Regulatory Stringency Research Articles

Drivers of green innovation and green acquisition: empirical evidence from the food and beverage industry

Purpose Green innovation and green acquisition are key green marketing strategies. This paper aims to explore and compare the drivers of green acquisition and green innovation strategies firms adopt. Moreover, the moderating role of top management team (TMT) sustainability commitment is investigated. Design/methodology/approach The research model used secondary data based on 1,565 firm-year observations in the beverage and food industry in the US. The two-stage control function approach was used for data analysis. Findings Media attention motivates firms to pursue both green innovation and green acquisition. The TMT sustainability commitment plays a pivotal moderating role. It strengthens the link between environmental regulation stringency and green innovation but weakens the impact of media attention on green acquisition. Practical implications Managers can leverage the study’s findings to guide sustainable marketing decisions in response to environmental regulations and media scrutiny. Policymakers and investors can encourage firms to adopt more sustainable practices, helping align corporate strategies with Sustainable Development Goals 9 and 12. Originality/value Though green innovation determinants are extensively studied, most studies rely on surveys or qualitative methods rather than secondary data. Also, as an alternative to developing in-house green technologies or products, the drivers of green acquisition remain unclear despite its growing prevalence. This study addresses both gaps in the sustainable marketing literature.

Evaluating the influence of environmental regulations on green economic growth in China: A focus on renewable energy and energy efficiency guidelines

China's status as the world's largest energy consumer highlights its pivotal role in global energy consumption and the urgency of enhancing its energy efficiency and renewable energy development. This study evaluates the influence of environmental regulations on green economic growth in China, with a focus on renewable energy and energy efficiency, from 2000 to 2023 across 30 provinces. Using the Metafrontier-Global-SBM super-efficient DEA model, the research measures green economic development through the lens of energy efficiency. An enhanced fuzzy comprehensive assessment gauges the stringency of environmental regulations. To explore non-linear impacts, regional spillover, and feedback effects, a spatial econometric model was applied. The results reveal a U-shaped non-linear relationship between environmental regulations and green economic growth, with significant spatial feedback and regional spillover effects. Environmental regulations are also shown to have a substantial positive influence on the development of renewable energy, a critical driver of green economic growth. Policy implications suggest that strengthening environmental regulations could accelerate renewable energy adoption and foster sustainable economic growth across regions in China.

Advancing greener LNG-fueled vessels: Compact simultaneous reduction system for CH4, NOX and CO2 emissions

Stringent ship regulations necessitate simultaneous emission reductions, challenged by cargo loss and energy constraints. This study proposes a compact reduction system that simultaneously mitigate CH4, NOX, and CO2 emissions onboard LNG-fueled vessels. The proposed system integrates two pivotal technologies: a metal support-based compact methane oxidation catalyst (MOC)-selective catalytic reduction (SCR) system to capture CH4 and NOX, and a cryogenic CO2 capture (CCC) system to capture and store CO2 in its solid phase utilizing LNG's cold energy. This innovative approach addresses two challenges. First, the compact MOC-SCR system employs metal support with an enhanced surface area-to-volume ratio surpassing the capabilities of ceramic support materials, achieving a volume reduction of 80.02% and 79.82% respectively. Secondly, the CCC system significantly lowers specific energy consumption by 61.54% by harnessing LNG's cold energy compared to the absorption-based CO2 capture system. As a result, the proposed system not only reduces CH4, NOX, and CO2 emissions simultaneously with a high capture rate but also reduces volume and weight. Furthermore, it achieves a high CO2 capture rate of 92.12%, while diminishing cargo losses by 25.30%. These findings provide valuable guidance for developing environmentally sustainable vessels, aligning with the continuously increasing stringency of regulations.

A mediation analysis of the relationship between land use regulation stringency and employment dynamics

ABSTRACT The paper examines the effects of stringent land use regulations, measured using the Wharton Residential Land Use Regulatory Index (WRLURI), on employment growth during the period 2010–2020 in the Retail, Professional, and Information sectors across 878 local jurisdictions in the United States. All the local jurisdictions exist in both (2006 and 2018) waves of the WRLURI surveys and hence constitute unique panel data. We apply a mediation analytical framework to decompose the direct and indirect effects of land use regulation stringency on sectoral employment growth and specialization. Our analysis suggests a fully mediated pattern in the relationship between excessive land use regulations and employment growth, with housing cost burden as the mediator. Specifically, a one standard deviation increase in the WRLURI index is associated with an approximate increase of 0.8 percentage point in the proportion of cost burdened renters. Relatedly, the higher prevalence of cost-burdened renters has moderate adverse effects on employment growth in two sectors. A 1 percentage point increase in the proportion of cost burdened renters is associated with 0.04 and 0.017 percentage point decreases in the Professional and Information sectors, respectively.

