IDEAS home Printed from https://ideas.repec.org/a/bla/bstrat/v35y2026i5p6769-6786.html

Unlocking Green Growth: The Role of Business Environment in Enhancing Environmental Sustainability

Author

Listed:
  • Yugang He

Abstract

South Korea faces a persistent tension between export‐led industrial growth and rapid decarbonization, making an integrated view of institutional, financial, technological, and governance levers essential. This study quantifies how business‐environment quality and related mechanisms shape environmental sustainability. Annual national data for 1998–2023 are used, including regulatory efficiency, green finance, energy transition, digitalization, corporate environmental disclosure, and green technology innovation. An autoregressive distributed lag model with bounds testing and an error‐correction term identifies short‐run dynamics and long‐run equilibrium; Kernel‐based Regularized Least Squares provides nonlinear robustness. Results show significant long‐run reductions in CO2 per capita across all factors, with the largest effect from energy transition, followed by regulatory efficiency, green innovation, green finance, digitalization, and disclosure. Cointegration is confirmed; diagnostics indicate well‐specified, stable estimates; the error‐correction coefficient implies gradual but steady adjustment toward equilibrium. Robustness checks reproduce sign and magnitude patterns. The evidence indicates that streamlined regulation, credible disclosure, green intermediation, digital capabilities, and renewable substitution operate as complementary channels. Policy design should therefore combine enforcement reforms, scalable green finance, accelerated renewable integration, and firm‐level digital and innovation investment. These steps are suited to bank‐mediated, supply‐chain‐dense economies and offer a practical path to durable abatement.

