Mutual dependence and selective coercion: corporate environmental investment among Chinese private firms

Abstract

Abstract Neo-institutionalism suggests unified coercion which overlooks the mutual dependent relationship between state and businesses in developmental societies. This study incorporates the insight of mutual dependence, and proposes a model of selective coercion to explain how the state coerces Chinese private firms for environmental investment. Findings reveal that the local state is more likely to coerce firms that are more dependent on the state through political connections and less likely to coerce those which are highly important to local tax revenues and those which are substantially costly for regulation enforcement. Provinces that are more dependent on tourism economy exert harder coercion on firms, whereas those that place higher priority on economic development exert lighter coercion on firms. This study contributes to the literature of the neo-institutionalist theory and corporate environmental behavior.