Business Strategy and the Environment

Bus. Strat. Env. 2017

Published online in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/bse.1983

Institutional Pressures and Environmental

Management Practices: The Moderating Effects of
Environmental Commitment and Resource Availability
Shanyong Wang, Jun Li* and Dingtao Zhao
Department of Business Administration, School of Management, University of Science and Technology of China,
Hefei, Anhui Province, China

ABSTRACT
With the deterioration of the environment and the shortage of natural resources, firms are facing
increasing pressures to implement environmental management practices in their daily operation
management. Drawing on institutional theory and environmental management literatures, this
research tries to explore how institutional pressures motivate firms to implement environmental
management practices, and how such effects are moderated by firms’ environmental
commitment and resource availability. The results of a survey of 188 Chinese firms suggest that
regulatory pressures and normative pressures are positively and significantly related to firms’
propensity to implement environmental management practices. Moreover, the results indicate
that firms’ environmental commitment positively moderates the relationships between
institutional pressures and environmental management practices, while firms’ resource availabil-
ity plays different roles depending on the types of pressure (regulatory or normative pressures).
Implications and suggestions for future research are provided. Copyright © 2017 John Wiley &
Sons, Ltd and ERP Environment

Received 11 January 2017; revised 13 July 2017; accepted 27 July 2017

Keywords: environmental management practices; institutional pressures; environmental commitment; resource availability; resource-
based view

Introduction

E
NVIRONMENTAL MANAGEMENT ISSUES HAVE BECOME AN IMPORTANT CONSIDERATION FOR FIRMS DUE TO GROWING PUBLIC CONCERNS
and governmental pressures on environmental protection (Brammer et al., 2012; Lee and Klassen, 2016;
Zhu et al., 2017). Firms are expected to adopt and implement environmental management practices to alle-
viate the negative influence of their activities on the natural environment (Hofer et al., 2012; Mårtensson and
Westerberg, 2016; Yu et al., 2017). Environmental management practices refer to ‘measures, techniques, procedures,

*Correspondence to: Jun Li, Department of Business Administration, School of Management, University of Science and Technology of China, No. 96, Jinzhai
Road, Hefei, Anhui Province, 230026, P.R. China.
E-mail: laj2336@mail.ustc.edu.cn:

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 S. Wang et al.

and policies a firm uses which are aimed at monitoring and reducing the negative impacts on the natural environ-
ment’, such as taking note of environmental considerations when designing new products or developing new pro-
cesses, adopting advanced technologies to use/reuse/recycling of resource and energy, and implementing
environmental management programs (Montabon et al., 2007; Leonidou et al., 2013; Yu et al., 2017). In fact, the im-
plementation of environmental management practices can reduce the pollution levels by more than 50%, and thus
they are regarded as effective methods to protect the natural environment (Brammer et al., 2012; Grolleau et al.,
2015). While the significance and importance of implementing environmental management practices is widely rec-
ognized, not all firms are willing to implement environmental management practices in their daily operation man-
agement (Brammer et al., 2012; Zhu et al., 2017). Therefore, research on the antecedents of implementing
environmental management practices, and exploring under what conditions firms are willing to implement environ-
mental management practices, are of great significance and interest.
Recently, scholars have increasingly touted institutional theory as an important research perspective for studies
on firms’ environmental protection behavior (Buysse and Verbeke, 2003; Berrone et al., 2013; Colwell and Joshi,
2013; Moon et al., 2014; Albertini, 2017). They think that institutional pressures can strongly affect firms’
predispositions toward environmental protection issues. However, the findings of previous studies on how
institutional factors affect firms’ environmental protection behavior are mixed. For example, some studies find that
institutional pressures have significant and positive effects on firms’ intention to take measures to protect the
environment (e.g. Roxas and Coetzer, 2012; Colwell and Joshi, 2013), while others reveal that they are insignificant
(e.g. Nygaard and Biong, 2010). That is to say, firms will respond heterogeneously when they are subjected to a
homogeneous level of institutional pressures (Berrone et al., 2013; Colwell and Joshi, 2013). Thus, it is necessary
to investigate the potential moderators and explore the effects of potential moderators on the relationships between
institutional pressures and environmental management practices.
Exploring the moderating effects of firms’ resources and environmental commitment may help resolve the
inconsistency in previous studies. According to the resource-based view, the activities and practices that firms
undertake largely depend on the resources firms own (Grant, 1991; Amit and Schoemaker, 1993). Meanwhile,
according to environmental management literature, firms’ environmental responsiveness and sustainable develop-
ment are also affected by their environmental awareness and environmental commitment (Jansson et al., 2017).
Furthermore, in fact, firms’ responses to environmental issues are driven by external forces and internal factors
(Muller and Kolk, 2010; Colwell and Joshi, 2013). Institutional pressures can be seen as important external forces
and firms’ resources and environmental commitment can be seen as the two important internal factors. Resources
are key factors influencing firms’ production and operation decisions and environmental protection behavior (Grant,
1991; Amit and Schoemaker, 1993; Buysse and Verbeke, 2003; Berrone et al., 2013; Leonidou et al., 2013). Leonidou
et al. (2013) argue that resources are vital inputs in designing and implementing environmental protection strategies,
and a firm is more likely to take environmental protection initiatives if the firm has sufficient resources. A firm with
inadequate resources is more likely to hold a ‘wait and see’ attitude and to be reluctant to take measures to protect the
environment even if facing external pressures (Brammer et al., 2012). Environmental commitment can be defined as
the extent to which the top management commits to support its efforts in environmental protection and implemen-
tation of environmental protection practices (Chan, 2010; Armstrong and Green, 2013; Jansson et al., 2017). Firms
with strong environmental commitment will be more likely to adopt environmental protection initiatives (Chen
et al., 2015). In contrast, firms with weak environmental commitment are less likely to adopt and implement environ-
mental protection initiatives. Thus, in this research, considering the importance of firms’ resources and environmen-
tal commitment to environmental protection, they are selected and regarded as the potential moderator variables.
It can be predicted that firms respond differently to the same levels of institutional pressure due to the
differences in internal resources and environmental commitment. The external institutional pressures and internal
resources and environmental commitment may work together and interact with each other to affect firms’ environ-
mental management practices. However, to the best of our knowledge, no research has empirically explored the
interaction effects of institutional pressures, firms’ resources and environmental commitment on environmental
management practices to date. Such a void leaves a theoretical and empirical research gap. The current research
tries to narrow this gap.
The remainder of this research is organized as follows. The following section deals with the literature review and
proposes the conceptual framework and hypotheses. The next section focuses on data and the research method.

