Does party organization embeddedness boost corporate environmental performance?

Abstract

In contrast to corporations in other countries, the role that party organizations play in Chinese firms is distinctly unique. This paper presents empirical evidence of a positive effect of party organization embeddedness on corporate environmental performance. This effect is particularly pronounced for firms operating in regulated industries and those with a stronger cultural system of environmental protection. The study also reveals that the embedding of party organization enhances corporate environmental performance through reducing agency costs and increasing access to environmental subsidies. Overall, this paper emphasizes the importance of the unique arrangement of corporate party organizations in China and provides policy implications for improving the distinct Chinese corporate governance system, promoting green development, and advancing ecological civilization.