Do green products pay off? Register-based evidence on Finland's manufacturing firms

As environmental concerns reshape market demand, the economic implications of producing green products by firms remain underexplored. This study investigates the economic performance of Finnish manufacturing firms producing green products using merged firm-product data for the period 2008-2021. We examine the factors associated with green product engagement, compare the economic outcomes of green and non-green firms, and analyze the effects of adjusting green product portfolios. Our findings show that larger firms, firms with greater product diversity, and firms with a higher share of educated employees are more likely to produce green products. While green firms generally outperform non-green firms in terms of value added, revenue, and employment, they exhibit lower labor productivity and reduced export participation. Adjusting green product portfolios yields short-term financial benefits, but these effects diminish over time, with firms discontinuing green products experiencing a decline in labor productivity. These findings highlight the complex dynamics of green product manufacturing, and the importance of firm characteristics and strategic decisions in shaping economic outcomes.