The current issue and full text archive of this journal is available on Emerald Insight at: https://www.emerald.com/insight/1463-5771.htm Green product innovation and competitive advantage: an empirical study of chemical industrial plants in Jordanian qualified industrial zones Ghaith M. Al-Abdallah and Majda I. Al-Salim Green product innovation and competitive advantage Received 10 March 2020 Revised 18 September 2020 22 October 2020 Accepted 14 November 2020 American University of Madaba, Amman, Jordan Abstract Purpose – Green product innovation is a global industrial concern. This research examines the possible impact of green product innovation on firms’ competitive advantage in industrial enterprises operating in qualified industrial zones (QIZs). Design/methodology/approach – This research follows a descriptive analytical methodology, testing two hypotheses formulated based on the reviewed literature among chemical industrial plants of the three Jordanian QIZs (Amman, Zarqa and Irbid) in Jordan. Following a preliminary scoping study of all 219 Jordanian chemical manufacturers, a quantitative five-point Likert scale questionnaire was administered to firms applying green product activities. Findings – In total, 20 firms were found to be utilizing green product innovation, representing only 9.13% of the overall population. The hypothesis testing results indicated that green product innovation has a statistically significant positive impact on competitive advantage. The results also showed that the factor “firm resources” has a statistically significant positive moderation effect on the relationship between green product innovation and competitive advantage. Research limitations/implications – The vast majority of Jordanian chemical manufacturers were not implementing green innovation or practices; further study is needed to identify barriers. Findings are limited to managers of chemical industrial plants in Jordan, excluding the demand side (e.g. plant customers who purchase final products), which leaves a different research angle to be explored. Originality/value – This is a pioneering study of green product innovation implications for firm competitive advantage in manufacturing enterprises, especially in QIZs of Jordan (which offer tax exemptions to foreign and local investors and sell products to regional and international markets). Keywords Environmentally friendly inputs, Environmentally friendly processes, Output recyclability, Product-based advantage, Value-based advantage, Firm resources, Financial resources, None financial resources, Industrial enterprises, Emerging economies, Jordan Paper type Research paper 1. Introduction The new concept of green economy involves green growth, which has gained much attraction in recent years in both developed and developing countries and motivated international discussion, including the G20 and Rioþ20 United Nations Summit (Cherian and Jacob, 2012). Many international organizations, including the Organization for Economic Co-operation and Development (OECD) and the new such as Global Green Growth Institute (GGGI), are explicitly devoted to promoting the green growth and green innovation by sharing their experiences in this field for free. Also, the commercialization of environmentally friendly products and services could generate differentiation advantages and help in finding new market opportunities, the concept can be traced back to Schumpeter’s (1934) definition of The authors are grateful to the American University of Madaba for the financial support granted to this research project. Benchmarking: An International Journal © Emerald Publishing Limited 1463-5771 DOI 10.1108/BIJ-03-2020-0095 BIJ innovation, being revolved around the commercial applications of new technology, material, methods and sources of energy and not new inventions per se. Green product development and innovation improve firm reputation, shaping stakeholder perceptions of firm ethical behavior and corporate social responsibility(Al-Abdallah andAhmed, 2018; Chen, 2007; Miles and Covin, 2000). According to Ma et al. (2017), green product innovation denotes products, whether new or altered, designed with the purpose of reducing adverse environmental impacts. Green innovation is linked to the innovator’s performance, since manufacturing is known to be an egregious sector in terms of producing pollution and consuming natural resources. This paper focuses on the manufacturing sector in Jordan, which is the second-largest industrial sector in terms of capital invested and annual growth (Central Intelligence Agency (CIA), 2017). To facilitate local and foreign direct investment, the Jordanian government offers qualified industrial zones (QIZs) with tax exemptions, which have attracted many regional and international firms to establish industrial plants in Jordan (Jordan Investment Commission (JIC), 2018). The chemical industrial sector in QIZs targets national, regional and international markets; however, the nature of this sector and the environmental duties of producing such products are among major issues faced by stakeholders. Firms are forced to incorporate strategies to reduce environmental footprints in their daily operations, and sustainable environmental and economic development are key policy goals for the Ministry of Planning and International Cooperation in Jordan, which recognizes the country’s transformation toward the green economy as a priority, and by hosting the Global Green Growth Initiative (GGGI) for green growth planning. It is expected that Jordanian’s sustainable economic growth planning will exert increasing influence on industrial activities for varying degrees, including with regard to green product innovation (Ministry of Planning and International Cooperation (MOPIC), 2018). 2. Literature review 2.1 Green innovation Green product manufacturers’ major concerns are recyclability and disposal issues throughout the product life cycle, usage of materials recycled (with a preference for those that are less polluting, nonpolluting or nontoxic), energy use, human toxicity, ecological impact and sustainability issues at every stage of the life cycle (Groot and Boren, 2010). Processing of plastic waste continues to vary between developed and developing countries. According to D’Ambri
