Environmental regulation policy and the behavior of enterprises-The evidence from high energy consuming enterprises

Science Research Management ›› 2015, Vol. 36 ›› Issue (10) : 130-138.

Zhao Xiaoli¹, Zhao Yue², Yao Jin³

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Abstract

Environmental regulation is categorized into two broad groups: command and control regulation (CCR), and market-base regulation (MBR). CCR is dominated by compulsory characteristics and it allows managers very little freedom, while MBR does not tell a company what to do but provides a clear set of financial incentives that are designed to influence behavior positively instead. Based on the structural equation modelling (SEM), this paper makes an empirical analysis of the various influences of different types of environmental regulations on the adjustment of firm behavior by using the questionnaires from power industry and iron & steel industry. Results show that the impact of MBR on strategy is much greater than CCR, while the impact of CCR on innovation is much greater than MBR. Since firm strategy has direct impact on other firm behaviors, in general, the influence of CCR on firm behavior is weaker than MBR. Meanwhile, the stronger the industry monopoly is, the more possible a firm will not adopt the adjustment of strategy and production decision.

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environmental regulation / firm behavior / energy conservation and emission reduction / structure equation modeling

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Zhao Xiaoli, Zhao Yue, Yao Jin. Environmental regulation policy and the behavior of enterprises-The evidence from high energy consuming enterprises[J]. Science Research Management. 2015, 36(10): 130-138

References

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