The role of process innovativeness in the development of environmental innovativeness capability

Previous research suggests that innovation resources (i.e. internal and external Research & Development, acquisition of machinery, hardware, software, patents, and licenses) enhance environmental innovations. However, it is unknown how these resources should be deployed to develop environmental innovativeness capability. This research builds upon the resource management framework and proposes that environmental innovativeness capability is developed, at the firm level, through a two-sequenced bundling process. First, innovation resources are bundled into process innovativeness capability. Then, process innovativeness capability is extended to develop environmental innovativeness capability. The proposed model is tested with data collected through the 2008 Community Innovation Survey in Germany. The results confirm this two-sequenced bundling process. Specifically, results indicate that internal, external, hybrid innovation resources, and knowledge brought through Research & Development cooperation with suppliers are bundled into process innovativeness capability. Then, process innovativeness capability is extended and bundled with the knowledge brought through Research & Development cooperation with public research institutions into environmental innovativeness capability. These results are important because they provide a much-needed understanding on the development of firm level capabilities to undertake environmental innovations. Finally, this paper recommends managers to deploy their innovation resources to build capabilities on innovating processes, which in turn is the base for developing environmental innovativeness.