Journal of Business Ethics

, Volume 149, Issue 2, pp 363–382 | Cite as

Impact of Corporate Environmental Responsibility on Operating Income: Moderating Role of Regional Disparities in China

  • Christina W. Y. Wong
  • Xin Miao
  • Shuang Cui
  • Yanhong Tang


Although the same environmental regulations apply to all regions in China, legal enforcement can be different due to local economic development priorities. There is still a lack of knowledge about how regional disparities affect the operating performance results of the implementation of corporate environmental management practices, thus providing little information for foreign companies when they invest and develop their production base in China. To fill this research gap, this paper collects data from the Fortune 500 Chinese firms to investigate the moderating role of regional disparities in affecting the performance results of corporate environmental management efforts based on the institutional theory. The disclosed corporate environmental responsibility (CER) practices serve as proxy to represent corporate environmental management practices. Content analysis approach was applied to collect and analyze CER practices published in the corporate reports of Chinese manufacturers. The results show that CER has a positive impact on operating income, while regional disparities influence the relationship between CER and corporate operating income. Specifically, CER and operating income are positively related in Eastern China; on the contrary, they are negatively related in Western China. This paper adds to the body of knowledge about environmental discrepancies in the same emerging economy, and provides insights for systematic consideration in terms of the issues of government environmental regulations and corporate environmental strategies.


Corporate environmental responsibility Environmental regulations Governmental environmental responsibility Institutions Operating income Regional disparities 



Corporate environmental responsibility


Corporate social responsibility


Environmental Kuznets curve


Environmental protection law


Kinder Lydenberg domini


Gross domestic product


Governmental environmental responsibility


Natural-resource-based view



The authors thank the editors and reviewers for their valuable and insightful comments on earlier versions of the paper. This research was partially supported by the National Natural Science Foundation of China (Grant No. 71471047, Grant No. 71390522), the Humanities and Social Sciences Fund of Ministry of Education (Grant No. 15YJC630116), the Hong Kong Scholars Program (Grant No. XJ2013008), the Research Grants council of the Hong Kong Special Administrative Region of China (Grant No. PolyU 152170/14E), and the Hong Kong Polytechnic University (Grant No. G-YZ48).

Compliance with Ethical Standards

Conflict of interest

The authors declare that they have no other conflict of interest.

Research Involving Human and Animal Rights

This article does not contain any studies with human participants or animals performed by any of the authors.


