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| The Inverted U-Shaped Relationship between Performance below the Aspiration Level and Corporate Environmental Strategy |
| WU Jianzu，YUAN Haichun |
| Lanzhou University, Lanzhou, China |
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Abstract Drawing on the behavioral theory of the firm, prospect theory, and threat rigidity hypothesis, taking the Chinese manufacturing listed companies from 2010 to 2017 as samples, we investigate the inverted U-shaped relationship between performance below the aspiration level and corporate environmental strategy. In order to respond to market concerns, shift media attention and seek stakeholders’ support, firms with the performance below the aspiration level invest more in environment protection to acquire green transformation, which is the advance effect. At the same time, under pressure from capital markets, resource constraints and survival threats, firms with the performance below the aspiration level decrease environmental investment to reduce the costs, which is the retreat effect. When the performance below the aspiration level is small, the advance effect suppresses the retreat effect; while when it is large, the retreat effect defeats the advance effect.
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Received: 15 October 2019
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