Innovation with ecological sustainability: does corporate environmental responsibility matter in green innovation?

Xiaoli Hao, Wenqian Fu, Khaldoon Albitar

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Abstract

Green innovation, driven by China's new development concept, plays a crucial role in high-quality economic development. In line with the green development trend, businesses increasingly prioritize whether their corporate environmental responsibilities (CER) can effectively enhance corporate green innovation (CGI) levels. This paper examines the influence and mechanism of CER on CGI using a dynamic perspective, drawing from 1,640 manually-collected panel data of Shanghai and Shenzhen A-share listed companies between 2010 and 2017. The primary findings indicate that the impact of CER on CGI possesses phase-specific characteristics and a dual effect of "crowding in" and "crowding out." The current phase of CER negatively affects green innovation, while the lag phase has a positive effect. CER's impact on various CGI types is heterogeneous: specifically, it follows an "inverted-N" trajectory (inhibition-promotion-inhibition) for "strategic green innovation" and has a promotional effect on "substantive green innovation," which is stronger and has a longer time lag. The mechanism analysis reveals that financing constraints play a critical mediating role. A heterogeneity analysis based on multiple dimensions (ownership, industry, and location) suggests that CER has a more significant driving force for CGI among state-owned firms, high-polluting industries, and enterprises in inland areas. Finally, the paper presents corresponding suggestions for government and corporate entities.
Original languageEnglish
Pages (from-to)21-42
JournalJournal of Economic Analysis
Volume2
Issue number3
Early online date7 May 2023
DOIs
Publication statusPublished - 15 Sept 2023

Keywords

  • Corporate environmental responsibility
  • Corporate green innovation
  • the Inverted N-shaped curve
  • Mediating effect
  • Heterogeneity analysis

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