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BAR − Brazilian Administration Review

Vol. 18, No. 3, Art. 4, e200126, 2021
https://doi.org/10.1590/1807-7692bar2021200126

Research Article

Does Ecological Sustainability Really Matter? Evaluation of Its

Mediating Role in the Relationship between Innovation and
Competitiveness

Rafael Ricardo Jacomossi1

Paulo Roberto Feldmann2
Alcides Barrichello3
Rogério Scabim Morano4

1
Centro Universitário FEI, São Paulo, SP, Brazil
2
Universidade de São Paulo, São Paulo, SP, Brazil
3
Universidade Presbiteriana Mackenzie, São Paulo, SP, Brazil
4
Universidade Federal de São Paulo, Diadema, SP, Brazil

Received 24 November 2020. This paper was with the authors for one revision. Accepted 03 August 2021.
First published online 17 August 2021.
Editors-in-Chief: Carlo Gabriel Porto Bellini (Universidade Federal da Paraíba, Brazil)
Ivan Lapuente Garrido (Universidade do Vale do Rio dos Sinos, Brazil)
Associate Editor: Mônica Cavalcanti Sá de Abreu (Universidade Federal do Ceará, Fortaleza, CE, Brazil)
Reviewers: two anonymous reviewers
Editorial assistants: Kler Godoy and Simone Rafael (ANPAD, Maringá, PR, Brazil)
R. R. Jacomossi, P. R. Feldmann, A. Barrichello, R. S. Morano 2

ABSTRACT

Organizational studies highlight the role of innovation for competitiveness, but few of them
address ecological sustainability as one of the variables in this relationship. The traditional model
only considers economic growth to be anchored in the dimension of innovation, disregarding
the environment. Thus, the purpose of this study was to analyze the influence of ecological
sustainability on the relationship between innovation and global competitiveness. To reach the
goal of the manuscript, a database was used that included indicators from 119 countries present
in the Global Competitiveness Report of WEF and the Global Innovation Index. The data were
treated using regression analysis with mediation techniques. The results suggest significant
mediation of ecological sustainability in the relationship between innovation and global
competitiveness. This work shows the importance of ecological sustainability to increase country’s
innovative activity and consequently its competitiveness. Additionally, it draws attention to the
gap in studies that present these relationships at the country level. In terms of practical
contributions, the findings support the recommendation for companies to focus on actions to
environmental and innovation management improving sustainability and increasing
organizational performance and long-term survival. Finally, this research also draws attention to
the lack of an important indicator of ecological sustainability in a report addressing countries’
competitiveness.

Keywords: World Economic Forum; competitiveness of nations; ecological sustainability;

innovation; mediation

JEL Code: nonadherent

Does ecological sustainability really matter? Evaluation of its mediating role in the relationship between innovation and competitiveness 3

INTRODUCTION

Organizational studies on the theme of competitiveness show the role of technological innovation
as an instrument to promote productivity gains, improving the firms’ competitive conditions
(Gordon, 2016; Ichijo & Nonaka, 2007; Kalmakova, Bilan, Zhidebekkyzy, & Sagiyeva, 2021;
Nelson & Winter, 1982). The traditional model, however, has been criticized for disregarding
the environment while anchoring economic growth in the dimension of innovation. This model
has shown to be incomplete, neglecting other factors (Barrichello, Morano, Feldmann, &
Jacomossi, 2020; Feldmann, Jacomossi, Barrichello, & Morano, 2019) such as the ecological
sustainability that, according to Beck (1992), Giddens (1991), Jacomossi and Demajorovic (2017),
and Kalmakova, Bilan, Zhidebekkyzy, and Sagiyeva (2021), has proven to be legitimate in modern
society.

For Castells (2016), productivity gains through efficiency do not compensate the carbon
emissions resulting from increased consumption. Giddens (1991) states that modernity has a
dark side that gradually becomes apparent. For the author, placing science and technology at the
service of the industrialization process in search of ever-greater profits has caused an
unprecedented modification of nature, degrading the resources and threatening the survival of
present and future generations. Demajorovic (2003) corroborates these views, adding that infinite
human potential to build knowledge brings uncertainty about the future, creating challenges for
society to adjust its capacities to the increasingly rapid changes.

Organizations can respond to these challenges by guiding their decisions by using a process of
rationality that emphasizes both economic and environmental gains (Faustenhammer & Gössler,
2011). Jacomossi and Demajorovic (2017) demonstrate that it is possible to develop a learning
model for innovation in organizations that contemplates the environmental dimension.

The evolution of this debate led to a new element of analysis, eco-innovation, also known as
environmental innovation. This element is used to verify the firms’ conditions to innovate,
considering the concerns with the environment (Angelo, Jabbour, & Galina, 2012;
Hermundsdottir & Aspelund, 2021; Jacomossi & Demajorovic, 2017). Kammerer (2009) and
Beise and Rennings (2005) define this type of innovation as one that arises at the organizational
level and benefits the environment. It encompasses all organizational changes and novelties that
seek to mitigate or eliminate its environmental impacts. Along with the environmental benefit
comes an economic gain. By adapting their processes and adopting such practices, companies can
increase their productivity and improve competitiveness, making rational use of resources
(Horbach, Rammer, & Rennings, 2012).

In the debate on countries’ competitiveness, Porter (1990) argues that this type of competitiveness
has to do with the enterprises operating in the nations’ territories, which means that countries,
industries, and companies are elements of analysis that cannot be dissociated. Reports on nations’
competitiveness, such as the studies of the World Economic Forum (WEF) (Schwab, 2019;
Schwab, Sala-i-Martín, & Samans, 2017; Schwab, Sala-i-Martín, Samans, & Blanke, 2015; 2016),
highlight the relationship between innovation and competitiveness. However, they do not
R. R. Jacomossi, P. R. Feldmann, A. Barrichello, R. S. Morano 4

address the issue of ecological sustainability as one of the potential drivers for improving
productivity. The literature presents studies that indicate the role of innovation as a
competitiveness driver, as well as research highlighting the importance of sustainability in this
process. It is clear, therefore, the need to investigate these variables together. In this context, the
research question built in this study is: Does ecological sustainability influence the relationship
between innovation and the competitiveness of nations?

