Green M&A, Business Model Innovation and Sustainability of Heavy Polluters: Evidence from the China’s Environmental Protection Storm'

23 Pages Posted: 5 Jun 2020

See all articles by Bin Li

Bin Li

Shandong University - School of Management

Xin Liu

The University of Sydney - Discipline of Finance

Ya Liu

The University of Sydney - Discipline of Finance; University of Sydney Business School

Miao Liu

Shandong University - School of Management

Date Written: May 10, 2020

Abstract

Environmental regulation greatly increases the external transformation demands on heavily polluting enterprises. To respond to these demands, the remolding of and innovation in business models can be realized through green mergers and acquisitions (M&As), which have become a strategic choice for enterprises to guarantee sustainable development. This study uses the most heavily polluting enterprises in China from 2008 to 2016 as a sample to empirically test the influence path and practical effect of green M&As on sustainable development. The findings indicate that green M&As can provide legitimacy for heavily polluting enterprises to survive and further develop, significantly improving their sustainable development ability. At the same time, the business model innovation brought by green M&As further strengthens the protection effect. Namely, heavily polluting enterprises can realize business model innovation and improve their sustainable development ability through green M&As. Further examination shows that the larger the scale of a heavily polluting enterprise, the more difficult it is to reshape their business model through green M&As. However, heavily polluting enterprises with high research and development (R&D) investments and state-owned property rights are more likely to realize business model innovation through green M&As. This study verifies the Porter hypothesis of green management in the context of M&As, and also provides theoretical support for the green finance practices of heavily polluting enterprises.

Keywords: green mergers and acquisitions; business model innovation; heavily polluting enterprises; sustainability; Van Horne model

JEL Classification: G30; G34; I18

Suggested Citation

Li, Bin and Liu, Xin and Liu, Ya and Liu, Miao, Green M&A, Business Model Innovation and Sustainability of Heavy Polluters: Evidence from the China’s Environmental Protection Storm' (May 10, 2020). Available at SSRN: https://ssrn.com/abstract=3597310 or http://dx.doi.org/10.2139/ssrn.3597310

Bin Li

Shandong University - School of Management

27, Shanda South Road
Jinan, Shandong Province
China

Xin Liu

The University of Sydney - Discipline of Finance

P.O. Box H58
Sydney, NSW 2006
Australia

Ya Liu (Contact Author)

The University of Sydney - Discipline of Finance ( email )

P.O. Box H58
Sydney, NSW 2006
Australia

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia

Miao Liu

Shandong University - School of Management

27, Shanda South Road
Jinan, Shandong Province
China

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