eres (2019), regulations imposed in developed economies to encourage recycling have been instrumental in increasing total recycling rates to around 30%, while developing economies in general have negligible recycling rates (close to zero percent). This is despite the long-term economic sustainability benefits of recycling, apart from environmental benefits; aside from limiting industrial waste and reducing environmental impacts, recycling produces substantial socio-economic gains (D’Ambri
eres, 2019). Many firms have started to use green innovation or similar terms to describe their contributions to sustainability through incorporating impact assessment and improvement mechanisms in the product development cycle (Chiou et al., 2011). In addition, some governments are promoting this concept to meet their sustainable development targets, while keeping their industries and economies competitive. For instance, in the European Union (EU), green product innovation involves supporting a wider range of objectives for competitiveness and economic growth known as the Lisbon strategy (Machiba, 2011). Green product innovation can be viewed as the improvement of products or processes related to environmental issues, such as energy-saving, pollution-prevention, waste recycling, green designs and corporate environmental management, which can enhance the product value (Chen et al., 2006). Furthermore, the offset costs of environmental investments (whereby green innovation can be categorized into green product innovation and green process innovation) can enhance the performance of products while satisfying environmental protection requirements (Chen et al., 2006). Reuvers (2015) explained the differences between green and normal innovation in terms of the latter embracing the same underlying values and practices, but with increased emphasis on cost savings and positive environmental impacts of products or processes. However, green innovation is commonly misunderstood to only emphasize the value of the product in terms of how much it can reduce the environmental footprint, with the result that it can be seen as an expendable aspect of organizational strategy, due to a focus on short-term profitability. Green innovation is actually a more expansive and potentially profitable long-term strategic orientation that can be embedded in an innovation culture within enterprises (Reuvers, 2015). 2.2 Green product innovation measurement Green product innovation can be measured in different ways and from different perspectives. This study adapted one of the most widely used measurement scale in the literature, initially proposed by Chen et al. (2006), which consists mainly of the following dimensions: (1) choosing the materials of the product that produce the least amount of pollution for developing the new product; (2) choosing the materials of the product that minimize the harmful effects to health; (3) choosing the materials that consume the least amount of energy and resources; (4) utilizing the least amount of materials to produce the new product and (5) vigilantly focusing on the product being easy to reuse and recycle (Chen et al., 2006; Chang, 2011, 2018; Lin and Chen, 2017). The first two dimensions of the measurement scale can be referred to as environmentally friendly inputs, while the second two can be referred to as environmentally friendly processes and the last can be entitled output recyclability. 2.3 Competitive advantage Competitive advantage is gained by finding a method that better positions a firm relative to rivals in the context of current and expected market developments. It is an essential objective of all firms, whose attainment can occur only via a sustainability orientation (Hakkak and Ghodsi, 2015). Innovation is a component of competitive advantage that makes exceptional and statistically significant contributions for predicting customer satisfaction (Al-Salim, 2018). According to Hawkes (2017), competitive advantage comprises the following: (1) the ability to create customer value, which creates real marketing potential; (2) operational scalability via business processes and firm structure; (3) business sustainability, including investing in leadership and innovation training, to mitigate risks and generate strength and (4) positive financial net performance, achieved through focusing on value and reducing complications. Aside from its defining characteristic as a key determinant of superior performance and a strong market position (Aboumoghli and Al-Abdallah, 2018), competitive advantage is of significant importance in numerous financial and nonfinancial indicators, such as the value of firms’ intangible assets, such as brand identity (Chen, 2007). In this sense, competitive