Journal of Cleaner Production 266 (2020) 122054

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Do corporate environmental ethics influence firms’ green practice?

The mediating role of green innovation and the moderating role of
personal ties
Ying Guo a, b, Lifang Wang a, Qian Yang a, *
a
School of Management, Northwestern Polytechnical University, West Youyi Road, Xi’an, 710072, China
b
School of Economics and Management, Shanxi Normal University, Gongyuan Street, Linfen, 041000, China

a r t i c l e i n f o a b s t r a c t

Article history: Drawing on resource-based view and social exchange theories, this study examines the relationships
Received 25 September 2019 between corporate environmental ethics, green innovation and firm economic performance. It also ex-
Received in revised form plores the moderating effects of two different types of personal ties on these relationships. The analysis
29 April 2020
of a sample of 416 Chinese firms indicates that green innovation partially mediates the relationship
Accepted 2 May 2020
Available online 5 May 2020
between corporate environmental ethics and firm economic performance. Business ties amplify the
positive effect of corporate environmental ethics on green innovation, whereas political ties mitigate the
Handling Editor: Charbel Jose Chiappetta effect. These results contribute to the clean production literature by explaining firms’ green practices
Jabbour from the internal organisational culture perspective and by recognising the contingent roles of social
factors.
Keywords: © 2020 Published by Elsevier Ltd.
Firm economic performance
Corporate environmental ethics
Green innovation
Business ties
Political ties

1. Introduction environmental regulations (Cai and Zhou, 2014; Hojnik and

Ruzzier, 2016; Zailani et al., 2015), local communities (Lee et al.,
Environmental deterioration and sustainable development have 2016; Provasnek et al., 2017), consumer demand (Cai and Li,
become global concerns (Borghesi et al., 2015; De Marchi, 2012; 2018; Huang et al., 2016a), interfirm and firm-university coopera-
Peng and Lin, 2008). Following 40 years of rapid economic devel- tion (De Marchi, 2012; Cainelli et al., 2012), technological oppor-
opment, Chinese enterprises face serious environmental challenges tunities (Cai and Li, 2018) and expected benefits (Hojnik and
due to their excessive resource consumption and environmental Ruzzier, 2016) as drivers of green innovation. In addition to these
pollution (Lin et al., 2014; Li et al., 2018a,b). Traditional economic external and interfirm relationship antecedents, recent studies
theory posits that investments in environmental management in- have demonstrated the relevance of organisational internal factors
crease firms’ transaction costs, creating additional burdens and to green innovation (Xavier et al., 2017; Zhou et al., 2018). For
negatively impacting firms’ economic performance (Stefan and example, the dynamic capabilities of enterprises have positive ef-
Paul, 2008). However, recent research has demonstrated that fects on the organisational adoption of green innovation in the
green innovation can improve firms’ product differentiation, busi- early stage of diffusion (Zhou et al., 2018).
ness performance and competitive advantage (Hojnik and Ruzzier, One critical internal factor, corporate environmental ethics
2016; Huang and Li, 2017; Tang et al., 2018). (CEE), integrates environmental awareness into decision-making
Previous studies have explored the drivers of green innovation inside and outside an enterprise and further formalises green be-
from the perspective of institutional pressure and have identified liefs and ethics through the development of environmental policies
(Chang, 2011). To implement green innovation, which is more
complicated and uncertain than traditional innovation (Spence
* Corresponding author. et al., 2011), enterprises must formulate clear environmental pol-
E-mail addresses: [email protected] (Y. Guo), [email protected] icies and possess matched organisational support from the
(L. Wang), [email protected] (Q. Yang).

https://doi.org/10.1016/j.jclepro.2020.122054
0959-6526/© 2020 Published by Elsevier Ltd.
2 Y. Guo et al. / Journal of Cleaner Production 266 (2020) 122054

