The Contextual Role of Regulatory Stakeholder Pressure in Proactive Environmental Strategies: An Empirical Test of Competing Theoretical Perspectives

Abstract

Guided by two competing theoretical perspectives, we investigate the contextual role of perceived regulatory stakeholder pressure in the relationship between firms’ strategic orientation and their pursuit of a proactive environmental strategy (PES). While the enhancing perspective suggests that perceived regulatory stakeholder pressure strengthens the association between strategic orientation and PES, the buffering perspective argues that greater regulatory stakeholder pressure mitigates this relationship. Our study looks at a sample of 349 German energy sector firms to identify which perspective holds greater explanatory power. Surprisingly, the empirical findings go beyond the arguments made in the buffering perspective: high perceived regulatory stakeholder pressure not only weakens but also eradicates the relationship between strategic orientation and the pursuit of a PES. Our results indicate that in the case of high perceived regulatory stakeholder pressure, market-oriented considerations are eclipsed by the need to gain legitimacy within the regulatory stakeholder context.