advantage can be gained through environmentally friendly products, green design and clean production processes (Arenhardt et al., 2016; Chuang and Huang, 2015). Aside from the positive brand identity associated with green activities (when communicated effectively to stakeholders), green product innovation meets legislative and regulatory environmental regulations and serves to build barriers and tone market entrants (Chen et al., 2006). Successful green product innovation can make product imitation more difficult and trigger competitive advantage (Chang, 2018; Garcia-Perez-de-Lema and Durendez, 2007). With green product innovation, firms can improve product design, quality and reliability, which can differentiate and allow firms to charge higher prices and increase profit margins in the long run, by building a positive image in consumers’ minds (Chen, 2010). Green product innovation and competitive advantage BIJ Due to the diverse and interconnected benefits of green innovation for competitive advantage, managers are strongly advised to consider adopting green innovation (Wong, 2012). Green products have features that differentiate them from similar products and add competitiveness, which brings future product success in multiple ways, depending on its position in the supply chain. Green retail products have greater demand to the rising number of eco-conscious customers and in markets with increasingly strict environmental regulations (Wong, 2012). However, competitive advantage is highly complex phenomenon, entailing risk in corporate decisions whereby managers must evaluate potential benefits along with the costs of innovation and differentiation management, focusing on operational efficiency and excellence. A well-examined and clear competitive advantage via green product innovation can guide firms more efficiently toward achieving their strategic goals (Braslina et al., 2014). 2.4 Competitive advantage measurements Competitive advantage is a factor that is difficult to observe; it is the measurement of unobservable variables that are accomplished by unknown variables (Sachitra, 2016). Nevertheless, there are several methods to assess and evaluate competitive advantage in business, depending on the examined situation (Hosseini et al., 2018). In manufacturing industries, measurements of competitive advantage can be conducted through product-based and value-based advantage (Chang, 2011; Ismail et al., 2012; Jo~ao et al., 2012; Ortega, 2010). Product-based competitive advantage comes from higher product quality packaging, design and style, which leads to relatively better performance (Gimenez and Ventura, 2003; Morgan et al., 2004).Value-based advantage comes from the dimension of value and quality, mainly in terms of cost-based and service-based advantages (Al-Bourini et al., 2013; Gimenez and Ventura, 2003; Morgan et al., 2004). A firm may add unique value to regular products in order to generate a sustainable competitive advantage through enhancing quality, service provision and the intention to open a customer–company dialogue(Al-Abdallah and Chew, 2020; Persson, 2015). The latter may produce niche products in competitive markets, where there is more focus on price. Above-average performance may be established through exploiting all market opportunities and completely neutralizing all competition threats and pressures (Sigalas et al., 2013), and green competitive advantage attributes should be considered part of related strategic planning. 2.5 Firm resources The resource-based view of the firm, in which resources and capabilities play a central role, has been one of the main theoretical perspectives in the strategic management theory since the mid-1980s (Shoemaker and Amit, 2016). Major elements of firm resources include tangible and intangible physical, financial, empirical and human capital resources. Ismail et al. (2012) found that resources, capabilities and systems can produce firm competitive advantage and greater performance, with relative effects of organizational resources, capabilities and systems on competitive advantage. Camelo et al. (2003) considered firm resources to include all assets, capabilities, attributes, information and knowledge controlled by the organization that enable it to conceive and implement advance business strategies. Bundles of resources can sustain above average returns for firms, and there is strong evidence to support the resource-based view (RBV) approach (Crook et al., 2008). In theory, firms with greater resources and superior capabilities are able to gain and sustain competitive advantage (Carmeli and Tishler, 2004), although naturally this requires appropriate management, and does not arise of its own accord. A firm that optimizes the utilization of its strategic resources with its core competencies may achieve a competitive advantage, which leads to greater performance (Malika and James, 2016; Al-Abdallah et al., 2014). When analyzing the competitive advantage sources, the heterogeneity of resources should persist over time because the resources used to implement firms’ strategies are not perfectly mobile across firms, and some of the resources cannot be traded in markets and may be difficult to accumulate or emulate (Peteraf and Barney, 2003). According to Qui et al. (2019), green product innovation is positively correlated with both resource integration capability and resource reconfiguration capability. According to Dangelico et al. (2017), the current literature lacks theoretically