enterprise (Dean and McMullen, 2007). Thus, CEE is likely to affect By cultivating CEE, enterprises formalise environmental beliefs
green innovation. However, few studies have conducted relevant and behaviours (Chang, 2011), and they thus indicate that they
theoretical development or empirical verification of this attach importance to environmentally friendly production pro-
relationship. cesses and technologies. Green innovation is a core management
In addition, according to embeddedness theory, enterprises are activity that reduces waste and environmental pollution (Triguero
embedded in social networks, and firms’ economic behaviours are et al., 2013) and requires innovative new or improved systems,
inevitably influenced by their social connections (Granovetter, practices, processes, and products that can reduce a firm’s envi-
1985). This effect is much stronger in emerging economies such ronmental burden (Chen et al., 2006). As indicated by previous
as China because emerging markets generally have problems with studies (Chen, 2013), corporate environmental awareness plays a
weak market mechanisms and asymmetric information (Huang critical role in green innovation because enterprises that place a
et al., 2016b; Lin et al., 2014). In such environments, organisations high value on and are highly concerned about the environment
have traditionally relied on informal alternatives such as personal tend to put more attention, time, or effort into developing green
ties (guanxi in China) for access to information, contract enforce- innovations (Papagiannakis et al., 2014). Additionally, enterprises
ment and rights protection (Sheng et al., 2011). Park and Luo (2001) with strong CEE can integrate the work of different departments
differentiated personal ties into business ties (with executives of into environmental policies (Chang, 2011). A firm’s success in
suppliers or buyers) and political ties (with government in- solving environmental problems, promoting green innovation, and
stitutions). These two types of personal ties are likely to influence achieving sustainable benefits can be a capability that competitors
firms’ green innovation differently due to their different resource- cannot imitate (Porter and Van der Linde, 1995).
bridging and adaptive capabilities (Chen and Wu, 2011). Few Some studies emphasis the intentions of green innovation. For
studies have explicitly considered the contingent roles of personal example, Xavier et al. (2017) find that green innovation has many
ties in the context of China (Wang et al., 2018). different connotations and is often not distinguished from eco-
To fill these research gaps, we use resource-based view (RBV) design, which is essentially any action intended to reduce firms’
theory and social network theory to develop an integrated model to environmental impact. Some studies emphasis the objective; for
(1) investigate the direct effects of CEE on firm economic perfor- example, the Organisation for Economic Co-operation and Devel-
mance, (2) explore how green innovation mediates the effect of CEE opment (OECD) (2009) defines green innovation as ‘the develop-
on firm economic performance and (3) examine how business ties ment of products (goods and services), processes, marketing
and political ties moderate the relationship between CEE and green methods, organisational structure, and new or improved institu-
innovation. We use survey data from 416 Chinese enterprises to test tional arrangements, which, intentionally or not, contribute to a
our conceptual model. The results contribute to the literature on reduction of environmental impact in comparison with alternative
clean production by linking green innovation to firms’ internal CEE practices’. Some studies emphasis the varieties of green innovation;
and incorporating the contingent roles of personal ties into the for example, Chen et al. (2006) define green innovation as ‘hard-
model. ware or software innovation that is related to green products or
processes, including the innovation in technologies that are
2. Theoretical background involved in energy-saving, pollution-prevention, waste recycling,
green product designs, or corporate environmental management’,
2.1. A resource perspective of corporate environmental ethics and Huang and Li (2017) define green innovation as actions related
to environmental goals such as energy saving, pollution prevention,
The RBV theory suggests that a firm’s core competence is based waste recycling and eco-design. We define green innovation as
on access to corporate resources that may be scarce, valuable, non- innovations such as new or improved systems, practices, processes
substitutable or imperfectly imitable (Barney, 1991). Furthermore, and products that reduce a firm’s environmental burden.
variance in firms’ resources leads to heterogeneous corporate ac-
tivities and performance (Hitt, 2001). Resources include not only 2.2. Socially embedded ties
assets, capabilities, information and knowledge, but also corporate
culture (Barney, 1991). As an element of organisational culture that The social network theory emphasises how personal ties help
highlights environmental management (Weaver et al., 1999a), CEE firms access and acquire scarce resources and information
can be a critical invisible resource for enterprises seeking to achieve possessed by their partners (Peng and Luo, 2000). Studies have
environmental goals (Chang, 2011; Peng and Lin, 2008). CEE con- demonstrated that personal ties positively affect innovation
sists of a firm’s total ethical beliefs, values and norms related to (Kemper et al., 2013; Wu, 2011), marketability (Gu et al., 2008) and
environmental concerns (Ahmed et al., 1998). It typically consists of firm economic performance (Li et al., 2008). As China’s transition
six components: ethic officers, codes, committees, training pro- economy is a mixture of planning and market-trading modes,
grammes, communication systems and a disciplinary mechanism personal ties are an inevitable element of business practices (Peng
(Weaver et al., 1999b). and Luo, 2000).
Peng and Lin (2008) note that CEE is an important element of a Scholars have classified personal ties into business ties, which
firm’s overall organisational structure. Unlike specific green ac- are transversal connections with executives of their suppliers,
tions, CEE is a mind-set that reflects a firm’s basic attitudes and buyers, and competitors, and political ties, which are vertical con-
ethical beliefs towards the natural environment (Ahmed et al., nections with government institutions (Sheng et al., 2011; Park and
1998). In terms of CEE’s function, Chang (2011) demonstrates that Luo, 2001). Through business ties, enterprises can acquire com-
CEE formalises a firm’s value of and expectation for ethical plementary, diverse and innovative market resources (Silva et al.,
behaviour, and is a driving force for green innovation and its 2017) and technology capital (Shi et al., 2014). Firms can also
competitive advantages. Chen and Chang (2013) indicate that CEE is improve their commercial legitimacy (Rao et al., 2008) and trust-
an element of corporate culture needed to attain sustainable worthiness with potential resource providers (Reinholt et al., 2011).
development. Drawing on previous studies, we define CEE as an Close business ties can also reduce opportunistic behaviour in the
element of corporate culture that integrates environmental market, enhance trust between enterprises and function as a
awareness into decision-making and formalises green beliefs and ‘structural hole’ in the process of green innovation. For political ties,
ethics through environmental policies. although strong ties between enterprises and governments can
 Y. Guo et al. / Journal of Cleaner Production 266 (2020) 122054 3

ease pressure from governments and the public (Faccio, 2006), waste, saving raw materials), increasing resource use (Chen et al.,
which could divert attention from environmental concerns (Lin 2006) and reducing pollution. In addition, reduced emission
et al., 2014), heavy reliance on governments’ preferential treat- levels reduce waste treatment and disposal costs. Therefore, green
ments could inversely reduce firms’ incentives to improve inno- innovation practices may contribute to a lower pollution penalty
vation efficiency (Chen and Wu, 2011). and non-compliance costs (Li, 2014). Taking these findings
together, we propose the following hypothesis.
3. Hypothesis development
H1. Green innovation mediates the positive impact of CEE on firm
economic performance.
3.1. Mediation role of green innovation