Suggested Citation

  • Yugang He, 2026. "Unlocking Green Growth: The Role of Business Environment in Enhancing Environmental Sustainability," Business Strategy and the Environment, Wiley Blackwell, vol. 35(5), pages 6769-6786, July.
    • Handle: RePEc:bla:bstrat:v:35:y:2026:i:5:p:6769-6786
    DOI: 10.1002/bse.70528
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/bse.70528
    Download Restriction: no
    File URL: https://libkey.io/10.1002/bse.70528?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Doyoon Kim & Dongyoub Shin & Jaehong Lee & Grimm Noh, 2024. "Sustainability from institutionalism: determinants of Korean companies’ ESG performances," Asian Business & Management, Palgrave Macmillan, vol. 23(3), pages 393-425, July.
    2. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    3. Doyoon Kim & Dongyoub Shin & Jaehong Lee & Grimm Noh, 2024. "Sustainability from Institutionalism: Determinants of Korean Companies' ESG Performances," Post-Print hal-04894939, HAL.
    4. Priyanka Mishra & Ghanshyam Singh, 2023. "Energy Management Systems in Sustainable Smart Cities Based on the Internet of Energy: A Technical Review," Energies, MDPI, vol. 16(19), pages 1-36, September.
    5. Turhan Kaymak & Eralp Bektas, 2017. "Corporate Social Responsibility and Governance: Information Disclosure in Multinational Corporations," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(6), pages 555-569, November.
    6. M. Bahmani-Oskooee & Gour Goswami, 2003. "A disaggregated approach to test the J-Curve phenomenon: Japan versus her major trading partners," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 27(1), pages 102-113, March.
    7. Henryk Dzwigol & Aleksy Kwilinski & Oleksii Lyulyov & Tetyana Pimonenko, 2024. "Digitalization and Energy in Attaining Sustainable Development: Impact on Energy Consumption, Energy Structure, and Energy Intensity," Energies, MDPI, vol. 17(5), pages 1-17, March.
    8. Dongwon Lee & Ji-Young Ahn, 2025. "Unlocking the potential of green human resource management in Korea: a comprehensive review," Asia Pacific Business Review, Taylor & Francis Journals, vol. 31(1), pages 133-156, January.
    9. Robert G. Eccles & Ioannis Ioannou & George Serafeim, 2014. "The Impact of Corporate Sustainability on Organizational Processes and Performance," Management Science, INFORMS, vol. 60(11), pages 2835-2857, November.
    10. Leonidou, Leonidas C. & Fotiadis, Thomas A. & Christodoulides, Paul & Spyropoulou, Stavroula & Katsikeas, Constantine S., 2015. "Environmentally friendly export business strategy: Its determinants and effects on competitive advantage and performance," International Business Review, Elsevier, vol. 24(5), pages 798-811.
    11. Bolton, Patrick & Kacperczyk, Marcin, 2021. "Do investors care about carbon risk?," Journal of Financial Economics, Elsevier, vol. 142(2), pages 517-549.
    12. Qian, Wei & Chen, Xuan, 2021. "Corporate environmental disclosure and political connection in regulatory and leadership changes: The case of China," The British Accounting Review, Elsevier, vol. 53(1).
    13. Md Qamruzzaman & Salma Karim, 2024. "Unveiling the synergy: Green finance, technological innovation, green energy, and carbon neutrality," PLOS ONE, Public Library of Science, vol. 19(10), pages 1-37, October.
    14. Flammer, Caroline, 2021. "Corporate green bonds," Journal of Financial Economics, Elsevier, vol. 142(2), pages 499-516.
    15. Saeidi, Sayedeh Parastoo & Sofian, Saudah & Saeidi, Parvaneh & Saeidi, Sayyedeh Parisa & Saaeidi, Seyyed Alireza, 2015. "How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction," Journal of Business Research, Elsevier, vol. 68(2), pages 341-350.
    16. Hainmueller, Jens & Hazlett, Chad, 2014. "Kernel Regularized Least Squares: Reducing Misspecification Bias with a Flexible and Interpretable Machine Learning Approach," Political Analysis, Cambridge University Press, vol. 22(2), pages 143-168, April.
    17. Jae-Hyup Lee & Jisuk Woo, 2020. "Green New Deal Policy of South Korea: Policy Innovation for a Sustainability Transition," Sustainability, MDPI, vol. 12(23), pages 1-17, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xu, Chong & Tao, Miaomiao & Qi, Lingli & Roubaud, David, 2025. "Can green CEOs trigger the green premium effect?," Finance Research Letters, Elsevier, vol. 80(C).
    2. Liu, Chih-Liang & Tsui, Chih-Kai, 2026. "ESG and bank loan cost," Finance Research Letters, Elsevier, vol. 91(C).
    3. Seyi Saint Akadiri & Oktay Özkan, 2026. "Navigating Uncertainty: The Impact of ESG Factors on Clean Energy Markets and Investment Dynamics," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 33(1), pages 1270-1285, January.
    4. Baek, Jungho & Koo, Won W. & Mulik, Kranti, 2009. "Exchange Rate Dynamics and the Bilateral Trade Balance: The Case of U.S. Agriculture," Agricultural and Resource Economics Review, Cambridge University Press, vol. 38(2), pages 213-228, October.
    5. Dergiades, Theologos & Tsoulfidis, Lefteris, 2008. "Estimating residential demand for electricity in the United States, 1965-2006," Energy Economics, Elsevier, vol. 30(5), pages 2722-2730, September.
    6. Martin Gürtler, 2019. "Dynamic analysis of trade balance behavior in a small open economy: the J-curve phenomenon and the Czech economy," Empirical Economics, Springer, vol. 56(2), pages 469-497, February.
    7. Chen, Jianqiang & Hsieh, Pei-Fang & Hsu, Po-Hsuan & Levine, Ross, 2025. "Environmental liabilities, borrowing costs, and pollution prevention activities: The nationwide impact of the Apex Oil ruling," Journal of Corporate Finance, Elsevier, vol. 91(C).
    8. Xiaohua Sun & Danish Khan & Yubai Zheng, 2024. "Articulating the Role of Technological Innovation and Policy Uncertainty in Energy Efficiency: an Empirical Investigation," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 14597-14616, September.
    9. Halicioglu, Ferda & Yolac, Sema, 2015. "Testing the impact of unemployment on self-employment: empirical evidence from OECD countries," MPRA Paper 65026, University Library of Munich, Germany.
    10. Kwame Akosah, Nana & Omane-Adjepong, Maurice, 2017. "Exchange Rate and External Trade Flows: Empirical Evidence of J-Curve Effect in Ghana," MPRA Paper 86640, University Library of Munich, Germany, revised Dec 2017.
    11. Junko SHIMIZU & Kiyotaka SATO, 2015. "Abenomics, Yen Depreciation, Trade Deficit, and Export Competitiveness," Discussion papers 15020, Research Institute of Economy, Trade and Industry (RIETI).
    12. Roy, Arup, 2024. "Impacts of economic development, globalization, and gross capital formation on natural resources rents: Evidence from India," Resources Policy, Elsevier, vol. 97(C).
    13. Galloppo, Giuseppe & Guida, Roberto & Paimanova, Viktoriia & Urbani, Roberto, 2026. "Green innovation is the need of the hour: the role of regional-level framework and institutional investor types," Finance Research Letters, Elsevier, vol. 87(C).
    14. Kim, Sehoon & Kumar, Nitish & Lee, Jongsub & Oh, Junho, 2025. "ESG lending," Journal of Financial Economics, Elsevier, vol. 173(C).
    15. Nilgun Yavuz & Veli Yilanci & Zehra Ozturk, 2013. "Is health care a luxury or a necessity or both? Evidence from Turkey," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(1), pages 5-10, February.
    16. Arize, Augustine C., 2017. "A convenient method for the estimation of ARDL parameters and test statistics: USA trade balance and real effective exchange rate relation," International Review of Economics & Finance, Elsevier, vol. 50(C), pages 75-84.
    17. Ferda Halicioglu, 2010. "An Econometric Analysis of the Aggregate Outbound Tourism Demand of Turkey," Tourism Economics, , vol. 16(1), pages 83-97, March.
    18. Ali Çelik & Metehan Özırmak, 2025. "Understanding the Association Between Bitcoin Mining and Environmental Sustainability in Light of the Sustainable Development Goals Through the DARDL and KRLS Methods," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(5), pages 6505-6527, October.
    19. Jos� J. Cao-Alvira, 2014. "Real Exchange Rate Volatility on the Short- and Long-Run Trade Dynamics in Colombia," The International Trade Journal, Taylor & Francis Journals, vol. 28(1), pages 45-64, March.
    20. Huo, Xiaolin & Jiang, Dayan & Qiu, Zhigang & Yang, Sijie, 2022. "The impacts of dual carbon goals on asset prices in China," Journal of Asian Economics, Elsevier, vol. 83(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:bstrat:v:35:y:2026:i:5:p:6769-6786. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.