The Driving Factors, Incentive Strategies, and Value Utility of Green Product Innovation- Taking Saudi Arabian Petrochemical Enterprises as an Example

Abstract

Saudi Arabia, the world's largest oil exporter, also has the world's second largest oil and fifth largest natural gas reserves; Its gross domestic product in 2022 was 1108.15 billion US dollars, and with a population of about 34.6 million, Saudi Arabia's per capita GDP in 2022 was 32030 US dollars. However, Saudi Arabia's economy is completely dependent on natural resource exports, and "if the country has no foresight, there must be immediate worries". Natural resources are non-renewable resources, and even if reserves are abundant, they may eventually be depleted; The petroleum related chemical industry causes serious environmental pollution; The living environment and natural weather and climate in Saudi Arabia also urgently need improvement; Therefore, reducing the dependence of the national economy on oil, improving the domestic economic structure system, and implementing sustainable development strategies are crucial for the sustained growth of the Saudi Arabian national economy. Green product innovation, as a proactive, integrated, and innovative solution to environmental problems, comprehensively considers the environmental impact and hazards of products throughout their entire lifecycle, including design, manufacturing, use, and recycling. It is an innovative model that not only meets the needs of economic development but also takes into account environmental sustainability. Vigorously developing green product innovation in Saudi Arabia's petrochemical industry is an inevitable choice to transform economic growth patterns, improve living environments, and achieve low-carbon economy and sustainable development. In recent years, there has been an increase in academic attention and discussion on green product innovation, but existing research still lacks systematic and comprehensive understanding of green product innovation. This article constructs a multidimensional structure of green product innovation from three gradients: driving factors, incentive strategies, and the impact of green product innovation on enterprise performance, making the concept of green product innovation more comprehensive, specific, three-dimensional, and coherent. Green product innovation is a strategic policy that is influenced by complex mechanisms in multiple aspects and levels. There are two limitations in the research on its driving factors. Firstly, scholars mainly focus on the impact of a single or a few factors on green product innovation from a single theoretical perspective, and mostly use regression analysis methods. The factors driving green product innovation are complex and diverse, and traditional regression research methods alone cannot explain the differences in green product innovation between different enterprises by studying the net effects of independent and dependent variables; The second is the lack of a comprehensive perspective to explore how the influencing factors of green product innovation interact with each other through configuration methods, as well as the complex relationship between multiple antecedents and green product innovation. Previous studies have also shown inconsistent results on the impact of green product innovation on corporate performance. Some studies suggest that green entrepreneurial orientation has a positive impact on corporate performance. Some studies also suggest that there is no correlation between green entrepreneurial orientation and corporate performance, while others suggest a negative correlation between green entrepreneurial orientation and corporate performance. It can be seen that the relationship between green entrepreneurship orientation and corporate performance still needs further research, and the intermediary mechanism and boundary conditions between the two need to be further explored. Based on the review of previous research, this article will clarify the concept of green product innovation, study the driving factors, incentive strategies and impact on enterprise performance of green product innovation. The aim is to answer the following questions: how to create a mechanism for green product innovation for enterprises from the internal structure and external environment, so that they can smoothly carry out green product innovation, and how to motivate enterprises to carry out green product innovation? What is the impact of green product innovation on the environmental and economic performance of enterprises? How to utilize green product innovation to achieve comprehensive growth of enterprises, society, and living environment? On the basis of previous research, this article conducts a more systematic, comprehensive, multi-dimensional, and multi gradient study of green product innovation, aiming to provide comprehensive guidance for Saudi Arabian petrochemical enterprises to carry out green product innovation. The green product innovation structure system constructed in the article is composed of three modules: the driving factors of green product innovation, the incentive strategies for green product innovation, and the utility value of green product innovation on enterprise performance. We conducted a study on the driving factors of green product innovation. This study is based on institutional theory and higher-order theory, dividing the driving factors of green product innovation into two configurations: internal and external factors of the enterprise. The matched two configurations are organically integrated to obtain qualitative and quantitative outputs of green product innovation. Among them, external factors consist of resource pressure, environmental regulatory pressure, normative pressure, and imitation pressure, and are configured using institutional theory; The internal factors consist of the enterprise's green innovation ability, willingness to innovate, behavior and environmental awareness of executives. The internal factors are configured using higher-order theories; Then, through the collected enterprise survey questionnaires, the model is demonstrated and applied according to classic research steps such as questionnaire collection, variable measurement, and fuzzy set qualitative comparative analysis. Finally, the results of QCA operation are analysed and discussed and summarized. The results indicate that there are six configuration paths for innovation of high green products, with configuration H1 being dominated by external factors and named as "institutional pressure+innovation willingness driven", consisting of (regulatory pressure * normative pressure * imitation pressure * green innovation willingness). Configuration H1 emphasizes the tendency of various systems of government management companies towards green environmental protection. Configuration H2 is driven by external factors and named "Resource Capability+Manager Environmental Cognition Driven", consisting of (Resource Capability * Regulatory Pressure * Regulatory Pressure * Manager Environmental Cognition). H2 emphasizes the impact of resources on the enterprise and is applicable to energy related enterprises. Configuration H3 is driven by external factors and is named "imitation pressure+innovation capability driven". It is consisted by (imitation pressure * regulatory pressure * normative pressure * green innovation capability). H3 configuration is suitable for resource-based, labor-intensive, and low product technology industries. Configuration H4 is driven by internal factors and named "Manager's Environmental Cognition+Regulatory Pressure Driven". It is consisted by (Manager's Environmental Cognition * Green Innovation Ability * Green Innovation Behavior * Regulatory Pressure), and H4 configuration emphasizes the quality of enterprise leadership. Configuration H5 is driven by internal factors and named "Green Innovation Ability+Resource Capability Driven". It is consisted by (Green Innovation Ability * Green Innovation Behavior * Green Innovation Willingness * Resource Capability), and emphasizes the overall quality of enterprise employees. Configuration H6 is driven by internal factors and is named "Green Innovation Behavior+Imitation Pressure". It is consisted by (Green Innovation Behavior * Green Innovation Ability * Green Innovation Willingness * Imitation Pressure). H6 is suitable for resource service industries, and these six configuration paths cover the situation of the vast majority of companies in Saudi Arabian petrochemical enterprises, providing comprehensive guidance for the driving factors of green product innovation in Saudi Arabian petrochemical enterprises. We propose incentive strategies and improvement strategies for green product innovation in enterprises. By analysing and summarizing the driving factors of green product innovation, the design goals and requirements of incentive strategies for green innovation willingness are summarized. Based on the previous research conclusions, countermeasures and suggestions are proposed to stimulate and enhance green product innovation in enterprises from aspects such as internal innovation behavior, innovation ability, innovation willingness, and environmental cognition of managers, as well as external resource capacity, regulatory ability, environmental regulatory pressure, and imitation pressure. A theoretical model is constructed using contingency theory, corporate profile, and natural resource perspective to explore the explanatory mechanism of green product innovation on corporate performance. The overview of a company is the foundation of its performance, and its research variables include the company's performance last year, return on assets, company size, proportion of highly educated talents, sales growth rate, age distribution of R&D management personnel, and industry growth rate; The natural resource perspective determines the depth of green product innovation in enterprises, with research variables including green dynamic capabilities, green knowledge sharing, and environmental dynamics. In terms of model validation, the first step is to construct a dataset for analysing the model through sample collection, sample design, and data collection. Then, financial and environmental performance is used as the dependent variable, and the width and depth of enterprise green product innovation, internal resource relaxation, and external business environment are used as independent variables. The control variables include: first-order lag of the dependent variable, enterprise size, and the ratio of highly educated talents in the enterprise, Age distribution of enterprise R&D management personnel, sales growth rate, state-owned components, green knowledge sharing, green dynamic capabilities, environmental dynamics, industry asset return rate, and industry growth rate; An two GMM model is applied that includes individual fixed effects and time fixed effects for quantitative calculations, and finally the results are analysed, discussed and summarized. The results indicate that: The breadth and depth strategies of green product innovation in enterprises have different effects on their financial performance, and empirical results indicate that the two strategies indeed play different roles. The implementation of green product innovation breadth strategy by enterprises may lead to a decrease in financial performance due to excessive expansion of green products; Implementing a deep strategy of green product innovation in a rhythmic and step-by-step manner that can significantly improve the financial performance of enterprises. Although the two strategies have different effects, overall, green product innovation has a positive effect on corporate financial performance. The breadth and depth of green product innovation in the industry have a weak promoting effect on the financial performance of enterprises in the industry; However, overall green product innovation in the industry has a significant contagion effect (positive spillover) on the financial performance of enterprises in that industry, that is, in industries with higher levels of green product innovation, enterprises can achieve higher financial performance by "riding the ride of green product innovation in the industry". The green product innovation of enterprises, whether it is the breadth strategy or the depth strategy, has an infectious effect on the performance of other enterprises. The breadth of green product innovation will exacerbate the negative relationship between the breadth of green product innovation and corporate performance, while weakening the positive relationship between the depth of green product innovation and corporate performance; The depth of green product innovation weakens the negative relationship between the breadth of green product innovation and corporate performance, while strengthening the positive relationship between the depth of green product innovation and corporate performance. Enterprises carrying out green product innovation should follow the law of innovation, draw on and utilize the existing experience, knowledge, capabilities, and resources of the enterprise. They should be down-to-earth and strive to deepen their efforts, rather than seeking too much and too fast, and only pursue quantity advantages. Secondly, capable enterprises need to become pioneers in green product innovation in the industry. This can not only improve financial performance through green product innovation itself, but also gain competitive advantages in green product innovation capabilities and market share through pioneer behavior. In summary, this article systematically, comprehensively, multi-dimensionally and gradient studies green product innovation. The research results supplement existing literature and provide theoretical guidance for Saudi Arabian petrochemical enterprises to carry out green product innovation.

Keywords: Green product innovation; Natural resource view; Green innovation willingness; Green knowledge sharing; Enterprise performance