Analysis of the impact mechanism of environmental regulations on corporate environmental proactivity—based on the perspective of political connections

Previous studies have demonstrated the favorable effects of political connections on corporate environmental proactivity (CEP). However, few studies have further verified whether this is definitively the case under environmental regulations and their underlying reasons, which would help elucidate the performance and motivation of politically connected firms’ (PCFs’) environmental proactivity. Using data from Chinese A-shares-listed industrial firms from 2010 to 2016, we find that environmental regulations can significantly improve CEP. Compared with non-politically connected firms (NPCFs), PCFs are more responsive to environmental regulations. Counterfactual analysis based on corporate resource conditions suggests that firms that are more supported by government in debt financing and show higher environmental proactivity are only found in PCF samples. In order to maintain this political relationship and continuously obtain debt financing support, PCFs tend to “bind” their business decisions to the government’s environmental governance objectives and display higher environmental proactivity. In summary, PCFs’ environmental proactivity involves self-interest decisions based on their resource conditions.     

The effect of domestic and foreign trade coordination on technological innovation: complements or substitutes?

Based on the theory of technology spillover in international trade, this paper discusses the technological innovation effect of trade by taking the influence of domestic trade into account. Under the constraint of the production possibility frontier, there is either complementarity or substitutability between domestic and foreign trade. It must be decided whether resources should be concentrated in one of the sectors (trade specialization) or instead allocated equally (trade equalization) between the two sectors. This paper firstly discusses how domestic trade and foreign trade work together to influence technological innovation, and how trade equalization and specialization affect different types of innovation. Using a provincial-level panel dataset from 2007 to 2015 in China, this paper constructs the indicators of domestic and foreign trade linkage and examines the impact of trade on innovation. The findings show that trade equalization mainly promotes incremental innovation, while trade specialization improves radical innovation. Thus, in the area of incremental innovation, attention should be paid to the equalized development of domestic and foreign trade, while in areas pursuing radical innovation, emphasis should be put on the specialization of the trade sector, avoiding equal allocation of resources to the two sectors.     

Disentangling the effects of domestic corporate political activity and political connections on firms’ internationalisation: Evidence from US retail MNEs

Scholars are increasingly investigating the implications of firms’ domestic corporate political activity (CPA) and political connections on their internationalisation prospects. In this paper, using insights from the resource dependence theory, we argue that domestic CPA and political connections developed within the home country have contrasting effects on firms’ international expansion, such that, while domestic CPAs (mainly, lobbying and campaign contributions) facilitate internationalisation, political connections deter internationalisation. We also argue that this relationship is moderated by firms’ international experience and product diversification. We test our hypotheses using a panel dataset comprising 38 retail Multinational Enterprises (MNEs) originating in the United States (US) whose activities we traced over the 16-year period 2003?2018. Our findings support our hypotheses.     

Do political connections matter in accessing capital markets? Evidence from China

We analyze the influence of political connections on firms' access to capital and the ensuing effect on the cost of raising capital. Using a dataset of 413 IPOs from 2009 to 2012, we exploit a research setting where government is still highly involved with the process. We find that firms rely on political connections to reduce IPO rejection risk as a firm's political connections are positively associated with the propensity of obtaining approval for an IPO. We further find that political connections are negatively associated with the cost of IPO and connected firms appear to perform better subsequent to their IPOs.     

The effect of innovation policy on SMEs’ employment and wages in Argentina

This article evaluates the effect of the Argentinean Support Program for Organizational Change on employment and wages. The program aimed at increasing small and medium-sized enterprises’ competitiveness by co-financing technical assistance to support process and product innovation activities. Although employment is not usually the main objective of these types of programs, they are always implemented assuming that they create—or at least do not destroy—employment opportunities. We use a unique data set with information for the population of firms in Argentina from 1996 to 2008 to test this important assumption. Using a combination of fixed effects and matching, we find that both process and product innovation support increased employment and wages, with a higher impact on employment. In addition, we find that product innovation support had a larger effect on wages than process innovation support.     

A Green Picture is Worth A Thousand Words?: Effects of Visual and Textual Environmental Appeals in Advertising and the Moderating Role of Product Involvement

This study examined the main effects and interaction effects of textual environmental claims and green visuals on attitude-toward-the-ad (A_ad), attitude-toward-the-brand (A_b), purchase intention (PI), and green brand associations. In general, the use of textual environmental claims and green visuals lead to more positive advertising responses and more favorable perception of the brand's environmental effort. Textual environmental claims had stronger impact, but if no textual information was available, the use of green visuals could also generate positive perception of the brand's environmental effort. In addition, when textual claims or green visuals are present, participants perceived high involvement products as more environmentally friendly than low involvement products.     

Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs

The performance implications of innovation in small and medium-sized enterprises (SMEs) have attracted considerable interest among academics and practitioners. However, empirical research on the innovation-performance relationship in SMEs shows controversial results. This meta-analysis synthesizes empirical findings in order to obtain evidence whether and especially under which circumstances smaller, resource-scarce firms benefit from innovation. We find that innovation-performance relationship is context dependent. Factors such as the age of the firm, the type of innovation, and the cultural context affect the impact of innovation on firm performance to a large extent.     

Environmentalism—A Question of Guilt? Testing a Model of Guilt Arousal and Effects for Environmental Campaigns

Guilt has been identified as a crucial factor mediating the effects of social campaigns. So far, however, knowledge regarding the process of guilt arousal is limited. This paper studies processes of guilt arousal and effects for the context of environmental donation campaigns. Following the extended parallel process model, environmental concern and self-efficacy are introduced as main predictors. Results of an experiment show that guilt arousal enhances campaign effects for those with a high concern but is the wrong strategy to reach those with a low concern. Guilt arousal is not influenced by self-efficacy and occurs independently of emotional message frames.     