CEE highlights managers’ consciousness of their environmental

responsibility (Weaver et al., 1999a) and is considered a powerful
3.2. Moderation role of personal ties
driver of green innovation. First, CEE may focus enterprises’
attention on green innovation. As enterprises with positive envi-
3.2.1. Business ties
ronmental beliefs take responsibility for conserving resources and
Business ties may amplify the positive effect of CEE on green
reducing waste in their production process (Liao, 2018), they are
innovation. First, business ties help organisations identify, acquire
likely to further commit to implementing environmental manage-
and deploy the external resources required for green innovation. A
ment, including a green innovation strategy (Chen et al., 2006). CEE
firm’s green innovation process is a complex system that requires
formalises corporate environmental value beliefs and environ-
external and internal resources (Uyarra et al., 2016), and green in-
mental behaviour norms (Chang, 2011), enabling enterprises to
novations that are based solely on corporate internal resources are
integrate environmental concepts into their entire production and
difficult to implement. Corporate executives’ network of relation-
business activities. The decision-making in such firms is informed
ships with suppliers, customers and competitors may form an
by green innovation.
interested community that helps enterprises obtain access to the
Second, CEE may enhance the capability of green innovation
complementary, diverse and innovative resources held by external
because it systematically integrates and optimises various re-
stakeholders (Shi et al., 2014; Silva et al., 2017). These external re-
sources and is conducive to the development of green innovation.
sources, such as knowledge and competencies, contribute to
Enterprises that have environmental ethics are more willing to
corporate growth and provide the basis for innovation strategies
devote efforts to developing an eco-friendly operation (Hojnik and
(Chesbrough, 2003).
Ruzzier, 2016) that provides an adequate foundation and guarantee
Second, business ties provide enterprises with effective and
for green innovation. Moreover, CEE enables enterprises to inte-
reliable information that successfully transforms CEE into green
grate different sectors by developing formal environmental policies
innovation. In China’s emerging market, regulatory mechanisms
(Chang, 2011) and strengthening green cooperation with suppliers
and laws are not strong (Peng and Luo, 2000). Unethical conduct
and competitors (Yen and Yen, 2012), effectively improving the
increases the transaction costs of business activities (Wu, 2011).
reach of green innovation, solving environmental problems and
Business ties help enterprises overcome these disadvantages, adapt
removing obstacles to green innovation.
to market changes and develop appropriate green innovation
Third, CEE improves the efficiency of green innovation. Under
strategies. Close business ties facilitate enterprises’ access to reli-
the same stakeholder pressure, managers who focus more on the
able information, which may effectively reduce the costs of
environment may implement green innovation strategies when
searching and filtering information (Wu, 2011) and alleviate the
subject to strong pressure. Some scholars have asserted that
information asymmetry problem in the process of green innova-
managers’ emphasis on the environment may have a positive in-
tion. For example, enterprises can obtain raw materials, logistics
fluence on the speed and scope of corporate management of
and other information from upstream partners or competitors
environmental concerns (Bansal and Hunter, 2003) and on the
including information related to cutting-edge technical direction,
enhancement of firms’ ability to respond to environmental con-
dynamic market environments and market demand/customer
cerns (Papagiannakis and Lioukas, 2012), thus promoting the effi-
preferences (Wu, 2011). Business ties that provide such information
ciency of green innovation.
enable businesses to respond quickly and flexibly to rapidly
Green innovation can lead to improved firm economic perfor-
changing environments (Gu and Su, 2018; Wu, 2011), reduce
mance. Firms that replace wasteful and inefficient practices with
environmental uncertainty (Peng and Luo, 2000) and promote the
new or improved processes, technologies, systems, and products
smooth transition of environmental ethics into green innovation.
can increase product value and gain competitive advantages (Porter
Third, business ties create opportunities for innovation coop-
and Van der Linde, 1995). Ecological modernisation theory (2000)
eration and improve the efficiency of green innovation. Close
also suggests that through green innovation, enterprises can ach-
business ties are conducive to the development of alternative
ieve environmental and economic performance and an environ-
enforcement mechanisms (e.g. norms, trust, and reputation) (Wu,
mentally friendly society. Specifically, green innovations contribute
2011), as they establish and enhance trust and reciprocity be-
to firm economic performance through increased revenue and cost
tween enterprises and thus reduce the occurrence of opportunistic
reduction.
behaviour. Personal interactions create both formal and informal
Green innovation can increase revenues by creating new green
conduits, allowing enterprises to learn how to jointly solve prob-
products, processes, and services (Borghesi et al., 2015) that help
lems and to receive direct feedback from partners, which may help
enterprises meet the diverse needs of customers (Cai and Li, 2018;
them overcome obstacles and improve learning outcomes (Uzzi,
Li, 2014) and establish a green image (Chen et al., 2006). Thus,
1997). That is, in addition to allowing formal cooperation with
green innovation increases corporate market share and creates
their partners, business ties can spawn broader cooperation op-
high economic returns (Cai and Li, 2018; Li, 2014). Therefore, green
portunities for enterprises. Thus, we propose the following
innovation may be an effective strategy for creating new business
hypothesis.
value (Cai and Zhou, 2014), and it can bring additional profits to
enterprises. From the cost reduction perspective, green innovation H2. Business ties positively moderate the effect of CEE on green
may reduce corporate costs by saving resources (e.g. recycling innovation.
4 Y. Guo et al. / Journal of Cleaner Production 266 (2020) 122054

