Journal of Business Ethics

, Volume 136, Issue 1, pp 147–165 | Cite as

The Impact of Competitors–Firm Power Divergence on Chinese SMES’ Environmental and Financial Performance



Competitor pressure is one of the major reasons that a SME engages in environmentally friendly or damaging activities. Extant research has argued that environmental strengths and concerns have mirror opposite relationships with stakeholder antecedents as well as with performance outcomes. We suggest this argument does not reflect the reality. Building on stakeholder management and Red Queen theories, we hypothesize that environmental strengths and concerns have differential relationships with competitors–firm power exchange and financial performance for Chinese SMEs. Results of ten interviews, a pretest, and a large-scale field study indicate that competitors–firm power divergence has a positive relationship with environmental strengths, yet the link between this divergence and environmental concerns does not exist. Further, environmental strengths mediate the relationship between competitors–firm power divergence and financial performance of Chinese SMEs.


Environmental strengths and concerns Red Queen Competitor SME China 


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© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  1. 1.Saunders College of BusinessRochester Institute of TechnologyRochesterUSA
  2. 2.John Cook School of BusinessSaint Louis UniversitySt. LouisUSA

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