega i e
en i onmen al impac s
Independen a iables
CSR con ac ing Whe he and o wha ex en senio execu i e’s compensa ion is linked o CSR/H&S/
Sus ainabili y a ge s.
Resou ce use p ac ices Whe he and o wha ex en a company has adop ed g een p ac ices ha imp o e esou ce
educ ion, wa e e iciency, ene gy e iciency, en i onmen al supply chain, en i onmen al
ma e ial sou cing, and en i onmen al managemen c i e ia.
Emissions p ac ices Whe he and o wha ex en a company has adop ed g een p ac ices ha imp o e emission
educ ion, was e educ ion, clima e change oppo uni ies, en i onmen al es o a ion, ISO
14000, and en i onmen al in es men .
Con ol a iables
Fi m size The na u al loga i hm o he numbe o ull employees.
ROA (%) The a io o income a e ax o o al asse s.
Le e age The a io o o al deb o o al asse s.
CSR: co po a e social esponsibili y; ROA: e u n on asse s.
Table 4. Desc ip i e s a is ics o esea ch a iables.
Va iable Obse a ions Mean S anda d de ia ion Minimum Maximum
GIPe 5,603 36.213 34.252 0 99.799
CSR con ac ing 5,603 41.160 41.925 0 98.810
Emissions p ac ices 5,603 3.475 1.568 0 6
Resou ce use p ac ices 5,603 4.452 1.738 0 6
Fi m size 5,603 8.978 1.956 1 13
ROA (%) 5,603 6.030 6.950 −8.896 21.533
Le e age 5,603 0.242 0.160 0 0.581
GIPe : g een inno a ion pe o mance; CSR: co po a e social esponsibili y; ROA: e u n on asse s.
428 Business Resea ch Qua e ly 28(2)
dis ibu ions de ia e om he assump ions o no mali y
and con inui y ha unde lie adi ional eg ession models,
making he Tobi model an app op ia e al e na i e.
The Tobi model add esses hese limi a ions by assum-
ing ha he e is an unobse ed la en a iable ha gene -
a es he obse ed da a. I models he ela ionship be ween
his la en a iable and he obse ed a iable, conside ing
he censo ing o unca ion mechanism. Howe e , i is
impo an o no e ha he eg ession coe icien s in a Tobi
analysis a e linea and addi i e wi h espec o he la en
esponse con inuum bu no he obse ed a iables. This
means ha he coe icien s e lec he ela ionship be ween
he unde lying la en a iable and he p edic o s, a he
han he ela ionship be ween he obse ed a iable and
he p edic o s. The e o e, we adop he pos -es ima ion
p ocedu e o es ima e he ma ginal e ec o he censo ed
expec ed alue and desc ibe how he obse ed a iable
changes wi h espec o he eg esso s. This in ol es es i-
ma ing he pa ial de i a i e o he expec ed alue o he
censo ed a iable wi h espec o each o he eg esso s,
while holding all o he o he a iables cons an .
We used a eg ession-based app oach o es ou hypo h-
eses. Fi s , we cons uc ed a Tobi eg ession model o es
he e ec o CSR con ac ing on g een inno a ion pe o -
mance (H1). Rega ding he indi ec e ec , he causal s eps
app oach o ou -s ep media ion model es ablished by
Ba on and Kenny (1986) is he mos ex ensi ely used
me hod o examine he media ion e ec . Howe e , i has
been hea ily c i icized due o i s low powe (Aguinis e al.,
2017; Hayes, 2017; Radu & Smaili, 2022). The e o e, we
adop ed he me hod p oposed by Hayes (2017) o examine
he indi ec media ion e ec . Conside ing ha he e a e wo
po en ial media o s in his s udy (i.e., esou ce use p ac ices
and emissions p ac ices), we ollowed Hayes (2017) and
used pa allel mul iple media o models o es he media -
ing e ec o g een p ac ices ( esou ce use p ac ices and
emissions p ac ices) be ween CSR con ac ing and g een
inno a ion pe o mance (H2). The ollowing Tobi eg es-
sion models a e used o he empi ical analysis:
GIPe BcCSR Con ac ing
BCon ols e
i i
i i
0
1
(1)
RUP aBaCSR Con ac ing
BCon ols e
i i
i i
21
3
(2)
EP aBaCSR Con ac ing
BCon ols e
i i
i i
42
5
(3)
GIPe BcCSR Con ac ingbRUP a
bEP aBCon
i i i
i
61
27
oolse
i i
(4)
ccab ab
11 22
. (5)
In Model (1), o i m i and yea , GIPe i ep esen s he
g een inno a ion pe o mance, CSR Con ac ingi e lec s
he adop ion o CSR con ac ing, and Con ols ep esen s
all o he con ol a iables. This eg ession is aimed o p e-
dic he posi i e e ec o CSR con ac ing on g een inno-
a ion pe o mance (H1).