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Institutional Pressures and Environmental Management Practices

Data analysis and results are presented in the fourth section. In the fifth section, the results are discussed. In the
final section, we conclude the research and point out the implications and limitations.

Theoretical Background and Hypotheses

Institutional theory proposes that organizational behaviors and practices are largely influenced by a broader external
social environment, such as laws, regulations, cultures, norms, values and social expectations (DiMaggio and
Powell, 1983; Scott, 2005; Colwell and Joshi, 2013). Any firms can maintain or obtain legitimacy only if they
conform to these external social environments (DiMaggio and Powell, 1983; Colwell and Joshi, 2013). Legitimacy
enables a firm with the right to operate and perform the business in a certain way (Bruton et al., 2010). Moreover,
concern over legitimacy will induce firms to adopt the dominant practices that are socially valuable within an
institutional filed (Berrone et al., 2013). Thus, it can be speculated that a firm is more likely to implement environ-
mental management practices since ecological environmental problems have aroused wide concern and the whole
society has reached a consensus on environmental protection (Brammer et al., 2012).
According to DiMaggio and Powell (1983), institutional pressures originate from the institutional environment
and could affect firms’ managerial decisions and practices. Additionally, Scott (2005) divides institutional pres-
sures into regulatory, normative and mimetic pressures. These pressures mainly arise from firms’ stakeholders,
such as governments, non-governmental organizations, suppliers and customers (Oliver, 1997). Regulatory pres-
sures are the pressures that originate from political influence exerted by the powerful stakeholders (e.g. govern-
ments) on which the focal firm depends. These powerful stakeholders provide explicit guidance to firms
through rules, rewards and even sanctions (DiMaggio and Powell, 1983). Empirical evidence indicates that regula-
tory pressures could be the result of a government mandate (Bruton et al., 2010). Normative pressures are the pres-
sures that stem from collective expectations, values and standards within particular organizational context
(DiMaggio and Powell, 1983). There is empirical evidence that normative pressures originate from non-
governmental organizations, customers and suppliers in the supply chain (Liu et al., 2010). Mimetic pressures
mainly arise from imitating other organizations’ successful actions and practices to minimize cognitive uncertainty
(DiMaggio and Powell, 1983).
Although institutional pressures include three kinds of pressure, Scott (2005) indicates that regulatory and nor-
mative pressures deserve special attention. Meanwhile, Berrone et al. (2013) note that these three pressures are at
work simultaneously, but their role and relevance is context specific. In the context of environmental management,
most of the research considers that regulatory and normative pressures are crucial for firms (Kassinis and Vafeas,
2006; Brammer et al., 2012; Colwell and Joshi, 2013). In addition, the environmental management initiatives are
just beginning in most firms in China and the benefits obtained from implementing environmental management
practices are unclear and long term. In this situation, most firms tend to hold a wait and see attitude and are unwill-
ing to follow and imitate their partners or competitors to implement environmental management practices. The ef-
fect of mimetic pressures is limited and can be omitted. Hence, in this research, it is reasonable to merely explore
the role of regulatory and normative pressures in affecting firms to implement environmental management
practices.

Regulatory Pressures and Environmental Management Practices

Pressures from regulators usually aim to alleviate climate change and improve environmental quality (Zhu and
Sarkis, 2007). To some degree, environmental management practices are geared toward this goal. Regulatory pres-
sures are often exerted by powerful stakeholders (governments and partners), who have the power to ask firms to
comply with various environmental standards and regulations (Roxas and Coetzer, 2012). The pressures usually
originate from the enforcement of standards and regulations rather than the standards and regulations themselves
(Berrone et al., 2013). In practice, regulatory pressures affect firms to implement environmental management prac-
tices through imposition and inducement mechanisms (DiMaggio and Powell, 1983). Under the imposition mech-
anism, every firm must comply with standards and regulations unconditionally. Otherwise, the relevant regulatory

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agencies can punish and sanction these firms and even deny the firms’ existence in their jurisdiction (Deephouse,
1996; Berrone et al., 2013). Under the inducement mechanism, by complying with standards and regulations, firms
have opportunities to gain several incentives such as subsidies, tax deductions and access to scarce and requisite re-
sources (DiMaggio and Powell, 1983). Thus, considering the threats and opportunities of regulatory pressures, firms
are inclined to implement environmental management practices.
In addition, it is worth noting that, though environmental management practices can help firms to reduce toxic
emissions and protect the natural environment, the cost may be high and the financial returns may be uncertain
(Oliver, 1997). However, environmental management practices help firms not only to gain government support
and social legitimacy but also to avoid penalties and other losses (e.g. suspend business for rectification and even
lawsuit) for resistance and poor obedience of standards and regulations (Shu et al., 2016). Thus, when firms take
into account the costs and benefits, they may have greater willingness to implement environmental management
practices. Based on this analysis, the following is hypothesized.

