Environmental regulations, innovation and firm performance: A revisit of the Porter hypothesis

R. Ramanathan, Qile He, A. Black, A. Ghobadian, D. Gallear

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This paper examines the relationships between environmental regulations, firms' innovation and private sustainability benefits using nine case studies of UK and Chinese firms. It aims to unravel the mechanisms by which a firm's environmental behaviour in improving its private benefits of sustainability is influenced by its relationship with the government, which primarily enacts regulations to maximise public sustainability benefits in the interests of society as a whole. The paper takes its cue from the Porter hypothesis to make some broad preliminary assumptions to inform the research design. A conceptual framework was developed through inductive case studies using template analysis. The results show that depending on firms' resources and capabilities, those that adopt a more dynamic approach to respond to environmental regulations innovatively and take a proactive approach to manage their environmental performance are generally better able to reap the private benefits of sustainability.
NOTICE: this is the author’s version of a work that was accepted for publication in journal of cleaner production. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in journal of cleaner production, VOL in press (2016) DOI: 10.1016/j.jclepro.2016.08.116

© 2016, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/
Original languageEnglish
Pages (from-to)79-92
Number of pages14
JournalJournal of Cleaner Production
Issue number2
Early online date24 Aug 2016
Publication statusPublished - 1 Jul 2017


  • Environmental regulations
  • Flexibility
  • Innovation
  • Public benefits of sustainability
  • Private benefits of sustainability
  • Porter hypothesis


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