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Why firms go green and how green impacts financial and innovation performance differently: An awareness-motivation-capability perspective

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Abstract

Based on the awareness-motivation-capability framework, this research examines how firm-level factors (environmental scanning and organizational slack) individually and collectively interact with institutional factors (government support and industry competition) to influence a firm’s adoption of green management. Moreover, we distinguish the impacts of green management on financial performance and innovation performance. The empirical findings reveal that environmental scanning and organizational slack facilitate green management, government support strengthens these positive relationships, and industry competition attenuates the effect of environmental scanning on green management. In addition, green management enhances innovation performance to a greater extent than financial performance. This research provides an integrative framework illustrating how firm-level factors and institutional environments influence green decisions and proposes that green management may impact firm performance measures in distinctive ways.

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Notes

  1. Given the relatively small sample size (N = 42), we adopted the criterion of p < .10 in this part. All the results are available on request.

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Acknowledgements

The National Natural Science Foundation of China (No. 71472150, No. 71503143) is gratefully acknowledged for the provision of support to this study.

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Authors and Affiliations

  1. School of Management, Xi’an Jiaotong University, 28 West Xian Ning Road, Xi’an, 710049, Shaanxi, China

    Chengli Shu, Mengli Zhao & Jinxin Liu

  2. Entrepreneurship, Commercialisation and Innovation Centre, University of Adelaide, 10 Pulteney Street, Adelaide, SA, 5005, Australia

    Chengli Shu & Wendy Lindsay

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  1. Chengli Shu
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Correspondence to Chengli Shu.

Appendix

Appendix

Measurement scales

Constructs

SFL

Environmental scanning [Composite reliability = .817; measured by Questionnaire B]

 In the past three years, your company normally has:

  Collected information on your competitors’ strategic tactics.

.672

  Closely examined industry trends, practices, and strategies.

.818

  Thoroughly examined future macroeconomic trends.

.840

  Collected information on sales growth, customer preferences, and relevant technology.

*

Organizational slack [Composite reliability = .803, measured by Questionnaire B]

In the past three years, your company:

 Has maintained a pool of financial resources that can be used on a discretionary basis.

.798

 Is able to secure necessary bank loans.

.840

 Has retained earnings sufficient for market expansion.

*

Government support [Composite reliability = .890, measured by Questionnaire B]

In the past three years, the government has:

 Provided necessary technology information and support to our firm.

.838

 Provided support for our firm to seek financial resources.

.837

 Provided support to access imported technology and equipment when needed.

.725

 Provided direct financial support such as tax reductions to our firm.

.883

Industry competition [Composite reliability = .735, measured by Questionnaire B]

In the past three years, the industry in which our company involves has:

 Had many new competitors enter the market.

.748

 Engaged in many unpredictable competitive activities.

.738

 Experienced more and more fierce competition.

.603

Green management [Composite reliability = .898; measured by Questionnaire A]

In the past three years, your company has:

 Protected the environment.

.801

 Maintained a harmonious relationship with the nature.

.826

 Maintained an ethical working environment.

.891

 Utilized resources wisely and responsibly.

.747

 Economized the usage of raw materials.

.718

Firm financial performance [Composite reliability = .889; measured by Questionnaire A]

As compared with its major competitors, how has your firm performed in the past three years in terms of:

 Profits.

.837

 Return on investment.

.901

 Return on assets.

.822

Firm innovation performance [Composite reliability = .816; measured by Questionnaire A]

As compared to the major competitors, how has your firm performed in the past three years in terms of:

 Number of new products.

.823

 Number of patents.

.819

 Number of R&D projects.

.683

  1. SFL, standardized factor loading
  2. *Items dropped to improve reliability

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Shu, C., Zhao, M., Liu, J. et al. Why firms go green and how green impacts financial and innovation performance differently: An awareness-motivation-capability perspective. Asia Pac J Manag 37, 795–821 (2020). https://doi.org/10.1007/s10490-018-9630-8

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