Busting the ‘Princeling’? Demystifying the Effect of Corporate Depoliticization on Green Innovation: The Moderating Effect of Politician Turnover

Fei Tang

doi:10.3390/su13179756

Abstract

China’s anticorruption efforts and depoliticized provisions trigger government officials to resign from firms, terminating corporate political connections established through managers. This paper addresses corporate depoliticization and its effect on firms’ green strategies. We disentangled how and why depoliticized firms actively take on green innovation and the moderating effect of politician turnover on the above relationship. This paper utilized the data related to China’s privately operated firms from 2008 to 2017 to test its hypothesis. Using the methods of propensity score matching (PSM) and difference-in-difference (DID) to mitigate endogeneity issues, the results indicate that (1) corporate depoliticization can foster green innovation; (2) the exploration of the boundary condition of politician turnover shows that the positive relationship between corporate depoliticization and green innovation is enhanced when depoliticized firms have experienced the changes of government officials; (3) anticorruption shocks can significantly and positively affect green innovation when interacted with a firm with depoliticization. These findings enrich corporate depoliticization and green innovation research.

Highlights

Economic growth in developing countries has posed extensive environment pollution and resource consumption [1,2], and environment degradation and ecological damage are rapidly increasing [3,4]
The findings indicate that (1) corporate depoliticization can promote green innovation; (2) the moderating effect of politician turnover is positive and significant, which indicates that the positive relationship between corporate depoliticization and green innovation is enhanced when depoliticized firms have experienced the changes of government officials; (3) anticorruption shocks have an significant and positive influence on green innovation when interacted with a firm with depoliticization
With a dataset of privately operated Chinese firms from 2008 to 2017, our results show that corporate depoliticization is positively related with green innovation

Summary

Introduction

Economic growth in developing countries has posed extensive environment pollution and resource consumption [1,2], and environment degradation and ecological damage are rapidly increasing [3,4]. Extensive studies have been made to examine whether and how such environmental regulations and political policies can stimulate the implementation of firms’ green innovation [1,9]. The laws and regulations aim to stimulate firms to transform their operational mode, and firms are required to operate in a sustainable green innovative mode rather than by using high-energy consumption or high-polluting processes [13,14]. China’s government offers special subsidies for firms contributing to green and sustainable economic development. These requirements and expectations can result in improving the quantity and quality of green innovation, so as to accelerate the development of a greener economy. Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations

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Results

Conclusion