3 Hypotheses of the theoretical model
3.1 Better access to markets
Improving environmental performance may facilitate access to
certain markets. In general, reducing pollution and other environmental impacts
can revive the image or the overall business prestige, thereby increasing
customer loyalty and supporting sales. In particular, if one wants to evaluate
the potential to reach more customers of green companies , it is useful to
scrutinise the policies of public and private organisations that are focusing
more on the environmental performance (or performance in terms of sustainable
development) as a purchasing criterion when selecting suppliers of goods and
services (demand pull). This phenomenon is also known as `buy green'. Many
companies now take into account in their purchasing decisions, considerations
related to social responsibility. Indeed, according to an OECD survey,
involving over 4000 facilities in seven different countries, 43% of these
latter evaluate the environmental performance of their suppliers (Lanoie, et
al., 2007).
The magnitude of the green public procurement is difficult to
assess, but it is clear that this phenomenon does exist. Also, in May 2001, the
Environment Ministers of the OECD countries have adopted an Environmental
Strategy for the first decade of the 21st century that contains a
recommendation to «improve the environmental performance of procurement
practices public.» It seems that by improving their environmental
performance, some companies have actually an easier access to certain markets.
At this stage, given that green procurement seems more present in the public
sector, the companies that are most the likely to benefit from it are those who
sell to the public organisations (construction, energy, transportation
equipment, medical products and office equipment). Taking into account this
theoretical background, one can formulate the following hypothesis:
H1: Firms investing in eco-innovation have a better access to
certain green markets compared to their conventional competitors.
3.2 Product differentiation
When companies decide to stand out by creating products and
services more environmentally friendly, they can hope that, in the future, it
will allow them to exploit lucrative niches within their industry and therefore
benefit from increased revenues and they can pass on the extra cost incurred to
customers willing to pay products or services more environmentally friendly.
Thus, Sinclair-Desgagné (2004, p. 6) writes that «many companies
(like McDonald's, Exxon, etc...) learned the hard way that
consumer loyalty to their products depends largely on the perception that they
are environmentally benign.» It is clear that consumer behaviour can have
a significant impact on sales. It appears that the differentiation strategy is
more likely to be effective if: 1) information about the environmental
attributes of the product is credible (e.g. eco-label), 2) consumers are
willing to pay and 3) innovation is protected from imitation by competitors.
Various examples suggest that a wide range of businesses can actually improve
their environmental performance and achieve higher incomes by using this
strategy. Even companies that produce goods rather homogeneous and usually
difficult to differentiate, such as agricultural products and energy, can also
achieve similar results (Lanoie, et al., 2007).Therefore, and after examining
this condition the following hypothesis may be stipulated:
H2: Eco-innovative firms have a higher return on sales since
they are able to differentiate themselves than other firms.
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