Can Institutional Forces Create Competitive Advantage? An Empirical Examination Of Environmental Innovation

This paper examines institutional pressures as antecedents of environmental innovation. Drawing on institutional theory and a resourced-based view of the company, this paper puts forth an argument that regulatory and normative forces influence the companies' propensity to innovate in environmental-related projects. Furthermore, the paper suggests that this relationship is contingent on the availability and specificity of the companies' resources. These relationships were tested using environmental patents and citations of 340 publicly-traded companies from polluting industries in the U.S. Results suggest that institutional pressures can be a source of competitive advantage, and regulatory forces are becoming more strongly associated with environmental innovations as the intensity of companies' R&D activities increase.