Is green manufacturing expensive? Empirical evidence from China

Abstract

With increasingly serious environmental problems, a circular economy production system is in urgent needs. This study explores whether green manufacturing (GM) is expensive and how external institutional environmental pressures influence the cost of GM among industrial enterprises in emerging economies. Through an analysis of 10,380 observations of 1470 listed manufacturing firms in the Chinese share market from 2008 to 2015, this paper finds that GM increases operating cost (OC). In addition, the positive relationship between GM and OC is strengthened with reduced pollution level in the local city. Furthermore, synergistic effects of the local pollution level and the local government’s pollution information transparency are found. Firms’ OC increases more as firms carry out GM when both the local pollution level and pollution information transparency of local government are high, or when the local pollution level and the local government’s pollution information transparency are low.

Keywords:

• green manufacturing
• operating cost
• pollution level of local city
• pollution information transparency of local government
• synergistic effects

Acknowledgements

We would like to thank our editors and the anonymous reviewers for their valuable comments. We also thank the Institute of Public and Environmental Affairs for their warm and professional help.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. http://www.mep.gov.cn/.

Additional information

Funding

Our gratitude goes to the National Social Science Foundation of China, as this study is supported by the Project of Green Industry Chain Evaluation Index System and Green Governance Mechanism (Project No. 15AZD061).