Does the informal environmental regulation matter? Third-party environmental disclosure and firm environmental innovation

Seminar abstract

This paper examines one of the important sources of competitiveness in changing institutions—to what extent of firms commit to environmental innovation. While the management of environmental innovation has received considerable attention from regulatory changes perspective, our knowledge about how normative forces push firms to become environmental innovators—and why some firms do more/little—remains immature. In order to provide novel insights into the firms’ environmental innovation activities and their theoretical implications, this paper draws on the institutional theory. More specifically, this study aims to shed light on the effects of normative forces of social actors (i.e., professional third-party environmental NGOs) on firm environmental innovation. Particular emphasis is placed upon the analysis of normative institutional changes that highlights newly defined norms on environmental responsibilities rather than existing stable normative institutions. We take a pilot policy, the Pollution Information Transparency Index (PITI)— third-party environmental disclosure project, as a quasi-natural experiment and examine 25,844 firm-year observations from 1,988 Chinese listed firms during 2006 to 2018 for testing the hypotheses advanced in this paper. The results of a difference-in-difference (DID) estimation suggest a positive effect of third-party environmental disclosure on environmental innovation performance. Yet such positive effect varies across firms, and different organizational responses depend on firms’ evaluation on to what extent PITI project’s claims are consistent with their institutional arrangements (i.e., political and business interests). Achieved and bureaucratic political ties and levels of long- and short-term investors are found as key contingency factors. The findings have important theoretical and practical implications on how normative institutional changes result in intended organizational outcomes and the contingencies under which newly defined institutions are likely to be accepted or resisted by firms.

How to join this seminar

This seminar is free to attend with no need to register in advance

We welcome you to join us online on Wednesday 8 June 2022 at 12pm

Speaker bio

 Dr. Ji Yan, Karena, is Associate Professor in Marketing in Durham University Business School. Her current main research interests fall into– innovation and technology management. In particular, her research focuses on environmental innovation, innovation policy impact, cross-border innovation management, foreign R&D funds attraction, the innovation activities among customers, suppliers and competitors and integrate their processes to generate innovation performance.

Karena has been published constantly in international leading/excellence level journals such as Research Policy, Journal of Product Innovation Management, British Journal of Management, International Journal of Operations and Production Management. Her research has social impact that UK media Economics, The Sunday Times and BBC has reported her research. She is also a board member of Durham Energy Institute.