A content analytic investigation of the inter-linkage between innovation and successful environmental strategy

We conduct a content analysis based assessment of the relationship between environmental and business performance. Based on Porter and Van der Linde (1995)'s thesis that innovation driven environmental strategy leads to superior business performance, we analyze if alignment among focus on innovation, environmental operations, strategic orientation, and stakeholder communication result in superior innovation, environmental and financial performance. We analyze the contents of publicly available, sustainability reports of 30 environmentally exemplar firms to collect the necessary information. Subsequently, we examine this information utilizing strategic alignment theory and the natural resource based view. Our analysis reveals, focus on innovation motivates environmental operations which contribute to superior innovation and environmental performance, and strategic environmental orientation and stakeholder communication strengthen the positive relationship between environmental innovation focus and environmental operations. However, contrary to Porter and Van der Linde's thesis, environmental and innovation performance do not seem to yield superior business performance in a foreseeable period. Limitations of the study and future research opportunities are discussed.