Environmental self-regulation and firm survival: Evidence from China

• Published in: Journal of cleaner production 2022-06, Vol.355, p.131795, Article 131795
• Main Authors: Chen, Yanying, Liu, Jingke, Liang, Feng Helen
• Format: Article
• Language: English
• Subjects: China; Environmental self-regulation; Firm survival; Mediating effect
• ISSN: 0959-6526; 1879-1786
• DOI: 10.1016/j.jclepro.2022.131795

Environmental self-regulation (ESR) is an increasingly important instrument to solve environmental problems. Although ESR is linked to improved firms' environmental performance, it is unclear whether ESR benefits firms’ long-term survival. We use environmental certifications, an externally certified form of ESR, and operation data of Chinese manufacturing firms from 1999 to 2013 to examine the impact of ESR on firm survival. We find that ESR participation significantly improves firm survival, and this effect is more evident on heavy-polluting firms and non-state-owned firms and in regions and periods with more stringent environmental regulations. Mediating effect analysis shows that this enhanced survival effect is mainly from favorable governmental treatment including lower compliance cost and higher subsidies, instead of from market factors including cost reduction, higher demand, and technology improvement. This study contributes to our understanding of the performance consequences of firm environmental conduct and the underlying mechanisms. •Environmental self-regulation (ESR) improves firm survival in China during 1999–2013.•ESR's effect is more evident among heavy-polluting firms and non-state-owned firms.•ESR's effect is more evident in regions and periods with more stringent regulations.•The enhanced survival effect is from lower regulatory cost and higher subsidies.•The effect from cost reduction, higher demand and tech improvement is insignificant.