Thus, this study analyzes, at a macroeconomic level, the influence of ecological sustainability on
the relationship between innovation and global competitiveness. Thus, it is expected that the
present work can contribute to a better understanding of the importance of considering
ecological sustainability in micro and macroeconomic strategies. Although several studies portray
such influence at the level of firms, there is a need for research that presents these relations at
the country level.

This work is composed, in addition to this introduction, by literature review sections involving
the relationships between the variables studied (innovation, global competitiveness, and
ecological sustainability), hypothesis and theoretical model construction, methodology used, as
well as analysis and discussion of results, and conclusions.

LITERATURE REVIEW

Enterprises seek several goals, including high profit, competitiveness, and long-term survival.
Besides, ecological sustainability has become a fundamental issue by business and non-business
organizations since it leads to superior performance. Sustainability requires sufficient resources
and capacities to be implemented (Zhang, Khan, Lee, & Salik, 2019).

The relationship between the variables innovation, global competitiveness, and ecological
sustainability, seen in pairs, is the object of research, as shown in the following subsections.
However, there is little research that relates the three variables concomitantly. Thus, the literature
presented here follows this dynamic, which will support the proposed theoretical model, while
simultaneously evaluating all relationships.

Innovation and global competitiveness

The classic explanation regarding the process of nations’ growth and development is based on a
combination of the following factors of production: cheap labor, an abundance of raw materials,
and the availability of capital. The factor innovation is added to this discussion, based on
Schumpeter (1934). From the author’s studies, the economic competitiveness paradigm has been
based on the capacity of companies and countries to innovate. Studies focusing on the
performance of firms and nations point to the role of technological innovation as a crucial
inducing factor to explain economic growth and wealth generation (Ichijo & Nonaka, 2007;
Mytelka, 2000; Nelson & Winter, 1982; Pavitt, 1984; Schumpeter, 1934).
Does ecological sustainability really matter? Evaluation of its mediating role in the relationship between innovation and competitiveness 5

The scope of studies that highlight innovation as one of the main driving forces for economic
development and business competitiveness — both in the academic and organizational fields —
has grown significantly (Barrichello, Santos, & Morano, 2020; Sukumar, Jafari-Sadeghi, Garcia-
Perez, & Dutta, 2020; Torres, Pagnussatt, & Severo, 2017). The research by Torre, Pagnussatt,
and Severo (2017) highlighted the main concepts of innovation as a source of competitive
advantage, showing that it should be one of the organizations’ strategies to differentiate from
competitors and to contribute to their sustainability over time.

Microeconomic studies, on the other hand, have been dedicated to examining the function of
innovation in increasing the performance of organizations. Porter (1990) analyzes competition in
various sectors of the economy in several countries, showing that the most successful companies
are those that better use technological knowledge, dealing effectively with innovation. The author
concludes that the progress and development of countries are related to how developed their
business environments are, enabling them to innovate faster than their foreign rivals.

Additionally, many studies (Barrichello, Morano, et al., 2020; Denkowska, Fijorek, & Yna Wegrz,
2020; Dima, Begu, Vasilescu, & Maassen, 2018; Quan, Xiao, Ji, & Zhang, 2021) point out the
importance of education on competitiveness of countries. The findings of these studies highlight
the importance of innovation and education as influencers of countries’ competitiveness. Policy
development concerning the workforce’s lifelong learning possibilities and the focus on R&D
activities can contribute to the competitiveness of countries.

As can be seen, the studies show that the relationship between innovation and competitiveness
is relevant, as well as it is important to understand the role of ecological sustainability as a way to
reinforce the innovative practices of companies and countries.

The relationship between innovation and ecological sustainability

Human life depends on the environment, but the high-speed exploitation of natural resources
has increased degradation and jeopardized nature’s capacity for regeneration (Hardin, 1968; Li
et al., 2021; Morano, Moraes, & Jacomossi, 2018). In this context, the companies have
contributed to the worsening of this situation (Melville, 2010). Moyano-Fuentes, Maqueira-
Marín, and Bruque-Cámara (2018) examined the relationship between technological innovation
and engagement in environmental sustainability, considering the firms’ institutional and
competitive environment. The most innovative companies are also the ones more engaged in
environmental sustainability, looking for satisfying economic restrictions established by the
competitive environment and the institutional pressures from all the stakeholders.

Sustainability in the context of innovation can be seen in the development of innovative green
products (Wu et al., 2021). Green product innovation is a fundamental factor for achieving
environmental sustainability, growth, and better quality of life (Angelo et al., 2012; Zhan, Tan,
Ji, & Tseng, 2018). A priority for academia and organizations nowadays is to develop the
understanding that environmental innovation is a result of the combination of innovation and
sustainability (Cheng, Yang, & Sheu, 2014). Companies must incorporate environmental
R. R. Jacomossi, P. R. Feldmann, A. Barrichello, R. S. Morano 6

sustainability into product development, observing the different dimensions and types of
ecological products. In turn, public policies must act as an active function in stimulating demand
for green products by subsidies and discounts for green markets in emerging stages (Dangelico &
Pujari, 2010).

Dutra, Silva, and Cubas (2019) recognize the possibility that socio-environmental actions taken
by companies can generate results in terms of economic performance. Such actions are in line
with global challenges and are among the several sustainable development goals listed in Agenda
2030, established by the United Nations (UN). For the authors, in general, companies have a
significant concern to produce with social, environmental, and economic sustainability, in line
with the ninth Sustainability Development Objective (SDG), which prioritizes the construction
of incentive to innovation, inclusive and sustainable industrialization, and resilient
infrastructure.

Environmental sustainability can be hard to implement, mainly for small and medium-sized
enterprises (SMEs) (Kernecker, Seufert, & Chapman, 2021). For Kanda, Hjelm, Clausen, and
Bienkowska (2018), SMEs can look for external support to manage some of their issues in
innovation. In this sense, some organizations support such companies in the innovation process.

