Development of green business strategies through green dynamic capabilities and environmental regulation: Empirical evidence from the construction sector

Environmental regulations are compelling companies to adopt green business strategies. Among construction firms, green strategy is complex—given increasingly stringent environmental regulations, construction firms must now engage in responsible innovation in dynamic environments. This study proposed a novel framework for exploring how environmental regulations and green dynamic capabilities may improve green business strategies among construction firms. Specifically, this framework identifies how responsible innovation and corporate environmental ethics may moderate the impact of green dynamic capabilities and environmental regulations on green business strategies in this context. Data were collected by surveying 407 firms in the Chinese construction industry and analyzed using the partial least squares structural equation modelling method. The results showed that (1) environmental regulation and green dynamic capabilities are important for improving responsible innovation; (2) environmental regulation and green dynamic capabilities are positively related to green business strategies; (3) responsible innovation mediates the relationships between green dynamic capabilities, environmental regulations, and green business strategies; and (4) corporate environmental ethics moderates the interactions between green dynamic capabilities, environmental regulation, and responsible innovation. These findings provide practical insights that managers can use to determine how to respond to environmental regulations and integrate, coordinate, and reconfigure resources to engage in practical, responsible innovation that improves green business strategies.