Foreign direct investment, environmental regulation, and energy transition—An empirical study based on data from 38 OECD countries worldwide

AbstractThis study formulates a theoretical hypothesis regarding the intricate interplay among foreign direct investment (FDI), environmental regulation, and energy transition. To empirically validate this hypothesis, a comprehensive analysis is carried out on 38 member nations of the Organization for Economic Cooperation and Development (OECD) over the span of 2003 to 2020, utilizing a panel fixed effects model, a panel quantile model, and a panel threshold regression model. The findings of the research indicate that (1) FDI exhibits an inhibitory impact on energy transition and, according to the heterogeneity analysis, FDI significantly inhibits energy transition in developed nations. However, the inhibitory influence on energy transition in developing nations is not as pronounced. (2) A considerable amount of dampening influence is exerted by FDI on energy transition at various stages of the transition and is most apparent when the transition is in the growth phase. (3) A threshold effect is evident in FDI and environmental regulation in relation to energy transition owing to the mismatch between the two developments. Notably, the influence of FDI on energy transition significantly varies based on the stringency of environmental regulation. As formal environmental regulation surpasses a designated threshold, FDI shifted from facilitating to inhibiting the energy transition. The same conclusions were reached when informal environmental regulation was considered as the threshold variable. Drawing from the conclusions of this paper, the countries of the OECD can develop a theoretical framework to formulate foreign investment introduction policies and regulate environmental regulation efforts to promote the energy transition.

Environmental regulation and intermediate imports: Firm-product-level evidence

This study examines the effects of domestic environmental regulations on import activity. Using a panel of firm-product-level data and variations in regulatory stringency across products established by China’s Eleventh Five-Year Plan for Environmental Protection (covering 2006–2010), it reveals that tougher regulations on emission-intensive industries at home led to increases in downstream manufacturers’ imports of emission-intensive intermediate inputs. Specifically, a 1% increase in sulfur dioxide emission intensity resulted in a 0.026% increase in intermediate imports after the implementation of the regulation. A back-of-the-envelope calculation suggests that, although the regulation increased emissions in source countries, it reduced global emissions of sulfur oxides and carbon dioxide. This is because the increases in imports caused by the regulation mainly came from countries with lower emission intensity than China. The regulation did not disproportionately increase imports from or emissions in developing countries.

The platform policy matrix: Promotion and regulation

AbstractThis study provides a comprehensive analysis of policy measures adopted by countries in response to the rapid growth of digital platforms, which significantly impact various sectors and national economies. It examines the delicate balance between regulation and innovation, offering nuanced policy recommendations. Central to this study is the introduction of the “Platform Policy Matrix,” a strategic framework that explores the relationship between innovation encouragement and regulatory stringency in platform economies. The matrix is divided into four quadrants: “Regulatory Innovation,” “Accelerated Innovation,” “Laissez‐Faire,” and “Stringent Regulation.” This framework aims to guide policymakers in achieving a balance that protects consumers while fostering a competitive and innovative environment. The study advocates for a multifaceted approach that recognizes the unique characteristics of digital platforms. It underscores the necessity for policies that simultaneously promote innovation and enforce necessary regulations in rapidly evolving platform ecosystems. This approach ensures that innovation thrives while maintaining essential regulatory oversight, adapting policy frameworks to the dynamic nature of digital platforms.

FAR regulations and the spatial size of Brazilian cities

ABSTRACT This paper evaluates the influence of the maximum allowed floor area ratio (FAR) on the spatial size of Brazilian cities. We built a novel database on building height restrictions for the 325 largest cities in the country and combined it with recent satellite data. Our estimations show that, as predicted by the monocentric model, tighter constraints are associated with larger urban areas, and this result is robust to several specifications, sensitivity tests and different estimation strategies. Additionally, back-of-the-envelope calculations show that a higher stringency of the building-height regulation generates an annual cost of about US$9.67 million per average Brazilian city.

Investigating How Nontariff Measures Impact the Turfgrass Seed Trade

Turfgrass seed, a living organism, is facing more stringent trade regulations compared with nonliving products. We applied multiple empirical approaches to explore the impact of these regulations on trade flows in grass seeds. We constructed a series of novel variables to measure these regulations, such as environment regulation stringency, pre-shipment inspections, market conditions, and product requirements. Our results showed that nontariff trade measures had substantial impacts on the trade of grass seeds. These measures sometimes worked as barriers to trade and at other times worked as catalysts for trade.

