Political embeddedness and the adoption of environmental management practices: The mediating effects of institutional pressures

We examine the effect of political embeddedness on environmental management practices and identify different channels for this relationship. We find that politically embedded firms are less exposed to coercive pressure, but have higher normative and mimetic pressures to engage in environmental management. Additionally, normative and mimetic pressures are higher for firms operating in a more competitive market, whereas oligopolistic firms are subject to higher coercive pressure. Our findings support both legitimacy theory which argues that political embeddedness shields firms from environmental regulations, as well as control-based theories arguing that politically embedded firms should perform better in environmental management. We also demonstrate that market-based incentives are especially important to induce politically embedded firms to adopt environmental practices when regulatory pressure does not work well.

Automated summary

This study examines the impact of political embeddedness on environmental management practices and identifies different channels for this relationship. The findings suggest that politically embedded firms face less coercive pressure but higher normative and mimetic pressures to engage in environmental management. Moreover, normative and mimetic pressures are higher for firms operating in a competitive market, while oligopolistic firms face greater coercive pressure. The results support both legitimacy theory, which argues that political embeddedness shields firms from environmental regulations, and control-based theories, which propose that politically embedded firms perform better in environmental management. The study also demonstrates the importance of market-based incentives to encourage politically embedded firms to adopt environmental practices in the absence of effective regulatory pressure.