Eco-innovation in the extractive industry: Combinative effects of social legitimacy, green management, and institutional pressures

Abstract

There is growing pressure on extractive industry companies, such as those in the mining and oil sectors, to balance their economic performance with social and environmental practices, yet knowledge is lacking on how social legitimacy drives eco-innovation in extractive industry firms. Drawing upon institutional theory, we examine the impact of social legitimacy on eco-innovation and the moderating roles of green management and institutional pressure. Using a time-lag sample of 161 firms engaged in mining, and oil and gas activities in Ghana, the results indicate that social legitimacy positively relates to eco-innovation. In addition, our results show that the impact of social legitimacy on eco-innovation is moderated by green management practices such that the relationship is amplified when green management is high. Finally, in a three-way interaction effect, we demonstrate that the moderation of green management practices on the linkage between social legitimacy and eco-innovation is enhanced when institutional pressure is greater. These findings contribute to the eco-innovation and sustainability literature.