  1. Aiken, L. S., & West, S. G. (1991). Multiple regression: Testing and interpreting interactions. Newbury Park: Sage.Google Scholar
  2. Albertini, E. (2013). Does environmental management improve financial performance? A meta-analytical review. Organization & Environment, 26(4), 431–457.CrossRefGoogle Scholar
  3. Ambec, S., & Lanoie, P. (2008). Does it pay to be green? A systematic overview. Academy of Management Perspectives, 22(4), 45–62.CrossRefGoogle Scholar
  4. Ang, S. H. (2008). Competitive intensity and collaboration: Impact on firm growth across technological environments. Strategic Management Journal, 29(10), 1057–1075.CrossRefGoogle Scholar
  5. Aragon-Correa, J. A., & Sharma, S. (2003). A contingent resource-based view of proactive corporate environmental strategy. Academy of Management Review, 28(1), 71–88.CrossRefGoogle Scholar
  6. Asif, M., Searcy, C., Zutshi, A., & Fisscher, O. A. M. (2013). An integrated management systems approach to corporate social responsibility. Journal of Cleaner Production, 56, 7–17.CrossRefGoogle Scholar
  7. Auty, R. M. (1993). Sustaining development in mineral economies: The resource curse thesis. London: Routledge Press.CrossRefGoogle Scholar
  8. Bai, X., Shi, P., & Liu, Y. (2014). Realizing China’s urban dream. Nature, 509(7499), 158–160.CrossRefGoogle Scholar
  9. Bansal, P., & Roth, K. (2000). Why companies go green: A model of ecological responsiveness. Academy of Management Journal, 43(4), 717–736.Google Scholar
  10. Bardhan, P., & Mookherjee, D. (2006). Decentralization and local governance in developing countries: A comparative perspective. Cambridge: MIT Press.Google Scholar
  11. Beijing Daily. (2015). Accessed December 6, 2015, from
  12. Borland, H., & Lindgreen, A. (2013). Sustainability, epistemology, ecocentric business, and marketing strategy: Ideology, reality, and vision. Journal of Business Ethics, 117(1), 173–187.CrossRefGoogle Scholar
  13. Brammer, S., & Millington, A. (2008). Does it pay to be different? An analysis of the relationship between corporate social and financial performance. Strategic Management Journal, 29(12), 1325–1343.CrossRefGoogle Scholar
  14. Brown, B., & Perry, S. (1994). Removing the financial performance halo from Fortune’s “Most Admired” companies. Academy of Management Journal, 37(5), 1347–1359.Google Scholar
  15. Busch, T., & Hoffmann, V. H. (2011). How hot is your bottom line? Linking carbon and financial performance. Business and Society, 50(2), 233–265.CrossRefGoogle Scholar
  16. Buysse, K., & Verbeke, A. (2003). Proactive environmental strategies: A stakeholder management perspective. Strategic Management Journal, 24(5), 453–470.CrossRefGoogle Scholar
  17. Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32(3), 946–967.CrossRefGoogle Scholar
  18. Cao, S., Li, S., Ma, H., & Sun, Y. T. (2015). Escaping the resource curse in China. Ambio, 44(1), 1–6.CrossRefGoogle Scholar
  19. Chan, R. Y. K. (2005). Does the natural-resource-based view of the firm apply in an emerging economy? A survey of foreign invested enterprises in China. Journal of Management Studies, 42(3), 625–672.CrossRefGoogle Scholar
  20. Chan, T.-Y., Wong, C. W. Y., Lai, K. H., Lun, V. Y. H., Ng, C. T., & Ngai, E. W. T. (2015). Green service: construct development and measurement validation. Production and Operations Management,. doi: 10.1111/poms.12407.CrossRefGoogle Scholar
  21. Chauvin, K. W., & Hirschey, M. (1993). Advertising, R&D expenditures and the market value of the firm. Financial Management, 22(4), 128–140.CrossRefGoogle Scholar
  22. Chen, M. H., Chang, Y. Y., & Lee, C. Y. (2015a). Creative entrepreneurs’ guanxi networks and success: Information and resource. Journal of Business Research, 68(4), 900–905.CrossRefGoogle Scholar
  23. Chen, Y., Tang, G. Y., Jin, J. F., Li, J., & Paille, P. (2015b). Linking market orientation and environmental performance: The influence of environmental strategy, employee’s environmental involvement, and environmental product quality. Journal of Business Ethics, 127(2), 479–500.CrossRefGoogle Scholar
  24. Chow, G. C. (2008). China’s energy and environmental problems and policies. Asia-Pacific Journal of Accounting & Economics, 15(1), 57–70.CrossRefGoogle Scholar