3.2.2. Political ties

Unlike business ties, political ties may weaken the positive
impact of CEE on green innovation. First, political ties could, to
some extent, reduce enterprises’ initiative and enthusiasm for
pursuing green innovation. Although political ties can help garner
support from governments and other institutions, heavy reliance
on government resources and preferential treatment may weaken
managers’ incentives to promote innovation (Chen and Wu, 2011).
Specifically, enterprises with strong political ties tend to use their
Fig. 1. Conceptual model.
political links to alleviate government supervision (Lin et al., 2014),
circumvent environmental laws and regulations and slow the pace
of environmental legislation, ultimately reducing green in-
(2018a,b); Lin et al., 2014) or survey items (Chang, 2011; De
novations (Russo and Fouts, 1997). As a result, high-level political
Marchi, 2012; Cai and Li, 2018). Following Chang (2011), De
ties distract enterprises from environmental concerns (Lin et al.,
Marchi (2012) and Cai and Li (2018), we used survey items to
2014), weakening their incentives to carry out green innovations.
collect data on green innovation and other constructs in our con-
Second, political ties may interfere with corporate governance
ceptual model.
and reduce firms’ internal capabilities. Although political connec-
To measure personal ties, we adapted five items to measure
tions with government can bring firms benefits, corporate activities
business ties and four items to capture political ties from Sheng
may be subject to different levels of political interference and
et al. (2011) and Peng and Luo (2000).
management suppression (Wu, 2011). This phenomenon may lead
To measure firm economic performance, we adapted three
to a number of problems such as weak governance, a low level of
items from Li et al. (2018a,b). The respondents compared their
professionalism and inefficient resource allocation (Lin et al., 2014).
firms’ economic performance with their competitors’ profitability,
To obtain additional government resources, some managers even
total sales of goods and services, and market share in the past three
relinquish their decision-making autonomy and indulge officials’
years.
rent-seeking behaviour (Sheng et al., 2011). Notably, the problems
Firm age, firm size and industry type were included as control
caused by political ties may negatively affect corporate governance
variables. These three variables have been shown to affect green
and hinder the improvement of organisational capacity (Wu, 2011),
innovation and firm economic performance (Liao, 2016). Firm size
thus negatively impacting the development of green innovation
was assessed using staff numbers (Dibrell et al., 2011; Liao, 2016),
efficiency.
and five firm sizes were defined. Firm age was assessed as the years
Third, enterprises’ excessive efforts to build and maintain po-
since the company was founded (Liao, 2016), and four categories
litical ties make corporate green innovation difficult. Enterprises
were used. Different industry sectors have different pollution po-
embedded in political networks may have to bear high costs (Lin
tential, so we defined two industry types: pollution-intensive sec-
et al., 2014), such as funds for implementing philanthropic activ-
tors and non-pollution-intensive sectors. All of the measurements
ities and hiring political lobbyists, to gain support from the gov-
for the key constructs used a 7-point Likert scale, as summarised in
ernment and its affiliates. Additionally, enterprises must provide a
Table 1.
steady stream of investment to maintain their political ties, which
consumes a substantial amount of corporate resources (Wu, 2011),
leading to a negative impact on corporate investment in green 4.2. Data collection
innovation practices. Therefore, we propose the following.
From January 2018 to September 2018, we collected data from
H3. Political ties negatively moderate the impact of CEE on green
four provinces or cities in China: Shanghai, Shaanxi, Guangdong
innovation.
and Tianjin. They respectively represented the industrial centres of
Based on the above analysis, we construct the theoretical model
Changjiang River Delta, western China, Zhujiang River Delta, and
presented in Fig. 1:
Bohai Rim region, and were representative of different degrees of
development within China’s market economy.
4. Methods A random sample of 784 enterprises was selected covering
different industries, including the pharmaceutical and medical,
4.1. Questionnaire design chemical and petrochemical, and service industries. For each en-
terprise, we identified a key informant, who was generally the
The survey questionnaire was structured into five sections: president, vice president, green manager or CEO, who was knowl-
enterprise characteristics (e.g. industry sector, year founded, edgeable about the green innovation practices of the firm. We
number of employees), CEE, green innovation, personal ties and contacted these managers through emails or telephone calls before
firm economic performance. To ensure reliability and validity, we mailing them the questionnaire. Each questionnaire included a
based our questionnaire on mature scales that fit our research brief introduction highlighting the purpose of the study and
context. The survey questionnaire was initially in English, and we ensuring the participants of confidentiality. The respondents were
translated it into Chinese using the back-translation technique. Six also informed that they could obtain the final results if they
managers and scholars examined and modified the survey items to returned a completed questionnaire. Follow-up calls and mailings
make them clearer. We then conducted a pre-investigation with were made 2 weeks after the initial mailing to improve the effective
mid- or top-level decision-makers, graduate students and pro- response rate. To protect the respondents’ confidentiality, the
fessors who specialise in environmental management. The ques- finished questionnaires were sent directly to the researchers.
tionnaire was revised based on their feedback. Of the 480 questionnaires received, 416 were complete and
We used the scale developed by Henriques and Sadorsky (1999), acceptable, giving a response rate of 53.1%. The descriptive statistics
which included four items, to measure CEE. of the participating firms and respondents are given in Table 2. A t-
Previous studies have measured green innovation by number of test was carried out on the characteristics of the respondent and
patents (Li et al., 2017; Ioppolo et al., 2019), ISO14001 (Li et al. non-respondent firms. The results showed no significant
 Y. Guo et al. / Journal of Cleaner Production 266 (2020) 122054 5

Table 1
Measures of constructs.