Hypothesis 1. Regulatory pressures positively influence the implementation of environmental management practices.

Normative Pressures and Environmental Management Practices

Normative pressures typically come from media, industrial associations, academic institutions and other focal so-
cial actors (suppliers and customers) (Scott, 2005). It is indispensable for firms to keep in touch with these actors
when they do business, and these actors may define appropriate standards, norms and behaviors for firms to fol-
low (Roxas and Coetzer, 2012). The high degree of embeddedness strengthens the effects of standards and norms
on firms’ practices since these standards and norms are associated with the issue of legitimacy (Scott, 2005). To
quest and maintain legitimacy, firms may compare themselves with these actors consciously and try their best to
operate in line with standards, norms and social expectations that are shared in the institutional field (Berrone
et al., 2013).
This logic can be extended to the context of implementing environmental management practices. Generally, en-
vironmental standards and norms from actors around firms can influence their environmental responses. Indeed,
these local actors not only create and share environmental standards and norms that may push firms beyond basic
regulatory requirements, but also affect resource allocation, cooperative relationships and legitimacy (Reid and
Toffel, 2009). The prevalence of green activities and environmental management practices is likely to increase nor-
mative pressures and induce firms to comply with these environmental standards and norms and implement the
prevailing environmental management practices.
Moreover, these local actors tend to have more concern about environmental issues and are unlikely to be satis-
fied with symbolically conforming to environmental standards and norms, and thus firms cannot obtain legitimacy
only by engaging in ceremonial practices (Berrone et al., 2013). Visible and salient environmental management prac-
tices such as equipment and technology update are more advocated, since these practices signal a substantive deter-
mination to reduce emissions, offer a more positive response to normative pressures and more easily gain support
and legitimacy (Shu et al., 2016). If firms do not comply with these environmental standards and norms, do not suc-
cumb to normative pressures and do not implement environmental management practices, they will be subjected to
resistance, isolation and social protestation (Roxas and Coetzer, 2012). However, compliance with standards and
norms, in turn, brings a good reputation for firms and enhances their survival and profit probability in the long term
(Colwell and Joshi, 2013). Based on this analysis, the following is predicted.

Hypothesis 2. Normative pressures positively influence the implementation of environmental management practices.

Heterogeneity in Firm Responses to Institutional Pressures

Firms might be subject to homogenous institutional pressures when they are located in the same associations and
regions (Zhu et al., 2013). Do all firms respond homogeneously when they are subject to the same levels of

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Institutional Pressures and Environmental Management Practices

institutional pressure? If not, what explains this heterogeneous response? The reasons are ex ante heterogeneity
among firms; namely, each firm will consider its current conditions when it responds to the institutional pressures
(Berrone et al., 2013). Specifically, this research mainly explores two sources of ex ante heterogeneity among firms:
environmental commitment and resource availability.
A firm’s commitment to environmental ethics is a key driver in environmental management and is helpful to
understand the relationships between institutional pressures and environmental management practices (Yen and
Yen, 2012). Environmental commitment affects firms’ responses to institutional pressures through two channels.
First, firms with a high level of environmental commitment are more likely to regard environmental protection
as their corporate social responsibility and be eager to protect the environment (Muller and Kolk, 2010). Under
the influence of internal environmental protection motivations and external pressures, firms are willing to imple-
ment substantive environmental management practices and encourage all employees to engage in environmental
management. Second, firms with a high level of environmental commitment more easily cultivate green organi-
zational culture that is conductive to the implementation of environmental management practices than their
peers, and are more visible to those external stakeholders who exerted pressures on them. Meanwhile, these
firms can also maintain good relationships with stakeholders since their activities and practices are compliant
with social expectations. Thus, considering institutional pressures, firms with a high level of environmental com-
mitment will be more likely to implement environmental management practices. Together, the following is
expected.

Hypothesis 3. Environmental commitment strengthens the relationships between institutional pressures (regulatory
and normative pressures) and environmental management practices.

The second driver of heterogeneity in firms’ responses to institutional pressures is variation in firms’ resource
availability. The resource-based view highlights the importance of resources and divides them into tangible and
intangible (Grant, 1991; Amit and Schoemaker, 1993). According to the resource-based view, firms’ resources
can generate rare, valuable, non-substitutable and imperfectly imitable capabilities and improve competitive
advantages and business performance (Benitez-Amado and Walczuch, 2012). Meanwhile, firms’ strategies and
action plans are also dependent on resources and even constrained by resources. Resources give firms leeway
in choosing and adjusting strategies and actions in response to external and internal circumstance changes
(Sharfman et al., 1988).
Prior research notes that lack of adequate resources is the major obstacle to implementing environmental
protection initiatives (Brammer et al., 2012). Generally speaking, sufficient resources give firms greater willing-
ness and ability to implement environmental management practices to respond to external influences, especially
external institutional pressures (Leonidou et al., 2013). However, firms with inadequate resources are reluctant to
implement environmental management practices, since the implementation costs are high and the benefits are
ambiguous in the short term. To these firms, survival and profitability are more important, and the focuses of
business operations are to make use of their scarce sources to meet the immediate needs and gain profits
(Berrone et al., 2013). Thus, these firms are more inclined to disregard the external pressures or respond to them
in a ceremonial way.
Furthermore, firms with sufficient resources are more concerned about their image and reputation (Leonidou
et al., 2013). A bad image and reputation for poor environmental protection can impair relationships with
stakeholders, especially resource provider stakeholders (e.g. suppliers, customers, financial institutions and labor
market), and then further affect their sustainable ability to access resources. Thus, under the influence of
institutional pressures, it can be assumed that resource-abundant firms will be more inclined to implement environ-
mental management practices. Accordingly, we postulate the following.

