Macro-Institutional Pressures and Firms’ Environmental Management Behavior: The Moderating Effect of Micro-Institutional Pressures

Abstract

How to promote firms’ environmental management behavior is a concern for academics. In order to explain the reasons why firms’ environmental management behavior exhibits heterogeneity from the institutional perspective, this paper seeks to investigate the relationship between macro-institutional pressures and firms’ environmental management behavior, with the moderating effects of micro-institutional pressures. Firms’ environmental management behavior is classified into substantive environmental management behavior and symbolic environmental management behavior. Macro-institutional pressures typically include environmental regulation, industry imitation, and media attention, while micro-institutional pressures include cognitive focus of executive and cognitive complexity of executive. A sample of 236 groups from 118 listed companies in China’s heavy-polluting industries is employed. It is found that environmental regulation is more likely to promote substantive environmental management behavior, while industry imitation and media attention are more likely to promote symbolic environmental management behavior. Moreover, cognitive focus of executive negatively moderates the relationship between environmental regulation and substantive environmental management behavior and the relationship between media attention and symbolic environmental management behavior. Cognitive complexity of executive positively moderates the relationship between macro-institutional pressures and firms’ environmental management behavior. The findings of this paper clarify the reasons for the heterogeneity of firms’ environmental management behavior from the institutional perspective, which contributes to improving the institutional environment, integrating executive cognition, and promoting firms’ environmental management behavior.

Challenges for Compliance with Industrial Effluent Regulations – the Industry Perspective

“…Non-compliance shall thus be expressly and legally penalized. When firms are confronted with a credible threat of regulation, they are more likely to adhere to environmental regulations because they may face harsh punishments if they violate them [12].…”