The Effect of Regulatory Pressures and Environmental Dynamism on Green Product Innovation and Performance

Environmental management is an important industrial or operations management topic in the last two decades. One obvious driving force is the associated regulations, which have exerted enormous pressures on many manufacturing companies. Nevertheless, whether or not such pressures would lead to better firm performance eventually is unclear, in spite of the fact that environmental performance of firms should logically be boosted in order to comply with the regulations. In this study, we argue that green product innovation, which has been recognized as a predictor to improve environment performance, plays a mediating role between the aforementioned regulatory pressures and firm performance. An empirical questionnaire survey with 250 respondents from various Chinese industries was conducted to verify this hypothesis. In addition, this study also attempts to examine the moderating effect of the external dynamic factors on the relationship. This is the major drawback of many traditional empirical studies that only adopted a static view in their considerations. More specifically, the other hypothesis aims to evaluate the moderating effect of environmental dynamism on the relationship between green production innovation and firm performance.