Hypothesis 4. Greater resource availability strengthens the relationships between institutional pressures (regulatory
and normative pressures) and environmental management practices.

Based on the above analysis, the research framework is depicted in Figure 1.

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 S. Wang et al.

Figure 1. The research framework [Colour figure can be viewed at wileyonlinelibrary.com]

Research Methodology
Sample and Data Collection
A questionnaire survey method is employed to collect data to test the research hypotheses. The data is collected from
the industrial firms in the Yangtze River Delta, an area with the highest GDP per capita in China (Zheng et al.,
2016). We select sample firms from this area for three reasons. First, according to a report by China State Statistical
Bureau,1 Yangtze River Delta has the largest number of industrial firms in China, while relatively few studies have
been conducted in this area. So, research on firms in this area may be more interesting and meaningful than in
other areas with few industrial firms. Second, environmental problems such as water pollution and air pollution
in this area are becoming more and more serious. Thus, research on firms’ environment management in this area
is urgent and relevant and could provide useful implications for firms and governments. Finally, Yangtze River
Delta is an area where the market economy is relatively active and mature. Firms’ environmental social responsibil-
ity is gradually increasing and a ‘green mindset’ is accepted by most firms (Zhu and Sarkis, 2007). Firms are willing
to engage in environmental management and undergoing a ‘green revolution’. Therefore, data collection from these
firms in this area is appropriate.
In general, it is difficult for researchers to collect data directly from industrial firms in China because many firms
are reluctant to cooperate with research teams (Davies and Walters, 2004). Thus, to conduct the survey smoothly
and easily, the research team sough assistance from the local government agencies. To obtain a representative sam-
ple, the research team randomly selected 1000 firms from a list provided by government agencies. These sampled
firms cover distinct ownership structures and represent an extensive range of industries (see Table 1). According to
the contact information of firms provided by government agencies, the research team made telephone calls to these
firms, explained the research purpose and asked whether they are willing to participate in the survey. In total, 783
firms agreed to participate. Then the research team delivered a pair of questionnaires and a cover letter to these
783 firms. Considering that top and middle-level managers play dominant roles in firms’ decision-making process,
the cover letter asked each firm to select one top manager and one middle-level manager to answer the question-
naire, and regarded them as the ‘key informants’ (Shu et al., 2016). Furthermore, the cover letter assured the re-
spondents of strict anonymity and confidentiality and that their responses would never be leaked, and that there
are no right or wrong answers. In addition, to encourage their participation, the research team promised to offer
a summary of the research results if the firm required.
To improve the response rate, follow-up telephone calls and reminder emails are used. In total, 518 pairs of ques-
tionnaires were returned. The research team then discarded the incomplete, unmatched and missing data question-
naires. Finally, 188 pairs of useful questionnaires are obtained, for a response rate of 18.8% (188/1000), which is
comparable to those of other survey based firm-level studies (Brammer et al., 2012; Perez-Valls et al., 2016; Jansson
et al., 2017). The detailed profile of the sampled firms is presented in Table 1.

1
See detail at http://www.stats.gov.cn

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Institutional Pressures and Environmental Management Practices

Frequency Percentage (%)

Respondent position
Top managers
Secretary of CPC3 of the firm 23 12.23
Chairman 52 27.66
CEO (chief executive officer) 48 25.53
Managing director 50 26.60
Other members of top management teams 15 7.98
Middle-level managers
Human resource manager 18 9.57
Financial manager 25 13.30
Assets and logistics manager 32 17.02
Marketing and sales manager 28 14.89
Production and operations manager 29 15.43
Other functional department managers 56 29.79
Industry type
Coal chemicals and petrochemicals industry 25 13.30
Pharmaceutical industry 23 12.23
Machinery and equipment industry 37 19.68
Paper and printing industry 42 22.34
Rubber and plastics industry 19 10.11
Electronics and electrical industry 19 10.11
Other industries 23 12.23
Ownership structure
State owned 28 14.89
Privately owned 38 20.21
Foreign controlled 56 29.79
Joint venture 66 35.11
Firm age (years since establishment)
Less than 10 56 29.79
10–15 41 21.81
16–25 50 26.60
More than 25 41 21.81
Firm size (number of full-time employees)
Less than 100 26 13.83
100–500 19 10.11
501–1000 57 30.32
1001–2000 50 26.60
More than 2000 36 19.15
Total 188 100

Table 1. Sample demographic (N = 188)

3
CPC is short for Communist Party of China

To test the potential non-response bias, t-tests are conducted to compare the early respondents (those who
returned the completed questionnaires within 10 days) and late respondents2 (those who returned the completed
questionnaires during the last 10 days) (Armstrong and Overton, 1977). The results suggest that there are no signif-
icant differences between these two groups regarding ownership structure, firm size, firm age or industrial type.
Thus, it can be concluded that non-response bias is not a major concern in this research.