These organizations offer economic innovations such as prototyping, collection, and

dissemination of information and brand. These innovations seek to validate the environmental
benefits of ecological innovations. Beise and Rennings (2005) state that there is little support for
activities that require changes in public policies toward eco-innovation. Thus, public policies
must encourage and promote the creation of different types of organizations that support eco-
innovation, creating the opportunity to facilitate the implementation of all needed activities
(Ford, Steen, & Verreynne, 2014).

Silva et al. (2019) measured the environmental performance of publicly traded companies that
integrate the Brazilian corporate sustainability (ISE) and carbon-efficient (ICO2) indices of the
Brazilian stock exchange (BMF & Bovespa) using the IPAT indicator (Impact, Population,
Affluence — represented by the level of resource consumption by the population — and
Technology). The indicator showed effectiveness in assessing the technological efficiency of
production, revealing that there is no direct relationship between variation in the quantity
produced and the size of the impact since the variable ‘technology’ is the element that influences
the generation of impact. The authors conclude that the environmental impact depends on the
degree of technology the firms adopt. Also, the public administration can use the IPAT to develop
environmental policies associated with the companies’ performance, and the indicator may be
used to assess the effectiveness of the state’s environmental investments (Köhler et al., 2013).

Innovation is highly necessary to achieve competitiveness and sustainability in value chains,

reinforcing the importance of public-private partnerships (innovation platforms) that are
necessary conditions to achieve the excellent capacity for innovation in these spaces (Degato &
Carlos, 2017). Klewitz, Zeyen, and Hansen (2012) mention the possibility of organizational
Does ecological sustainability really matter? Evaluation of its mediating role in the relationship between innovation and competitiveness 7

environmental innovation, a broader process with effects across the company. In this case,
environmental innovation would be associated with reshaping all strategic thinking.

The relevance of environmental, social, and other effects following the progress took the
sustainability challenges beyond the traditional front of governments and civil society, gaining
the corporate agenda (Mathur & Berwa, 2017). In this context, Marikina (2018) found a strong
correlation between ecological sustainability and global competitiveness. According to the author,
ecological regulation plays a prominent role both in achieving sustainability and in the positive
development of countries’ competitiveness.

As seen, the discussion on global competitiveness also goes through the intricacies of innovation
and ecological sustainability, so it is important to investigate the direct relationship between
ecological sustainability and global competitiveness.

The relationship between ecological sustainability and global competitiveness

Countries’ economic and environmental performance are inter-connected (Crowder &

Reganold, 2015; Gilli, Mazzanti, & Nicolli, 2013; Salvati & Carlucci, 2011). In this sense,
Borland, Ambrosini, Lindgreen, & Vanhamme (2016) propose that competitiveness should
consider not only the business environment but also global natural environments. It is essential
to treat the analysis of competitiveness systemically, demonstrating the influence of economic,
social, and environmental variables on competitiveness (Soares & Hansen, 2014). Innovative
agricultural systems, for example, allow sustainably achieving production goals, with organic
agriculture being the most innovative of these systems (Crowder & Reganold, 2015). However,
there are still important divergences in the debates about the relationships among the countries’
environmental, economic, and innovation performances (Gilli et al., 2013; Salvati & Carlucci,
2011).

In modern societies, economic activities are nearly related to environmental challenges. The
connection between environmental regulation and industrial competitiveness has received more
attention due to pressures on environmental protection and economic development
(Stavropoulos, Wall, & Xu, 2018). In this context, sustainable development has entered a new
era in the development of metric-driven environmental policies. Countries are required to
integrate environmental performance metrics into policies related to pollution control and
management of natural resources (Lang & Marsden, 2018; Wendling, Emerson, Esty, Levy, &
Sherbinin, 2018).

This theme brings up the need for corporations to adapt their processes while maintaining
competitiveness. Innovation proves to be an essential factor, as it allows the restructuring of
organizational processes, in addition to the development of new products, technology, and
processes. However, the academic understanding of competitiveness, sustainability, and
innovation have been fragmented (Desore & Narula, 2018). It is possible to observe that, in the
short term, there is a movement of investment in sustainable innovation to obtain
competitiveness, profiting from the benefits of eco-efficiency or the value-added. In the long term,
R. R. Jacomossi, P. R. Feldmann, A. Barrichello, R. S. Morano 8

sustainability problems require substantial investments in innovation, which brings the

managerial challenge of investing without affecting competitiveness (Spezamiglio, Galina, &
Calia, 2016). For Soares and Hansen (2014), the organizations’ plans to increase competitiveness
have to include the factors related to sustainability.

High competitiveness requires constant attention to the conditions under which companies can
gain or lose value. A company’s competitiveness determines its long-term performance.
Sustainable companies perform better in the long term in the face of restrictions imposed by the
economic, social, and environmental systems. The firms develop their strategies and sustainably
create value in the future. Sustainable practices are fundamental in business models, ensuring the
survival of companies since strategies in these directions are long-lasting and offer competitive
advantages (Lloret, 2016). Using resources in a balanced way helps the organization’s sustainable
development, providing an adequate way for the company to remain competitive and sustainable
(Ambruș, Izvercian, Ivascu, & Artene, 2017).

Tan, Ochoa, Langston, and Shen (2015) associate the need to use resources efficiently to adapt
to climate change. For the authors, entrepreneurs should seek to incorporate sustainable
practices, although this action may burden the contracts with additional costs that may reduce
economic performance. However, at the international level, companies with high sustainability
performance can await greater revenue growth, and sustainability performance has the chance to
become a competitive advantage.

The strictness of environmental regulations initially harms the industry, considering their
implementation cost. However, the introduction of innovations brings a subsequent positive
impact. Thus, traditional negative expectation about the effects of implementing environmental
regulations applies only to the first part of the process. After, the investment is compensated,
when the companies understand the market opportunities created by the regulation
(Stavropoulos et al., 2018).

