Effect of green innovation strategy on firm‐idiosyncratic risk: A competitive action perspective

Despite increasing concern for corporate environmental responsibility in numerous industries, the relationship between green innovation strategy (GIS) and idiosyncratic risk is a rarely scrutinised topic, particularly in the automotive domain. In this study, we empirically explore the association between GIS and idiosyncratic risk and analyse the moderating role played by the firm's competitive action. We rely on the secondary information sourced for 132 top automotive firms, in the period ranging from 2011 to 2017 by applying the system generalised methods of moments estimator to the dynamic panel data model. Our findings indicate that GIS significantly reduces the idiosyncratic risk of all firms, and this relationship strengthens with the increase in the competitive action of the firms. Our evidence supports “it pays to be green” firm heterogeneity argument. This study highlights the academic and managerial implications and focuses on the environmental issues published in environmental management literature.     

Inter‐firm R&D collaborations and green innovation value: The role of family firms' involvement and the moderating effects of proximity dimensions

The present paper investigates the relationship between the involvement of family firms in R&D collaborations aimed at developing green solutions and the value of resulting innovations. To dig into this relationship, the moderating effects of two proximity dimensions (i.e., geographical distance and technological relatedness) are also assessed. Analyses are based on a sample of 156 joint patents classified into the “Alternative energy production” field, as defined by the International Patent Classification Green Inventory and successfully filed at the United States Patent and Trademark Office in the period 1997–2010 by publicly listed companies. According to our conjectures, results reveal a positive relationship between the involvement of family firms and green innovation value. Moreover, our findings show that this relationship is hindered when partners are geographically distant or technologically proximate. Eventually, we contribute to the literature on green innovation by unveiling under which conditions inter‐firm R&D collaborations lead to more valuable innovations.     

Pursuing sustainable development through green entrepreneurship: An institutional perspective

Pursuing sustainable development through green entrepreneurship has been advocated, conceptualized, and empirically examined in the recent environmental management and entrepreneurship literature. However, green entrepreneurs are embedded in institutional environments that may discourage them from embracing sustainable development because of the “paradox of embedded agency.” How can a firm overcome the liability of such an agency issue and escape what has become known as a “green prison”? This study proposes that, because international venturing exposes firms to foreign institutions, it provides them with opportunities for institutional learning. Thus, we examine how international venturing influences green entrepreneurship which, in turn, impacts firm performance. Specifically, based on institutional theory, this study develops a firm-level green entrepreneurship framework with three dimensions: green initiatives (a firm's active adoption of green practices), received government green support (benefits that a firm gains from the government by adapting to governmental incentives, programs, and policies related to green practices), and green political influence (a firm's attempts to influence legislation that enacts laws, rules, and regulations related to green practices). The results obtained by analyzing 152 firms that engage in international venturing activities and 151 firms that do not show that international venturing is positively associated with green initiatives and government green support while these two factors further directly enhance firm performance and mediate the effects of international venturing on performance.     

Does doing “good” always translate into doing “well”? An eco‐efficiency perspective

Does doing “good” always translate into doing “well”? Debate over the “value” of corporate social responsibility is high on the agenda of corporate finance research. Deeper understanding is required on managers' incentives to pursue and implement corporate social responsibility related strategies, as is more thorough comprehension of the effect of these strategies to firms' performance levels as well as shareholder and wider stakeholder valuations of the firm. This paper provides a new lens by approaching the subject from a different methodological paradigm, grounded in the performance benchmarking methods more commonly applied in operational research. In so doing, we provide novel evidence of the effect of corporate choices on environmental, social, and governance (ESG) strategic investment compliance (i.e., doing good) to firms' eco‐efficiency levels (doing well). In brief, our empirical findings suggest that ESG and firm's eco‐performance are nonlinearly related. Specifically, advanced ESG policies and disclosure levels are associated with a positive affect to firms' eco‐efficiency levels, but only up to a point, after which the effect becomes “neutral,” that is, ESG demonstrates a visible pattern of diminishing marginal returns. Thus, we may humbly conclude that a firm may “do well” by doing good, but it is not clear they should ever expect to “do great” just by “doing good.” The threshold at which this “neutrality” appears varies systematically with the characteristics of the sector in which the firm is operating, as well as dimensions of board diversity. Finally, it is evident that ESG implementation choices can be a source of managerial agency problems.     