2
According to Armstrong and Overton (1977), late respondents are representative of the non-respondents.

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Measures
The constructs are measured with multiple item scales. All the items are adopted from previous literature and
modified slightly to fit the current research context. Each of the items is measured on a five-point Likert
scale ranging from 1 (‘strongly disagree’) to 5 (‘strongly agree’). The constructs and items are presented in
Appendix A.
The measurement items of institutional pressures are adopted from the works of Zhu and Sarkis (2007), Liu
et al. (2010), Roxas and Coetzer (2012) and Zhu et al. (2013). In this research, these items are used to evaluate the
respondents’ perceptions of the extent to which regulatory pressures and normative pressures exert significant
influences on their firms to implement environmental management practices. Four items are used to measure
environmental commitment, based on the works of Boehe and Cruz (2010), Chan (2010) and Chen et al.
(2015). These items are used to ask respondents to assess their firms’ commitment and determination to protect
the environment. A higher composite score means that the firm is more willing to implement environmental
management practices. The scale for resource availability consists of four items, which are adopted from the
works of Benitez-Amado and Walczuch (2012), Leonidou et al. (2013) and Lin and Wu (2014). These items are
used to ask the respondents to evaluate the resources the firm owned to implement environmental management
practices. Environmental management practices are measured based on four items from Montabon et al. (2007),
Brammer et al. (2012) and Grolleau et al. (2015). This research also includes several control variables, namely firm
size, firm age and ownership structure, which may affect the implementation of environmental management
practices.
In addition, considering the role of top and middle-level managers in implementing environmental management
practices, the answers from them are averaged to measure regulatory pressures, normative pressures, resource avail-
ability and environmental management practices (Shu et al., 2016). According to upper echelon theory, top manage-
ment plays a dominant role in production and operation management, and a firm’s environmental commitment is
often regarded as top management environmental commitment (Hambrick and Mason, 1984; Chan, 2010; Colwell
and Joshi, 2013). Thus, in this research, a firm’s environmental commitment is measured using answers only from
top managers (Hambrick and Mason, 1984).

Data Analysis and Results

In the following data analysis, we first estimate the measurement model to assess the reliability and validity of the
constructs, and then estimate the structural model to test the relationships among the hypothesized constructs.

Measurement Reliability and Validity

Confirmatory factor analysis (CFA) is conducted to evaluate the construct reliability, unidimensionality, convergent
validity and discriminant validity of the multi-item measurement scales. In the present study, Amos 17.0 and SPSS
19.0 software packages are used to conduct data analysis. The CFA results indicate an acceptable fit between the
measurement model and the data set (χ 2/df = 2.40, CFI = 0.93, IFI = 0.92, NFI = 0.91, PGFI = 0.65,
RMSEA = 0.05).
In general, Cronbach’s alpha values and composite reliability values are used to assess the reliability of the
constructs (Fornell and Larcker, 1981). As shown in Table 2, Cronbach’s alpha values range from 0.78 to
0.94 and the composite reliability values range from 0.86 to 0.96. They are all higher than the recommended
threshold value of 0.70 and support reliability (Liu et al., 2010). To evaluate the convergent validity of the con-
structs, individual item loading and average variance extracted (AVE) are used (Fornell and Larcker, 1981). As
shown in Table 2, the CFA results reveal that all items are significantly loaded on the constructs. The loadings
are significant at the p < 0.001 level and higher than the benchmark value of 0.70 (The loading and cross-
loading table is presented in Appendix B.) The AVE values range from 0.60 to 0.85, which are above the

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Institutional Pressures and Environmental Management Practices

Constructs Items Standardized factor loading Cronbach’s alpha value Composite reliability AVE

Regulatory pressures (RP) RP1 0.75*** 0.78 0.86 0.60

RP2 0.74***
RP3 0.79***
RP4 0.81***
Normative pressures (NP) NP1 0.74*** 0.86 0.90 0.70
NP2 0.85***
NP3 0.87***
NP4 0.88***
Environmental commitment (EC) EC1 0.50 (dropped) 0.88 0.92 0.80
EC2 0.89***
EC3 0.96***
EC4 0.83***
Resource availability (RA) RA1 0.83*** 0.87 0.92 0.79
RA2 0.23 (dropped)
RA3 0.94***
RA4 0.90***
Environmental management EMP1 0.72*** 0.84 0.89 0.68
practices (EMP) EMP2 0.86***
EMP3 0.84***
EMP4 0.86***
Marker variable (MV) MV1 0.92*** 0.94 0.96 0.85
MV2 0.92***
MV3 0.93***
MV4 0.92***

Table 2. Confirmatory factor analysis (CFA) results for measurement model

AVE, average variance extracted.
Significant at
***p < 0.001

benchmark value of 0.50 (Fornell and Larcker, 1981). These results provide a strong support for unidimension-
ality and convergent validaity.
Furthermore, we need to test the discriminant validity of the constructs. Following Paulraj et al. (2008), the re-
lationships between shared variances among constructs and AVE values are compared. As shown in Tables 2 and
3, all the correlations between the constructs are less than the square roots of the AVE values, which supports the
discriminant validity of the constructs. Hence, given these results, it can be concluded that the measurement model
has adequate reliability, convergent validity and discriminant validity.

