Environmental Risk and Green Innovation: Evidence From Evacuation Spills
51 Pages Posted: 1 Dec 2020 Last revised: 28 Apr 2021
Date Written: April 28, 2021
Abstract
Exploring evacuation spill information from the U.S. Coast Guard’s National Response Center database, we examine how firms alter their green innovation activities and strategies in response to environmental spills occurring near their headquarters. We find that, in response to nearby environmental spills, firms increase both environmental innovation input and output. Increases in managers’ perceived risk and compliance cost, in part due to public outrage and reprobation, enhanced local environmental regulations, as well as human capital redeployment, are three plausible underlying economic channels through which environmental risk affects firms’ green innovation.
Keywords: Environment Risk, Green Innovation, Compliance Cost, Human Capital Redeployment
JEL Classification: O30, Q50, G30
Suggested Citation: Suggested Citation