Linking Environmental Regulation and Financial Performance: The Mediating Role of Green Dynamic Capability and Sustainable Innovation

Xinpeng Xing, Tiansen Liu, Lin Shen and Jianhua Wang
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Xinpeng Xing: School of Business, Jiangnan University, Wuxi 214122, China
Tiansen Liu: School of Economics and Management, Harbin Engineering University, Harbin 150001, China
Lin Shen: School of Business, Jiangnan University, Wuxi 214122, China
Jianhua Wang: School of Business, Jiangnan University, Wuxi 214122, China

Sustainability, 2020, vol. 12, issue 3, 1-22

Abstract: This study develops a multiple mediating model for exploring the link between environmental regulation and financial performance through green dynamic capability, sustainability exploration/exploitation innovation, based on the data from 355 Chinese manufacturing firms. Empirical results support a mediating role of green dynamic capability and sustainability exploration/exploitation in the link between environmental regulation and financial performance, respectively. What’s more, our findings indicate that environmental regulation can help improve financial performance via two multiple mediating paths, i.e., green dynamic capability and sustainability exploration innovation, as well as green dynamic capability and sustainability exploitation innovation. These key findings will help to understand how important green dynamic capability and sustainable innovation is when Chinese manufacturing firms establish a business-politics tie.

Keywords: environmental regulation; green dynamic capability; sustainability exploration innovation; sustainability exploitation innovation; financial performance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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