Corporate environmental R&D: does organisational innovation matter?

Investments in environmental research and development (R&D) are a crucial element for firms to make superior environmental performance compatible with financial performance. This relevance of environmental R&D suggests a need to identify its drivers. However, the literature on environmental R&D has given a prominent focus to external drivers to the firm, with a limited focus on factors internal to the firm. In contrast, the impact of crucial organisational changes in firms, in the form of organisational innovation, has not been addressed. We argue that organisational innovation drives environmental R&D expenditures. Using data on manufacturing firms from the Spanish Technological Innovation Panel survey during 2008–2016, we find support for this idea. Further analysis suggests that it is particularly the introduction of new methods of organising workplaces that is positively associated with environmental R&D. This suggests that a regulatory environment that facilitates workplace flexibility may promote environmental R&D investments.