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Augmenting the production function with knowledge capital to test the Porter hypothesis: the case of French food industries

Author

Listed:
  • Jean Pierre Huiban

    (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique)

  • Antonio Musolesi

    (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRA - Institut National de la Recherche Agronomique - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement)

Abstract

We investigate the impact of pollution abatement effort on the economic performances by exploiting a rich panel data set composed of French food industry firms, observed over the 1993-2007 period. We test the Porter hypothesis, assuming that pollution abatement effort has a positive effect on the firm performance by triggering innovation. This is done by estimating a production function augmented with knowledge capital, such a capital being produced by both pollution abatement and R&D investments. Using different estimation methods, including structural semi-parametric ones, we first show than the so-called Porter assumption cannot be rejected when focusing on the full population of French food industry firms since the estimations indicate a positive and significant (though rather small) contribution of the pollution abatement capital to the firm productivity. Then, we consider a more restrictive sample of (potentially) innovative firms, actually engaging both RD and pollution abatement investments. Henceforth, the contribution of pollution abatement capital becomes not significant in regard to the R&D's one. These results do not support the sometimes invoked hypothesis according to which the positive effect of pollution abatements efforts on firms' performances is linked to the induced increased innovation. At the same time, the standard hypothesis, assuming that pollution abatement effort significantly decreases the firm performance is always rejected.

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  • Jean Pierre Huiban & Antonio Musolesi, 2012. "Augmenting the production function with knowledge capital to test the Porter hypothesis: the case of French food industries," Working Papers hal-02804599, HAL.
    • Handle: RePEc:hal:wpaper:hal-02804599
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-02804599
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    References listed on IDEAS

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    Cited by:

    1. Eric Giraud-Héraud & Jean-Pierre Ponssard & Bernard Sinclair Desgagné & Louis-Georges Soler, 2016. "The agro-food industry, public health, and environmental protection: investigating the Porter hypothesis in food regulation," Review of Agricultural, Food and Environmental Studies, Springer, vol. 97(2), pages 127-140, September.
    2. Antonietti, Roberto & Marzucchi, Alberto, 2014. "Green tangible investment strategies and export performance: A firm-level investigation," Ecological Economics, Elsevier, vol. 108(C), pages 150-161.

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    productivity; environmental investment; R&D; knowledge capital; food industry;
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