Do Consumers Value Environmental Innovation in Product?

Abstract

Customers are considered to be major stakeholders whose demands and preferences have astrong influence on corporate strategies. In this sense, increased consumer environmental awarenesshas led to a growing demand for environmentally friendly products which, in turn, has compelledfirms to adopt innovative forms of integrating environmental protection into product developmentand production processes. Nevertheless, an "attitude-behavior gap" has been witnessed, whichimplies that consumers' environmental attitudes do not always translate into an actual ecologically compatible purchasing behavior and, consequently, eco-product innovations will not necessarily entail a positive economic impact for companies. This paper aims to analyze if the companies that invest in eco-product innovation are valued by consumers, showing higher growth. Specifically,we propose that eco-product innovation has a positive effect on a firm's sales growth. Additionally, we aim to analyze the consumers' preferences in relation to eco-product innovations considering two alternative approaches that companies can follow in this respect: eco-design and products with ecological use. The results obtained for an unbalanced sample of 5391 international companies corresponding to the period 2002-2017 (51,666 observations) show that proactive environmental innovation strategies are positively valued by consumers, having a positive impact on the companies' sales growth. Furthermore, consumers show a greater preference for environmental innovations ineco-design than for products with ecological use.