Environmental Regulation, Environmental Commitment, Sustainability Exploration/Exploitation Innovation, and Firm Sustainable Development

Xing Xing,Shen Shen,Liu Liu,Zhu Zhu,Wang Wang

doi:10.3390/su11216001

Abstract

The links among firms’ environmental regulation, innovation process, and sustainable development has been analyzed, but a research gap still remains in terms of environmental commitment and different types of sustainable innovation in firms’ sustainability. Through collecting a dataset of 380 valid respondents from Chinese manufacturing firms, this paper incorporates evironmental regulation, environmental commitment, sustainability exploration innovation, sustainability exploitation innovation, environmental performance, and business performance into a multiple mediating effect model. Our key emperical findings are as follows: (1) Environmental regulation not only cannot affect environmental performance and business performance, but also cannot affect the two types of firm performance through sustainability exploration innovation or sustainability exploitation innovation; (2) The relationship between environmental regulation, environmental performance (or business performance) is subsequently mediated by both environmental commitment and sustainability exploitation innovation; (3) Environmental regulation does not affect environmental performance (or business performance) through environmental commitment and sustainability exploration innovation. These results do, however, support the Porter Hypothesis in terms of revealing a new multiple mediating effect path dominated by environmental commitment and sustainability exploitation innovation. Our findings can provide a better understanding of how environmental commitment and sustainability exploitation innovation play a key effect in helping firms relieve the pressure from environmental regulation, and thus improve their environmental management while keeping their competitive edge.

Highlights

The dominant mode of economic growth at present has led to an enormous consumption of materials and energy that triggers the large-size pollutants emission, which has intensified the conflict between environmental protection and economic development
This paper aims to analyze the link between environmental regulation (EREG) and firm sustainable development under the multiple mediating effects of sustainability exploration innovation (SEXPLOR), sustainability exploitation innovation (SEXPLOI), and environmental commitment (ECOM) through using two dimensions of sustainable development
This paper provides a new insight into the effect of environmental regulation on sustainable development through the multiple mediating effect of environmental commitment and two types of sustainable innovations: sustainability exploration innovation and sustainability exploitation innovation

Summary

Introduction

The dominant mode of economic growth at present has led to an enormous consumption of materials and energy that triggers the large-size pollutants emission, which has intensified the conflict between environmental protection and economic development To alleviate this dilemma, governments worldwide broadly developed environmental regulation (EREG) tools [1,2]. Flexible regulation tools can optimize market structures, reduce production costs while improving operations efficiency, helping firms to keep their competitive edge [4,5]. Whether these regulation tools can improve firms’ sustainable development is still controversial, and this is expected to expand the theoretical explanation of Porter Hypothesis. With increasing literature on EREG, there is a growing debate on its actual effect, especially the effect mechanism of EREG on firms’ sustainable development

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