Simple and Painless? The Limitations of Spillover in Environmental Campaigning

The comfortable perception that global environmental challenges can be met through marginal lifestyle changes no longer bears scrutiny. The cumulative impact of large numbers of individuals making marginal improvements in their environmental impact will be a marginal collective improvement in environmental impact. Yet, we live at a time when we need urgent and ambitious changes. An appeal to environmental imperatives is more likely to lead to spillover into other pro-environmental behaviours than an appeal to financial self-interest or social status.

Green and Good? The Investment Performance of US Environmental Mutual Funds

Increased concern for the environment has increased the number of investment opportunities in mutual funds specialized in promoting responsible environmental attitudes. This article examines the performance and risk sensitivities of US green mutual funds vis-à-vis their conventional peers. We also analyze and compare this performance relative to other socially responsible investing (SRI) mutual funds. In order to implement this analysis, we apply a CAPM-based methodology and find that in the 1987–2009 period, environ- mental funds had lower performance than conventional funds with similar characteristics. However, if we focus on a more recent period (2001–2009), green funds achieved adjusted returns not significantly different from the rest of SRI and conventional mutual funds.     

Regional institutional development,political connections,and entrepreneurial performance in China’s transition economy

While previous research emphasizes the role of political connections in facilitating entrepreneurial performance during China’s early reform period (1978–1999), this study argues that regional institutions were increasingly conducive to entrepreneurial activities and, thus, also played a key role in China’s entrepreneurial success during that period. The purpose of this study is twofold. First, it aims to demonstrate how regional institutional development facilitated entrepreneurial performance in China. Second, it aims to understand how formal institutional development among Chinese regions affected the role of political connections. Using a two-level hierarchical dataset on Chinese private enterprises, this study finds that not only legal protection of property rights but also the development of market systems mattered for entrepreneurial performance. In addition, it shows that political connections played a diminishing role during regional institutional development in China.     

How much does KIBS contribute to the generation and diffusion of innovation?

This article aims to estimate the contribution of KIBS to the innovation system. Data on innovation gathered from national and European databases are analyzed using a methodology based on an input–output framework to estimate the drive for innovation in the Spanish economy and the contribution of KIBS. KIBS are found to be crucial to both the creation and diffusion of innovation. From among the four classifications of sectors analyzed herein, KIBS is found to be the only significant net generator of innovation.     

Who is afraid of political risk? Multinational firms and their choice of capital structure

This paper investigates how multinational firms choose the capital structure of their foreign affiliates in response to political risk. We focus on two choice variables, the leverage and the ownership structure of the foreign affiliate, and we distinguish different types of political risk, such as expropriation, unreliable intellectual property rights and confiscatory taxation. In our theoretical analysis we find that, as political risk increases, the ownership share tends to decrease, whereas leverage can both increase or decrease, depending on the type of political risk. Using the Microdatabase Direct Investment of the Deutsche Bundesbank, we find supportive evidence for these different effects.     

When Do Consumers Believe Puffery Claims? The Moderating Role of Brand Familiarity and Repetition

In the United States, exaggerated advertising claims for products and services, known as “puffery,” make up a considerable proportion of all claims in the marketplace. Legally, advertisers do not need to substantiate the puffery claims because it is believed that consumers would not be deceived by such exaggerated claims. This research reports two experiments that examined the moderating role of brand familiarity and repetition on puffery claims. Results indicated that while puffery generally led to weak main effects, it had significant interaction effects with brand familiarity (Study 1) and claim repetition (Study 2) on the dependent variables.     

Domestic political connections and international expansion: It's not only ‘who you know’ that matters

Former politicians on the board of directors bring to the firm domestic political connections and political knowledge. Previous research has mainly highlighted the role of contacts, without fully recognizing the role of political knowledge accumulated at home. By focusing on the effect of domestic political connections on foreign direct investment, we show that domestic political knowledge also shapes foreign expansion. We argue that contacts provided by former politicians may not be useful for foreign expansion whilst their political knowledge can be of help in countries with discretionary governments and with similar institutional environments to the one of the home country.     

Does servant leadership foster creativity and innovation? A multi-level mediation study of identification and prototypicality

The purpose of this multi-level study is to examine how servant leadership affects both employee creativity and team innovation. Drawing from social identity, in particular, relational identification theory, we found on the basis of a two-nation Asian sample of 154 teams that servant leadership promotes individual relational identification and collective prototypicality with the leader which, in turn, fosters employee creativity and team innovation. In addition, our study suggests that the mediated effect of leader identification is strongest when team climate for innovation is high.     

Good Market for Five Kinds of Environmental Protection Equipment

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Does ownership type matter for innovation? Evidence from China

According to the institution-based view, ownership type is a key variable affecting environment-strategy configurations. This study configures the mechanism in which ownership types (as an institutional factor) moderate the effect of innovation strategies on firms' innovation performance. An empirical analysis was conducted on Chinese hi-tech manufacturing firms, using information related to the innovation activities of 303 firms. The empirical results suggest that ownership type affects the positive relationship between three sources of innovation (internal R&D activities, partnering with alliance partners, and partnering with universities) and innovation performance, as well as the negative relationship between external contracting and innovation performance (product or process innovation). The results imply that organizations doing business in China must be aware of the business environment that they intend to enter, especially if the intention is to develop new products or innovate current business processes.