From production to climate technology contribution: Exploring the nonlinear relationship between green manufacturing orientation and climate change innovation.

Abstract

Firms are increasingly facing pressure to align their manufacturing strategies with environmental goals; however, evidence on whether these efforts are associated with meaningful climate change innovation (CCI) remains mixed. This study examines the impact of green manufacturing orientation (GMO) on CCI and whether this relationship varies across different industries. We apply a text-based GMO measure from annual reports for 322 Standard and Poor's 500 firms between 2009 and 2019 and link it to climate-related patent data. Panel regression analysis reveals an inverted U-shaped relationship, where moderate levels of GMO are most strongly associated with CCI contributions, while overly intensive approaches exhibit diminishing returns in non-manufacturing industries. In contrast, for manufacturing firms, the relationship is U-shaped. These findings extend the natural resource-based view by conceptualizing GMO as a bounded, context-dependent capability and emphasize that policymakers should prioritize GMO investments in manufacturing sectors, where stronger and sustained innovation benefits are likely to be realized.