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The purpose of this paper is to examine firms’ knowledge-sourcing behavior in green technology development with respect to the home country’s market- vs nonmarket environmental policy stringency.

This paper empirically analyzes the effects of market and nonmarket environmental policy stringency on firms’ knowledge sourcing activity with patent data from OECD countries during 1991–2010, across five categories of green technologies.

When a nation establishes more stringent market environmental policies, firms likely source more international knowledge rather than domestic knowledge about green technology, up to a point. After that level, this balance shifts (inverted U-shaped curve) due to the risks associated with greater investment costs and commerciality. Nonmarket environmental policies instead should exhibit a positive, linear relationship with international relative to domestic knowledge sourcing. This study also reveals the dynamic roles of a firm’s green technological capability with market-based environmental policy stringency and a substitutive role of the capability with nonmarket-based environmental policy stringency.

This study shows the effect of market and nonmarket environmental policy stringency on firms’ knowledge sourcing. The findings provide meaningful implications for policymakers regarding the optimal levels of market and nonmarket environmental policy stringency that will enhance their countries’ green technology development.

This paper enriches the literature of environmental policy and knowledge sourcing and offers the direction of future research of how environmental policy stringency influences a firm’s knowledge sourcing for green technology development.

Textile, listed as one of the highly environmentally sensitive goods, its trade is susceptible to be influenced by the implementation of stringent environmental policies. This paper aims to investigate the long-run relationship between revealed comparative advantage (RCA) and Environmental Policy Stringency Index (EPSI) for textile exports of G20 countries in panel data setup.

Apart from trend analysis, the authors have employed Pedroni and Westerlund panel cointegration method and fully modified ordinary least square (FMOLS) method to study the long-run relationship between RCA and EPSI in presence of cross-sectional dependence.

A strong link between trade and environmental stringency is observed for textile in the present study. For G20 countries, slight evidence of the Pollution Haven Hypothesis has also been witnessed in the study. Correspondingly, the results reveal the presence of long-run association between the variables under study, implying that stringent environmental policies reduce RCA for some countries, whereas some countries witness the Porter hypothesis.

The results imply that policy formulation should not aim at limiting the efforts of connecting RCA to environmental stringency but to set trade policies in a wider framework, considering environmental concerns, as these are inseparable subjects. However, this study also provides relevant real-world implications that can support further research.

The present study has important implications for textile exporters such as green innovations. The Porter hypothesis can be a beneficial tool for G20 exporters in enhancing their export performance, especially for the ones dealing in environmentally sensitive goods. This study offers relevant policy implications and provides directions for future research on global trade and environment nexus.

This study deals in a debatable area of research that evaluates the interlinkages between environmental stringency and global trade flows in the G20 countries. An important observation of the study is the asymmetrical nature of policy stringency across different countries and its impact on trade. The unavailability of updated data is the limitation of the present study.

Trade of environmentally sensitive goods (ESGs) is often exposed to countries with less stringent regulations suggesting that those countries have comparative advantage in the polluting sector. The Group of Twenty (G20) members are among the highest polluters, globally. Different stringency policies are enacted time to time in G20 to control environment pollution. However, the impact of policy stringency on export performance of ESGs is seldom examined. The paper aims to address some of the issues concerning this matter.

The present study aims to address the short run and long-run association between Revealed Comparative Advantage of ESGs and Environmental Policy Stringency Index for the period of 1990–2019 in G20. Periodic fluctuations and time adjustment mechanism are also studied. Second Generation Panel Cointegration, Vector Error Correction, Impulse Response Function and Variance Decomposition methods are employed to address the objectives.

Result is evident that more exposure to stringent environmental regulations reduces the comparative advantage of ESGs in the long run. But there is no evidence of the short-run relationship between the variables. The possible reason could be that new regulations enacted prove fruitful in the long run.

The novelty of the study is to focus on inter linkages between stringency and global export competitiveness in G20, almost nonexistent in the past studies. The study also provides a road map to policymakers to find out potential ways for sustainable development by balancing environmental stringency measures and international trade.

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2022-0560

The purpose of this paper is to examine the role of activism in determining the identity of the “green” median voter and the influence of the green voter on environmental regulatory stringency in the US states.

Regulatory stringency is measured using output weighted abatement spending and an industry concentration adjusted index of state environmental compliance costs for the period 1989-1994. Activism measures include environmental initiatives, median support for pollution standards and voter ideology. Fixed-effects panel methodology is used in empirical estimation.

The authors find that activism increases stringency in regulating overall as well as media-specific pollution. The results particularly highlight the nuances of different approaches to activism and their varied impact across pollution media.