Construct Description Factor AVE CR Cronbach’s

loadings alpha

Corporate environmental 1.Firm has specific policies for environmental protection 0.863 0.780 0.934 0.933
ethics 2.Firm has a budget for environmental protection 0.914
3.Firm integrates environmental programme, strategy, or objectives to marketing campaigns 0.887
4.Firm integrates environmental programme, strategy, or objectives to its culture 0.868
Green innovation Manufacturing process of the company 0.680 0.914 0.912
1.Reduces consumption, e.g., fuel, gas, oil, and petrol 0.818
2.Reuses and recycles materials 0.777
3.Develops clean technologies that promote energy efficiency and pollution prevention. 0.905
4.Reduces emissions of harmful substances and hazardous wastes. 0.793
5.Reduces use of raw materials 0.825
Business ties Firm has good connections with managers of 0.615 0.887 0.882
1.Suppliers 0.849
2.Customers 0.870
3.Competitors 0.852
4.Marketing-based corporative enterprises 0.744
5.Technological corporative enterprises 0.565
Political ties 1.Firm maintains close personal ties with government officials 0.874 0.731 0.916 0.916
2.Firm establishes close ties with regulatory authorities such as commerce and 0.906
industry bureaus.
3.Firm’s ties with local officials is satisfactory 0.863
4.Firm allocates a great deal of resources to build ties with government officials 0.772
Firm economic performance Firm performs better compared with competitors over the past year on 0.661 0.854 0.854
1.Profitability 0.808
2.Total sales of goods and services 0.806
3.Market share 0.825

differences. Furthermore, we conducted t-tests to evaluate the independent and dependent variables. As expected, the un-rotated
differences between the early responses (216) and later responses test resulted in five diverse factors, and the highest score was
(200). No significant differences were observed, suggesting that the 21.76%. Thus, no single factor could account for the majority of the
data were relatively free from non-response bias. variance. These results suggested there was no serious threat of
We conducted several procedures to mitigate the potential CMV.
dangers of common method variance (CMV). First, we surveyed top
managers knowledgeable about their green innovation manage- 4.3. Reliability and validity
ment. We expected these individuals to have accurate and reliable
information (Narayanan et al., 2011). Second, we examined the First, to examine the factor structure of the measurement items,
potential CMV based on Harman’s single-factor test, using all of the we used explorative factor analysis (EFA). The results extracted five
factors corresponding to each variable. The five-factor solution for
the 21 items explained 78.0% of the total variance. Cronbach’s a-
Table 2 values were used to analyse the reliability of the scales. In addition,
Demographic profile of sampled firm and respondents.
the composite reliability (CR) was calculated based on the confir-
Type of industry Frequency percentage (%) matory factor analysis (CFA) factor loadings. Then, we calculated
Food, beverage, alcohol, and cigars 42 10.1 the average variance extracted (AVE) values to ascertain scale
Textile, apparel, and luxury 38 9.1 convergent validity. As shown in Table 1, the CR for each construct
Pharmaceutical and medical 50 12.0 was at least 0.854, and AVE was at least 0.615. The Cronbach’s a-
Chemicals and petrochemicals 37 8.9 value was at least 0.854, indicating that the theoretical constructs
Electrical machinery and equipment 21 5.0
possessed sufficient reliability and convergent validity. Further-
Transportation and transportation infrastructure 27 6.5
Computer and communications equipment 48 11.5 more, we conducted goodness-of-fit tests of five different models
Software and technology services 73 17.5 by synthesising the five latent variables. As shown in Table 3, the
Trade and retail 51 12.3 CFA of each model and the five-factor model neatly fit the data
Others 29 7.0
(X2 ¼ 365.375, df ¼ 179, X2/df ¼ 2.041, SRMR ¼ 0.035, GFI ¼ 0.921,
Type of ownership Frequency percentage (%)
State-owned firms 46 11.1% NFI ¼ 0.942, IFI ¼ 0.969, RMSEA ¼ 0.050,CFI ¼ 0.969, TLI ¼ 0.964),
Private firm 308 74.0% whereas the other models did not fulfil the basic fitness re-
Others 29 14.9% quirements, suggesting that all of the variables were distinct and
Gender of respondents Frequency percentage (%) therefore appropriate for inclusion in the analyses. Table 4 presents
Female 132 31.7
the variables’ Pearson correlations, means and standard deviations
Male 284 68.3
Age of respondents Frequency percentage (%) (SDs).
Under 25 87 20.9
25e40 years 251 60.3 5. Analysis and results
Over 40 years 78 18.8
Tenure of respondents Frequency percentage (%)
<4 years 17 4.1 5.1. Test of mediation effect
4e6 years 69 16.6
6e8 years 220 52.9 To test the mediation effect, we used hierarchical regression
8e10 years 95 22.8 using SPSS22.0 software and bootstrapping technique using
Over 10 years 15 3.6
AMOS22.0 software.
6 Y. Guo et al. / Journal of Cleaner Production 266 (2020) 122054

Table 3
Results of confirmatory factor analysis.

Models X2/df SRMR GFI NFI IFI TLI CFI RMSEA

Five-factor model 2.041 0.035 0.921 0.942 0.969 0.964 0.969 0.050
Four-factor model 8.087 0.097 0.678 0.764 0.787 0.754 0.786 0.131
Three-factor model 9.962 0.106 0.637 0.704 0.726 0.689 0.725 0.147
Two-factor model 16.045 0.159 0.356 0.518 0.534 0.478 0.533 0.190
One-factor model 22.133 0.203 0.443 0.332 0.342 0.267 0.340 0.226

Note: Five-factor model: CEE, green innovation, business ties, political ties, firm economic performance.
Four-factor model: combing CEE and green innovation on the five-factor model.
Three-factor model: combing CEE, green innovation, and firm economic performance on the five-factor model.
Two-factor model: combing business ties and political ties on the three-factor model.
One-factor model: combing CEE, business ties, political ties, green innovation, and firm economic performance on the five-factor model.

