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Firm sustainable development and stakeholder engagement: The role of government support

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  • Yi Quan
  • Huiying Wu
  • Sihai Li
  • Sammy Xiaoyan Ying

Abstract

This study examines the sustainable development of Chinese firms in the context of the government implementing environmental policies that support green initiatives, from a resource‐based perspective. Using a sample of Chinese listed firms in the most polluting industries during the period 2001–2015, we find a positive relationship between environmental performance and economic performance. We also find that government‐controlled resources, including bank loans and tax benefits, are the mechanisms through which the effects of environmental investments are transformed into economic gains. Further analyses show that the positive association between environmental and economic performance holds for state‐owned firms only. These results indicate that although “being green” is associated with improvements in firm performance, such a strategy benefits only those firms that receive preferential treatment from the government. This study reveals that the Chinese Government, as the most influential stakeholder, plays an important role in determining the impact of environmental performance on economic performance.

Suggested Citation

  • Yi Quan & Huiying Wu & Sihai Li & Sammy Xiaoyan Ying, 2018. "Firm sustainable development and stakeholder engagement: The role of government support," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1145-1158, December.
    • Handle: RePEc:bla:bstrat:v:27:y:2018:i:8:p:1145-1158
    DOI: 10.1002/bse.2057
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