The role of regulation and regional government quality for high-growth firms: the good, the bad and the ugly

ABSTRACT High-growth firms (HGFs) are important for job creation and productivity growth. We investigate the relationship between product and labour market regulations, as well as the quality of regional governments that implement these regulations, and the development of HGFs across European regions. Using data from Eurostat, the Organisation for Economic Co-operation and Development (OECD), World Economic Forum (WEF), and Gothenburg University, we show that both regulatory stringency and the quality of the regional government relate to the regional shares of HGFs. In particular, we find that the effect of labour and product market regulations is moderated by the quality of regional government. Depending on the quality of regional governments, regulations may have a ‘good, bad or ugly’ influence on the development of HGFs. Our findings contribute to the debate on the effects of regulations and offer important building blocks to develop tailored policy measures that may influence the development of HGFs in a region.

Impact of Financial Regulations on Bank Profitability in Uganda

Purpose: The aim of the study was to assess the impact of financial regulations on bank profitability in Uganda. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: Financial regulations significantly influence bank profitability, primarily by affecting operational costs, risk management practices, and lending activities. Stricter capital requirements, such as those imposed by Basel III, generally enhance financial stability but may reduce profitability by limiting leverage and increasing the cost of compliance. Regulatory measures aimed at consumer protection and transparency, while beneficial for market integrity, can also impose additional administrative burdens and costs on banks. Conversely, deregulation periods often see increased profitability due to relaxed constraints on lending and investment activities. However, this can come at the expense of higher risk exposure and potential financial instability. Overall, the balance between regulatory stringency and bank profitability hinges on the specific regulations in place and the banks' ability to adapt and innovate within those frameworks. Implications to Theory, Practice and Policy: Agency theory, capital structure theory and information asymmetry theory may be used to anchor future studies on assessing the impact of financial regulations on bank profitability in Uganda. Practitioners should advocate for risk-based regulation that tailors regulatory requirements to banks' risk profiles and systemic importance. Policymakers should prioritize efforts to harmonize financial regulations across jurisdictions, especially in global banking hubs.

Using the International Alcohol Control (IAC) policy index to assess effects of legislative change in Aotearoa New Zealand

BackgroundThe IAC Policy Index was developed to allow comparison in alcohol policy between countries and within countries over time including in low resource settings. It measures four effective alcohol policies and takes into account stringency of regulation and the actual impact on the alcohol environment, such as trading hours and prices paid. This framework was used to assess policy in Aotearoa New Zealand in a time period covering two relevant legislative changes. This is the first study to use an alcohol policy index to assess and describe legislative change within country.MethodsData to calculate the IAC Policy Index was collected for 2013 and 2022. Stringency of policy was assessed from legislative statutes and impacts of policy on the alcohol environment from administrative data and specifically designed data collection.ResultsThe overall IAC Policy Index score improved over the time period. The scores for the separate policy areas reflected the legislative changes as hypothesised, but also independent changes in impact, given ecological changes including reduced enforcement of drink driving countermeasures and increased exposure to marketing in digital channels. The IAC Policy index reflects the changes in policy status observed in Aotearoa, NZ.DiscussionThe IAC Policy Index provided a useful framework to assess and describe change in alcohol legislation contextualised by other influences on policy impact over time within a country. The results indicated the value of assessing stringency and impact separately as these moved independently.ConclusionsThe IAC Alcohol Policy Index, measuring both stringency and actual impact on the alcohol environment with a focus on only the most effective alcohol policies provides meaningful insights into within-country policy strength over time. The IAC Policy Index used over time can communicate to policy makers successes and gaps in alcohol policy.

Dynamic regulation of water potential in Juniperus osteosperma mediates ecosystem carbon fluxes.