clear and empirically tested insights into the specifics of the relationship between green product innovation and resource capabilities of manufacturing firms. Some scholars concluded that in the age of organizations, the accessibility of specialized human assets and time designated to complete projects may be considered factors of ecoinnovation. In addition, reducing raw materials or resources required are among the results commonly obtained by such projects (Portillo-Tarragona et al., 2018). Recently, much attention on resource-based research had been focusing on intangible assets or nonfinancial resources. Many scholars supported this argument with the development of a business model based on the RBV, which concluded that when firms improve their environmental performance, they enhance their competitive advantage mainly by reducing costs, gaining a strong reputation among customers and increasing their competitiveness in international markets; these benefits can positively affect the overall financial performance of firms (AlAbdallah and Abo-Rumman, 2013; Lindell and Karagozoglu, 2001). Furthermore, Cho and Linderman (2020) examined firm resources and product and process innovation patterns and even proposed an introductory model between firm resources and innovation, using an RBV approach. Green product innovation and competitive advantage 3. Research model and hypotheses Based on the literature reviewed above, green product innovation in this research is the independent variable, and firm competitive advantage is the dependent variable, while firm resources is the moderator variable. Accordingly, the research model is demonstrated in Figure 1. 3.1 Research hypotheses Based on the previous model, two main alternative hypotheses were formulated: H1. There is a significant positive direct impact of green product innovation on competitive advantage at α ≤ 0.05. H2. Firm resources significantly moderate the direct relation between green product innovation and competitive advantage at α ≤ 0.05. Moderator Variable Firm Resources Independent Variable Dependent Variable Green Product Innovation Competitive Advantage Source(s): Developed by the researchers based on the literature review and previous studies Figure 1. The research model BIJ 4. Research methodology This research follows a descriptive analytical methodology. It is descriptive in attempting to examine the current situation to determine the possible impact of the independent variable (green product innovation) on the dependent variable (competitive advantage) without any interference or manipulation of any kind. It is analytical in attempting to explain the underlying reasons for the obtained results. An initial scoping study was conducted among the 219 identified chemical industrial firms operating in Jordan’s QIZ, using publicly available telephone numbers listed with the Jordan Chamber of Industry. When directly asked about green product activities, many firms claimed to be implementing them; however, the tendency toward social desirability bias concerning greenwashing among corporate employees is well known (Chen et al., 2019). Consequently, a set of probing questions were framed as specified by the literature and international industry standards to explore the different aspects of green product activities within the plant, based on which an evaluation was made. If firms were not actually applying the majority of these activities (with enough details about what they did, how and when), it was concluded that they were not applying green product policies in a substantive or meaningful way, and they were accordingly excluded from the study. Consequently, the final number of firms actively engaged in green product activities was identified (n 5 20). Only these 20 firms were subsequently included in the quantitative survey questionnaire, as described in the following subsections. 4.1 Research tool A five-point Likert scale questionnaire (ranging from 1 5 strongly disagree to 5 5 strongly agree) was utilized as the main research tool in collecting primary data from 20 personnel from the selected firms found to be applying green product activities. Participants comprised higher and middle managers of chemical industrial plants operating in Jordan. The questionnaire consisted of five main parts comprising 41questions and statements, designed based on the reviewed literature. The first part consisted of the cover letter and the consent form, which explained the nature of the research and the purpose of the data collection. The consent form ensured the privacy and anonymity of the respondents and their plants, the voluntary nature of participation and the right to withdraw at any time, based on which participants’ written consent to voluntarily participate was obtained. The second part collected demographic information through eight close-ended questions; five questions concerning participants’ socio-demographic characteristics (educational level, current position, gender, age and professional experience) and three questions about the plants (such as location, number of employees and plant age). The third part consisted of 15 statements that collected data on green product innovation (the independent variable). The latter was measured through three main dimensions: environmentally friendly inputs, environmentally friendly processes and outputs recyclability (products and byproducts). The fourth part consisted of ten statements that collected data on competitive advantage (the dependent variable), which was measured through two main dimensions: product-based advantage and value-based advantage. The fifth and final part of the questionnaire consisted of eight questions that collected data on firm resources (the moderator variable). The moderator variable was measured through two main dimensions: financial resources and non-financial resources. Despite the fact that the questionnaire was developed based on previously established research, the researchers conducted a pilot study to check the validity and reliability of the research tool, as discussed in the following subsections. 