  25. Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. P. (2011). Does it really pay to be green? Determinants and consequences of proactive environmental strategies. Journal of Accounting and Public Policy, 30(2), 122–144.CrossRefGoogle Scholar
  26. Cordeiro, J. J., & Sarkis, J. (1997). Environmental proactivism and firm performance: Evidence from security analyst earnings forecasts. Business Strategy and the Environment, 6(2), 104–114.CrossRefGoogle Scholar
  27. Cornelius, N., Wallace, J., & Tassabehji, R. (2007). An analysis of corporate social responsibility, corporate identity and ethics teaching in business schools. Journal of Business Ethics, 76(1), 117–135.CrossRefGoogle Scholar
  28. Costanza, R., Kubiszewski, I., Giovannini, E., Giovannini, E., Lovins, H., McGlade, J., et al. (2014). Time to leave GDP behind. Nature, 505(7483), 283–285.CrossRefGoogle Scholar
  29. Delmas, M., Hoffmann, V. H., & Kuss, M. (2011). Under the tip of the iceberg: Absorptive capacity, environmental strategy, and competitive advantage. Business and Society, 50(1), 116–154.CrossRefGoogle Scholar
  30. DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160.CrossRefGoogle Scholar
  31. Dongguan Sunshine Net. (2015 Accessed December 7, 2015, from
  32. Duriau, V. J., Reger, R. K., & Pfarrer, M. D. (2007). A content analysis of the content analysis literature in organization studies: Research themes, data sources, and methodological refinements. Organizational Research Methods, 10(1), 5–34.CrossRefGoogle Scholar
  33. Endrikat, J., Guenther, E., & Hoppe, H. (2014). Making sense of conflicting empirical findings: A meta-analytic review of the relationship between corporate environmental and financial performance. European Management Journal, 32(5), 735–751.CrossRefGoogle Scholar
  34. Graves, S. B., & Waddock, S. A. (1999). A look at the financial-social performance nexus when quality of management is held constant. International Journal of Value-Based Management, 12, 87–99.CrossRefGoogle Scholar
  35. Grossman, G. M., & Krueger, A. B. (1991). Environmental impacts of a North American Free Trade Agreement. National Bureau of Economic Research Working Paper 3914, NBER, Cambridge MA.Google Scholar
  36. Gunningham, N. (2009). Shaping corporate environmental performance: A review. Environmental Policy and Governance, 19, 215–231.CrossRefGoogle Scholar
  37. Hair, J. F., Anderson, R. E., Tatham, R. L., & Black, W. C. (1998). Multivariate data analysis. Upper Saddle River, NJ: Prentice Hall.Google Scholar
  38. Hart, S. L., & Ahuja, G. (1996). Does it pay to be green? An empirical examination of the relationship between emission reduction and firm performance. Business Strategy and the Environment, 5(1), 30–37.CrossRefGoogle Scholar
  39. Hart, S. L., & Dowell, G. (2011). A natural-resource-based view of the firm: fifteen years after. Journal of Management, 37(5), 1464–1479.CrossRefGoogle Scholar
  40. Harwood, T. G., & Garry, T. (2003). An overview of content analysis. The Marketing Review, 3(4), 479–498.CrossRefGoogle Scholar
  41. Hassel, L. G., Nilsson, H., & Nyquist, S. (2005). The value relevance of environmental performance. European Accounting Review, 14(1), 41–61.CrossRefGoogle Scholar
  42. Hillman, A. J., & Keim, G. D. (2001). Shareholder value, stakeholder management, and social issues: What’s the bottom line? Strategic Management Journal, 22(2), 125–139.CrossRefGoogle Scholar
  43. Holder-Webb, L., Cohen, J. R., Nath, L., & Wood, D. (2009). The supply of corporate social responsibility disclosures among US firms. Journal of Business Ethics, 84(4), 497–527.CrossRefGoogle Scholar
  44. Holtbrügge, D., & Dögl, C. (2012). How international is corporate environmental responsibility? A literature review. Journal of International Management, 18(2), 180–195.CrossRefGoogle Scholar
  45. Hoskisson, R. E., Hitt, M. A., Wan, W. P., & Yiu, D. (1999). Theory and research in strategic management: Swings of a pendulum. Journal of Management, 25(3), 417–456.CrossRefGoogle Scholar
  46. Huang, Y., & Sternquist, B. (2007). Retailers’ foreign market entry decisions: An institutional perspective. International Business Review, 16(5), 613–629.CrossRefGoogle Scholar
