Enhancing green product and process innovation: Towards an integrative framework of knowledge acquisition and environmental investment

Abstract Despite the increasing interest in green innovation literature, little is known on how and under what conditions firms' knowledge transfer activities affect green innovation. There is lack of research that on how particular organizational capabilities are seen more useful and how it influences on green innovation performance. To address this research gap, we examine a mediation model in which we explore whether a firm's knowledge acquisition capability and investment in environmental management mediate the impact of buyer‐driven knowledge transfer activities on green product innovation and green process innovation. On the basis of an analysis of a sample of 239 manufacturing firms, we find that buyer‐driven knowledge activities have a greater positive impact on green product innovation than green process innovation. Investment in environmental management fully mediates the relationship between buyer‐driven knowledge transfer activities and green process innovation, and knowledge acquisition capability partially mediates the relationship between buyer‐driven knowledge transfer activities and green product innovation. The current study provides evidence that internal competencies and the role of buyers in knowledge transfer are critical for explaining the green product innovation and green process innovation. Our results suggest that buyer involvement pushes firms to develop resource acquisition capability to enhance green product innovation. Our results also highlight the importance of investment in environmental management for overcoming the environmental challenges in the manufacturing firms.