A drawback of the empirical estimation is the lack of continuous historical abatement spending data. A longer panel with alternative stringency measure(s) would add explanatory power to activism, especially since some activism measures capture slow-changing institutional factors.

The study identifies the conditions under which activism can have the most impact on a society's environmental outcomes since pollution varies in damages, hence abatement costs, across pollution media.

The paper adds to the existing literature by incorporating three alternative measures of environmental activism to systematically investigate its impact on environmental stringency within a fixed-effects regression design. It also promotes a deeper understanding of the efficacy of the activism process by deconstructing policy stringency across pollution media to show that activism and its impacts are more nuanced than previously studied.

The stringency policy and economic support policy in response to and to address the coronavirus disease 2019 have become a significant concern since the end of 2019. The motivation that led to this study is that, the selection of the stringency policy and the economic support policy appear to have brought about the opposite effects of the environmental costs of carbon dioxide emissions. The study's objective is to examine the contradictory impacts of these stringency and economic support policies on carbon dioxide emissions.

This study applies panel data for the top four countries responsible for carbon dioxide emission, namely China, the United States of America, India and Russia. A fully modified ordinary least squares estimator and dynamic ordinary least squares estimator are employed to determine the long-run parameters.

The results indicate that the effect of reduced carbon dioxide emissions due to a one-unit increase in the stringency policy is greater than the effect of increased carbon dioxide emissions caused by a one-unit increase in the economic support policy. Hence, if the two policies are implemented simultaneously, a positive net effect on environmental costs will be gained.

The study investigates in a general scope, the impact these response policies have on the environment. Future researchers may enhance the research on environmental impact in different sectors due to the implementation of both policies to enrich the analytical perspective.

The results have provided implications for policymakers to emphasize more on stringency-oriented policies while giving economic support to the low-income or unemployed households in order to reduce carbon dioxide emissions.

Despite the foreseen effects of the stringency policy and economic support policy, there has hardly been any studies that have explored empirically the nexus between both policies with carbon dioxide emissions in one empirical model. Furthermore, the paper uses the high-frequency data in determining the contradictory impacts of stringency policy and economic support policy on CO₂ emissions.

The authors investigate the impact of the stringency of environmental policy on the financial performance of European automobile manufacturers. This paper contributes to the debate about the impact of environmental policy on a firm's competitive performance.

The authors use cross-country sector-level panel data for 71 firms from 18 European countries from 2010 to 2019. The authors apply a fixed-effect model and then, to address the endogeneity issues, the authors use the generalized method of moments (GMM) model. To further examine the validity of the results, the authors use a data-mining modeling approach as a robustness test.

By considering the dynamic impact of environmental policy and overcoming the endogeneity issues, the results show that the impact of the stringency of environmental policy on a firm's financial performance depends on the time horizon: the stringency of environmental policy has a short-term negative impact but a long-term positive impact on a firm's financial performance.

The authors limited the study to the auto industry in Europe. In addition, future research could consider the impact of environmental policy on other financial performance indicators such as Return on Sales or Return on Equity. Also, it would be interesting to conduct a similar study in the United States or China using a firm-level data set to examine the robustness of the results.

Stringency of environmental policy improves a firm's financial performance in the long term. It is essential for firms and managers to consider the dynamic impacts of environmental policy on their financial performance and adopt a long-term perspective when evaluating the costs and benefits of complying with environmental regulations. The findings help management develop a long-term vision for investment and budget allocation. The results support management's view for strategic decision-making against the common budget argument and challenges for stockholders when it comes to adopting new technologies and planning long-term investment.

It is crucial for firms to recognize the broader societal benefits that come with environmental policy. Firms must not only focus on their financial performance but also on their social responsibility to protect the environment and contribute to the greater good. Therefore, firms must take a long-term perspective and recognize the broader societal benefits of environmental policy in order to make informed decisions that support both their financial success and their social responsibility.

This paper contributes to the literature by helping to explain the inconsistent results of studies about the impact of environmental policy on a firm's competitiveness. Using a firm's financial performance as one of the main metrics for competitiveness, this study takes into account both endogeneity and contemporaneity in evaluating the impact of the stringency of environmental policy on a firm's financial performance.

As the world began to witness an unprecedented rate of environmental destruction, economists and international institutions have been toiling away for decades, making every effort to dissect the dynamics of the relationship between the environment and the economy. Many claims have preached that there is a trade-off between environmental wellbeing and economic prosperity, where economic growth would be hindered by environmental protection. As we continue to neglect nature, will the world be capable of maintaining infinitely growing economies without falling into a deficit of natural resources? The foundation of all forms of economic growth springs from nature. Therefore, this study aims to explore the true impact of environmental protection policies on economic performance, and claims that well-designated environmental policies would only strengthen economies.

