How does the go‐with‐the‐flow export strategy affect corporate environmental performance?—Evidence from Chinese manufacturing firms

Abstract

AbstractHow the export strategy affects corporate environmental performance (CEP) is an integral part of trade and environmental issue. This paper investigates the impact of the go‐with‐the‐flow export strategy on CEP during the period 2000 to 2013 by the Chinese Industrial Firms Green Production Emissions Database and the China Customs Database. The study shows that the go‐with‐the‐flow export strategy increases firms' pollution emissions, that is, the more the firms follow the market, the higher their SO2 emission intensity. However, this environmental degradation effect is only found in small and domestic‐owned firms. Furthermore, this study finds that the go‐with‐the‐flow export strategy could lead to a conservative production strategy and low survival pressure, which makes firms shortsighted in terms of less investment in clean innovation and sustainable production. Based on these empirical results, the government should reduce firms' cost of clean innovation and ameliorate the problem of market information asymmetry. Such efforts would allow firms to devote more resources to sustainable production rather than information gathering. In addition, environmental regulations should go hand in hand with the promotion of green technology to avoid the expelling effect of regulation and for firms' sustainable production.