A new paper, recently published in Energy Economics, by Md. Samsul Alam (with his colleagues) provides novel insights on the relationship between corporate R&D and firm environmental performance
Business enterprises play a significant role in increased carbon emissions due to their energy consumption for producing goods and services. With the ever-increasing environmental pressures from the government and policymakers, business enterprises look for means to minimise their environmental impact through raising energy efficiencies, reducing pollution, and encouraging reuse and recycling. However, investing in environmental management increases costs without resulting in financial benefits. Therefore, the vital question corporate managers are now facing is how to minimise environmental impacts without reducing firm performance. Recently, management literature emphasizes the idea of ‘win-win’ environmental policies that investment in environmental strategies will benefit both environmental and financial performance. In this connection, corporate research and development (R&D) investment plays a substantial role in reducing environmental impacts without compromising business economic return.
We investigate this issue by employing firm-level data for a sample of 1,350 firms in G-6 countries (Canada, France, Germany, Japan, the UK, and the US) for the period of 2004–2016, amounting to 9,792 firm-year observations. By using the natural resource based view (NRVB) as a theoretical framework, we find that R&D investment negatively affects the energy and carbon emissions intensities suggesting that R&D investment leads to efficient energy consumption, thus lower carbon emissions. Our results are robust to alternative variable specifications, sub-samples, lagged or dynamic effects, and alternative econometric specifications. We strongly believe that our findings offer novel insights to the policymakers, business managers, and regulators.