Driving mechanism model of enterprise green strategy evolution under digital technology empowerment: A case study based on Zhejiang Enterprises

Digital technology innovation is sweeping the world, endowing the development of enterprises with the new feature of “digital + green,” which improves the efficiency of enterprises in implementing green strategy. Previous studies emphasized the driving force of enterprise green strategy evolution under the traditional economic model, but often ignored its driving mechanism under digital technology empowerment. Collecting the data from first-hand interviews and second-hand documents and selecting 11 case enterprises in Zhejiang, China, this study adopts multiple case method to construct a driving mechanism model of enterprise green strategy evolution under digital technology empowerment. This study proposed as follows, first, the enterprise green strategy is innovatively divided into five evolution stages (green beginner, green responder, green adapter, green activist, and green leader), and it is found that most case enterprises reached a higher stage. Second, digital technology empowerment affects the enterprise green strategy evolution through the mediating role of managerial perception, enterprise competitive capabilities, data and information elements, enterprise resource utilization efficiency, green product design, and whole process digitalization and digital marketing. Third, corporate governance (including public ownership, ownership concentration, independence, and diversity of the board of directors) significantly and positively moderate between various factors and enterprise green strategy evolution. Finally, a series of policy implications and managers' coping strategies are proposed.     

Does gender diversity matter for green innovation?

This study empirically investigated the relationship between board gender diversity and firm's green innovation, using panel data of public companies of China's manufacturing. Green product innovation was assessed by “green” patents and green process innovation assessed by environmental management certification. The endogeneity problem that resulted from self‐selection of gender diversity was addressed by means of extended probit regressions with an instrumental variable, and the instrumental variable was elaborately constructed based on changes in directorships. The findings show that occurrence of green innovation at the firm‐level is systematically related to female board representation. Specifically, women can exert a sizable and positive effect on green innovation, once they enjoy at least two seats on the boards; a further increase in representation of women on the boards can increase the likelihood of green product innovation rather than the likelihood of green process innovation. These results were robust to various regression specifications and alternative samples. The study provides empirical evidence that women at the top management can play a positive role in developing firm's active environmental strategies, and the conclusions are of practical implications for improving corporate governance along the environmental dimension.     

Toward a structural view of co-opetition in supply networks

Co-opetition, or simultaneous competition and cooperation, in the supply chain management literature has been treated as a dyadic relational phenomenon where the buyer's strategy is considered to be the primary driver. In this paper, we move beyond the dyadic view and propose a theory of co-opetition in supply networks. We argue that as firms within a supply network interact over time to access, share, and transform resources, new ties between firms are formed and existing ties dissolve, giving rise to co-opetition dynamics at the network level. Taking a configurational approach, we employ the inter-related dimensions of ties between firm, firm-level task, network-level objective, and governance to specify four practical supply network archetypes that cover a wide range of economic activities. We then explain how coopetitive relationships may evolve in these supply network archetypes. Specifically, we discuss how relationships form or dissolve in these archetypes and how local structural changes lead to co-opetition dynamics at the network level. We also discuss the implications of such dynamics from a managerial perspective.     

In the LEED: Racing to the Top in Environmental Self‐Regulation

Does voluntary participation in eco‐certification become more substantive over time, or less? Although past research on voluntary programs suggests that later participants are more likely to greenwash by only symbolically adopting voluntary standards, theories of regulatory competition suggest a possible “race to the top.” We argue that participation in voluntary programs can facilitate competition that enables a race, and we advance a theory of self‐regulatory competition to explain dynamics of participation in voluntary environmental programs. Under this perspective, environmental self‐regulation may facilitate a race to the top, despite possibilities for purely symbolic adoption. Analyzing data from a voluntary green building certification program in the United States, we introduce a methodology to distinguish propensities for symbolic certification from more substantive environmental performance. Data demonstrate that later adopters invest additional resources to attain higher certification, becoming greener and suggesting a race to the top in a voluntary greenbuilding certification program.     

CEO hometown identity and firm green innovation

Drawn on the upper echelons theory, this study investigates how chief executive officer (CEO) hometown identity drives firm green innovation. We propose that CEO hometown identity has a positive impact on a firm's green innovation performance. Furthermore, we explore the moderating role of managerial discretion determined by organizational and environmental factors (i.e., institutional ownership and market complexity). We propose that institutional ownership negatively moderates the positive relationship between CEO hometown identity and green innovation, but market complexity plays a positive moderating role. Using Chinese publicly listed firms from 2002 to 2016 in heavily polluting industries, our findings support these hypotheses. Our research contributes to the upper echelons theory and corporate social responsibility literature and has substantial practical implications.     

