The effect of institutional ownership and ownership dispersion on eco-innovation

•Institutional ownership has a positive effect on eco-innovation.•There are divergences between institutional investors in relation to eco-innovation.•Ownership dispersion corrects the prevalence of investors’ short-term objectives. This paper aims to determine the role that the different institutio...

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Bibliographic Details
Published in:Technological forecasting & social change 2020-09, Vol.158, p.120173, Article 120173
Main Authors: García-Sánchez, Isabel-María, Aibar-Guzmán, Cristina, Aibar-Guzmán, Beatriz
Format: Article
Language:English
Subjects:
Companies
Corporate social responsibility
Dispersion
Eco-innovation
Innovations
Institutional investments
Institutional ownership
Ownership
Ownership dispersion
Participation
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Summary:•Institutional ownership has a positive effect on eco-innovation.•There are divergences between institutional investors in relation to eco-innovation.•Ownership dispersion corrects the prevalence of investors’ short-term objectives. This paper aims to determine the role that the different institutional investors play in promoting eco-innovation, focusing on the analysis of the corrective or enhancing effect that can be derived from ownership dispersion related to the participation in a company's stock capital of institutional investors with different time horizons. The results obtained for a sample of 6,454 companies for the period 2002–2017 show the convergence of the short-term institutional investors’ interests with the long-term institutional investors’ demands, which has a positive effect on the implementation of proactive environmental strategies, such as eco-innovation. Additionally, this positive effect is enhanced by disperse ownership structures associated with the participation in a company's stock capital of both types of institutional investors, thereby increasing the firm's commitment to environmental sustainability. Although financial institutions and pension funds diverge from this long-term orientation, seeking an immediate economic return, ownership dispersion allows for correcting their individual negative effect on eco-innovation.
ISSN:0040-1625
1873-5509
DOI:10.1016/j.techfore.2020.120173