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How Firms Profit from Green Management: The Perspective of Strategic Renewal |
Li Ningjuan,Lai Shuang |
(School of Public Policy and Administration,Northwest Polytechnical University,Xi’an 710129, China) |
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Abstract Green management is an important consideration for firms to cope with environmental problems concerned by the government and the public. Green management refers to a series of management practices relating to the protection of natural environment and resources, and the improvement of resource and energy consumption effectiveness. Some researchers argue that firms with green management practices might demonstrate high social responsibility and ethic concerns, may gain reputation and image benefits, which results in social and political legitimacy. Managers also expect to improve financial performance through green management. Therefore this article seeks to answer “how and when green management will contribute to firm performance”.#br#There are a few challenges to answer this question. Firstly, the existing research has tested the linkage between green management and performance with no consensus reached. One possible reason may be that some important mediating mechanisms between green management and performance are ignored by most research. Secondly, driven by the government, most Chinese manufacturing enterprises are undergoing rapid green transformation. This specific characteristic leads to prominent problems of conflicting internal tensions between new green management practice and existing organizational strategies for most firms. However, most existing theories of green management are originated from firms of developed countries and may not applicable for Chinese senario characterized by rapid green transformation.#br#This study aims to address the above limitations by examining a moderated mediation model based on the integration ofa resource-based view and strategic renewal literatures. Firstly, it introduces strategic renewal into the model as a key mediating variable between green management. Strategic renewal entails firms to fundamentally alter their path dependence by transforming business models, strategies, and structures. Evidences show that large firms rely on strategic renewal to reconcile the conflicting forces for change and stability. Also, strategic renewal represents internal activities that can serve to redirect enterprise strategy, which allows the enterprise to capture new product-market opportunities, and adapt to dynamic market environments. Accordingly, it’s argued that strategic renewal is a tool for firms to reconcile the conflicting forces between green management and existing organizational strategies, and also acts as a conduit for firms to be aligned with external environment. Secondly, competitive intensity reflects the competition level among firms. It has been argued that a firm’s benefits from green management practices may be influenced by the behaviors of its customers and competitors. So the effectiveness of strategic renewal on firm performance, and the mediating role of strategic renewal in green management may be contingent on competitive intensity.#br#Related hypotheses are tested with hierarchical regression and bootstrap methods based on survey data of 288 enterprises.Empirical results show that(1) green management exerts a positive influence on firm performance; (2) strategic renewal is positively associated with firm performance; (3) strategic renewal fully mediates the relationship between green management and firm performance; (4) competitive intensity enhances the relationship between strategic renewal and performance, and positively moderates the indirect effect of green management on performance via strategic renewal. #br#The findings of this study make at least three contributions to the literature. First,this study contributes to green management literatures by highlighting the mediating mechanism of strategic renewal between green management and firm performance, and it is the first attempt to resolve the internal conflicting forces between new green management practice and existing organizational strategies. Second, empirical results involving the moderated mediation effects of competitive intensity contributes to the understanding of when firms can benefit more from green management via the mediating role of strategic renewal. Third, the study extends strategic renewal perspectives to the green transformation context by introducing strategic renewal to the theoretical model. Compared to with traditional arguments based on a resource-based view or institutional theory, this effort represents a complementary perspective to examine the path mechanisms by which green management influences performance. #br#At last, practical implications are proposed. First, firms should be confident of green management, because empirical results confirm the positive relationship between green management and firm performance.Second, it is better to initiate strategic renewal when firms engage in green management practices, because strategic renewal can function as a key conduit to transform green management into firm performance, and the mediating effect of strategic renewal is even more evident in more competitive markets.#br#
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Received: 07 February 2022
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