Finally, according to Porter and Linde (1995), Marikina (2018), and Zhan, Tan, Ji, and Tseng
(2018), soft environmental regulations fail to push firms to achieve an innovation edge. On the
other hand, rigorous regulations lead to producing innovation that becomes a differential, with
positive impacts.

Development of the hypothesis and theoretical model

The literature shows the concern about — and the inseparable role of — the relationship between
innovation, environmental sustainability, and competitiveness of nations (Beise & Rennings,
2005; Horbach et al., 2012; Kammerer, 2009; Porter & Linde, 1995).

In its Global Competitiveness Report (GCR) 2013/2014, the World Economic Forum expanded
its understanding of competitiveness to involve sustainability. The report states three important
concepts. First, ‘sustainable competitiveness’ is “the set of institutions, policies, and factors that
make a nation remain productive over the long term while ensuring social and environmental
Does ecological sustainability really matter? Evaluation of its mediating role in the relationship between innovation and competitiveness 9

sustainability” (Schwab, Sala-i-Martín, & Brende, 2013, p. 55). The second concept, ‘social
sustainability,’ is “institutions, policies, and factors that enable all members of society to
experience the best possible health, participation, and security; and that maximize their potential
to contribute to and benefit from the economic prosperity of the country in which they live”
(Schwab et al., 2013, p. 59). Finally, ‘environmentally sustainable competitiveness’ is “the
institutions, policies, and factors that ensure efficient management of resources to enable
prosperity for present and future generations” (Schwab et al., 2013, p. 58). This last concept takes
into account the relationship between several elements of competitiveness and environmental
sustainability. In its reports, WEF highlighted that only competitiveness does not necessarily drive
sustainable levels of prosperity (Schwab et al., 2013; Schwab, Sala-i-Martín, Eide, & Blanke 2014).

In the GCR 2013/2014, the item ‘environmental sustainability’ in the Global Competitiveness
Index (GCI) structure was composed of three groups of indicators covering (1) environmental
policy, (2) use of renewable resources, and (3) degradation of the environment. Another three
groups of indicators that made up the item ‘social sustainability’ were (1) access to basic needs,
(2) vulnerability to shocks (economic exclusion), and (3) social cohesion. Together with the
traditional GCI, the GCR presented the Sustainability-adjusted Global Competitiveness Index
(SGCI), which easily mediates sustainable competitiveness among countries. The SGCI was
obtained by averaging the scores for social and environmental sustainability (Schwab et al., 2013).

According to the GCR 2014/2015, the results of the analysis comparing SGCI and GCI did not
indicate a clear association between being competitive and being sustainable (Schwab et al.,
2014).

Thus, from the GCR 2015/2016 on, the definition of competitiveness returned to be the one
adopted previously, “the set of institutions, policies, and factors that determine the level of
productivity of an economy” (Schwab et al., 2015, p. 4). According to the GCR 2015/2016, the
focus remained on productivity since growth models indicate that, in the long term, productivity
is the key factor that explains a country’s level of prosperity and, therefore, the prosperity of its
citizens.

Notwithstanding, some authors used the SGCI to demonstrate the importance of the
relationship between innovation, sustainability, and competitiveness, elaborating studies that
correlate the SGCI and the Global Innovation Index (GII), the latter published by the University
of Cornell, IMD, WIPO, and IMD World Competitiveness Yearbook (Fonseca & Lima, 2015).

The research developed by Doyle and Perez-Alaniz (2017) addresses the lack of sustainability
indicators in the GCR, offering a broad review of sustainable competitiveness as an aggregating
concept that unites the comprehensions around sustainable development and covers the aspects
of social, economic, and environmental sustainability. For the authors, by comprehensively
measuring sustainable competitiveness, the SGCI is a plausible synthetic metric to assess different
aspects of sustainable development in different countries.
R. R. Jacomossi, P. R. Feldmann, A. Barrichello, R. S. Morano 10

Although environmental vulnerability and its socioeconomic effects were explicitly discussed in
the GCRs 2013/2014 and 2014/2015 (Schwab et al., 2013; 2014), these issues were absent in
the following reports (Schwab et al., 2017; 2015; 2016). Despotovic, Cvetanovic, Nedic, and
Despotovic (2019) used data from the GCR to correlate social sustainability indexes and their
impact on the economic dimension of sustainability, but they did not obtain conclusive findings.
Based on these results, the authors confirmed the complexity of studying this topic, considering
its economic, competitive, social, and environmental developments.

Zhang, Khan, Lee, and Salik (2019) examined the influence of innovation management and
technological innovation on the organizations’ performance, considering the potential mediating
role of sustainability in this relationship. The study indicated that innovation management and
technological innovation contribute significantly and positively to the organizations’
sustainability and performance. Additionally, the authors indicated that sustainability mediates
innovation management and organizational performance and partially mediates technological
innovation and organizational performance.

The works by Doyle and Perez-Alaniz (2017) and Zhang et al. (2019) inspire further examination
on the theme of environmental sustainability within the scope of the GCR, despite the previous
studies that showed no relationship between competitiveness and sustainability (Schwab et al.,
2014).

Additionally, the research by Marikina (2018) describes the impact that environmental and
management regulations have on competitiveness in Balkan countries. This research
demonstrated that regulation affects both achieving ecological sustainability and the development
of competitiveness in the countries. Despite the results, the research lacks support concerning
the cause and effect relationship between ecological sustainability and the countries’
competitiveness due to the statistical tools used and the lack of reports regarding the significance
of the verified relationships. The understanding of how much ecological sustainability affects
competitiveness may be an exciting piece of information to assess the real importance of
sustainability as a component of competitiveness.

Considering the literature review, this study examines the following hypothesis:

H1: The relationship between innovation and global competitiveness is mediated by ecological
sustainability.

The theoretical model presented in Figure 1 was designed to test H1.

Does ecological sustainability really matter? Evaluation of its mediating role in the relationship between innovation and competitiveness 11

+ Ecological +
Sustainability

+ +

Global
Innovation
+ + Competitiveness

Figure 1. Theoretical model developed

Note. Elaborated by the authors.

