Paper Title
Does Top Management Matter in the Practice of Corporate Environmental Strategies? The Case of China
Abstract
Amidst the global increase in environmental consciousness, business researchers and practitioners have been increasingly attracted to study how firms integrate environmental considerations into their strategy development process (Chan and Ma, 2016). In this context, ‘environmental strategy’ is often conceptualized as a pattern in action that intends to manage the interface between business and the natural environment over time (Sharma, 2000). Some researchers further contend that environmental strategies cover the whole spectrum of environmental postures ranging from reactivity to proactivity (Hart, 1995). While reactive strategies are concerned with external recycling and recovery of wastes to meet the regulatory minimum, proactive environmental strategies focus on reducing the creation of wastes and pollutants through modifying operations, using different raw materials and redesigning products. Although strategy researchers have been exploring the dynamic relationship between business and the natural environment since the 1980s, their understanding of what motivates firms to go green is still limited (Delmas and Toffel, 2004). Among the various possible environmental motives, Darnall (2006) contends that internal initiatives rather than external factors are likely to play a more critical role for corporate environmental practices. Consistent with this contention, this study undertakes to examine how one major internal initiative, the top management of a firm, would influence its adoption of different forms of environmental strategies. Specifically, this study draws on upper echelons theory (Hambrick and Mason, 1984) to empirically examine how a CEO’s environmental commitment and knowledge would influence the corporate practice of reactive and proactive environmental strategies. Using regression to analyze responses collected from a survey on 303 CEOs of randomly selected firms operating in China’s Pearl River Delta region, this study reveals that a CEO’s environmental commitment and knowledge both exert a significant positive influence on the practice of reactive and proactive environmental strategies. Subsequent moderation analysis further reveals that industry type (i.e., the industry in which the responding firm operates) strengthens the influence of CEO-related attributes (i.e., environmental commitment and knowledge) on the practice of reactive (vs. proactive) environmental strategies. Implications of these results are further discussed in the paper.
Key words - Corporate environmental strategies, top management, China, upper echelons theory