Green Patenting Takes Time to Pay Off. A Quasi-Experimental Study on the Italian Machinery Industry 

Despite extensive research on the relationship between environmental innovation and firm performance, there is still uncertainty about whether and when adopting eco-friendly practices pays off. To address this gap, we investigate whether green patents confer an incremental growth premium relative to other innovations and whether this premium follows a distinct, and possibly more delayed, temporal profile. Using a panel of 6,148 Italian machinery and equipment manufacturers (NACE 28) observed from 2014 to 2023 and a flexible conditional Difference-inDifferences (DID) approach, we estimate the dynamic effects of patenting on firm sales performance. The results indicate that general patenting leads to positive and persistent gains, with effect sizes that become larger at longer horizons. Additionally, green patents provide an extra growth premium that emerges only from the third year after the first green patent and is especially pronounced between three and five years after patenting. By revealing these dynamics, the study reframes the debate from whether it pays to be green to when firms can expect to benefit from environmental innovation.