Table 4
Means, SDs, and Pearson correlations.

Variables Mean S.D. Correlations

Age Size Industry Corporate environmental Green Business Political Firm economic
ethics innovation ties ties performance

Age 2.040 0.932 1

Size 2.220 1.074 0.095 1
Industry 0.410 0.493 0.079* 0.086 1
Corporate environmental 3.266 1.376 0.061 0.038 0.005 1
ethics
Green innovation 4.161 1.709 0.018 0.017 0.015 0.448** 1
Business ties 3.754 1.085 0.070 0.040 0.005 0.124* 0.076 1
Political ties 3.668 1.205 0.032 0.013 0.139*** 0.151** 0.039 0.123* 1
Firm economic performance 4.753 1.466 0.016 0.008 0.147** 0.381** 0.453** 0.047 0.068 1

Note: *p < 0.05; **p < 0.01; ***p < 0.001.

Hypothesis 1 posited a mediating effect of green innovation on occurred when the BC-CIs of the indirect parameters did not
the relationships between CEE and firm economic performance. We contain zero. Our analysis results are displayed in Table 6. The
examined the mediating effect using four steps as recommended by estimation of the 95% BC-CI interval of the direct effect of CEE on
Baron and Kenny (1986). firm economic performance excluded zero [0.205, 0.481], indi-
First, the independent variable (CEE) must be significantly cating that CEE was positively related to firm economic perfor-
related to the dependent variables (firm economic performance). mance. The estimation of the 95% BC-CI interval of the direct effect
Model 6 (Table 5) showed that CEE was significantly and positively of CEE on green innovation excluded zero [0.385, 0.619], indicating
associated with firm economic performance (b ¼ 0.383, P < 0.001). that CEE was positively associated with green innovation. The
Second, the independent variable (CEE) must be significantly estimation of the 95% BC-CI interval of the direct effect of green
related to the mediator (green innovation). Model 2 (Table 5) innovation on firm economic performance excludes zero [0.175,
showed that CEE positively affected green innovation (b ¼ 0.448, 0.501], which suggests that green innovation is positively related to
P < 0.001). firm economic performance. The estimation of the 95% BC-CI in-
Third, the mediator (green innovation) must be significantly terval of the indirect effect of CEE on firm economic performance
related to the dependent variable (firm economic performance). via green innovation excluded zero [0.088, 0.288], indicating that
Model 7 (Table 5) showed that green innovation was significantly the effect of CEE on firm economic performance was significantly
and positively associated with firm economic performance and partly mediated by green innovation. Thus, Hypothesis 1 was
(b ¼ 0.451, P < 0.001). further supported.
Fourth, when adding the mediator (green innovation) to the first
step, the previously significant effect of the independent variable 5.2. Test of moderation effect
(CEE) on the dependent variable (firm economic performance)
should be either reduced or insignificant. In Model 8 (Table 5), To test the moderation effect and thus eliminate possible mul-
when green innovation was added, CEE was still positively affected ticollinearity, we mean-centred the main variables before exam-
firm economic performance (b ¼ 0.226, P < 0.001), but the corre- ining the interactive effects. The variance inflation factor scores of
lation coefficient decreased from b ¼ 0.383 (P < 0.001) to b ¼ 0.226 the variables were all below 10.0, indicating multicollinearity was
(P < 0.001). In line with Baron and Kenny (1986), we concluded that not a serious problem. The regression results are reported in
green innovation partially mediated the relationship between CEE Table 5.
and firm economic performance, providing support for Hypothesis Hypothesis 2 posited that business ties positively moderate the
1. These results suggested that CEE can improve firm economic effect of CEE on green innovation. Model 3 (Table 5) showed that
performance by increasing green innovation. the interaction term ‘CEE ⅹ business ties’ was positively related to
To further confirm Hypothesis 1, we used bias-corrected boot- green innovation (b ¼ 0.205, p < 0.001), indicating that business
strapping to test the significance of the mediation effect using ties positively moderate the effect of CEE on green innovation. Thus,
AMOS. This method not only evaluated the Beta coefficient of the H2 was supported.
indirect effects but also demonstrated the statistical significance of Hypothesis 3 predicted that political ties negatively moderate
the coefficients with bootstrapped bias-corrected confidence in- the relationship between CEE and green innovation. Model 4
tervals (BC-CIs) using 1000 duplicate samples. The mediation effect (Table 5) showed that the interaction term ‘CEE ⅹ political ties’ was
 Y. Guo et al. / Journal of Cleaner Production 266 (2020) 122054 7

Table 5
Hierarchical regression results.

