Examining the effects of government intervention on the firm’s environmental and technological innovation capabilities and export performance

Abstract

Considering our living environments directly affect the quality of our daily lives, many believe that the environment should only be safeguarded by the mighty hands of the government instead of leaving the environmental stewardship in the hands of profit-making private enterprises. As such, the government often intervenes with the way private enterprises conduct business through many different forms of environmental regulations and business incentives. However, the efficiency and effectiveness of such government intervention are still unknown and unclear at best. Many sceptics still think that economic growth and environmental protection are in conflict with each other and subsequently the firm’s environmental performance and export performance cannot be achieved simultaneously even with active government intervention over the firm’s environmental management. To clarify this misconception, this paper aims to examine whether government intervention leads to the affected firm’s both environmental and export performance (export sales performance). In addition, it investigates whether government intervention enhances the firm’s environmental and technological innovation capabilities and thus makes the firm more competitive in the global marketplace. In so doing, this paper verifies the ecological modernisation theory and institutional theory using the empirical analysis of the survey data obtained from the Korean manufacturing industry.