4.2 Validity A questionnaire is known to have face validity if its content seems relevant to the intentions of the research; face validity is established if the questionnaire is measuring what is supposed to be measure. According to Taherdoost (2016), the appearance of the questionnaire with respect to viability, clarity, uniformity of style and formatting should also be checked to establish validity. Therefore and before the final copy of the questionnaire was distributed, the questionnaire was presented to a panel of experts in the field from both industrial and business backgrounds and to a panel of specialized academics from Jordanian universities. After incorporating their notes and comments, the questionnaire was distributed to a small random sample to check clarity of the questionnaire from participants’ point of view. Based on the results of the pilot study, necessary adjustments were carried out. Green product innovation and competitive advantage 4.3 Reliability To determine reliability, Cronbach’s alpha (α) test was utilized to examine the internal consistency of the questionnaire. According to Sekaran (2003), reliability coefficients ranging from 0.70 and above indicate high internal consistency and reliability for results. The closer the reliability coefficient is to 1.0, the more reliable the results; any coefficients below 0.6 are considered to be poor. Table 1 shows the Cronbach’s alpha α test results, indicating the reliability values for all research variables: green product innovation (0.823), competitive advantage (0.757) and firm resources (0.781). The values ranged from firm resources to green product innovation. The overall reliability value of the questionnaire is 0.910. All of these values reflect high reliability; therefore, the research tool was acceptable for this research purpose and the collection of primary data. 4.4 Research population The sector of interest for this research was the chemical industrial enterprises operating in Jordan, including chemical industrial plants for the major national products (including potash, phosphates, pharmaceuticals, cement, clothes, fertilizers among others). According to the internal records of the Jordan Chamber of Industry (2019), chemical industries had the highest exporting volume for 2017 years among other contributors and subsectors. Further details about the examined sector can be found in Table 2 and Figure 2. Table 2 shows manufacturing sector growth in general, with exports increasing in value by 9.3% from 2017 to 2018. The secondary data revealed that chemical industries have the highest export change between 2017 and 2018, which is equivalent to 53.6%. A total of 219 chemical industrial plants were listed in the three main QIZs of Jordan: 146 in Amman, 69 in Zarqa and 4 in Irbid. The researchers approached personnel at all 219 chemical industrial enterprises in Jordan using public contact information to determine the firms that utilize green products activities, which were eligible to be included in this research. After completing scoping study on the 219 firms, 20 firms were found to be exercising some level of green innovation, comprising 9.13% of the total chemical industry plants operating in Jordan, which formed the target population of this research. They included 17 plants in Amman, three Item no Variable 1 2 3 Total Green product innovation Competitive advantage Firm resources Questionnaire No. of items Cronbach’s α 15 10 8 33 0.823 0.757 0.781 0.910 Table 1. Cronbach’s α approach for main constructs and dimensions BIJ Importance (%) Industry sector Therapeutic and medical supplies Plastic and rubber Chemicals Engineering, electrical and information technology (IT) Wood and furniture Construction Packaging, paper, carton and office equipment Food, agriculture and livestock Textile and readymade garments Table 2. Mining Value of industrial exports by sector, 2017 Total Source(s): Main Industrial Indicators (2018) and 2018 Percentage change (%) Million JD 2017 2018 11.4 2.2 20.9 12.2 20.8 32.5 53.6 7.6 472 82 683 661 570 108 1,049 611 1.1 1.2 7.7 9.5 19.4 14.4 100.0 23.3 2.4 5.8 12.6 10.2 20.5 9.3 46 61 365 424 884 911 4,589 57 60 386 477 974 724 5,016 Value of Industrial Exports by Sector, 2017 and 2018 1200 Millions JD 1000 800 600 400 200 0 Figure 2. Value of industrial exports by sector, 2017 and 2018 Industrial sector 2017 2018 Source(s): Main Industrial Indicators (2018) plants in Zarqa and none in Irbid; therefore, Irbid was excluded from subsequent analysis. The plant characteristics are presented in Table 3, which describes the characteristics of the target population. Most of the chemical industrial plants were located in Amman QIZ, with 51–100 employees, which have been operating in Jordan for a period of 10–15 years. 