Some plants exhibit dynamic hydraulic regulation, in which the strictness of hydraulic regulation (i.e. iso/anisohydry) changes in response to environmental conditions. However, the environmental controls over iso/anisohydry and the implications of flexible hydraulic regulation for plant productivity remain unknown. In Juniperus osteosperma, a drought-resistant dryland conifer, we collected a 5-month growing season time series of in situ, high temporal-resolution plant water potential ( ) and stand gross primary productivity (GPP). We quantified the stringency of hydraulic regulation associated with environmental covariates and evaluated how predawn water potential contributes to empirically predicting carbon uptake. Juniperus osteosperma showed less stringent hydraulic regulation (more anisohydric) after monsoon precipitation pulses, when soil moisture and atmospheric demand were high, and corresponded with GPP pulses. Predawn water potential matched the timing of GPP fluxes and improved estimates of GPP more strongly than soil and/or atmospheric moisture, notably resolving GPP underestimation before vegetation green-up. Flexible hydraulic regulation appears to allow J. osteosperma to prolong soil water extraction and, therefore, the period of high carbon uptake following monsoon precipitation pulses. Water potential and its dynamic regulation may account for why process-based and empirical models commonly underestimate the magnitude and temporal variability of dryland GPP.

Environmental regulation and productivity growth in the euro area: Testing the porter hypothesis

This paper examines the impact of changes in the stringency of environmental regulations on productivity growth. We exploit several data sources, including the OECD Environmental Policy Stringency Index and balance sheet information from ORBIS and iBACH, to test the Porter hypothesis, according to which firms’ productivity can benefit from more stringent environmental policies. We estimate the regulatory impact over a five-year horizon using panel local projections. To identify the direction of the effects, we estimate CO2 equivalent emissions for all firms in our sample using a machine learning algorithm. As suggested by the country-level analysis and confirmed by the firm-level analysis, policy tightening negatively affects productivity growth of high-polluting firms and to a larger extent than that of their low-polluting peers. Hence, we do not find support for the Porter hypothesis in general. However, not all policies have the same impact – non-market based policies are the most detrimental to productivity growth – and not all highly polluting firms are affected in the same way – the negative impact is mitigated for large firms, which may benefit from easier access to finance and greater innovativeness.

A balance sheet analysis of monetary policy effects on banks

Monetary policy operations affect bank balance sheets (BBSs). This study develops a balance sheet model to examine the impacts of monetary policy operations on banks' ability to supply funds. That ability is assessed using the balance sheet capacities provided by regulatory risk management instruments. The balance sheet approach views a monetary policy operation as a transaction between the central bank and a commercial bank, modeling the transaction as multiple changes to the BBS. This study identifies and distinguishes the effects of multiple changes in the BBS on balance sheet capacity. A balance sheet change resulting from a monetary policy operation may positively or negatively affect balance sheet capacity. Thus, a monetary policy may have a positive and a negative effect simultaneously. Positive (negative) effects result from balance sheet changes that reduce (increase) bank risks, as measured by regulations. As regulatory stringency decreases, the positive effects increase, whereas the negative effects remain unchanged. A BBS capacity channel of monetary policy is also shown.

From foreign direct investment to environmental regulations: Does a feedback effect ever exist?

This study revisits the feedback effect from foreign direct investments (FDI) on environmental regulations under the presence of the host country's political structure. Such a relationship may encounter the endogeneity problem due to the omitted variable bias and reverse causality. As such, the two-step system generalized method of moments is employed. Using data from 21 OECD countries from 1990 to 2019, we confirm that FDI flows influence environmental regulations, but such an effect is conditional on the host country's political constraints. Specifically, FDI increases (decreases) the stringency of environmental regulations if domestic political constraints are sufficiently high (low). Understanding the mechanisms of how FDI flows can affect environmental regulations allows countries to revise their policies to attract more FDI flows to support economic growth while simultaneously minimising their negative effects on the environment.

How digital government mediate the influence of fossil fuels on green innovation: Evidence from China's a-share industrial enterprises

China's rapid economic growth has resulted in a heavy reliance on fossil fuels, necessitating effective government intervention to facilitate their green transformation within the industrial sector. Therefore, a comprehensive investigation into the impact of mineral resource and fossil fuel dependence (ED) on the green transformation of Chinese enterprises, alongside the role of digital governance systems, holds paramount importance. This study delves into the influence of ED on firms' green technology innovation (FGI) using data sourced from A-share industrial enterprises listed on China's Shanghai and Shenzhen stock exchanges during the period from 2011 to 2021. Additionally, it examines the internal mechanisms facilitated by digital government, and provides insights into the heterogeneity observed from the perspectives of enterprises' industry classifications and sizes. The following conclusions are drawn: (1) ED significantly impedes the enhancement of green technology innovation levels among listed industrial enterprises, and this finding remains robust across multiple testing methods. (2) ED demonstrates varying inhibitory effects on firms' green technology innovation, with the most pronounced impact observed in the energy production and supply industry and the mining industry, and a relatively weaker effect observed in manufacturing enterprises. Furthermore, the inhibitory effect of fossil energy dependence on green technology innovation is observed to be stronger in small-scale enterprises compared to their larger counterparts. (3) The advancement of the digital economy notably mitigates the inhibitory effect of fossil energy dependence on firms' green technology innovation. (4) ED primarily diminishes the level of green innovation by reducing the stringency of government environmental regulations, hindering regional marketization, and impeding the industrial structure's upgrade.

