Does community attitude matter? The effects of local community environmental orientation on firms' environmental practices

Abstract

AbstractFrom the perspective of institutional theory, prior studies mostly focus on the effects of regulatory and normative forces on firms' environmental practices. We argue that, as a cultural‐cognitive force, local community environmental orientation is another key factor determining firms' environmental practices and performance. With data collected from multiple respondents in 372 Chinese firms, this study demonstrates that such orientation affects two other types of institutional forces facing companies, namely, local legislation and community stakeholders' pressures. These two types of forces complement each other and jointly affect firms' environmental actions, such as green investment and environmental operations, which subsequently affect firms' social reputation. However, local environmental orientation does not directly affect firms' environmental actions. These findings suggest that institutional forces interact with each other to shape firms' environmental actions.