5. Results 5.1 Target population profile Since the target population of the research is only 20 plants, the researchers targeted them all through personally distributing 120 paper questionnaires to the 20 plants. In total, six Variables Class Location Amman Zarqa Total ≤50 51–100 101–150 151–200 >200 Total <5 5–9 10–14 15–19 20þ Total Firm employee number Plant age (years) Number Percentage 17 3 20 5 8 4 1 2 20 1 7 8 2 2 20 85 15 100.0 25 40 20 5 10 100.0 5 35 40 10 10 100.0 Green product innovation and competitive advantage Table 3. Plant characteristics questionnaires for each plant were submitted targeting the top and middle management, which represented the unit of analysis in this research. The selected managerial positions were general managers/directors, marketing managers, sales managers, quality managers, financial managers, human resource managers and production managers. A total of 101 questionnaires were successfully retrieved, forming a response rate of 84.17%; all retained questionnaires were screened and filtered for any unanswered questions, and after the screening, all 101 questionnaires were processed for statistical analyses. The target population profile is presented in Table 4. The majority of the respondents held bachelor’s degrees were (61.38%), working in top management (57.42%) and male (73.27%). The largest Variable Class Education level Diploma or less Bachelor Postgraduate Total Top-level management Middle-level management Others Total Male Female Total <25 25–34 35–44 45–54 55þ Total Below 5 5–9 10–14 15–19 20þ Total Current position Gender Age (years) Experience (years) Number Percentage 33 62 6 101 58 42 1 101 74 27 101 3 25 40 32 1 101 4 22 44 17 14 101 32.67 61.38 5.95 100 57.42 41.58 1 100 73.27 26.73 100 2.97 24.75 39.60 31.68 1 100 3.96 21.78 43.57 16.83 13.86 100 Table 4. Target population profile BIJ cohorts were aged between 35 and 44 (39.60%) and had 10–14 years of professional experience (43.57%). 5.2 Data analyses and hypothesis testing SPSS version 22 was utilized to describe and analyze the primary data. The results are presented in the next subsections. The summary of the descriptive analyses for each item in the questionnaire was conducted. Table 5 demonstrates a summary of the accumulative results of the descriptive analyses for the study variables. It shows that mean value of green product innovation measurement tool was 3.61, reflecting a moderate-to-high level of importance. According to mean values, the most important items were the following: producing biodegradable products (3.95) and avoiding harmful packaging material (3.9), while the least important items were offer to collect the waste from end-user for recycling (3.39) and the use of lower power consumption methods in production (3.36). Competitive advantage (3.95) reflected a relatively high importance level. The most important items were improving products’ attributes (4.1) and superior product offering (4.05), while the least important were difficulties of imitating green products by competitors (3.5). Moderate to high importance was indicated by the means for increase customer-based value (3.6) and firm resources (3.7). The most important items were hiring experienced employees (3.99) and amount invested in green transformation (3.96), while the least important were investment in employee training (3.29) and dedicating special assets for internal investment (3.6). 5.3 Hypothesis testing Simple and multiple regression analyses were used to test the two main hypotheses. 5.3.1 Hypothesis 1 H1. There is a significant impact of green product innovation on competitive advantage at a significance level α ≤ 0.05. To test this hypothesis, the researchers applied simple linear regressions to analyze the possible impact of green product innovation on firm competitive advantage. The results are presented in Table 6, showing that green product innovation has a statistically significant impact on competitive advantage. The calculated F is 99.56, and the probability value (significance level) of F is 0.000, which ensures that the results are within the acceptable range (α < 0.05). The value of R2 (coefficient of determination) reflected the amount of the variance No Table 5. Accumulative results of the descriptive analyses Mean SD Accumulative level* 1 Green product innovation 3.61 0.49 2 Competitive advantage 3.95 0.51 3 Firm resources 3.7 0.53 Note(s): *Less than 2.6 is low, 2.6 to less than 3.6 is moderate and 3.6–5 is high Domain Table 6. Simple regression analysis of green product innovation on competitive advantage Variable (R) (R2) F* Sig F** Moderate to high Relatively high Moderate to high β coefficient Sig** Green product innovation → Competitive 0.707 0.5 99.56 0.000 0.707 0.000 advantage Note(s): *Tabulated F-value 5 3.94 with degrees of freedom (1, 99); **The impact is significant at level (α ≤ 0.05) for the dependent variable (competitive advantage) explained by the independent variable (green product innovation) in this regression model. R2 also reflected the fitness of the variable to the research model and percentage of the variation in the dependent variable that could be accounted for because the independent variable equals 0.5 out of a possible 1.0. The contribution of green product innovation in competitive advantage equals 50%. The beta coefficient (β) reflected the magnitude of how much of the dependent variable can be explained by the independent variable; green product innovation has a beta coefficient of 0.707, which is considered significant (sig. level 5 0.000 at 0.05 level). Consequently, the alternative hypothesis is accepted, which means that there was a positive direct impact of the independent variable, green product innovation, on the dependent variable, competitive advantage. Furthermore, this impact is strong, with R between 0.6–0.8 (Mukaka, 2012). 