Green innovation Firm economic performance

Variables Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8

Demographics
Age 0.016 0.011 0.005 0.015 0.005 0.017 0.002 0.014
(0.091) (0.082) (0.079) (0.081) (0.077) (0.071) (0.069) (0.067)
Size 0.014 0.000 0.002 0.005 0.005 0.018 0.012 0.018
(0.079) (0.071) (0.068) (0.070) (0.067) (0.062) (0.060) (0.058)
Industry 0.012 0.018 0.011 0.027 0.147** 0.152** 0.142** 0.146**
(0.172) (0.154) (0.149) (0.155) (0.146) (0.135) (0.130) (0.127)
Main effect
CEE 0.448*** 0.402*** 0.461*** 0.383*** 0.226***
(0.055) (0.056) (0.055) (0.048) (0.051)
Green innovation 0.451*** 0.350***
(0.037) (0.041)
Business ties 0.109*
(0.068)
Political ties 0.041
(0.064)
Interaction Effect
CEE x Business ties 0.205***
(0.048)
CEE x Political ties 0.113*
(0.043)
R2 0.001 0.201 0.256 0.215 0.022 0.168 0.225 0.266
D R2 0.007 0.193 0.245 0.203 0.015 0.160 0.27 0.257
F-value 0.096 25.825*** 23.493*** 18.616*** 3.044* 20.731*** 27.793*** 29.656***

Note: *p < 0.05; **p < 0.01; ***p < 0.001, Standard errors in parentheses.

Table 6
Bootstrapping for mediation analyses.

Path Bootstrapping Estimated Value and Confidence Interval Pass or Not

Direct Effect Indirect Effect Total Effect

CEE-Green innovation 0.517 [0.385e0.619] e e Pass

Green innovation- Firm economic performance 0.345 [0.175e0.501] e e Pass
CEE-Firm economic performance 0.342 [0.205e0.481] 0.178 [0.088e0.288] 0.521 [0.414e0.609] Pass

Note: Bootstrapping sample ¼ 1000.

significantly and negatively related to green innovation (b ¼ 0.113,

p < 0.05), indicating that political ties negatively moderate the ef-
fect of CEE on green innovation, Thus, H3 was supported.
Furthermore, based on the suggestion of Aiken and West (1991),
we plotted two figures to illustrate the moderation effects of
business ties and political ties. By adding or subtracting a standard
deviation of the average value, we obtained high and low values for
business ties and political ties. Then, we regressed CEE on green
innovation at high and low levels of business ties and political ties.
As Fig. 2(A) shows, when business ties were high, the relationship
between CEE and green innovation was positive and significant,
whereas when business ties were low, the relationship between
CEE and green innovation was insignificant and flat, suggesting that
the positive relationship between CEE and green innovation be-
Fig. 2. The interaction impact of CEE and personal ties on r
comes stronger when the level of business ties increase. Therefore,
(A) The interaction impact of CEE and business ties on green innovation: the positive
Hypothesis 2 was confirmed. relationship between CEE and green innovation becomes stronger when the level of
In contrast, when political ties were low, the relationship be- business ties increase.
tween CEE and green innovation was positive and significant, (B) The interaction impact of CEE and political ties on green innovation: the positive
relationship between CEE and green innovation becomes weaker when the level of
whereas when political ties were high, the relationship between
political ties increase.
CEE and green innovation was insignificant and flat (Fig. 2(B)),
indicating that the positive relationship between CEE and green
innovation became weaker when the level of political ties pollution-intensive sectors, green innovation only partially medi-
increased. Hence, Hypothesis 3 was supported. ated the effect of CEE on firm economic performance, which was
We further classified the samples into pollution-intensive sec- the same result as in the overall model, whereas in non-pollution-
tors and non-pollution-intensive sectors and conducted the intensive sectors, the green innovation had a fully mediating effect.
mediating test and moderating test separately for each group. Second, in non-pollution-intensive sectors, political ties had a sig-
There were two differences between the two samples. First, in nificant negative moderating effect on the relationship between
8 Y. Guo et al. / Journal of Cleaner Production 266 (2020) 122054