Constructs Means SD RP NP EC RA EMP

Regulatory pressures 3.934 0.600 0.775 0.406** 0.018 0.209** 0.373**

Normative pressures 3.569 0.628 0.409** 0.837 0.055 0.199** 0.355**
Environmental commitment 3.319 0.743 0.013 0.050 0.894 0.001 0.136
Resource availability 3.966 0.584 0.213** 0.203** 0.006 0.889 0.472**
Environmental management practices 3.847 0.622 0.376** 0.358** 0.140 0.475** 0.825
Marker variable 3.360 0.968 0.013 0.005 0.045 0.054 0.010

Table 3. Means, standard deviations (SD) and correlations (n = 188)

The diagonal (in bold) elements are the square roots of AVEs. Unadjusted correlations among constructs are below the diagonal and the
adjusted correlations for potential common method bias are above the diagonal.
Significant at ***p < 0.001.

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Common Method Bias Analysis

Considering the mono-methodological nature of the research and the item characteristic effects, common
method bias may be a threat to the validity and need to be taken into consideration. Two methods are exploited
to test the potential common method bias. First, Harman’s one-factor test is performed. The results indicate that
all the measurement items can be divided into five factors, with eigenvalues greater than 1.0 and accounting
for 72.74% of the variance. The first factor only explains 29.38% of the variance, less than the benchmark
value of 50.0% (Harman, 1976). The results suggest that common method bias is unlikely to be a serious
problem.
Second, we select four-item scale for dependence and regard it as a method variance marker variable (MV) to
assess the common method bias. In principle, MV is theoretically unrelated to at least one other variable in this
research, preferably the dependent variable (Lindell and Whitney, 2001). In this research, as suggested by Liu et al.
(2010) and Shu et al. (2016), MV measures the innovativeness of the firm. The lowest positive correlation
(r = 0.005 in Table 3) between MV and other constructs is used to adjust the construct correlations and statistical
significance. The results of the correlations adjusted for common method bias are shown in Table 3. A compari-
son of the correlations above and below the diagonal in Table 3 indicates that none of the significant correlations
became insignificant after adjustment. Therefore, common method bias is not a major problem in the present
research.

Hypothesis Testing and Result Analysis

Intuitively, the relatively low inter-correlations between independent and moderate variables (see Table 3) suggest
that multicollinearity is not a serious problem. Meanwhile, collinearity tests also indicate that all variance inflation
factors (VIFs) are less than 10.0, which suggests that multicollinearity is unlikely to be a major concern in the fol-
lowing regression analysis. To test the hypothesized relationships, hierarchical moderated regression analysis is
conducted. Following Aguinis (1995), the independent and moderator variables are mean-centered before
conducting regression analysis to alleviate the possibility of multicollinearity, although it is not a pervasive problem
in this research. The control variables and marker variable are considered in the analysis. The hierarchical moder-
ated regression results are presented in Table 4.
As reported in Table 4, we first examine the main effects of institutional pressures on environmental manage-
ment practices. The results in Model 1 indicate that regulatory pressures (β = 0.305, p < 0.001) and normative pres-
sures (β = 0.211, p < 0.01) have positive and significant effects on environmental management practices, which
supports Hypotheses 1 and 2. Meanwhile, regulatory pressures tends to have the strongest influence on environ-
mental management practices, since its regression coefficient is larger than that of normative pressures. In Models
2 and 3, we include the interaction terms between institutional pressures, environmental commitment and resource
availability.
In Model 2, we explore the moderating effect of environmental commitment. The results indicate that the inter-
action terms are positive and significant for regulatory pressures (β = 0.049, p < 0.01) and normative pressures
(β = 0.096, p < 0.01). The results indicate that the environmental commitment positively and significantly moder-
ates the effects of institutional pressures on environmental management practices. For a given level of institutional
pressure, a firm with a high level of environmental commitment with respect to its counterparts will implement
more environmental management practices. The significant moderating effects are illustrated in Figures 2 and 3.
As such, Hypothesis 3 is supported.
In Model 3, we analyze the extent to which the resource availability moderates the effects of institutional pres-
sures on environmental management practices. The results show that resource availability positively and signifi-
cantly moderates the relationship between normative pressures and environmental management practices
(β = 0.168, p < 0.05), while it negatively and significantly moderates the relationship between regulatory pressures
and environmental management practices (β = 0.193, p < 0.01). In other words, at greater levels of resource avail-
ability, the negative effect of regulatory pressures on environmental management practices becomes stronger, but
the opposite seems to be true for normative pressures. The significant moderating effects are illustrated in Figures 4

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Institutional Pressures and Environmental Management Practices

Dependent variable: environmental management practices (EMP)

Model 1 Model 2 Model 3 Model 4

Control variables
Firm size 0.122 0.110 0.126 0.111
Firm age 0.019 0.011 0.011 0.009
Ownership structure 0.133 0.105 0.148 0.119*
Marker variable 0.001 0.001 0.017 0.019

Independent variables
Regulatory pressures (RP) 0.305*** 0.301*** 0.291*** 0.288***
Normative pressures (NP) 0.211** 0.223** 0.162* 0.170**

Moderator variables
Environmental commitment (EC) 0.133* 0.121*
Resource availability (RA) 0.365*** 0.368***

Interacting effects
EC*RP 0.049** 0.042*
EC*NP 0.096** 0.112**
RA*RP 0.193** 0.169*
RA*NP 0.168* 0.171*
R2 0.229 0.264 0.400 0.435
R2 change 0.207 0.227 0.370 0.396
F value 10.785*** 7.097*** 13.212*** 11.232***

Table 4. Results of hierarchical moderated regression analysis

Significant at
*p < 0.05
**p < 0.01
***p < 0.001

Figure 2. The moderating effect of environmental commitment on the relationship between regulatory pressures and environmental
management practices

and 5. The results provide mixed support for Hypothesis 4. The reasonable explanations for these findings are
discussed in the following analysis.
In Model 4, we include all variables and interaction terms as independent variables, and regard Model 4 as a
full model. The results indicate that the significant effects of institutional pressures and interaction terms

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 S. Wang et al.

