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Can Environmental Regulation Flexibility Explain the Porter Hypothesis?—An Empirical Study Based on the Data of China’s Listed Enterprises

Guichuan Zhou (), Wendi Liu (), Liming Zhang () and Kaiwen She ()
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Guichuan Zhou: Business School, Sichuan University, Chengdu 610065, China
Wendi Liu: Business School, Sichuan University, Chengdu 610065, China
Liming Zhang: Business School, Sichuan University, Chengdu 610065, China
Kaiwen She: School of Economics, Sichuan University, Chengdu 610065, China

Sustainability, 2019, vol. 11, issue 8, 1-14

Abstract: Previous studies indicate that the Porter hypothesis (PH) generates controversial and inconsistent conclusions on the impact of environmental regulation (ER) on business performance. As a result, based on the data of China’s A-share listed companies from 2016 to 2018, a moderated mediating effect model is established to examine the relationship between ER, technological innovation and business performance, as well as the moderating effect of environmental regulation flexibility (ERF) on the relationship. Results show that technological innovation has a significant mediating effect on the relationship between ER and business performance. Furthermore, ERF has a negative moderating effect on the mediating effect technological innovation exerted. At a certain degree, the flexible ER could weaken technological innovation’s mediating effects on the relationship between ER and business performance, and further could mitigate the negative impact of ER on both technological innovation and business performance. Also, an inflexible ER intensifies its negative effects on technological innovation and business performance, which is to the disadvantage of enterprises becoming the subject of environmental protection consciously and sustainably.

Keywords: porter hypothesis; environmental regulation; technological innovation; flexibility; business performance (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2019
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