Barriers to innovation and innovation performance: the mediating role of external and internal funding in Korean green companies

The purpose of this study is to analyze whether the investment of R&D funds in the innovation process by utilizing external and internal funds to overcome constraints and influence innovation performance when green companies face innovation barriers using the Green Industry Innovation Survey of the Green Technology Center. This study utilized data from the Green Technology Innovation Survey (GIIS) of the National Green Technology Research Institute and analyzed regression and mediation effects using the R package. In particular, this study analyzed the relationship between internal R&D funds and external R&D funds investment on innovation performance in the case of obstacles in carrying out green technology innovation activities. The results show that the innovation performance of firms that try to overcome barriers by investing in internal R&D funds is significantly higher than that of firms that overcome barriers by investing in external R&D funds, and internal R&D funds mediate the relationship between innovation barriers and innovation performance. The contributions of this study are, first, that it is important to recognize the barriers that firms face in green industries and to conduct R&D despite the perceived barriers. We add to the academic literature on the importance of R&D investment for technological innovation in overcoming barriers to innovation. Second, we emphasize the importance of R&D through internal resource commitment to increase innovation performance in green industries. We find that even when firms recognize barriers, investing internal resources to conduct R&D activities for innovation is more important than taking the risk of investing external R&D resources.