This model seeks to understand whether ecological sustainability acts as a variable that mediates
the relationship between innovation and competitiveness, interfering in how the first affects the
second. Mediation analysis is a statistical method used to assess evidence of how a causal
antecedent ‘X’ transmits its effect to a consequent variable ‘Y’ (Hayes, 2018). The S-O-R (stimuli-
organism-response) model of behavioral psychology — which shows that an active organism
interferes between stimulus and response, for instance — represents the most general formulation
of a mediation hypothesis. The main idea in this model depicts the effects of stimuli on the
behavior being mediated by several processes of transformation internal to the organism, making
the stimulus-response relationship sometimes observable only indirectly (Baron & Kenny, 1986;
Woodworth, 1926).

METHODOLOGY

The research used secondary data obtained from the combination of indicators from 119
countries present in the Global Competitiveness Report (GCR) 2017-2018 (Schwab et al., 2017)
and Global Innovation Index 2018 (GII) (Dutta, Lanvin, & Wunsch-Vincent, 2018). This
research was anchored in these two reports since the GCR contemplates aspects of innovation
and global competitiveness, variables that are the focus of the study but not present information
on ecological sustainability in the countries. Thus, such a variable was researched in another
report that dealt with the topic and was close to the initial variables. This report was the GII,
taking care to keep the same countries from both sources of information and the same period of
publication, avoiding discrepancies between the data analyzed.

The indicators related to innovation and global competitiveness were retrieved from the GCR.
Innovation involves data in the so-called pillar 12 of the report and is related to the presence of
high-quality scientific research institutions, investment in research and development (R&D), the
protection of intellectual property, and collaboration in research and technological developments
between industries and universities. Global competitiveness is obtained by the use of GCI itself,
R. R. Jacomossi, P. R. Feldmann, A. Barrichello, R. S. Morano 12

assessing the factors and institutions identified as determinants in productivity and long-term
economic growth and prosperity of the nations. Both indicators are derived from the World
Economic Forum (WEF) survey and other indexes prepared by the WEF, such as the Human
Capital Index, the Networked Readiness Index, the Gender Gap Index, the Enabling Trade
Index, and the Travel & Tourism Competitiveness Index. The survey also considered data from
other WEF reports, such as The Inclusive Economic Growth and Development Report, and other
studies on regional competitiveness. The WEF survey got the opinions of around 14,000 business
executives in different economies between February and June 2017. The 2017 edition of the
survey was available in 39 languages, 21 of which were available online (Schwab et al., 2017).

The indicator related to ecological sustainability, on the other hand, was taken from the Global
Innovation Index (GII), a developing project that constructs on its previous editions while
incorporating newly available data. The index is based on the latest research on the measurement
of innovation. The GII model describes 90.8% of the world’s population and 96.3% of the
world’s GDP (Dutta et al., 2018). Ecological sustainability is one of three sub-pillars existing in
pillar 3, infrastructure, in GII. As mentioned before, the decision to use the GII was because
there is no indicator in the GCR related to ecological sustainability. Appendix A shows the
countries that are in the two reports. Countries appearing in only one of them were excluded
from the analysis.

Table 1 presents the definitions of the variables used in the theoretical model developed. The
ecological sustainability variable was extracted from the GII (Dutta et al., 2018), and the others
— global competitiveness and innovation — obtained from the GCR (Schwab et al., 2017).

Table 1

Conceptual definitions of variables used

Variable Definition
Ecological sustainability Composed by the number of ISO 14001 certificates of conformity issued on
environmental management systems, the Environmental Performance Index of
Columbia and Yale Universities, and GDP per unit of energy use (efficiency in the
use of energy).

Global competitiveness Given by factors that establish the level of a country’s productivity, which defines
the level of development that it can achieve.

Innovation Enough investment in research and development (R&D), especially by the private
sector; the presence of high-quality scientific research institutions that can generate
the basic knowledge needed to build the new technologies; extensive collaboration
in research and technological developments between universities and industry; and
the protection of intellectual property.

Note. Based on Schwab, K., Sala-i-Martín, X., & Samans, R. (2017). The Global Competitiveness Report 2017-2018. Geneva,
CH: World Economic Forum and Dutta, S., Lanvin, B., & Wunsch-Vincent, S. (2018). Global Innovation Index 2018. Ithaca, NY;
Fontainebleau, FR; Geneva, CH: Cornell University, INSEAD, and WIPO.

The ecological sustainability variable is formed with three items: GDP per unit of energy use,
environmental performance, and ISO 14001 environmental certificates (Dutta et al., 2018).
Does ecological sustainability really matter? Evaluation of its mediating role in the relationship between innovation and competitiveness 13

The GDP per unit of energy use is adopted to monitor the impacts of energy policies, forecast
energy demand, study the evolution of the domestic energy market, and evaluate possible areas
for action (Dutta et al., 2018).

Environmental performance is based on 24 indicators that assess the environmental health and
vitality of the ecosystem in countries. They are part of the Environmental Performance Index
(EPI), a report developed by the Yale Center for Environmental Law & Policy, which measures
how close countries are to the settled environmental policy goals designed in the Paris Climate
Agreement and the United Nations Sustainable Development Goals (SDGs) 2015 (Dutta et al.,
2018).

ISO 14001 certificates determine the requirements for an environmental management system
that a company must use to improve its environmental achievement. ISO 14001 is planned for
organizations that look to manage their environmental responsibilities regularly, contributing to
environmental sustainability (Dutta et al., 2018).

The quantitative method adopted involved regression analysis with model 4 of PROCESS (Hayes,
2018), macro of the software IBM SPSS Statistics® 20.0. Considering the theoretical model
proposed, with an independent variable influencing a dependent variable, and a third variable
presenting a possible indirect route of influence, regressions analysis seems to be the best choice
to evaluate the relationship among the elements considered.

