Does Corporate Environmental Responsibility Enhance Environmental Performance? Evidence From Emerging Economies

ABSTRACT Despite the recognized importance of corporate environmental responsibility (CER) in advancing firms' performance in emerging economies like China, its role in enhancing environmental performance (EP) remains underexplored in the existing literature. Drawing on institutional perspective, this study aims to investigate the relationship between CER and EP and how environmental factors—such as political ties (PT), institutional development, and industry competition—shape this relationship. Using a dataset of 635 Chinese‐listed firms from 2011 to 2022, we test the theoretical model using a fixed‐effects regression model. The results demonstrate that CER positively influences firms' EP. Additionally, findings reveal that PT and institutional development strengthen the positive relationship between CER and EP, while industry competition weakens it. These results remain robust across alternative measures and endogeneity checks, including Heckman two‐stage, Propensity Score Matching, two‐stage least squares, and a 1‐year lag model. Overall, this study contributes to corporate business ethics and environmental management literature in emerging economies by providing new insights into the conditions under which CER impacts EP. Moreover, it offers valuable practical implications for managers and policymakers in implementing CER to improve environmental outcomes more effectively.