This study aims to investigate the impact of environmental protection policies on gross domestic product (GDP) growth utilizing a selected sample of 18 OECD countries. Fixed effects panel regression was conducted for the sample from 1998 to 2015.

Findings suggest that an increase in the environmental protection stringency is associated with an increase in GDP in the long-run. Whereas in the short run, more stringent environmental policies have been shown to have a questionable impact on GDP, brought to light by the mixed results portrayed in the short-run data.

While it is true that this study has utilized data from the The Organisation for Economic Co-operation and Development (OECD), the findings could be applicable to countries of the MENA region. This is due to the fact that GDP levels of OECD countries and Middle East and North African (MENA) countries have been converging over the past few decades. The convergence suggests that both regions seem to be following similar trends since the year 1990, with an increasing similarity in trend over the years.

This paper empirically proves that the protection of nature is necessary for the sustenance of long-term economic growth. This study also provides an approximate time range of when the economic gains of environmental protection would be realized, specifically in the beginning of a green growth transition. This makes the study findings accurately relevant to Arab countries, where providing a time range is necessary to alleviate some the uncertainty of policymakers in the MENA region towards environmental policies.

While previous research has identified that environmental innovation is shaped by a variety of drivers, researchers have devoted limited attention to the role of nature-based resources in the country. Building on environmental innovation theory and the natural resource-based view of the firm, this study introduces ecological resource deficits as a novel driver of environmental innovation. The authors explore how ecological resource deficits interact with institutional and regulatory drivers as well as firm-level technology drivers to explain the extent of environmental innovation across different countries.

The authors apply fuzzy-set qualitative comparative analysis to a multi-source dataset to identify different pathways for environmental innovation across 28 countries.

Findings show that higher environmental innovation is a function of ecological resource deficits complemented by the presence of at least two other conditions. Moreover, the results show that environmental policy stringency and societal expectations are substitute conditions of environmental innovation.

This study reveals the interdependences between different conditions for environmental innovation across countries contributing to a more nuanced understanding of the geography of environmental innovation.

The present study examines the rationale behind the increased global presence of corporate green bonds as a green financing tool to facilitate sustainable practices and eco-friendly investing. The authors investigate the intriguing question of whether the companies that issue green bonds are valued more by investors or not, and further extend our analysis by exploring whether the green image of companies helps to minimize the value erosion during a crisis and enhance the resilience of the stocks?

To examine the association between environmental commitments and firm value, the authors use the COVID-19 crisis as an exogenous shock and create a perfect natural setting to eliminate the endogeneity bias from our estimations. Moreover, the authors use propensity score matching to choose a one-to-one match of green bond firms with a larger pool of brown bond firms and eliminate the “size effect” arising out of the disproportionate sample size of green and brown bond firms.

The results of the study indicate that green bond firms are valued more by investors compared to brown bonds firms. Hence, green bond issuance acts as a strong signal of a firm's environmental commitment and it is well recognized by the investors. One of the possible reasons for a higher value of green bond firms may be due to their ability to arrest value erosion during environmental shocks. The authors could not find any difference in the resilience of green and brown bond firms.

The study contributes to the growing literature in the area of impact investing, specifically on exponentially growing innovative instrument green bond. Our study integrates two areas of research, i.e. corporate finance and impact investing by examining the impact of green bond issuance on firm value and stock market returns. The results would help environmentally sensitive investors to devise their investment portfolios more efficiently.

Multinational enterprises (MNEs) own and control technological resources and capabilities that make them critical actors in accelerating the transition toward net zero. Even beyond the energy sector, stakeholders are putting increasing pressure on MNEs to reduce the carbon intensity of their operations, that is, to improve their carbon performance. While there is unambiguous evidence that national climate policy is a critical catalyst for long-term carbon performance improvements, there is limited research on how MNEs’ carbon strategies react to climate policies. This chapter reviews the concepts, drivers, and strategies connected to carbon performance in the broader sustainability and management literature to clarify potential complementarities to international business (IB). The authors then highlight how MNEs will face increasing institutional complexity along two dimensions: (1) the structural diversity of institutional environments and (2) institutional dynamism, primarily reflected by public policy. The proposed conceptual framework maps these two dimensions to national and subnational levels, and the authors present two data sources that allow the quantitative analysis of country differences in the diversity and dynamism of national climate policy. The authors conclude that there are ample opportunities for IB researchers to explore MNEs’ strategic reactions to climate policy and to inform policymakers about the consequences of national climate policy in the global economy.