The Relationship between Standard-Induced Pollution Prevention Practices and Financial Performance: Testing the Mediating Role of Green Growth Initiatives

Abstract

This study explores whether green growth (GG) initiatives can effectively complement standard-induced pollution prevention (P2) practices for long-term profitability in an attempt to combine a resource-based view (RBV) of firms and institutional theory. Using survey data collected from 299 manufacturing facilities in Korea, this article empirically examined the mediation effect of GG initiatives on the relationship between P2 practices and financial performance by structural equation models (SEM) with the LISREL technique. Results suggest that GG initiatives such as a new mechanism for environmental regulations in combination with P2 practices can enhance financial performance, which will, in turn, lead to economic recovery and new employment. This finding contributes to the strategic management literature. Theoretical and practical implications of the study’s findings and directions for future research are discussed.