Law Reinforcement, Production Pattern and Enterprise Environmental Performance: Evidence from Environmental Courts in China

Abstract

Law reinforcement agencies can be established to improve enterprise environmental performance, a determinant of sustainable growth, but their micropractical evaluation is unclear. This paper uses panel data (1998–2014) from the Chinese Industrial Enterprise Pollution Database and the Chinese Industrial Enterprise Database and adopts the multiperiod difference-in-differences (DID) method to investigate the impact of law reinforcement on enterprise environmental performance (measured by air pollutant emissions). Using the establishment of China’s city-level environmental courts (ECs) as an identification strategy, the study finds a strong positive effect of EC establishment on firms’ environmental performance and confirms the validity of law reinforcement. Furthermore, the effects are heterogeneous for firms with different characteristics (including scale, profit, ownership, pollution intensity and location). Notably, we find that firms improve their environmental performance by changing their production pattern and energy consumption structure. Additionally, ECs could influence firms’ environmental behaviors by enhancing judicial efficiency and generating a deterrence effect. These findings show the government could improve enterprises’ environmental performance through law reinforcement but should consider the heterogeneous effect on different firms.

Environmental Vertical Management and Enterprises’ Performance: Evidence from Water Pollution Reduction in China

“…The coefficient of V MR is not significant, implying that EVMR has no impact on the number of wastewater treatment facilities. The possible reason is that wastewater treatment facilities are classified as highinvestment fixed assets, and enterprises tend to carry out technical transformation of the original treatment facilities rather than new equipment purchases; this finding is consistent with the fact that enterprises are unwilling to equip pollution treatment facilities to incur high costs [58]. According to transaction cost theory, when the marginal cost of internal transactions is smaller than the marginal cost of market transactions, enterprises tend to raise the degree of vertical integration by internalizing some external market activities to reduce total costs [45].…”

“…Referring to existing literature [52,58], the effects of environmental regulations on enterprises' WPR can be affected by region-and firm-level characteristics. Thus, we further investigate whether the effects of EVMR on WPR vary with enterprise sizes, regions, and industry pollution intensities.…”

“…Conversely, the estimated coefficients of V MR for small-and micro-sized enterprises are not statistically significant, indicating that EVMR does not affect enterprises' WPR. Since they are unwilling to or cannot afford the high costs of pollutant treatment because of their small scale and lack of matched pollutant treatment equipment, the effects of EVMR on the WPR of small-and micro-sized enterprises are fairly limited [58]. Different provinces and cities in China have great differences in the socioeconomic development level and environmental problems [61].…”

Optimal Strategies of Customization and Information Sharing in the Presence of Feature Creep

“…In this context, we take into consideration the environmental impacts of the production process, and then explore the impacts of the manufacture's customization production on environmental performance. Regarding environmental and sustainable operation management in the supply chain, a large amount of the Literature has focused on the manufacturer's production process [14][15][16][17][18]. Similarly, we also aim at the production process and investigate the impacts of strategic customization production on environmental performance in the presence of feature creep.…”