Xylem safety in relation to the stringency of plant water potential regulation of European beech, Norway spruce, and Douglas-fir trees during severe drought

Key messageNorway spruce operates with larger hydraulic safety margins (HSM) than beech and Douglas-fir despite the known drought sensitivity of spruce, questioning a pivotal role of HSM in drought tolerance.The exceptional 2018/2019 drought exposed Central Europe’s forests to severe stress, highlighting the need to better understand stomatal regulation strategies and their relationship to xylem safety under extreme drought. We studied diurnal, seasonal, and inter-annual variation in stomatal conductance (gs) and leaf water potential (ΨLeaf) in co-occurring European beech (F. sylvatica), Norway spruce (P. abies), and Douglas-fir (P. menziesii) trees in the two summers and related them to hydraulic traits characterizing drought resistance. In 2018, F. sylvatica exhibited a continuous ΨLeaf decline from June to September, as is characteristic for an anisohydric strategy, while P. abies closed stomata early and reached the least negative ΨLeaf-values at the end of summer. P. menziesii showed low ΨLeaf-values close to P12 (the xylem pressure at onset of embolism) already in July. Both conifers closed stomata when approaching P12 and maintained low gs-levels throughout summer, indicative for isohydric regulation. In 2019, all three species showed a linear decline in ΨLeaf, but F. sylvatica crossed P12 in contrast to the conifers. The three species exhibited similar water potentials at turgor loss point (− 2.44 to − 2.51 MPa) and branch P50 (xylem pressure at 50% loss of hydraulic conductance; − 3.3 to − 3.8 MPa). Yet, F. sylvatica and P. menziesii operated with smaller hydraulic safety margins (HSM means: 0.79 and 0.77 MPa) than P. abies (1.28 MPa). F. sylvatica reduced leaf size and specific leaf area in 2019 and increased Huber value. Our species comparison during extreme drought contradicts the general assumption that conifers operate with larger HSMs than angiosperm trees. Contrary to expectation, P. abies appeared as hydraulically less vulnerable than Douglas-fir.

The opposite innovation impacts of air and water pollution regulations: Evidence from the total emissions control policy in China

This paper uses a unique firm-level data set from China’s two most developed regions, the Yangtze River Delta (YRD) and the Pearl River Delta (PRD), to examine the effects of environmental regulations on innovation. Variations in air and water pollution reduction plans under the Total Emissions Control Policy from the 10th to the 12th Five-Year Plans (2001–2015) are explored to measure the stringency of environmental regulations faced by industrial firms. To alleviate endogeneity concerns, we calculate city-level fair pollution reduction volumes which rely only on each city’s contribution to national pollution emissions in the base years and use them as instrumental variables of reduction plans. The two-stage least square estimations reveal that while air pollution regulation (APR) motivates industrial firms to innovate, water pollution regulation (WPR) hinders firm innovation. We confirm the opposite effects by estimating the impact on entrepreneurs’ perceptions of the importance of innovation in industrial firms’ development. Heterogeneity effect analysis shows that APR also hinders innovation in heavily air-polluting industries and state-owned firms, and WPR produces a decreasing innovation-hindering effect over time, which is larger in the YRD region than in the PRD region. We interpret the opposite impacts with the fact that water pollution discharges are more equally distributed across industries than air pollution emissions, resulting in more pervasive and stringent WPR.

Unintended consequences of punishment: Adverse effects of environmental penalties on green patents

We find that manufacturing firms that have received high environmental penalties experience significant declines in subsequent green patenting activity. We further use a difference-in-differences strategy exploiting the passage of 1990 Clean Air Act Amendment (1990 CAAA) as a shock to environmental regulatory stringency and show that the increase in regulatory stringency is linked to decreases in corporate green innovation. The adverse effect of environmental penalties on green innovation is stronger in firms with greater business uncertainty, higher product market competition, higher institutional ownership, and weaker financial conditions. Overall, the empirical evidence is consistent with the view that environmental penalties prompt firms to manage their risk exposure by reducing green innovation activity.