Institutional strength, polluting sectors and non-environmentalist tendency: a neo-institutional theory perspective

Purpose This study aims to redirect attention from traditional analyses of environmental performance towards examining firms that exhibit “zero” environmental performance – those that entirely neglect ecological practices. Specifically, it investigates the institutional drivers (i.e. coercive and mimetic pressure) behind the worldwide tendency of firms to adopt non-environmentalist behaviors. By highlighting the practices of these firms, the research seeks to alert regulators and practitioners to a critical yet under-examined issue, particularly in the context of escalating ecological challenges and the pressing need to address climate change. Design/methodology/approach Our approach is grounded in neo-institutional theory, emphasizing the role of institutional pressures in shaping organizational behavior towards environmentalism. We analyze an extensive international dataset comprising 59,172 firm-year observations collected from 2002 to 2019 by employing a fixed-effects logistic regression model. Our methodology involves examining the impact of coercive pressure, represented by the quality of public governance and mimetic pressure, indicated by affiliation with polluting industries, on firms’ environmental practices or the lack thereof. Findings The analysis reveals that public governance quality (a form of coercive pressures) significantly deters firms from neglecting environmental practices, particularly in areas of eco-innovation, emissions and resource consumption reduction. Interestingly, while affiliation with polluting industries (a form of mimetic pressure) generally discourages non-environmental behavior, it paradoxically encourages non-eco-innovative engagement. Over the study period, we observe a gradual decline in the tendency of firms to ignore environmentalism and its three key components, suggesting an increasing institutional influence on corporate environmental practices. However, further analyses also indicate that public regulations are not as impactful in recent periods as they used to be in deterring firms from neglecting environmental practices. Practical implications Given the global nature of climate change and ecological concerns, preventing environmental exploitation should be a collective goal for all nations via strengthening public governance quality. Additionally, while polluting industries tend to adopt eco-friendly practices due to institutional pressures, their resistance to eco-innovation raises questions about long-term ecological solutions. Originality/value This research contributes to the existing literature by focusing on a largely unexamined segment of firms – those with “zero” environmental performance. By employing a novel approach that scrutinizes the effects of institutional pressures on the neglect of environmental practices, our study offers fresh insights into how coercive and mimetic forces can either hinder or facilitate non-environmentalist behavior in the business sector.