<p>Corporate social and environmental responsibility has become a central focus in business management research. Hence, understanding the drivers of firms’ environmentally responsible behavior is both theoretically important and practically relevant. Recognizing local governments as public agents influencing firms within their jurisdictions, this study examines the impact of local governments’ political incentives on the environmental performance of local firms. Using China’s National Hygienic City campaign as a quasi-natural experiment, we find that the campaign, functioning as a political incentive for local governments, significantly reduces local firms’ pollution emissions. This effect is particularly pronounced among firms with greater institutional embeddedness (i.e., state-owned enterprises, firms receiving higher levels of government subsidies, and firms located in regions with lower levels of marketization) as well as among those facing stronger environmental legitimacy pressures. This study contributes to the literature on corporate environmental responsibility by identifying a novel determinant of firm pollution emissions and enriches the discussion of corporate governance by highlighting the pivotal role of local governments in promoting corporate environmental responsibility. </p>

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Local governments as key agents: How national hygienic city campaign shapes corporate environmental performance

  • Ge Yang,
  • Jiasi Fan,
  • Zhaoyang Qin

摘要

Corporate social and environmental responsibility has become a central focus in business management research. Hence, understanding the drivers of firms’ environmentally responsible behavior is both theoretically important and practically relevant. Recognizing local governments as public agents influencing firms within their jurisdictions, this study examines the impact of local governments’ political incentives on the environmental performance of local firms. Using China’s National Hygienic City campaign as a quasi-natural experiment, we find that the campaign, functioning as a political incentive for local governments, significantly reduces local firms’ pollution emissions. This effect is particularly pronounced among firms with greater institutional embeddedness (i.e., state-owned enterprises, firms receiving higher levels of government subsidies, and firms located in regions with lower levels of marketization) as well as among those facing stronger environmental legitimacy pressures. This study contributes to the literature on corporate environmental responsibility by identifying a novel determinant of firm pollution emissions and enriches the discussion of corporate governance by highlighting the pivotal role of local governments in promoting corporate environmental responsibility.