Reply to “Modeling Managerial Altruism,CSR, and Donations: A Comment”

We point out that the main concern of this comment is on the assumptions about “managerial compensation” and “who should make the donation decision for the firm”.     

Examining green policy and sustainable development from the perspective of differentiation and strategic alignment

The study seeks to explain the influence of green policy on sustainable development from the perspective of differentiation and strategic alignment. The study examined the relationships among a divergent green management strategy, green competencies, and firm performance. The results indicate that a divergent green management strategy is associated with higher firm performance and that such relationship is moderated by green competencies. The study confirms that a differentiation strategy pays off for firms that implement green management. The study also confirms that green policy should consider the strategic alignment between green management strategy and green competencies.     

Green management,firm innovations,and environmental turbulence

The multifaceted nature of firm innovation has prevented researchers from fully explaining the relationship between firm innovation and green management. This study, building on the Schumpeterian theory of innovation, explores this relationship by examining three major types of firm innovation—strategic innovation, managerial innovation, and product innovation—and their respective relationships with green management, considering several dimensions of environmental turbulence as distinctive boundary conditions. We propose that both strategic innovation and managerial innovation facilitate green management, which in turn mediates these effects on new product performance. The results of a survey of 303 Chinese firms provide strong support for this mediating logic. Moreover, we find that market turbulence weakens the effect of strategic innovation on green management whereas technological turbulence strengthens such effect but the effect of managerial innovation on green management is not influenced by environmental turbulence. Our research contributes to the innovation as well as green management and sustainability literatures by offering a framework in which to analyze firm innovation and green management and by showing how firms pursue sustainability and prosperity under specific environmental conditions.     

The Economic Deterioration of the Family: Historical Contingencies Preceding the Great Recession

The “Great Recession” in the United States exposed contradictions between the economic well‐being of families and capital that developed in the decades prior to this latest downturn. Using social structure of accumulation theory, a qualitative institutional analysis, and quantitative time‐series models, this article investigates historically contingent relations between the nature of public assistance, family economic deterioration, and capital accumulation. To sustain the circuit of capital, I argue that the family propped up economic growth first through public cash assistance and then through private expenditures, the latter of which lead to the economic deterioration of families dependent on unprecedented levels of debt.     

Corporate diversification and innovation: Managerial myopia or inefficient internal capital markets?

Which is more innovative: the decentralized, diversified firm, or the centralized, more narrowly focused firm? The economics and finance literatures argue that diversified firms have innovation advantages as their operating units have access to an internal capital market. In contrast, the strategy and entrepreneurship literatures argue that managers of these firms suffer from “managerial myopia,” discouraging them from investing in projects with long-term, uncertain payoffs. We take a fresh look at the relationship between innovation and diversification using a comprehensive sample of diversified and nondiversified firms and a novel approach that teases out the mechanisms influencing the relationship between diversification and innovation. Consistent with conceptual and empirical work in strategy, we find a robust negative correlation between diversification and R&D intensity, suggesting that diversification reduces innovation by discouraging investment. However, our analysis suggests that internal capital market inefficiencies, rather than managerial myopia, is responsible for this observed negative relationship.     

Moral hazard,debt overhang and capital structure

This paper investigates the impact of managerial moral hazard on the debt overhang of a firm by constructing a contingent claims model in which the manager faces costly effort. Using a calibrated capital structure model, we show that the costs of debt overhang become more serious in the presence of managerial moral hazard. Such costs even account for more than half of the total agency costs at a high level of cash flow. Moreover, in contrast to the results of Hackbarth and Mauer (2012), our model predicts a U-shaped relationship between the leverage ratio and investment opportunities of a firm, which is caused by managers’ moral hazard. Finally, by considering this moral hazard, we also show the coexistence of low leverage ratios and high credit spreads, which explains the phenomenon of “low debt levels and high credit spreads” observed in practice.     

Mindfulness,socioemotional wealth,and environmental strategy of family businesses

The study advances knowledge in the field of business strategy and the environment by incorporating mindfulness theory into the research on socioemotional wealth (SEW) and its environmental consequences in family businesses. Using an integrative model, the paper investigates the relationship between mindfulness SEW dimensions and family firms' environmental strategies, specifically in developing sustainable products and processes. This study also proposes the firm's capabilities as a mediator in this relationship, while market turbulence is a moderator in the relationship between the firm's capabilities and sustainable products and processes. The empirical results show that in protecting SEW, specifically in the identification of family members with the firm and binding social ties, mindfulness provides a rich endowment that develops appropriate capabilities to produce sustainable products and processes. While the moderating role of market turbulence is insignificant, we can infer that irrespective of how turbulent (or not) the market is, the firm's capabilities are a key determinant of sustainable products and processes. Our findings offer theoretical and managerial implications for sustainable practices in the family business context.     

