Proactive environmental strategy, environmental innovation and firm performance

This paper investigates to what extent proactive environmental strategy (PES) can enable environmental innovation, and hence firm performance. Applying the theoretical lens of organisational ambidexterity, this study develops a research framework utilising two PESs, i.e., environmental corporate social responsibility (ECSR) and environmental disclosure (ED); three forms of environmental innovation, i.e., exploitative environmental innovation (EiEI), exploratory environmental innovation (ErEI) and a combination of EiEI and ErEI (CmEI). To examine the proposed hypotheses, a second-hand dataset including 3,190 data points from 581 Chinese industrial firms collated between 2010 and 2019 was employed for empirical analysis. The results reveal that, EiEI and CmEI can be enabled by both ECSR and ED, whereas ErEI is facilitated by these two PESs with some years' delay. Consequently, only CmEI has a positive effect on a firm's performance. The derived implications for researchers and managers are also addressed.