Green innovation adoption in the construction sector: the role of absorptive capacity and the effect of environmental requirements

Abstract

This study has investigated and attempted to enhance understanding of the role of absorptive capacity in influencing a firm to adopt green innovation. Absorptive capacity which has been argued by previous study as an important factor to facilitate the adoption of innovation, may require some degree of pressure from regulators and customers, to be exerted on particular firms, to influence them to become involved in green innovation. Therefore, this study has also attempted to evaluate the extent of the moderating effect of regulatory and customer requirements on the relationship between a firm’s absorptive capacity and its adoption of green innovation. A research framework was developed and three research questions were posited. An electronic questionnaire survey was created and distributed to general building firms from the construction industry in Scotland. Subsequent semi-structured interviews were conducted with a subset of participants from the survey as well as with a number of construction industry experts, to investigate further the results of the survey. A total of 84 respondents participated in the survey, while 13 respondents contributed invaluable input from the interview sessions. The findings suggest that, on the whole, the level of green innovation adoption by most of the general building firms in Scotland can be considered as relatively low. Their engagement in green-related activities, however, was focusing more on the technical and process side, which was directly influenced by firms’ high levels of existing knowledge and efforts to build new knowledge through employee training. The green administrative practices, on the other hand, had not really been given attention by the building firms as it is a voluntary-based act, which does not demonstrate tangible, financial benefit to them. The evidence from the study also shows that neither environmental requirements from regulators nor customers could encourage the building firms to adopt green practices even when they have high levels of absorptive capacity. The low levels of compliance as well as poor environmental demand from the customers indicate the number one concern within the industry, that is, cost, which hinders the building firms from becoming ‘greener’. Additionally, this study provided insights and further understanding regarding knowledge-based factors that could facilitate the adoption of green innovation. This study has also made a methodological contribution by providing evidence and support for the use of mixed method approach to enhance understanding of the construction industry, which has tended to be the focus of quantitative studies. The findings of this study also have a number of implications, especially for policy makers, to explore into strategy and stringent regulations that could encourage more firms in the construction sector, which are operating in one of the industries that contributes most to environmental problems, to seek to reduce their impact on the natural environment. As the government takes a leadership role in this regard, participation from the other stakeholders within the industry is of importance to prompt a wider adoption of green practices. Here, architects, in particular, are in a potentially useful position to have a very strong influence in encouraging building firms to become involved in green practices. Besides, both individuals within the organisations (e.g. the top management and decision makers) and the society outside the organisations (e.g. customers and users of construction outputs) need to be educated to motivate them to make better environmental choices in order to contribute to environmental protection or sustainability.