Institutional pressure, firm's green resources and green product innovation: evidence from Taiwan's electrical and electronics sector

Purpose Integrating economic and green initiatives into firm strategies is a challenge for firms in various industries. The study aims to incorporate multiple views, i.e. green innovation theory (GIT), the green institutional perspective (GIP) and the natural-resource-based view (NRBV), to develop a comprehensive model to explore why and how firms implement green product innovation (GPI). Design/methodology/approach The study explores the relationships among institutional pressure, the firm's green resources and GPI. The research also distinguishes two different types of GPI: exploratory GPI and exploitative GPI. A total of 270 valid questionnaires were collected from electrical and electronics manufacturers in Taiwan. The authors employed structural equation modeling (SEM) using analysis of moment structures (AMOS) 23.0 to test the hypotheses. Findings The results show that institutional pressure has a significant positive correlation with the firm's green resources. Furthermore, institutional pressure has a significantly positive influence on exploratory GPI and exploitative GPI, respectively. The firm's green resources also have a significantly positive effect on both exploratory GPI and exploitative GPI. In addition, institutional pressures have significantly positive indirect effect on both exploratory GPI and exploitative GPI. Research limitations/implications Economic benefits and environmental sustainability are the most pressing issues faced by the electrical and electronics industry today. The study's investigation covers Taiwanese electrical and electronics manufacturers only, so the test of the research model has limited generalizability. The authors suggest that to expand the generalizability of the findings, future research should examine this model in the context of other regions such as Southeast Asia, Africa, South America, etc. Practical implications The study has many interesting implications for both practitioners and policymakers. The authors' findings suggest that while Taiwanese electrical and electronics manufacturers face significant pressure from customers, competitors and regulation requirements (e.g. waste electrical and electronic equipment [WEEE], restriction of hazardous substances [RoHS] and energy using product [EuP] directives), firms in that sector should efficiently and effectively deploy their green resources and then perform proper GPI (e.g. exploratory GPI or exploitative GPI). These results also serve as a reminder to policymakers that balancing coercive (command-and-control) mechanisms with incentives and voluntary mechanisms is the best means by which to develop motivational and effective GPI policies. Originality/value First and foremost, the paper divides GPI into exploratory GPI and exploitative GPI. Furthermore, the research incorporates two important schools of thought, i.e. the GIP and NRBV, thus providing a more holistic view by which to explore why and how companies adopt GPI.