Business strategy, green innovation, and carbon reduction performance: evidence from China

Abstract

This study examines the impact of business strategy on carbon reduction performance (CRP), with a focus on the mediating effect of green innovation and the moderating effect of environmental turbulence. Using a dataset of China’s industrial listed companies spanning from 2010 to 2021, several key findings emerge: First, compared with defenders, prospectors demonstrate a strong inclination toward improving CRP. Second, green innovation acts as a partial mediator between business strategy and CRP. Third, environmental turbulence, which can be divided into market turbulence and technological turbulence, has a heterogeneous moderating effect on business strategy and green innovation; specifically, market turbulence weakens the impact of business strategy on green innovation, while technological turbulence enhances it. Finally, additional research reveals that the positive impact of business strategy on CRP is more pronounced when firms are non-state-owned, operating in heavily polluting industries, and in the mature or declining stages of the corporate life cycle.

Keywords:

• business strategy
• carbon reduction performance
• green innovation
• market turbulence
• technological turbulence

Disclosure statement

The authors confirm that there are no competing interests to declare.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China (Grant number 71874042); the Fundamental Research Funds for the Central Universities (Grant number HIT.HSS.202102).