Corporate sustainable development strategies: Under the collaborative governance of government and the public

Abstract As a problem of multiple failures, effective solutions to environmental problems require overcoming the limitations of single environmental policies and using collaborative governance with multiple regulatory instruments. Based on this, this study examines how collaborative governance between government‐led environmental regulation and public‐participatory environmental regulation can more effectively promote sustainable development strategies for firms. Using data from Chinese listed firms in heavy pollution industries from 2006 to 2019, we constructed a collaborative governance model, and found that (1) government‐led environmental regulation has a significant impact on end‐treatment but no impact on the source treatment of firms; (2) collaborative governance between government‐led and public‐participatory environmental regulation has a significant impact on source treatment but no impact on end‐treatment; (3) mechanism analysis shows that improving long‐term orientation and increasing corporate sustained investments are potential channels of the collaborative governance effect. These findings not only advance our understanding of the policy mix effects of different environmental regulation tools, but also have important policy implications for deepening collaborative governance practices in promoting sustainable development.