5.3.2 Hypothesis 2 H2. Firm resources significantly moderate the direct relation between green product innovation and competitive advantage at α ≤ 0.05. To test this hypothesis, the researchers applied hierarchical regression to measure the interaction effect between green product innovation and firm resources and whether this effect is significant in predicting competitive advantage. The results are shown in Table 7, indicating that the direct relationship between firm resources and competitive advantage is statistically significant, as the probability value is less than 0.05 (sig. level 5 0.000). The direct relationship is reflected by R value, which is 0.591, which represents a relatively moderate to strong effect (R value 0.4–0.6) (Mukaka, 2012). Concerning the variation in the dependent variable, the results showed clearly that firm resources explain 36.1 % of the variation, which indicates the ability of the moderator variable (firm resources) to predict the dependent variable (competitive advantage) directly. As for the standardized beta (β), the value indicated that if competitive advantage increased by one standard deviation (SD), firm resources would increase by 0.6 standard deviations, which reflect the magnitude of the impact of the predictor variable with respect to the dependent variable. When the moderator variable firm resources interacted with the independent variable green product innovation, the R value increased to 0.775; this relationship is considered statistically significant, as the probability value is less than 0.05 (sig level 5 0.000), and the overall effect of green product innovation under the moderation of firm resources is considered strong (R between 0.6–0.8) (Mukaka, 2012). Based on these results, firm resources positively moderate the relation between green product innovation and competitive advantage. Green product innovation and firm resource model explained 60% of the variation in the dependent variable, noting that the moderator variable increased the magnitude of R2 from 0.50 to 0.6 (10%). The latter increase indicated the ability of the moderator variable to moderate the variation percentage in the dependent variable (competitive advantage), considering that all of the related model probabilities were statistically significant (less than 0.05). Accordingly, the second alternative hypothesis was accepted, concluding a significant positive moderation effect of firm resources on the direct relation between green product innovation and competitive advantage. 6. Conclusion and managerial implications The results indicated that green product innovation has a strong impact on competitive advantage; utilizing green product innovation will help chemical industrial plants and industrial enterprises, in general, to achieve competitive advantage. These results are consistent with the findings of Chen et al. (2006), who concluded that enterprises can obtain competitive advantage through green product innovation. Also, Ar (2012) similarly concluded that green product innovation generally has a positive effect on competitive Green product innovation and competitive advantage Firm resources → Competitive advantage Green products innovation → Competitive advantage (under firm resources effect) BIJ Table 7. Hierarchical multiple regression analysis to test the moderation effect of firm resources Domain (R) (R2) F* Sig F** 0.591 0.775 0.361 0.600 87.70 75.80 0.000* 0.000* β (standardized) 0.600 Firm resources 5 0.406 Green product innovation 5 0.465 Note(s): *Tabulated F-value 5 3.94 with degrees of freedom (1, 99); **The impact is significant at level (α ≤ 0.05) t Sig t** 9.43 Firm resources 5 5.16 Green product innovation 5 5.88 0.000 0.000 0.000 advantages and capabilities. Høivik and Shankar (2010) also agreed, stating that time and money invested in green products would pay off if firms could leverage such investment in brand and product differentiation, which can create long-term competitive advantage. Teece (2007) also stated that product innovation is considered a main factor in building competitive advantage, which should support long-term business performance. Additionally, the results are consistent with other studies such as Ma et al. (2017) and Arenhardt et al. (2016), in concluding that firms which are dynamically involved in green innovation may improve stakeholders’ opinions and improve the image of the firm, making them stand out among the competition, thus increasing their competitiveness, influence and appeal to achieve long-term success. Qui et al. (2019) also indicated that green product innovation is positively correlated with competitive advantage in the Chinese manufacturing industry, indicating that this is also pertinent to manufacturing in developing countries (having been well known for some time in developed economies). Although the results of this research are coherent with several previous studies, the level of impact of green product innovation on competitive advantage was found to be relatively weaker in the current inquiry. This could be due to the fact that utilization of green product innovation in chemical industry enterprises is relatively new in developing countries and will need more time before it can show the actual benefits on sustaining competitive advantage. Moreover, while competitive