Abstract
Previous studies indicate that the Porter hypothesis (PH) generates controversial and inconsistent conclusions on the impact of environmental regulation (ER) on business performance. As a result, based on the data of China’s A-share listed companies from 2016 to 2018, a moderated mediating effect model is established to examine the relationship between ER, technological innovation and business performance, as well as the moderating effect of environmental regulation flexibility (ERF) on the relationship. Results show that technological innovation has a significant mediating effect on the relationship between ER and business performance. Furthermore, ERF has a negative moderating effect on the mediating effect technological innovation exerted. At a certain degree, the flexible ER could weaken technological innovation’s mediating effects on the relationship between ER and business performance, and further could mitigate the negative impact of ER on both technological innovation and business performance. Also, an inflexible ER intensifies its negative effects on technological innovation and business performance, which is to the disadvantage of enterprises becoming the subject of environmental protection consciously and sustainably.
Highlights
One of the biggest challenges of the 21st century is to counterbalance environment deterioration [1,2]
Based on the empirical analysis of the relationship among environmental regulation (ER), technological innovation and business performance, as well as the moderating effect of environmental regulation flexibility (ERF), several conclusions and implications can be drawn. Both the mediating effect of technological innovation and moderating effect of ERF should be considered when analyzing the impact of ER on business performance
How to find an optimal balance between environmental protection and economic development has become an important issue of common concern to the governments and environmental protection organizations of all countries
Summary
One of the biggest challenges of the 21st century is to counterbalance environment deterioration [1,2]. The ER is definitely an effective approach for restraining enterprises’ behaviors to realize the improvement of environmental quality. In the field of ER and business performance, the most representative study is that of Porter (1991) [8] He suggested that the strict and appropriate ER could promote technology innovation, thereby offsetting ER costs for enterprise and improving business performance, creating a “win-win” result for the improvement of environment and business performance. This view has been widely discussed and is acknowledged as the Porter hypothesis (PH). An increasing number of studies have indicated that ER is not conducive to the improvement of business performance, because enterprises will have to spend extra funds when addressing ER [9,10]
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