Take Your Time: Examining When Green Innovation Affects Financial Performance in Multinationals

Abstract Although green innovation is seen by companies as a way to meet regulatory pressures and customers’ needs, there is still no consensus about its impact on performance. This paper examines the role of green innovation intensity on financial performance based on data from 356 multinationals firms using a fixed effect panel regression. We found three main results. First, there is no significant association of green innovation’s intensity with firm financial performance in the immediate year. Second, the association is positive, lasts during the subsequent years and becomes expressively higher after 2 years. Third, the degree of internationalization does not moderate this relationship. These findings provide empirical evidence that the return of green innovations is conditional to time but not to how much a multinational firm is internationalized.