The Impact of Product Environmental Innovation in Process Industries: Evidence from Innovation Efficiency and Performance

Abstract

This study examines the heterogeneous effects of product environmental innovation on firm-level innovation efficiency and performance in process industries, with a focus on the chemical and electronics sectors. Following the Organisation for Economic Co-operation and Development (OECD)’s Oslo Manual, four types of product environmental innovation are considered: reducing energy use and emissions (RUE), reducing pollution (RP), promoting recycling (PR), and enhancing durability and extending product life (EDEL). Innovation efficiency is evaluated using the input-oriented Banker–Charnes–Cooper (BCC) Data Envelopment Analysis (DEA) model, and regression analyses are applied to test the effects of each innovation type on efficiency and sales outcomes. The results reveal that RUE and EDEL consistently enhance both efficiency and performance, whereas PR has a negative impact on performance, and RP shows no significant effect. These findings demonstrate that product environmental innovation is not a homogeneous construct but yields heterogeneous outcomes depending on type and industry context. The study contributes to the literature by jointly examining efficiency and performance outcomes and by overcoming the limitations of single-metric evaluations, and it provides practical implications by clarifying which innovation types deliver immediate value in business-to-consumer (B2C) markets and which are more relevant for business-to-business (B2B) settings.