Strategic motives and performance implications of proactive versus reactive environmental strategies in corporate sustainable development

Abstract This study proposes and empirically tests a model delineating how different environmental motives would affect the practice of proactive and reactive environmental strategies, and ultimately corporate market performance. It also explores the moderating role of competitive intensity for the motive−strategy and strategy−performance relationships. By surveying manufacturing firms operating in the Pearl River Delta region of China, the study has derived several important findings. To summarize, the findings reveal that while performance‐based motivation drives the practice of proactive environmental strategy, it curtails the practice of reactive environmental strategy. Conversely, regulation‐based motive exerts exactly opposite influences on these two strategies. The findings further highlight that proactive environmental strategy directly enhances corporate market performance, and this enhancing effect will be strengthened as competitive intensity increases. However, reactive environmental strategy is found not to exert any significant direct influence on such performance, and competitive intensity does not moderate this influence too. Last, while competitive intensity does not moderate the positive influence of promotion‐based motive on proactive environmental strategy, it strengthens the negative influence of this motive on reactive environmental strategy. These findings furnish several significant academic and practical implications for pursuing corporate sustainable development.