CEE and green innovation, whereas in pollution-intensive sectors, (e.g. Parinaz et al., 2019). For business ties, Zhang et al. (2019b) and
the moderating effect was not significant. Wu (2011) confirm that business ties improve product innovation
performance. However, these studies examine direct effects;
6. Conclusion and discussion whether business ties and political ties moderate the effectiveness
of CEE on green innovation remains unclear. This study reveals that
This study tests a theoretical model linking CEE to firm eco- in emerging markets the moderating effects vary according to the
nomic performance through green innovation in the Chinese type of personal ties. Business ties enhance the positive effect of
context. Drawing from the resource-based view and social network CEE on green innovation, whereas political ties weaken corporate
theories, we examine how CEE improves firm economic perfor- incentives to implement green innovation. Our findings bring social
mance by promoting green innovation and then test the moder- perspectives into the clean production context and shed new light
ating effects of different types of personal ties on this relationship. on this issue by identifying business ties and political ties as a
The results indicate that green innovation mediates the relation- mechanism that moderates CEE effect on green innovation. We find
ship between CEE and firm economic performance. Furthermore, that building ties with a government and its affiliates consumes
business ties positively moderate the impact of CEE impact on resources that could be used for green innovation, weakening the
green innovation, whereas political ties negatively moderate the enthusiasm and ability of a firm to implement green innovation.
relationship. Thus, political capital may harm the implementation of firms’ green
innovation.
6.1. Theoretical implication
6.2. Managerial implications
This study makes several contributions to the literature. First, by
using RBV, this study provides a theoretical framework for exam- Our findings have the following implications for managers. First,
ining the positive relationship between CEE and firm performance. the results reveal that CEE can significantly promote green inno-
For instance, Chang (2011) proves that manufacturing companies’ vation and firm economic performance. Thus, enterprises should
environmental ethics can positively affect their competitive focus on the importance of environmental culture and invest re-
advantage. Kumar et al. (2019) find that CEE has positive effects on sources into developing and cultivating CEE. Enterprises may pro-
firms’ environmental performance and competitive advantage. Han mote green innovation by giving full play to the internal
et al. (2019) verify that higher CEE is likely to improve performance. mechanisms of enterprises’ environmental ethics. As the core of an
As RBV holds that corporate resources include not only assets, ca- enterprise, top managers play a vital role in protecting environ-
pabilities, information and knowledge, but also valuable corporate mental responsibility. When facing increasing environmental
culture (Barney, 1991), it explains why CEE, including managers’ pressure, top managers should adopt a pro-environment paradigm
concern for the environment, is an important organisational in- and promote environmental ethics in their enterprises. For
ternal cultural resource. As an organisational culture resource example, managers should formalise environmental protection
(Weaver et al., 1999a), CEE may integrate environmental awareness beliefs and environmental behaviour codes (Chang, 2011), enabling
into strategic decision-making and inform firms’ environmental enterprises to develop environmental management in their pro-
practices and environmental policy. Our study’s RBV perspective duction technology and business activities. Additionally, managers
both confirms and explains these positive associations. should carry out training and practical activities that are consistent
Second, this study extends the clean production literature by with CEE, develop a series of environmental policies or integrate
successfully linking CEE, green innovation and firm economic per- environmental policies into departments’ everyday business ac-
formance together. Previous studies have separately confirmed the tivities. By integrating environmental concerns into management
positive effect of CEE on green innovation (e.g. Chen and Chang, practices, enterprises may promote green innovation and thus
2013), the positive impact of corporate environmental conscious- achieve higher economic performance.
ness (e.g. managerial environmental concern) on green innovation Second, our results demonstrate that green innovation mediates
(e.g. Hojnik and Ruzzier, 2016), the positive effect of green product the relationship between CEE and firm economic performance.
and process innovation on firm performance (e.g. Tang et al., 2018; Thus, managers should treat green innovation as a passive strategic
Xie et al., 2019) and the positive effect of green patenting on firm behaviour for improving firm economic performance (Burgos-
performance (e.g. Zhang et al., 2019a). However, whether CEE can Jime
nez et al., 2013). Executives should understand that green
be transferred to firm economic performance via green innovation innovation does not degrade corporate profits, but can help en-
is unclear. A central finding of our study is that green innovation is terprises to achieve higher firm economic performance. In that
the intermediary mechanism in the process through which CEE sense, managers must recognise the importance of green innova-
improves firm economic performance. Using data collected from tion in their business strategy and adopt an open attitude toward
416 Chinese enterprises, our study demonstrates that green inno- green innovation activities. Managers should develop strategies to
vation partially mediates the relationship between CEE and firm encourage their enterprises to adopt green innovation practices. For
economic performance. This enriches the clean production litera- example, green innovation can be incorporated into corporate
ture by explaining firms’ green innovative efforts from an internal innovation strategies; knowledge of the components of green
organisational ethics perspective. innovation should be developed; and practical activities that
Third, this research enriches social network theory by showing reduce pollution, save energy, and increase waste reusing and
the moderating effects of different types of personal ties on the recycling should be stimulated. Additionally, when resources
relationship between CEE and green innovation. Firms’ economic permit, enterprises should invest in green infrastructure and pro-
behaviours are inevitably influenced by their social connections, vide a supportive environment for the development of green
and these effects are very prominent in emerging economies such products or process innovations. Additionally, our results show that
as China (Huang et al., 2016b; Lin et al., 2014). The effects of per- in pollution-intensive sectors, green innovation partially mediates
sonal ties on business transactions are complex. Studies in different the relationship between CEE and firm economic performance,
contexts have concluded that the effects of political ties on product which is the same as in the overall model, whereas in non-
innovation can be negative (e.g. Lin et al., 2014), positive (e.g. Zhang pollution-intensive sectors, it fully mediates the relationship. This
et al., 2019b), inverted U-shaped (e.g. Wu, 2011) or have no effect indicates that in non-pollution-intensive sectors, the pressure to
 Y. Guo et al. / Journal of Cleaner Production 266 (2020) 122054 9

reduce pollution is not that pressing. Firms’ CEE can be fully ach- CRediT authorship contribution statement
ieved and transferred to firms’ economic performance via green
innovation. In contrast, in pollution-intensive sectors, green inno- Ying Guo: Conceptualization, Writing - original draft, Method-
vation alone is not sufficient. Firms may also need to build gover- ology, Data curation. Lifang Wang: Software, Validation, Resources,
nance support, advanced pollution control technology and so on to Supervision, Funding acquisition. Qian Yang: Formal analysis,
fulfil their CEE. Visualization, Investigation, Writing - review & editing, Funding
Third, enterprises should focus on the construction of external acquisition.
personal ties to achieve greater returns for their green innovation.
Our findings provide good and bad news about the different effects Acknowledgements
of personal ties on green innovation and firm economic perfor-
mance. As business ties and political ties have opposite effects, This study was supported by the National Social Science
managers should treat the two types of personal ties differently. Fundation of China (19BGL093), the National Natural Science
Business ties promote CEE’s transformation efficiency, so managers Foundation of China (71502066), the Natural Science Foundation of
should strengthen their business ties with suppliers, competitors, Shaanxi Province (2020JQ-228), and the Fundamental Research
and customers as such ties can provide active support to enter- Funds for the Central Universities of China (3102019JC01).
prises with environmental ethics. Managers should cultivate and
maintain high-quality business ties to create favourable conditions
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