Exploring the effect of corporate environmental management responsibility on firm performance

Abstract

Business executives and scholars are increasingly interested in learning how corporate environmental responsibility (CER) and firm success are related. However, prior research in this field requires consistent and contradictory findings. This study fills this gap by suggesting and verifying a moderated mediation theory that better explains the association between CER and company performance by considering organizational slack and strategy similarity. From 2015 to 2017, 260 listed Chinese companies provided the data for this study, yielding 780 firm-year observations. According to the multivariate analysis findings, the association between CER and company effectiveness is mediated by strategic similarity. The relation between CER and strategic identity and the direct effect of CER on organizational value via strategic similarity are both moderated by organizational slack. These findings imply that CER efforts and pursuing strategic similarities are crucial for coping with stakeholder pressure and being competitive in the market. They offer useful insights for corporate managers looking to make educated decisions regarding CER.