  47. Jackson, G., & Apostolakou, A. (2009). Corporate social responsibility in Western Europe: An institutional mirror or substitute? Journal of Business Ethics, 94(3), 371–394.CrossRefGoogle Scholar
  48. Julian, S., & Ofori-Dankwa, J. (2013). Financial resource availability and corporate social responsibility expenditures in a sub-Saharan economy: The institutional difference hypothesis. Strategic Management Journal, 34(11), 1314–1330.CrossRefGoogle Scholar
  49. Kang, K. H., Lee, S., & Huh, C. (2009). Impact of positive and negative corporate social responsibility activities on company performance in the hospitality industry. International Journal of Hospitality Management, 29(1), 72–82.CrossRefGoogle Scholar
  50. Ke, S. (2010). Determinants of economic growth and spread-backwash effects in western and eastern China. Asian Economic Journal, 24(2), 179–202.CrossRefGoogle Scholar
  51. King, A. A., & Lenox, M. J. (2000). Industry self-regulation without sanctions: The chemical industry’s responsible care program. Academy of Management Journal, 43(4), 698–716.Google Scholar
  52. King, A. A., & Lenox, M. J. (2002). Exploring the locus of profitable pollution reduction. Management Science, 48(2), 289–299.CrossRefGoogle Scholar
  53. Konar, S., & Cohen, R. A. (2001). Does the market value environmental performance? Review of Economics and Statistics, 83(2), 281–289.CrossRefGoogle Scholar
  54. Lai, K. H., Wong, C. W. Y., & Cheng, T. C. E. (2012). Ecological modernisation of Chinese export manufacturing via green logistics management and its regional implications. Technological Forecasting and Social Change, 79(4), 766–770.CrossRefGoogle Scholar
  55. Lankoski, L. (2008). Corporate responsibility activities and economic performance: A theory of why and how they are connected. Business Strategy and the Environment, 17(8), 536–547.CrossRefGoogle Scholar
  56. Leisinger, K. (2015). Business needs to embrace sustainability targets. Nature, 528(7581), 165.CrossRefGoogle Scholar
  57. Li, S., Fetscherin, M., Alon, I., Lattemann, C., & Yeh, K. (2010). Corporate social responsibility in emerging markets: The importance of the governance environment. Management International Review, 50(5), 635–654.CrossRefGoogle Scholar
  58. Li, S., Song, X., & Wu, H. (2015). Political connection, ownership structure, and corporate philanthropy in china: A strategic-political perspective. Journal of Business Ethics, 129(2), 399–411.CrossRefGoogle Scholar
  59. Liu, Z., Guan, D., Moore, S., Lee, H., Su, J., & Zhang, Q. (2015). Steps to China’s carbon peak. Nature, 522(7556), 279–281.CrossRefGoogle Scholar
  60. Marquis, C., Glynn, M. A., & Davis, G. F. (2007). Community isomorphism and corporate social action. Academy of Management Review, 32(3), 925–945.CrossRefGoogle Scholar
  61. Mazurkiewicz, P. (2004). Corporate environmental responsibility: Is a common CSR framework possible?. Washington, DC: World Bank.Google Scholar
  62. Miao, X., Tang, Y., & Wong, C. W. Y. (2015a). Polluters migrate to China’s poor areas. Nature, 518(7540), 483.CrossRefGoogle Scholar
  63. Miao, X., Tang, Y., Wong, C. W. Y., & Zang, H. (2015b). The latent causal chain of industrial water pollution in China. Environmental Pollution, 196, 473–477.CrossRefGoogle Scholar
  64. Montabon, F., Sroufe, R., & Narasimhan, R. (2007). An examination of corporate reporting, environmental management practices and firm performance. Journal of Operations Management, 25(5), 998–1014.CrossRefGoogle Scholar
  65. Musgrave, R. A. (1959). Theory of public finance. New York: McGraw Hill.Google Scholar
  66. Neuendorf, K. A. (2002). The content analysis guidebook. TousandOaks, CA: Sage Publications.Google Scholar
  67. Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization Studies, 24(3), 403–441.CrossRefGoogle Scholar
  68. People’s Net. (2015). Accessed December 8, 2015, from
  69. Porter, M. E. (1991). American’s green strategy. Scientific American, 264(4), 168.CrossRefGoogle Scholar
  70. Porter, M. E., & van der Linde, C. (1995). Green and competitive: Ending the stalemate. Harvard Business Review, 73, 120–134.Google Scholar