Th ee Tobi panel eg essions we e used o es he
media ion e ec (H2). Models (2) and (3) es he ela ion-
ship be ween CSR con ac ing and he media o : g een
p ac ices ( esou ce use p ac ices and emissions p ac ices,
espec i ely). Model (4) es s he e ec o CSR con ac -
ing on g een inno a ion pe o mance when con olling o
g een p ac ices ( esou ce use p ac ices and emissions p ac-
ices). I also es s he e ec o g een p ac ices ( esou ce
use p ac ices and emissions p ac ices) on g een inno a ion
pe o mance when CSR con ac ing is con olled.
Acco ding o Hayes (2017), coe icien c in equa ion
(1) cap u es he o al e ec o CSR con ac ing on g een
Table 5. Pai wise co ela ions.
Va iables (1) (2) (3) (4) (5) (6) (7)
(1) GIPe 1.000
(2) CSR con ac ing 0.088
(0.000)
1.000
(3) Emissions p ac ices 0.452
(0.000)
0.187
(0.000)
1.000
(4) Resou ce use p ac ices 0.440
(0.000)
0.120
(0.000)
0.659
(0.000)
1.000
(5) Fi m size 0.358
(0.000)
0.056
(0.000)
0.470
(0.000)
0.418
(0.000)
1.000
(6) ROA (%) −0.117
(0.000)
−0.062
(0.000)
−0.074
(0.000)
−0.040
(0.003)
−0.088
(0.000)
1.000
(7) Le e age 0.006
(0.628)
0.048
(0.000)
0.142
(0.000)
0.090
(0.000)
0.016
(0.230)
−0.213
(0.000)
1.000
GIPe : g een inno a ion pe o mance; CSR: co po a e social esponsibili y; ROA: e u n on asse s.
Hou e al. 435
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Appendix 1. G een p ac ices indica o s de i ed om Eikon da abase.
G een p ac ices De ini ions Coding
Resou ce use p ac ices
1 Resou ce educ ion Does he company ha e a policy o educing he use o na u al esou ces? 0/1
2 Wa e e iciency Does he company ha e a policy o imp o e i s wa e e iciency? 0/1
3 Ene gy e iciency Does he company ha e a policy o imp o e i s ene gy e iciency? 0/1
4 En i onmen al supply chain Does he company ha e a policy o include i s supply chain in he
company’s e o s o lessen i s o e all en i onmen al impac ?
0/1
5 En i onmen al ma e ials
sou cing
Does he company claim o use en i onmen al c i e ia (e.g., li e cycle
assessmen ) o sou ce o elimina e ma e ials?
0/1
6 En i onmen al managemen Does he company use en i onmen al c i e ia in he selec ion p ocess o
i s supplie s o sou cing pa ne s?
0/1
Emissions p ac ices
1 Emissions educ ion Does he company ha e a policy o imp o e emission educ ion? 0/1
2Clima e change oppo uni ies Does he company iew clima e change as a business oppo uni y? 0/1
3 Was e educ ion Does he company epo on ini ia i es o ecycle, educe, euse,
subs i u e, ea , o phase ou o al was e?
0/1
4 ISO 14000 o EMS Does he company claim o ha e an ISO 14000 o EMS ce i ica ion? 0/1
5 En i onmen al es o a ion Does he company epo o p o ide in o ma ion on company-gene a ed
ini ia i es o es o e he en i onmen ?
0/1
6 En i onmen al in es men s Does he company epo on making p oac i e en i onmen al in es men s
o expendi u es in new echnologies?
0/1
EMS: en i onmen al managemen sys em.
