Apex ambition: Environmental management system certification in Chinese business groups

Business groups, as a predominant organizational paradigm, play a crucial role in environmental stewardship and sustainability efforts. Although existing research explores the influence of business groups on financial performance, innovation, and strategic diversification, there remains a noticeable lack of understanding regarding how internal hierarchical status influences strategies towards environmentally friendly practices. Our research, through the prism of the global standard for environmental management ISO 14001, offers an incisive look into how hierarchical positioning within Chinese business groups steers environmental management decision-making. Using a dataset of 21,983 observations from 4371 apex and non-apex firms between 2009 and 2022, we conduct logistic regression analysis. We find that apex firms are more inclined to obtain environmental management system (EMS) certification compared to non-apex firms, especially in non-state-owned and heavily polluting industries. A key finding is that apex firms within high-pollution sectors exhibit a stronger drive toward certification, whereas those in less polluting sectors demonstrate a reduced propensity for certification compared to non-apex firms, highlighting the critical role of industry pollution levels in shaping certification behavior. Furthermore, we document that a larger number of group affiliates tends to dampen EMS certification, while a higher proportion of green executives and a regional focus on environmental protection bolster their certification motivation. This research sheds light on how hierarchical status, industry pollution, and internal and external factors interact to influence environmental strategies, enriching the discourse on environmental management and strategic decision-making in emerging markets.