Dynamic Capabilities, Environmental Management Capabilities, Stakeholder Pressure and Eco-Innovation of Chinese Manufacturing Firms: A Moderated Mediation Model

Abstract

Growing social and academic concerns toward environmental sustainability are constantly driving attention toward eco-innovation as an effective solution to environmental problems. Extant studies on drivers of eco-innovation have not fully investigated the interaction mechanisms between different factors. Drawing upon the resource-based view, stakeholder theory, and environmental literature, this paper aims to explore the mechanisms of how firm capabilities and perceived stakeholder pressure interact to facilitate eco-innovation. Based on survey data collected from 169 Chinese manufacturing firms, the results of regression analysis based on bootstrap resampling method show that environmental management system (EMS) completely mediates the relationship between dynamic capabilities (including absorptive capability and reconfiguring capability) and eco-innovation (including eco-process and eco-product innovation). Furthermore, the relationship between absorptive/reconfiguring capabilities and EMS, as well as the direct and indirect relationship between absorptive capability and eco-process innovation, is contingent upon stakeholder pressure. The direct and indirect effects become stronger when managers perceive higher stakeholder pressure. This paper contributes to answering why firms undertake environmental activities beyond compliance through specifying the interaction between firm capabilities and stakeholder pressure.