Is Porter Hypothesis True or FalseA Perspective Based on Environmental Strategic Orientation

Abstract

With increasingly severe environmental regulations(ER), the need to develop efficient strategies towards environmental protection and high performance is a pressing issue for enterprises. However, extant literature on the subject rarely discusses how different environmental strategy orientations mediate the relationships involved in the Porter Hypothesis(PH). Therefore, this study focuses on an environmental strategy response to ER, and sustained high performance, by incorporating the idea of technology innovation(TI). We first divide environmental strategy into two modes: proactive environmental strategy(PES) and reactive environmental strategy(RES). We then contextualize two models to analyze the ER and enterprise performance(EP) correlation; and test the mediating effect of TI on this relationship, adhering to PES. The empirical data on 760 Chinese A-share listed enterprises in 2017 indicates that there is no generality in PH. An enterprises environmental strategic orientation may cause PH and traditional hypothesis disparity. ER is positively correlated with EP, with TI playing an intermediary role, in the PES mode; but in the RES approach, ER and EP exhibit a negative connect. This study holds great significance for enterprises aspiring to reinforce environmental protection, and promote strategic transformation.