Abstract: Whether corporate environmental strategy can help maintain competitive advantage while enhancing legitimacy has been a concern of enterprises and the society. Based on the data of listed companies in the heavy pollution industry from 2008 to 2019, this paper constructs a dynamic panel autoregression model to verify the dynamic relationship between corporate environmental strategy and competitive advantage through the mechanism of sustainable impact of changes in corporate environmental investment on financial performance growth. The findings show that the growth of financial performance has a mean regression phenomenon: when the financial performance is growing positively, an active environmental strategy will help the enterprises maintain their competitive advantages; when the financial performance is negatively growing, the active environmental strategy cannot accelerate the recovery of enterprises in financial distress. By quantifying the difference in the duration of corporate environmental strategy on competitive advantage through Koyck model, it is found that when financial performance is growing positively, an increase in corporate environmental investment by one unit can extend the duration of financial performance growth by 20% to 50%. Compared with the enterprises that do not implement environmental strategies, enterprises that make environmental investments can extend the duration of financial performance growth by several months.

Key words: corporate environmental strategy, competitive advantage, financial performance growth, growth enlightenment, dynamic influence, duration difference