ANALYSIS AND DISCUSSION OF RESULTS

The hypothesis was tested with the simple mediation model using the bootstrapping resampling
method, as suggested by Hayes (2018). The author considers bootstrapping resampling as the
most appropriate method for assessing indirect effects since it does not require any assumption
about the format of these effects’ distribution. In addition, non-standardized coefficients are the
preferred metric to report causal modeling results. Thus, the study tested the hypothesis using
the PROCESS (model 4), SPSS macro developed by Hayes (2018), with 5,000 bootstrapping
resamples, to obtain the total effects, direct and indirect, of the theoretical model proposed, and
also adopting non-standard path coefficients.

The innovation variable increased ecological sustainability (B = 4.9395; SE = 1.1101; t = 4.4406,

p < 0.0001, R2 = 0.1442), which had a positive effect on global competitiveness (B = 0.0141, SE
= 0.0035, t = 4.0592, p < 0.001, R2 = 0.6592) when controlling innovation. In addition, the
indirect effect of innovation on global competitiveness mediated by ecological sustainability was
positive (0.0694). The confidence interval of the effect, based on the bootstrapping method
[0.0315 : 0.1270; 5,000 resamples], does not contain zero, which supports the hypothesis of
mediation.

The results suggest significant mediation of ecological sustainability in the relationship between
innovation and global competitiveness. Despite the results indicating partial mediation (Baron
R. R. Jacomossi, P. R. Feldmann, A. Barrichello, R. S. Morano 14

& Kenny, 1986), it was decided not to use this designation, as recommended by Preacher and
Kelley (2011) and Rucker, Preacher, Tormala, and Petty (2011), adopting the proposal of relative
magnitude between the indirect effect (mediation indicator) and the total effect (direct effect +
indirect effect) between innovation and global competitiveness considered by the authors.
Following the recommendations of Pieters (2017), Table 2 shows the totality of relationships with
the use of the mediating variable.

Table 2

Total, direct, and indirect effects of innovation for global competitiveness

Confidence interval*

Description Value Standard error LL UL

Total effect (TE) 0.6005 0.0443 0.5128 0.6883

Direct effect (DE) 0.5311 0.0450 0.4420 0.6203
Indirect effect (IE) 0.0694 0.0242 0.0309 0.1258
IE/TE 0.1156 0.0388 0.0533 0.2130
IE/DE 0.1307 0.0513 0.0563 0.2706

Note. * Interval calculated with 95% confidence. Source: Elaborated by the authors.

In the relationship between indirect and total effect, it appears that 11.56% of the effect of
innovation on global competitiveness is due to ecological sustainability. This finding shows the
relative importance of this variable in the influence of innovation on global competitiveness.
Another method was also used to check the size of the indirect effect, the kappa-squared, advised
by Preacher and Kelley (2011), which indicates the intensity of the indirect effect found
concerning the maximum possible indirect effect. According to the authors, in general, an effect
that may seem minor in absolute size may be relatively large when considering the range of
potential values that the effect could have assumed, considering the characteristics of the model
or the distribution of variables. Even under ideal distribution conditions and linear relationships,
there are limits to the values that the regression coefficients (and, therefore, the indirect effects)
can assume, given certain characteristics of the data. In this study, the Preacher and Kelley’s
kappa-squared showed a value of 0.1438 (SE = 0.0377 [0.0732 : 0.2210]).

Therefore, items linked to innovation, such as investment in R&D, the presence of high-quality
scientific research institutions, and extensive collaboration in R&D between universities and
private companies, continue to be important to determine the level of productivity of an
economy, increasing a country’s potential prosperity. On the other hand, rational use of energy,
environmental protection, and state regulatory policies (Marikina, 2018; Zhan et al., 2018) work
as an incentive for companies to align themselves with standards established by norms such as
ISO 14001. Combined, the importance of these variables lies in the country’s maximum
potential prosperity. It is still unclear whether ecological sustainability should be viewed as a
fundamental and unique element for a country’s prosperity, since the indirect path between
innovation and global competitiveness, although relevant, does not prove to be the most valuable.
Does ecological sustainability really matter? Evaluation of its mediating role in the relationship between innovation and competitiveness 15

Theoretical models are an attempt to simulate reality, enabling the study of relationships between
variables to better understand the behavior of nature (Chwif & Medina, 2014; Ford, 2010). The
simple mediation model is the most fundamental mediation model that can be estimated and
oversimplifies the complex dynamics by which ‘X’ (innovation) influences ‘Y’ (global
competitiveness) in real processes scientifically explored (Hayes, 2018). However, the findings of
this research stimulate the debate about the real importance of ecological sustainability — and
how this element can be measured — in the relationship between innovation and global
competitiveness, without encouraging those who neglect the necessary care for the environment
(Fiala, 2008; Isaac, 2019; Sekerka & Stimel, 2011).

Countries known as large polluting economies, such as China, have been implementing
initiatives that have the potential to minimize environmental impacts. In this sense, the country
develops several projects in the areas of road transport, agriculture, clean energy, and
manufacturing in general (Woetzel & Joerss, 2009). Hermawan and Astuti (2021) analyze in their
research the various policies implemented by the countries of the Association of Southeast Asian
Nations (ASEAN), to reduce marine plastic waste. Several indicators are used in the study,
concluding that the process used in the handling of marine plastic waste needs to be resolved
collaboratively and comprehensively. The authors add that although each country already has
programmatic indexes and regulatory actions, there are still indicators that need to be improved,
such as government spending, inspection programs, and pollution reduction costs. The study by
Avilés-Sacoto, Avilés-Sacoto, Güemes-Castorena, and Cook (2021) assesses different states in
Mexico in terms of their environmental performance and offers a perspective on how
environmental initiatives can contribute to protecting and preserving the environment. From an
environmental point of view, the assessment helps understand how different initiatives
contribute to the conservation of natural resources and sustainable development.

Companies, in turn, are moving in the same direction, taking ecological sustainability to the
center of their corporate strategy. Siemens, for example, has built an environmental portfolio
centered on carbon-efficient products. Saint-Gobain, the construction and packaging enterprise,
developed sustainable housing technologies in the center of its strategy for product development
(Engel, Enkvist, & Henderson, 2015).