  71. Preston, L. E., & O’Bannon, D. P. (1997). The corporate social-financial performance relationship. Business and Society, 36(4), 419–429.CrossRefGoogle Scholar
  72. Preuss, L. (2009). Ethical sourcing codes of large UK-based corporations: prevalence, content, limitations. Journal of Business Ethics, 88(4), 735–747.CrossRefGoogle Scholar
  73. Qian, G., Li, L., Li, J., & Qian, Z. (2008). Regional diversification and firm performance. Journal of International Business Studies, 39(2), 197–214.CrossRefGoogle Scholar
  74. Ruf, B. M., Muralidhar, K., Brown, R. M., Janney, J. J., & Paul, K. (2011). An empirical investigation of the relationship between change in corporate social performance and financial performance: A stakeholder theory perspective. Journal of Business Ethics, 32(2), 143–156.CrossRefGoogle Scholar
  75. Russo, M. V., & Fouts, P. A. (1997). A resource-based perspective on corporate environmental performance and profitability. Academy of Management Journal, 40(3), 534–559.Google Scholar
  76. Russo, M. V., & Minto, A. (2012). Competitive strategy and the environment: A field of inquiry emerges. In P. Bansal & A. J. Hoffman (Eds.), The Oxford handbook on business and the natural environment (pp. 29–49). Oxford: University Press.Google Scholar
  77. Searcy, C., & Buslovich, R. (2014). Corporate perspectives on the development and use of sustainability reports. Journal of Business Ethics, 121(2), 149–169.CrossRefGoogle Scholar
  78. Sharma, S., & Vredenburg, H. (1998). Proactive corporate environmental strategy and the development of competitively valuable organizational capabilities. Strategic Management Journal, 19(8), 729–753.CrossRefGoogle Scholar
  79. Shen, H. B., Xie, Y., & Chen, Z. R. (2012). Environmental protection, corporate social responsibility and its market response: Case study based on the environmental pollution incident of Zijin Mining Group Co., China Industrial. Economics, 286, 141–151. (in Chinese).Google Scholar
  80. Sobhani, F. A., Amran, A., & Zainuddin, Y. (2009). Revisiting the practices of corporate social and environmental disclosure in Bangladesh. Corporate Social Responsibility and Environmental Management, 16(3), 167–183.CrossRefGoogle Scholar
  81. Song, M., Song, Y., Yu, H., & Wang, Z. (2013). Calculation of China’s environmental efficiency and relevant hierarchical cluster analysis from the perspective of regional differences. Mathematical and Computer Modelling, 58, 1084–1094.CrossRefGoogle Scholar
  82. Sun, Z., Li, Z., & Wang, J. (2006). Nature of ownership, debt covenants and accounting information: Evidences from Chinese listed companies. Management World, 22(10), 100–149. (in Chinese).Google Scholar
  83. Surroca, J., Tribo, J. A., & Waddock, S. (2010). Corporate responsibility and financial performance: The role of intangible resources. Strategic Management Journal, 31(5), 463–490.CrossRefGoogle Scholar
  84. Tang, Y., Wu, S., Miao, X., Pollard, S. J. T., & Hrudey, S. E. (2013). Resilience to evolving drinking water contamination risks: A human error prevention perspective. Journal of Cleaner Production, 57, 228–237.CrossRefGoogle Scholar
  85. Tangpong, C. (2011). Content analytic approach to measuring constructs in operations and supply chain management. Journal of Operations Management, 29(6), 627–638.CrossRefGoogle Scholar
  86. Turban, D. B., & Greening, D. W. (1997). Corporate social performance and organizational attractiveness to prospective employees. Academy of Management Journal, 40(3), 658–672.Google Scholar
  87. Ullmann, A. A. (1985). Data in search of a theory: A critical examination of the relationships among social performance, social disclosure, and economic performance of U.S. Firms. Academy of Management Review, 10(3), 540–557.Google Scholar
  88. Vanhamme, J., Lindgreen, A., Reast, J., & van Popering, N. (2012). To do well by doing good: Improving corporate image through cause-related marketing. Journal of Business Ethics, 109(3), 259–274.CrossRefGoogle Scholar
  89. Vuontisjarvi, T. (2006). Corporate social reporting in the European context and human resource disclosures: An analysis of Finnish companies. Journal of Business Ethics, 69(4), 331–354.CrossRefGoogle Scholar