Effect of local government decision‐making competition on carbon emissions: Evidence from China's three urban agglomerations

Analyzing the effect of local government decision‐making competition on regional carbon emissions is important for reducing carbon emissions in rapidly urbanizing areas. Taking the energy rebound effect into account, this study analyzes the effect on carbon emissions of competition between local governments in decision making. Focusing on China's three urban agglomerations, this study further discusses how to avoid this influence. The results show that local government decision‐making competition is one of the main causes of the regional “green paradox”; the effect of local government decision‐making competition on carbon emissions has significant regional heterogeneity and spatial dependence, and the short‐term energy rebound effect is greater than the long‐term energy rebound effect; and local government decision‐making competition has three effects on carbon emissions that also have interaction and substitution effects between them: factor market distortion, investment bias, and the “race to the bottom” of environmental policies. However, four measures can reduce the effect of local government decision‐making competition on carbon emissions: one, improving the performance evaluation system of local governments; two, promoting the marketization of factor prices; three, improving both the energy efficiency and upgrading of industrial structures; and four, introducing macro emission reduction policies that allow the central government to intervene directly.     

International Convergence of Accounting Practices: Choosing between IAS and US GAAP

This study examines reporting practices of a sample of foreign listed and domestic‐only listed companies from the United Kingdom, France, Germany, Japan and Australia to determine the extent to which companies voluntarily use “international” standards. Two types of use of non‐national standards in the consolidated accounts presented to the public are considered: adoption of “international” standards instead of national standards, and supplementary use where “international” standards are used in conjunction with national standards. “International” standards are defined as US GAAP or IAS (now IFRS). The study tests for a preference for either set of standards and considers the relationship of choice of regime with firm attributes. The results show significant voluntary use of “international” standards in all five countries and among foreign listed and domestic‐only listed companies. Companies using “international” standards are likely to be larger, have more foreign revenue and to be listed on one or more foreign stock exchanges. US GAAP is the predominant choice, but IAS are used by many firms in Germany and some in Japan. Firms listed in the United States' regulated markets (NYSE and NASDAQ) are more likely to choose US GAAP, but companies traded in the OTC market often select IAS. The study demonstrates for managers and regulators that there is considerable support for “international” standards, and that choice of IAS or US GAAP relates to specific firm characteristics which differ according to a firm's country of origin. Most use of “international” standards reflects individual countries' institutional frameworks, confirming the key role of national regulators and standard setters in assisting companies to achieve more comparable international reporting.     

Can environmentally oriented CEOs and environmentally friendly suppliers boost the growth of small firms?

The core question addressed in the natural resource‐based view (NRBV) of the firm is how to develop and exploit resources beneficial for both the natural environment and firm performance. Due to the resource constraints and increased competition facing small manufacturing firms, achieving this is a challenge for such companies. Building on the NRBV and resource orchestration literatures, we examine the relationship between green purchasing capabilities (GPCs), CEO's environmental orientation (EO), and firm growth. Results from 304 Swedish small manufacturing firms indicate a significant relationship between GPC and growth, and this relationship is positively moderated by the EO of the CEO.     

Price and quality competition with quality positions

In this study, we investigate price and quality decisions in a duopoly in the presence of firms’ quality positions , which are determined by the quality levels of their existing core products. Into a standard model of vertical differentiation, we incorporate a “repositioning cost” that is proportional to the quality differences between firms’ current and new products. By varying the levels of quality positions, we analyze the impact of this cost on the equilibrium outcomes. Our results show that the presence of repositioning costs restricts firms’ abilities to improve profitability and differentiate themselves vertically. As a result, a high‐positioned firm does not necessarily have a competitive advantage over a low‐positioned firm, even if the former offers a superior new product in equilibrium. In addition, if a low‐positioned firm is significantly cost‐efficient compared with its rival with regard to repositioning, then that firm can earn higher profits than those of a high‐positioned firm by strategically offering its low‐end product. These results contrast sharply with those based on the standard vertical differentiation model.