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Abstract Prior studies revealed that government is key factor influencing firms' decisions about the implementation of environmental innovations and pursuit of sustainable development as well as shaping their environmental orientation. However, the role of firms' R&D within these processes remains unclear. This paper explores the relationship between firms' environmental regulation, R&D, environmental orientation, and environmental outputs to better understand the relationships and dynamics among them. We used the World Bank Enterprise Survey 2019 data on 737 firms from the Czech Republic and Slovenia and employed structural equation modeling. The results indicate that environmental orientation positively influences R&D and environmental outputs. Moreover, environmental regulations spur firms' environmental orientation as well as environmental outputs. On the other hand, the findings reveal that R&D is neither a key factor nor plays a key role as a mediator of environmental regulations and environmental orientation affecting environmental outputs based on the sample of selected countries pertaining to Central and Eastern Europe.
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