  90. Waddock, S. A., & Graves, S. M. (1997). The corporate social performance-financial performance link. Strategic Management Journal, 18(4), 303–319.CrossRefGoogle Scholar
  91. Wagner, M. (2010). The role of corporate sustainability performance for economic performance: A firm-level analysis of moderation effects. Ecological Economics, 69(7), 1553–1560.CrossRefGoogle Scholar
  92. Wagner, M., & Schaltegger, S. (2004). The effect of environmental strategy choice and environmental performance on competitiveness and economic performance: An empirical study of EU manufacturing. European Journal of Management, 22(5), 557–572.CrossRefGoogle Scholar
  93. Waldman, D. A., Siegel, D. S., & Javidan, M. (2006). Components of CEO transformational leadership and corporate social responsibility. Journal of Management Studies, 43, 1703–1725.CrossRefGoogle Scholar
  94. Wang, H., Choi, J., & Li, J. (2008). Too little or too much? Untangling the relationship between corporate philanthropy and firm financial performance. Organization Science, 19(1), 143–159.CrossRefGoogle Scholar
  95. Weber, M. (2008). The business case for corporate social responsibility: A company-level measurement approach for CSR. European Management Journal, 26(4), 247–261.CrossRefGoogle Scholar
  96. Wei, C., Ni, J., & Du, L. (2012). Regional allocation of carbon dioxide abatement in China. China Economic Review, 23(3), 552–565.CrossRefGoogle Scholar
  97. Wong, C. W. Y. (2013). Leveraging environmental information integration to enable environmental management capabilities and performance. Journal of Supply Chain Management, 49(2), 114–136.CrossRefGoogle Scholar
  98. Wong, C. W. Y., Lai, K. H., Shang, K.-S., & Lu, C.-S. (2014). Uncovering the value of green advertising for environmental management practices. Business Strategy and the Environment, 23(2), 117–130.CrossRefGoogle Scholar
  99. Wong, C. W. Y., Lai, K. H., Shang, K.-S., Lu, C.-S., & Leung, T. K. P. (2012). Green operations and the moderating role of environmental management capability of suppliers on manufacturing firm performance. International Journal of Production Economics, 140(1), 283–294.CrossRefGoogle Scholar
  100. Xinhua News Agency. (2015a). Accessed December 12, 2015, from
  101. Xinhua News Agency. (2015b). Accessed December 6, 2015, from
  102. Yang, H. (2014). China must continue the momentum of green law. Nature, 509(7502), 535.CrossRefGoogle Scholar
  103. Yang, H., Huang, X., Thompson, J. R., & Flower, R. J. (2015). Enforcement key to China’s environment. Science, 347(6224), 834–835.CrossRefGoogle Scholar
  104. Yue, Y. China Environmental News. (2011). Accessed May 29, 2015, from
  105. Zhang, B., Bi, J., Yuan, Z., Ge, J., Liu, B., & Bu, M. (2008). Why do firms engage in environmental management? An empirical study in China. Journal of Cleaner Production, 16(10), 1036–1045.CrossRefGoogle Scholar
  106. Zhang, B., & Cao, C. (2015). Four gaps in China’s new environmental law. Nature, 517(7535), 433–434.CrossRefGoogle Scholar
  107. Zhang, J., Shia, B., Yi, H., Ma, S., & Ma, C. (2015). Illness and medical and other expenditures: Observations from western and eastern China. BMC Health Services Research, 15(69), 1–10.Google Scholar
  108. Zhang, Y.-X., & Wang, S.-R. (2010). Differences in development among children and adolescents in eastern and western China. Annals of Human Biology, 37(5), 658–667.CrossRefGoogle Scholar
  109. Zhao, M., Tan, J., & Park, S. H. (2014). From voids to sophistication: Institutional environment and MNC CSR crisis in emerging markets. Journal of Business Ethics, 122(4), 655–674.CrossRefGoogle Scholar
  110. Zhou, X. Y., Han, Y., & Wang, R. (2013). An empirical investigation on firms’ proactive and passive motivation for bribery in China. Journal of Business Ethics, 118(3), 461–472.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  • Christina W. Y. Wong
    • 1
  • Xin Miao
    • 2
  • Shuang Cui
    • 2
  • Yanhong Tang
    • 3
  1. 1.Business Division, The Institute of Textiles and ClothingThe Hong Kong Polytechnic UniversityKowloonHong Kong
  2. 2.School of ManagementHarbin Institute of TechnologyHarbinChina
  3. 3.Department of Administrative Management, College of Humanities and LawNortheast Agricultural UniversityHarbinChina

Personalised recommendations