Influence Mechanism of Environmental Regulation on Enterprise Profitability: Evidence from Sugar Firms in Guangxi Zhuang Autonomous Region, China

Abstract

Abstract: To investigate the mechanism of how environmental regulation affects enterprise economic performance in depth, this paper builds a cost-minimization model to explore how firms comply with environmental regulation and its impact on profitability via economic factor allocation and technology innovation. Based on the panel data of sugar firms in Guangxi Zhuang Autonomous Region of China during 2008-2016, the panel linear model and threshold model are employed for empirical analysis. Results confirm an inverted-N threshold effect (i.e., suppress→promote→suppress) of formal environmental regulation and a suppressing effect of non-formal regulation (i.e., education) on enterprise's profitability when technological innovation exists; while formal environmental regulation has a linear negative effect when there is no technological innovation. Further heterogeneity analyses show that formal regulation has a significant positive effect on larger and non-state owned sugar enterprises. As for non-formal regulation, only the instrument of education promotes the larger enterprise's profitability. This research extends the mechanism discussion of the relationship between environmental regulation and enterprise economic performance, and provides valuable insights on the formulation and the implementation of environmental regulation policies and programs.

Key words: environmental regulation in China, sugar firms' profitability, economic factor allocation, technological innovation, enterprise heterogeneity

Ge Jingfang, Si Wei, Meng Ting. Influence Mechanism of Environmental Regulation on Enterprise Profitability: Evidence from Sugar Firms in Guangxi Zhuang Autonomous Region, China[J]. Management Review, 2021, 33(8): 66-77,138.

References

[1] Palmer K., Oates W. E., Portney P. R. Tightening Environmental Standards:The Benefit-cost or the No-cost Paradigm?[J]. Journal of Economic Perspectives, 1995,9(4):119-132
[2] Porter M. E., Van der Linde C. Toward a New Conception of the Environment-competitiveness Relationship[J]. Journal of Economic Perspectives, 1995,9(4):97-118
[3] Gray W. B., Shadbegian R. J. Pollution Abatement Costs, Regulation, and Plant-level Productivity[R]. NBER Working Paper, 1995
[4] Greenstone M., List J. A., Syverson C. The Effects of Environmental Regulation on the Competitiveness of US Manufacturing[R]. NBER Working Paper, 2012
[5] Ambec S., Cohen M. A., Elgie S., et al. The Porter Hypothesis at 20:Can Environmental Regulation Enhance Innovation and Competitiveness?[J]. Review of Environmental Economics and Policy, 2013,7(1):2-22
[6] Berman E., Bui L. T. M. Environmental Regulation and Productivity:Evidence from Oil Refineries[J]. Review of Economics and Statistics, 2001,83(3):498-510
[7] Rexhäuser S., Rammer C. Environmental Innovations and Firm Profitability:Unmasking the Porter Hypothesis[J]. Environmental and Resource Economics, 2014,57(1):145-167
[8] Mohr R. D. Technical Change, External Economies, and the Porter Hypothesis[J]. Journal of Environmental Economics and Management, 2002,43(1):158-168
[9] 唐鹏程,杨树旺. 环境保护与企业发展真的不可兼得吗?[J]. 管理评论, 2018,30(8):225-235
[10] Yuan B., Ren S., Chen X. Can Environmental Regulation Promote the Coordinated Development of Economy and Environment in China's Manufacturing Industry?——A Panel Data Analysis of 28 Sub-sectors[J]. Journal of Cleaner Production, 2017,149:11-24
[11] Johnstone N., Managi S., Rodríguez M. C., et al. Environmental Policy Design, Innovation and Efficiency Gains in Electricity Generation[J]. Energy Economics, 2017,63:106-115
[12] Zhao X., Liu C., Yang M. The Effects of Environmental Regulation on China's Total Factor Productivity:An Empirical Study of Carbon-intensive Industries[J]. Journal of Cleaner Production, 2018,179:325-334
[13] 王杰,刘斌. 环境规制与企业全要素生产率——基于中国工业企业数据的经验分析[J]. 中国工业经济, 2014,(3):44-56
[14] Xie R., Yuan Y., Huang J. Different Types of Environmental Regulations and Heterogeneous Influence on "Green" Productivity:Evidence from China[J]. Ecological Economics, 2017,132:104-112
[15] Albrizio S., Kozluk T., Zipperer V. Environmental Policies and Productivity Growth:Evidence across Industries and Firms[J]. Journal of Environmental Economics and Management, 2017,81:209-226
[16] 龙小宁,万威. 环境规制、企业利润率与合规成本规模异质性[J]. 中国工业经济, 2017,(6):155-174
[17] Dechezleprêtre A., Sato M. The Impacts of Environmental Regulations on Competitiveness[J]. Review of Environmental Economics and Policy, 2017,11(2):183-206
[18] Stoever J., Weche J. P. Environmental Regulation and Sustainable Competitiveness:Evaluating the Role of Firm-level Green Investments in the Context of the Porter Hypothesis[J]. Environmental and Resource Economics, 2018,70(2):429-455
[19] 贺胜兵,杨文虎. FDI对我国进出口贸易的非线性效应研究——基于面板平滑转换模型[J]. 数量经济技术经济研究, 2008,25(10):44-55
[20] 巫强,刘志彪. 进口国质量管制条件下的出口国企业创新与产业升级[J]. 管理世界, 2007,(2):53-60
[21] 赵玉民,朱方明,贺立龙. 环境规制的界定,分类与演进研究[J]. 中国人口·资源与环境, 2009,19(6):85-90
[22] 于向宇,李跃,陈会英,等. "资源诅咒"视角下环境规制、能源禀赋对区域碳排放的影响[J]. 中国人口·资源与环境, 2019,29(5):52-60
[23] 黄庆华,胡江峰,陈习定. 环境规制与绿色全要素生产率:两难还是双赢?[J]. 中国人口·资源与环境, 2018,28(11):140-149
[24] 马艳艳,张晓蕾,孙玉涛. 环境规制激发企业努力研发?——来自火电企业数据的实证[J]. 科研管理, 2018,39(2):66-74
[25] 傅京燕,李丽莎. 环境规制、要素禀赋与产业国际竞争力的实证研究——基于中国制造业的面板数据[J]. 管理世界, 2010,(10):87-98
[26] Pargal S., Wheeler D. Informal Regulation of Industrial Pollution in Developing Countries:Evidence from Indonesia[J]. Journal of Political Economy, 1996,104(6):1314-1327
[27] 原毅军,谢荣辉. 环境规制的产业结构调整效应研究——基于中国省际面板数据的实证检验[J]. 中国工业经济, 2014,(8):57-69
[28] 傅京燕. 产业特征、环境规制与大气污染排放的实证研究——以广东省制造业为例[J]. 中国人口·资源与环境, 2009,19(2):73-77
[29] Hansen B. E. Threshold Effects in Non-Dynamic Panels:Estimation, Testing, and Inference[J]. Journal of Econometrics, 1999,93(2):345-368
[30] 余伟,陈强,陈华. 不同环境政策工具对技术创新的影响分析——基于2004-2011年我国省级面板数据的实证研究[J]. 管理评论, 2016,28(1):53-61
[31] 盛丹,张国峰. 两控区环境管制与企业全要素生产率增长[J]. 管理世界, 2019,35(2):24-42