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Hierarchy in green: Subordinate executives and eco-innovation dynamics

Author

Listed:
  • Liew, Millie
  • Li, Zhuo
  • Cao, June

Abstract

Internal governance is the process through which subordinate executives, driven by their longer decision horizons and focus on long-term value, counteract the CEO's short-term self-interests to influence corporate decisions. We examine whether and how internal governance affects eco-innovation, which delivers long-term value at the expense of initial investment outlays. We find that more effective internal governance motivates eco-innovation and that this effect operates through two channels. First, subordinate executives' bottom-up influence on the CEO prompts them to increase their long-term awareness to exercise this influence and motivate eco-innovation. Second, more effective internal governance enhances the top management team's ecological awareness to motivate eco-innovation. We further reveal that subordinate-driven internal governance plays a more significant role when CEOs are more opportunistic. Last, we find that more effective internal governance improves eco-innovation quality, highlighting that subordinates play an important role in both the quantity and quality of firms' eco-innovation.

Suggested Citation

  • Liew, Millie & Li, Zhuo & Cao, June, 2026. "Hierarchy in green: Subordinate executives and eco-innovation dynamics," Energy Economics, Elsevier, vol. 154(C).
    • Handle: RePEc:eee:eneeco:v:154:y:2026:i:c:s0140988326000253
    DOI: 10.1016/j.eneco.2026.109146
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    Keywords

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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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