Figure 3. The moderating effect of environmental commitment on the relationship between normative pressures and environmental
management practices

Figure 4. The moderating effect of resource availability on the relationship between regulatory pressures and environmental manage-
ment practices

Figure 5. The moderating effect of resource availability on the relationship between normative pressures and environmental manage-
ment practices

presented in the first three models remain significant in Model 4. Moreover, it is also found that the signs of
the estimated coefficients remain unchanged. To some degree, these stable conclusions validate the robustness
of our findings.

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Institutional Pressures and Environmental Management Practices

Discussion
This research mainly explores the effects of institutional pressures on environmental management practices and
confirms the propositions that institutional pressures positively and significantly affect environmental management
practices. In fact, to gain legitimacy and maintain good relations with stakeholders, firms are willing to signal a pro-
active environmental stance and implement environmental management practices when facing external pressures
(Scott, 2005). Meanwhile, we find that regulatory pressures tend to have stronger influence on environmental man-
agement practices than normative pressures. This is because, although China is transforming from a planned econ-
omy to a market economy, the power of regulatory agencies such as the government is strong and they have the
ability to implement several standards and regulations, or take several mandatory measures such as economic pen-
alties and even shutting down a firm. Thus, the effect of regulatory pressures is direct and more effective than nor-
mative pressures.
Furthermore, we investigate the moderating effects of environmental commitment and resource availability on
the relationships between institutional pressures and environmental management practices. Specifically, for a given
level of institutional pressures, we find that a firm with a high level of environmental commitment is more likely to
delve into implementing environmental management practices compared with firms with a low level of environ-
mental commitment. This is because a high level of environmental commitment helps firms to build a collective
sensitivity to environment-related issues and motivates firms to implement environmental management practices
to respond to external environmental pressures and concerns (Muller and Kolk, 2010; Chen et al., 2015). Moreover,
contrary to our expectations, we find that the moderating effect of resource availability plays different roles depend-
ing on the types of institutional pressure (regulatory versus normative pressures). According to the results, norma-
tive pressures have a positive effect on environmental management practices in firms with sufficient resources,
while regulatory pressures have a negative effect in those firms. These findings are confusing but interesting. Maybe
they can be explained as follows.
First, though regulatory agencies could generate greater pressures than normative actors, social legitimacy
mainly originates from normative actors rather than regulatory agencies (Berrone et al., 2013). The consequences
of resisting regulatory pressures are economic penalties, sanctions and even lawsuits, while the consequences of
resisting normative pressures may come in the form of legitimacy sanctions. To some extent, social legitimacy
has more a profound influence than economic penalties and sanctions. Thus, firms with sufficient resources will
put more emphasis on social legitimacy and succumb to normative pressures by implementing environmental man-
agement practices.
Second, the benefits of implementing environmental management practices are uncertain, and the costs are high
and may even exceed the economic penalties and sanctions in China (Shu et al., 2016). Meanwhile, firms with suf-
ficient resources have the ability to pay economic penalties and sanctions. The benefits obtained by utilizing suffi-
cient resources may be greater than the economic penalties and sanctions. Considering these factors, firms with
sufficient resources are more likely to disobey the regulatory pressures and prone to pay economic penalties and
sanctions rather than implementing environmental management practices.
Together, these two reasonable explanations indicate that firms use their resources to implement environmental
management practices depending on the type and strength of the pressures to which they need to respond. Firms
with sufficient resources are inclined to resist regulatory pressures and comply with normative pressures.

Conclusions, Implications and Limitations

Environmental management practices are effective ways for firms to reduce the negative influence of their activities
on the natural environment, and this has become a hot research topic. In this research, the results indicate that reg-
ulatory pressures and normative pressures can motivate firms to implement environmental management practices,
and this link is contingent on firms’ environmental commitment and resources. The results have several implica-
tions for research and practice.

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 S. Wang et al.

Theoretically, the current research enriches environmental management literature by proposing a

