Joining the Green Movement: The Relationship Between Green Innovation and Business Performance

The literature shows a growing interest in the relationship between environmental ("Green") innovation and the financial performance of organizations. Green innovation is the new or modified techniques, products, processes and systems implemented by organizations to reduce or prevent environmental harm. The aim of this paper, therefore, is to raise awareness on the concepts of environmental protection, sustainable development, and green innovation strategies. Specifically, the paper looks more closely at the latter dimension of organizational performance: financial performance of listed firms in the Kingdom of Bahrain. The sample of the study included 41 firms spread across three primary sectors operating in the Kingdom of Bahrain, namely the Financial Sector, Services sector and the Industrial sector. This paper followed a content analysis approach to complement the information gathered through the checklist developed by the researcher to measure the level of green innovation by the sample of listed firms. Financial reports for the year 2017 were obtained from the websites of the sample firms and other financial information and ratios were obtained from the Bahrain Stock Exchange website. The findings indicate a positive and significant relationship between return on assets and green innovation practices and strategies. This has important implications for managers and governments to promote firm performance through environmental innovation measures and practices.