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Green growth or red tape? Unraveling the interconnected effects of stringent environmental regulations and bribery on enterprise growth

Naimat Ullah (Sustainable Development Policy Institute, Islamabad, Pakistan)
Ummad Mazhar (Suleman Dawood School of Business, Lahore University of Management Sciences, Lahore, Pakistan)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 28 November 2024

63

Abstract

Purpose

Existing research offers mixed findings on the link and does not consider the role of institutional weaknesses, such as corruption, in the effectiveness of these regulations. To address this gap, we analyze the conditional effects of environmental regulations on firm growth across economies with varying perceptions of corruption.

Design/methodology/approach

We study the relationship between environmental regulations and firm performance using World Bank Enterprise Surveys data for manufacturing firms in 142 countries covering the 2007–2017 period.

Findings

Our findings support the “strong” version of the Porter Hypothesis, suggesting that stricter environmental regulations significantly enhance firm growth.

Research limitations/implications

However, when combined with high levels of bribery, these regulations have an adverse effect.

Originality/value

The robustness of these results is confirmed by employing various statistical techniques (e.g. IV-GMM) and alternative model specifications.

Keywords

Citation

Ullah, N. and Mazhar, U. (2024), "Green growth or red tape? Unraveling the interconnected effects of stringent environmental regulations and bribery on enterprise growth", Journal of Economic Studies, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JES-05-2024-0290

Publisher

:

Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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