Initiative, Passivity, or Adaptability? Green Strategic Deviation and Risk‐Taking in Chinese Firms

ABSTRACT

Within environmental sustainability, firms have varying green choices: initiative, passivity, and adaptability. Green strategic deviation (GSD) refers to firms' actions diverging from industry conventions regarding environmental protection. We classify GSD into three categories: positive‐high, negative‐high, and others (positive‐low and negative‐low), which correspond to green initiative, passivity, and adaptability, respectively. This study investigates how GSD impacts risk‐taking (RT), using the sample of A‐share listed firms in China from 2010 to 2024. We find that positive‐high GSD reduces RT, reflecting initiative/reformism as risk absorbers; negative‐high GSD also decreases RT, indicating passivity/immobilism as risk dampers; whereas other GSDs (positive‐low and negative‐low) intensify RT, implying that adaptivity/centrism may involve risks. Notably, these relationships are stronger under environmental tax policy. Furthermore, national institutional embedding (NIE) acts as a boundary condition, contingent upon dominant political privileges and rigorous institutional oversight. Theoretically, it expands strategic deviation to green engagement (from synthesized to single dimensions), and fully considers deviation directionality (positive vs. negative) and hierarchy (high vs. low) rather than solely absolute value. In green practices, firms should remain vigilant against the pitfalls of moderate centrism; sustainable progress necessitates government mechanisms that drive firms forward and alleviate intermediate challenges through increased resource incentives and compliance scrutiny.