The effect of innovation and learning on organizational performance under the influence of environmental regulation

Abstract

As the emphasis on the environment grows, businesses are incorporating sustainability concerns to enhance their performance while also promoting sustainability. Based on the Porter Hypothesis, this study evaluates the impact of environmental regulations, in specific, to illustrate how it influence business performance as well as innovative initiatives. Further, grounded in Dynamic capabilities view (DCV), we examine the effect of the organization factors - innovation and learning, on firm performance. The relationship between innovation and learning is also discovered in this study. The proposed framework is examined using data collected from 300 employees in Dong Nai province, Vietnam. The partial least squares-structural equation modeling (PLS-SEM) technique is adopted for hypothesis testing. The results would offer implications for firms as well as public organizations. First, governement could support businesses to comply and reach sustainability in their performance through suitable and flexible policies and regulations. On the businesses side, the results of this study would be useful for managers who are interested in implementing strategies that promote innovation and learning to improve their firm’s performance. Moreover, the findings also enhance existing theories regarding the relationship between environmental regulations and organizational performance in Vietnam and developing countries in general.