The Influences of Multi-Level Environmental Regulations on Firm Performance in China

A multi-level perspective of how environmental regulations affect firm performance receives less attention. By document analysis and semi-structured interviews, this study examines the influences of environmental regulations from the central government, the local governments, and the corporate on firm performance with a case study based on a state-owned enterprise named SINOPEC Yangzi Petrochemical Company (SYPC) in China. The findings show that the regulations from different levels exert distinct but interconnected influences on performance of SYPC. The guiding concepts from the central government, the prescriptive standards from the local governments, and the performance management systems from the SINOPEC headquarters incentivize SYPC to innovate green technology. Technical upgrade, good relations with the government, and popularity in the public due to the implementation of regulations improve economic performance of SYPC, though which is not the priority of the company. SYPC actively implements environmental policies but also acts as a part of the strategy of SINOPEC circumventing regulations.