comprehensive research framework that bridges institutional theory and the resource-based view, and shows
their joint effects on implementing environmental management practices. In the extant environmental manage-
ment literature, a few studies have provided insight into how firms’ environmental commitment and resource
profiles affect their environmental management practices. Complementing this research, the present research
suggests that the direct motivation for implementing environmental management practices arises from
institutional pressures. Also, firms’ environmental commitment and resource availability moderate the effects
of institutional pressures. As such, this research sheds new light on the role of environmental commitment
and resource availability in implementing environmental management practices. More importantly, the results
find the different effects of resources on the relationships between institutional pressures and environmental
management practices. In brief, this research provides a new perspective for environmental management
research by combining external institutional pressures and internal resource profiles and environmental
commitment.
In practice, the findings of this research can offer several guidelines and implications for implementing
environmental management practices. Specifically, for relevant regulatory agencies, formulating and
implementing environmental protection standards and regulations, and cultivating an environmental protection
atmosphere, beliefs and norms in the whole society, are indispensable to motivate firms to implement environ-
mental management practices. Punitive measures such as economic penalties and sanctions should be more
stringent than they are now. Several incentive measures such as subsidies and tax deductions can be provided
to reduce the cost of implementing environmental management practices. Meanwhile, regulatory agencies
should take measures to help firms realize that, though implementing environmental management practices is
costly, they can benefit a lot in the long run. For firms, the management team should understand the impor-
tance of environmental commitment and cultivate an environmental protection culture. High environmental
awareness and environmental commitment can help firms to implement environmental management practices
smoothly and then help them to obtain social legitimacy, keep good relations with stakeholders and ensure their
success. In addition, the managers should understand that the implementation of environmental management
practices is not only a simple reaction to external institutional pressures but also a way to perform corporate
social responsibility. Firms should implement environmental management practices consciously even if the
institutional pressures are weak.
Although this research provides some interesting findings and implications, it is important to highlight the
limitations. First, the research results may be affected by the cross-sectional nature of the data. To some extent,
the cross-sectional data could not entirely test the causal relationships between independent and dependent var-
iables in the proposed model. In subsequent research, a longitudinal design can be adopted. Second, we collect
data with only two informants from each firm for all constructs and items. In fact, individual perceptions of
these constructs and items might not entirely represent the opinions of the whole top management teams
and middle-level management teams. In addition, the current research omits the participation of frontline
employees. Therefore, future research should attempt to blend in data from multiple informants in management
teams and frontline employees. Finally, the findings of this research are mainly based on data collected
from Chinese firms in the Yangtze River Delta, which may restrict the generalizability of findings. Though
China shares some characteristics with other countries and regions, it also shows certain institutional differ-
ences (Shu et al., 2016). Thus, in future research, we should attempt to collect data from more countries and
regions.

Acknowledgments

This work was supported by the National Natural Science Foundation of China (Grants 71601174 and 71571172),
China Postdoctoral Science Foundation (Grant 2016 M590583) and Fundamental Research Funds for the Central
Universities.

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Institutional Pressures and Environmental Management Practices
Appendix 1. Constructs and Measurement Items
Construct
Regulatory pressures (RP)
Normative pressures (NP)
Environmental commitment (EC)
Resource availability (RA)
Environmental management
practices (EMP)
Innovativeness (marker variable)
Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment
Measurement item
RP1. Our firm tries to reduce the threat from the environmental regulations by implementing
environmental management practices.
RP2. Environmental regulations are important for our firm to implement environmental
management practices.
RP3. The local government has set strict environmental standards which our firm needs to comply
with.
RP4. Several penalties have been imposed on firms which violate environmental standards and
regulations.
NP1. The increasing environmental consciousnesses of consumers have spurred our firm to
implement environmental management practices.
NP2. Being environmentally responsible is a basic requirement for our firm to be part of this
industry.
NP3. Non-governmental organizations around our firm expect all firms in the industry to be
environmentally responsible.
NP4. Community stakeholders may not support our firm if our firm releases toxic substances and
emissions.
EC1. Our firm’s environmental efforts receive full support from top management and staff.
EC2. Our firm commits to reduce harmful emissions resulting from production and operations.
EC3. Our firm consistently assesses the impact of business on the environment.
EC4. Our firm values the natural environment as much as profits.
RA1. Our firm owns sufficient human resources to implement environmental management practices.
RA2. Our firm owns sufficient financial resources to implement environmental management
practices.
RA3. Our firm owns adequate physical resources to implement environmental management
practices.
RA4. Our firm owns sufficient intangible assets to implement environmental management practices.
EMP 1. In the past three years, our firm has utilized energy and resources wisely and responsibly to
protect the environment.
EMP 2. In the past three years, our firm has considered opportunities for reuse/recycling/recovery of
material when designing products.
EMP 3. In the past three years, our firm has participated in environmental protection activities and
programs.
EMP 4. In the past three years, our firm has adopted low-carbon and cleaner production
technologies.
MV1. Our firm has invested new research-and-development facilities to gain a competitive
advantage in
the past three years.
MV2. Our firm has invented new products and service in the past three years.
MV3. Our firm has utilized new opportunities and technologies in new markets in the past three
years.
MV4. Our firm has innovated in the production process in the past three years.
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Appendix B. Loading and Cross-Loading Table

Construct Item RP NP EC RA EMP

Regulatory pressures (RP) RP1 0.75 0.36 0.06 0.08 0.22

RP2 0.74 0.30 0.02 0.09 0.27
RP3 0.79 0.38 0.01 0.26 0.37
RP4 0.81 0.24 0.01 0.27 0.34
Normative pressures (NP) NP1 0.26 0.74 0.01 0.22 0.24
NP2 0.33 0.85 0.06 0.136 0.28
NP3 0.39 0.87 0.05 0.16 0.36
NP4 0.37 0.88 0.09 0.16 0.32
Environmental commitment (EC) EC1 0.03 0.24 0.50 0.03 0.02
EC2 0.03 0.01 0.89 0.01 0.08
EC3 0.03 0.03 0.96 0.02 0.20
EC4 0.03 0.09 0.83 0.03 0.10
Resource availability (RA) RA1 0.25 0.22 0.06 0.83 0.31
RA2 0.14 0.01 0.08 0.23 0.17
RA3 0.20 0.18 0.05 0.94 0.46
RA4 0.19 0.15 0.04 0.90 0.49
Environmental management practices (EMP) EMP1 0.17 0.19 0.11 0.52 0.72
EMP2 0.39 0.35 0.16 0.36 0.86
EMP3 0.38 0.39 0.10 0.37 0.84
EMP4 0.36 0.25 0.15 0.39 0.86

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