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Green links: corporate networks and environmental performance

Author

Listed:
  • Hossein Asgharian
  • Michał Dzieliński
  • Zahra Hashemzadeh
  • Lu Liu

Abstract

We investigate the propagation of environmental performance among competitors and in customer–supplier relationships. We find a significant causal effect among competitors, while the propagation from customers to suppliers and vice versa appears insignificant or does not survive identification tests. The effect is stronger among firms in highly concentrated competitor networks and toward firms with less market and bargaining power than their competitors. We also find significantly stronger propagation of environmental performance among competitors engaged in joint research and development activity. These results show that the propagation stems from both competitive pressure and technological spillover. Importantly, we find that propagation is strong when the competitor improves its environmental performance and when the firm’s own environmental performance is poor initially, alleviating concerns that improvements in performance are concentrated among firms, which are already green. Overall, network effects among competing firms are a significant force shaping environmental performance, and a force mostly for good.

Suggested Citation

  • Hossein Asgharian & Michał Dzieliński & Zahra Hashemzadeh & Lu Liu, 2024. "Green links: corporate networks and environmental performance," Review of Finance, European Finance Association, vol. 28(3), pages 1027-1058.
    • Handle: RePEc:oup:revfin:v:28:y:2024:i:3:p:1027-1058.
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    File URL: http://hdl.handle.net/10.1093/rof/rfad042
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    References listed on IDEAS

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    More about this item

    Keywords

    environmental performance; carbon intensity; corporate network; competitive effect; technological spillover;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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