Unilever is another company that engages in these issues. One example is the continuous
improvement process to mitigate the impact of its packaging on the environment (Boz,
Korhonen, & Sand, 2020). Another case concerning Unilever occurs with the acquisition of Ben
and Jerry’s, an ice cream manufacturer and recognized as one of the most social and
environmentally responsible brands in the United States. In this agreement, it was established in
the contractual clauses that Unilever would maintain the practices that enshrined Ben and Jerry’s
about society and the environment (Craven-Matthews, Nordlund, & Fouzbi, 2021).

Overall, several companies, including McDonald’s, Nestlé, Kraft-Heinz, PepsiCo, and Coca-Cola
have set goals in their strategic plans to improve the sustainability of their packaging by 2025 and
beyond, which includes greater recycling and recycled material, reducing virgin material in its
composition, sustainable supply, weight reduction, and packaging design for improved recovery
R. R. Jacomossi, P. R. Feldmann, A. Barrichello, R. S. Morano 16

(Boz et al., 2020). In another direction, companies like Nestlé, Cargill, Unilever, and Mondelez
International have made efforts to reduce deforestation in their supply chain (Veggeberg,
Delabre, & Jespersen, 2021).

Another important point in the discussion about innovation, global competitiveness, and
ecological sustainability is related to circular economy practices. The traditional consumption
model is based on the uncontrolled extraction of natural resources to supply productive activity
and, at the end of the cycle, not taking advantage of what will be discarded (Melo, 2020). In
contrast to the current model, the circular economy aims to generate less waste during the
production process. Thus, materials and resources already included in these processes, which
would have been discarded before, are reused, minimizing environmental impacts (Santomauro,
2020).

An example of this is plastic culture that uses polymers such as PE, PP, and PVC in greenhouse
and mulching (soil cover) films, irrigation systems, harvesting systems, bag silos (large flexible
silos), and other applications whose plastic used must have the correct destination so as not to
harm rural production, thus bringing environmental and economic benefits (Santomauro, 2020).
These plastic films are chemically additive to provide resistance to field conditions, where anti-
UV, used to protect against ultraviolet rays, and anti-drip, used to break the surface tension of
water, stand out (Chavarria & Santos, 2013).

The findings of this research show that ecological sustainability influences the relationship
between innovation and global competitiveness, which indicates that the GCR should
contemplate this dimension when building the Global Competitiveness Index. This possibility
has already been suggested in previous GCRs (Schwab et al., 2013), but the effort was
discontinued (Schwab et al., 2014). The economic development process should consider variables
related to the environment, responding to the current global scenario that demands such a
debate.

CONCLUSION

This paper analyzed, at a macroeconomic level, the influence of ecological sustainability on the
relationship between innovation and global competitiveness. There are several studies (Ambruș
et al., 2017; Dutra, Silva, & Cubas, 2019; Moyano-Fuentes et al., 2018) that portray such
influence at the level of firms. However, further research on these relationships is needed to
observe the countries, which is the contribution of this research. Notwithstanding, this study
avoids using any political or ideological narrative.

The research used indicators of global competitiveness and innovation, found in the Global
Competitiveness Report (GCR) of the World Economic Forum, and indicators of ecological
sustainability found in the Global Innovation Index (GII), prepared by Cornell University,
Institut Européen d’Administration des Affaires, and the World Intellectual Property
Organization.
Does ecological sustainability really matter? Evaluation of its mediating role in the relationship between innovation and competitiveness 17

It is noteworthy that the competitiveness indicators are based, in general, on economic,

infrastructure, institutional/political, health, and education factors. However, they do not
consider indicators referring to ecological sustainability. The 2013 and 2014 GCR editions
evaluated the possibility of considering ecological sustainability in the construction of the Global
Competitiveness Index (Schwab et al., 2013; 2014). This initiative was unsuccessful, considering
that the subsequent editions stopped discussing the topic (Schwab, 2019; Schwab et al., 2017;
2015; 2016).

This study, however, proved the importance of the topic by using multivariate data analysis to
demonstrate the mediating role of ecological sustainability in the relationship between
innovation and global competitiveness. As a result, it is possible to argue that the GCR should
reconsider the use of ecological sustainability as an element in the construction of the GCI since
it contributes to the prosperity of companies and countries. Such inclusion was also advocated
by Doyle and Perez-Alaniz (2017). They affirm that ecological sustainability indicators should be
incorporated into the WEF report to form a new index of sustainable competitiveness. This index
could be an important and credible metric to analyze sustainable development in several
countries. Such a perspective would enhance a more assertive adoption of managerial policies
related to the search for convergence between environmental and economic interests.

Nevertheless, the mediation found does not support the notion that ecological sustainability is
solely responsible for countries’ competitiveness, which can reinforce a duality, sometimes
perceived as antagonistic, between economy and environment. On the other hand, the existence
of the mediation suggests to political and economic agents that such antagonism is naive when
observing that ecological sustainability is one way to achieve competitiveness. Thus, a higher rate
of competitiveness in countries is connected to innovation activities, and part of this relationship
occurs through ecological sustainability. This study shows that the complementarity of these
dimensions cannot be overestimated nor overlooked. Common sense and balance are necessary
for the treatment of the three variables presented in the model discussed in this research
(innovation, ecological sustainability, and global competitiveness), which shows that the joint and
rational approach to these elements is crucial for the countries’ prosperity.

In terms of practical contributions, it is clear that the rational use of resources, the development
of green innovations, and the implementation of environmental certifications must be part of
firms’ strategies. The findings support the recommendation for companies to pay attention to
environmental and innovation management to improve sustainability and to increase
organizational performance and long-term survival. On the other hand, the public administration
has to adopt laws and policies for the protection and management of natural reserves and the
environment as a whole (Marikina, 2018; Zhan et al., 2018).

