Premium
The Inverted U‐Shaped Hypothesis and Firm Environmental Responsiveness: The Moderating Role of Institutional Alignment
Author(s) -
Eiadat Yousef,
Fernández Castro Alejandro M.
Publication year - 2017
Publication title -
european management review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.784
H-Index - 32
eISSN - 1740-4762
pISSN - 1740-4754
DOI - 10.1111/emre.12135
Subject(s) - coercion (linguistics) , conformity , institutional theory , environmental regulation , social psychology , business , economics , psychology , public economics , management , philosophy , linguistics
The impact of regulatory coercion on firm environmental responsiveness is well discussed by institutional theorists. The intuitive nature of the relationship is positive and monotonic, that is, the continuous strengthening of regulatory coercion prompts top management to be more environmentally responsive. This paper shows that: (1) overall, there is an inverted U‐shaped relationship between regulatory coercion and firm environmental responsiveness, that is, the continuous strengthening of regulatory coercion induces top management to bring their firms' environmental responsiveness up to a certain optimum level beyond which its ability to trigger more proactive and substantive environmental responsiveness begins to decelerate, while reactive and symbolic strategic conformity accelerates; (2) perceived institutional (mis)alignment moderates the inverted U‐shaped relationship between regulatory coercion and firm environmental responsiveness. Finally, results show that the moderated inverted U‐shaped hypothesis advances the long‐standing and contentious debate about the relationship between regulatory coercion and firm environmental responsiveness.