advantage is created by the firms, its realization is achieved in interaction with consumers, and the investigated plants target different regional and international markets, as the QIZs are primarily geared toward international exports. Therefore, given that the degree of green awareness can be assumed to vary among targeted markets (e.g. compared between the EU and the GCC), this may affect the level of appreciation by consumers and consequently the level of competitive advantage achieved by firms operating within Jordan to serve those markets, which create the potential value of firms investing in green activities. As for the local market, Alsmadi (2008) investigated the environmental behavior of Jordanian consumers and concluded that consumers have acceptable levels of environmental conscience, but environmental consciousness toward the environment in Jordan is expanding and is expected to have more effect on purchase decisions in the future. Investing in green product innovation nowadays may enhance future competitive advantage, even in markets that are currently not paying enough attention to the importance of green products. The results also indicate a significant positive moderating effect of firm resources on the direct relation between green product innovation and competitive advantage: the higher the firm resources, the higher the effect of green product innovation on competitive advantage. This is consistent with several previous studies which showed the significant and important role of firm resources in achieving and sustaining competitive advantage (Avlonitis and Slavou, 2007; Finney et al., 2005; Garnesy et al., 2006). There is no doubt that firm resources facilitate achieving competitive advantage, but this is tied to the ability of transforming these resources into real capabilities (Abou-Moghli et al., 2012). Cho and Linderman (2020) concluded that firm resources positively and directly affect product and process innovation. Similarly, Rose et al. (2010) also concluded that firm resources are of significant importance to accomplish a sustainable competitive advantage and enhance organizational performance. It is true that enterprises with higher resources will achieve more competitive advantage through green product innovation compared to enterprises with fewer resources. However, the results obtained in this research also reflected that the moderating effect of firm resources increases the effect of green product innovation on achieving competitive advantage by only 10%, which means that even without this moderation green product innovation would still have a strong effect on competitive advantage, reaffirming the findings on the research hypotheses. In addition, basic green transformation does not need a large initial investment, and it could start with simple activities; consequently, even small and medium enterprises Green product innovation and competitive advantage BIJ with less ample resources can also adopt green product innovation and gradually achieve relative competitive advantage(Abou-Moghli et al., 2012). 6.1 Recommendations Creating awareness about the topic of green innovation among the management of chemical industrial enterprises is highly recommended, since more than 91% of the chemical industry enterprises in Jordan operating in the QIZs have no green policies. The Jordan Competitiveness Program (JCP), according to the United States Agency for International Development (USAID, 2018), is an example of initiatives funded by international aid agencies to improve awareness of emerging technologies and trends, including green solutions. The JCP has been working with the local nonprofit organization Energy, Water, and Environment (EDAMA, 2019), which seeks to foster partnerships with private sector entities to create awareness and encouragement of green policies and practices. Also, the Ministry of Environment and the Energy and Minerals Resource Commission (EMRC) is working on the development of rules and regulations governing green technology in Jordan (USAID, 2018). Additionally, the chemical industry may potentially be moving toward implementing ISO 14001, which may facilitate green transformation, since it is centered on creating an environmental management system. According to Corbett et al. (2009), ISO 14001 does not state requirements for environmental performance, but it maps out a framework that a firm can follow to set up an effective environmental management system, which can be used by any enterprise to improve resource efficiency, reduce waste and reduce costs. 6.2 Recommendations for future research For future research, the researchers recommend applying the same research locally and regionally for other industrial sectors to compare the results and produce deeper understanding of the actual impact of green product innovation on competitive advantage in the manufacturing sector at large. In addition, since the vast majority of chemical firms in Jordan’s QIZs reported not implementing any green innovation or practices, examining barriers for implementing green strategies in general and product innovation in particular would help to better analyze the situation to identify necessary measures among all stakeholders and to address or overcome those barriers. 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Al-Abdallah can be contacted at: ghaith.abdallah@yahoo.com For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: permissions@emeraldinsight.com Green product innovation and competitive advantage