As for the limitations of the research, it is essential to mention the use of two different reports,
with different methodologies and approaches, to compose the theoretical model presented. This
procedure may be justified by the existing adherence between the GCR and the GII, mainly
regarding the similar scope of countries in the two reports. Future studies would benefit from
using other sources to explore the topics addressed here.
R. R. Jacomossi, P. R. Feldmann, A. Barrichello, R. S. Morano 18

The ecological sustainability theme is controversial and arouses passions, both on the side of the
uncompromising defense of the environment, even to the detriment of a minimum of prosperity
for human beings, and on the side of the clash between the possibility of generating wealth and
the protection of the environment.

The present paper proposed to locate sources related to innovation and competitiveness, but that
could not be linked to the aforementioned extremes. It was to seek ecological sustainability data
in a separate source from the GCR, ensuring that the research was no longer starting from a
premise about the importance of ecological sustainability in the relationship between innovation
and competitiveness.

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R. R. Jacomossi, P. R. Feldmann, A. Barrichello, R. S. Morano 24

Authors’ contributions

1st author: conceptualization (equal), data curation (equal), funding acquisition (equal), methodology (equal), project
administration (equal) resources (equal), supervision (lead), visualization (equal), writing – original draft (equal),
writing – review & editing (equal).
2nd author: conceptualization (equal), funding acquisition (equal), project administration (equal), resources (equal),
visualization (equal), writing – original draft (equal), writing – review & editing (equal).
3rd author: conceptualization (equal), data curation (equal), formal analysis (equal), funding acquisition (equal),
investigation (equal), methodology (lead), resources (equal), software (supporting), validation (equal), visualization
(equal), writing – review & editing (equal).
4th author: Conceptualization (equal), data curation (equal), formal analysis (equal), investigation (equal),
methodology (equal), resources (equal), software (supporting), validation (equal), visualization (equal), writing –
review & editing (equal).

Authors
Rafael Ricardo Jacomossi
Centro Universitário FEI, Departamento de Administração
Rua Tamandaré, 688, Liberdade, 01525-001, São Paulo, SP, Brazil
[email protected]
https://orcid.org/0000-0001-5584-142X

Paulo Roberto Feldmann

Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade
Av. Prof. Luciano Gualberto, 908, Butantã, 5508-010, São Paulo, SP, Brazil
[email protected]
https://orcid.org/0000-0001-5662-8735

Alcides Barrichello*
Universidade Presbiteriana Mackenzie, Centro de Ciências Sociais e Aplicadas
Rua da Consolação, 930, Consolação, 01302-000, São Paulo, SP, Brazil
[email protected]
https://orcid.org/0000-0003-1531-3651

Rogério Scabim Morano

Universidade Federal de São Paulo, Instituto de Ciência e Tecnologia, Instituto de Ciências Ambientais, Químicas
e Farmacêuticas
Rua São Nicolau, 210 – Sala 41 (4º andar), 09913-030, Diadema, SP, Brazil
[email protected]
https://orcid.org/0000-0002-3233-0843

* Corresponding author

Peer review is responsible for acknowledging an article's potential contribution to the frontiers of scholarly knowledge on business
or public administration. The authors are the ultimate responsible for the consistency of the theoretical references, the accurate
report of empirical data, the personal perspectives, and the use of copyrighted material.
This content was evaluated using the double-blind peer review process. The disclosure of the reviewers' information on the first
page is made only after concluding the evaluation process, and with the voluntary consent of the respective reviewers.
Does ecological sustainability really matter? Evaluation of its mediating role in the relationship between innovation and competitiveness 25

APPENDIX A
Table A1

Countries/regions from GCR/GII database

Region Country
East Asia and the Pacific (15) Australia
Brunei Darussalam
Cambodia
China
Hong Kong SAR
Indonesia
Japan
Korea, Rep.
Malaysia
Mongolia
New Zealand
Philippines
Singapore
Thailand
Vietnam
Eurasia (9) Armenia
Azerbaijan
Georgia
Kazakhstan
Kyrgyz Republic
Moldova
Russian Federation
Tajikistan
Ukraine

Latin America and the Caribbean (17) Argentina

Brazil
Chile
Colombia
Costa Rica
Dominican Republic
Ecuador
El Salvador
Guatemala
Honduras

Continues
R. R. Jacomossi, P. R. Feldmann, A. Barrichello, R. S. Morano 26

Table A1 (continued)
Region Country
Latin America and the Caribbean (17) Jamaica
Mexico
Panama
Paraguay
Peru
Trinidad and Tobago
Uruguay

Europe (36) Albania

Austria
Belgium
Bosnia
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Latvia
Lithuania
Luxembourg
Malta
Montenegro
Netherlands
Norway
Poland
Portugal
Romania
Serbia
Slovak Republic
Slovenia

Continues
Does ecological sustainability really matter? Evaluation of its mediating role in the relationship between innovation and competitiveness 27

Table A1 (continued)
Region Country
Europe (36) Spain
Sweden
Switzerland
Turkey
United Kingdom

Middle East and North Africa (15) Algeria

Bahrain
Egypt
Iran, Islamic Rep.
Israel
Jordan
Kuwait
Lebanon
Morocco
Oman
Qatar
Saudi Arabia
Tunisia
United Arab Emirates
Yemen
Sub-Saharan Africa (20) Benin
Botswana
Cameroon
Ghana
Guinea
Kenya
Madagascar
Malawi
Mali
Mauritius
Mozambique
Namibia
Nigeria
Rwanda
Senegal
South Africa
Tanzania
Uganda

Continues
R. R. Jacomossi, P. R. Feldmann, A. Barrichello, R. S. Morano 28

Table A1 (continued)
Region Country
Sub-Saharan Africa (20) Zambia
Zimbabwe

North America (2) Canada

United States

South Asia (5) Bangladesh

India
Nepal
Pakistan
Sri Lanka
Note. Based on Schwab, K., Sala-i-Martín, X., & Samans, R. (2017). The Global Competitiveness Report 2017-2018. Geneva,
CH: World Economic Forum and Dutta, S., Lanvin, B., & Wunsch-Vincent, S. (2018). Global Innovation Index 2018.
Ithaca, NY; Fontainebleau, FR; Geneva, CH: Cornell University, INSEAD, and WIPO.