The Role of Institutional Ownership in the Tendency Toward Green Innovations in Polluting and Clean Industries

Background and Objectives: Considering the increasing importance of environmental issues and the associated legal and social pressures, green innovations have become a critical dimension of organizational sustainability. This study aims to examine the role of institutional ownership in the tendency toward green innovations in both polluting and clean industries. Specifically, the research seeks to clarify whether the type of industry (polluting or clean) affects the degree of companies’ inclination toward green innovation, and whether institutional ownership can moderate this relationship.
Materials and Methods: The study is applied in terms of purpose and descriptive–analytical in terms of nature. The statistical population includes companies listed on the Tehran Stock Exchange during the years 2016 to 2024. Financial and institutional data of the companies were extracted from official databases and analyzed using a panel data model. In this model, the dependent variable is the tendency toward green innovation, the independent variables are the industry type (polluting and clean), the moderating variable is institutional ownership, and the control variables include company size, age, and investment.
Results: The results of the first and second hypotheses showed that the tendency toward green innovations is significant in both polluting and clean industries. In polluting industries, environmental pressures and legal requirements are among the most important drivers, whereas in clean industries, green innovation is mainly driven by competitive motives and technological efficiency. The findings related to the third and fourth hypotheses also indicated that institutional ownership plays a positive and significant moderating role in the relationship between industry type and the tendency toward green innovations. In polluting industries, institutional investors strengthen companies’ motivation to move toward green innovation, and in clean industries, institutional ownership acts as a supporting factor for green strategies.
Conclusion: The findings indicate that in the context of Iran, where environmental and social pressures are increasing, institutional investors can play a key role in shifting corporate behavior toward sustainability. Additionally, the negative effect of company size and traditional investments on green innovation highlights the need to reconsider resource allocation policies and strengthen environmental incentives in large companies. The results of this study showed that the tendency toward green innovations is significant in both polluting and clean industries, but the intensity and direction of institutional factors’ effects differ between the two groups. Specifically, companies operating in polluting industries are more inclined toward green innovations due to legal and social pressures, whereas in clean industries, this tendency is primarily driven by competitive strategies and corporate social responsibility.
Furthermore, the findings indicate that institutional ownership plays an important moderating role in these relationships: in polluting industries, the presence of financial institutions strengthens the tendency toward green technologies, while in clean industries, this effect is weaker and can sometimes be negative. These results emphasize that a proper combination of regulatory and incentive-based policies can enhance the interaction between institutional investors and companies in favor of sustainable development, thereby increasing the role of the capital market in supporting the transition to a green economy. It is recommended that company managers strengthen their green strategies by increasing the share of institutional investors, particularly those with a long-term perspective. Policymaking institutions can also facilitate the promotion of green innovations through tax incentives, the creation of green indices in the capital market, and mandatory environmental reporting.
Future research is suggested to examine the differences between types of institutional ownership (active, passive, green) and the various dimensions of green innovation (process, product, and organizational) to provide a more precise understanding of institutional effects on corporate sustainability.