The Relationship between Environmental Regulation and Corporate Economic Performance: Win-win or Win-lose?

초록

This paper examines the relationship between environmental regulation and corporate economic competitiveness. Research in this area has suggested two dividing perspectives: the win-lose perspectives in which environmental regulations undermine a firm’s economic productivity and competitiveness on one hand; the win-win perspectives in which environmental regulations promote economic productivity and competiveness by inducing innovation on the other hand. This paper empirically investigates such relationship in the context of an Environmental Protection Agency-initiated Green Lights (GL) voluntary environmental program. To do so, it constructs a treatment effects model to account for the effect of non-random assignment among GL corporate participants and non-participants. This model simultaneously estimates a probit model that predicts corporate participation in the GL program and a linear model that tests how corporate participation in the GL program contributes to economic performance. Our findings provide the positive and significant influence of corporate participation in GL program on economic performance and thus support the win-win perspectives.