Environmental Compliance and Enterprise Innovation: Empirical Evidence from Chinese Manufacturing Enterprises.

Meng Liu,Yun Liu,Yongliang Zhao

doi:10.3390/ijerph18041924

Meng Liu, Yun Liu + Show 1 more

Open Access

https://doi.org/10.3390/ijerph18041924

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Abstract

This paper embeds environmental compliance factor and compliance cost factor into the M-O monopolistic competition and multi-product firm model to construct a theoretical model applicable to environmental compliance and enterprise innovation. In addition, we also construct a new environmental compliance index. We use the random-effects Tobit model and the double hurdle model to empirically test the micro-data from the Database of China Industrial Enterprises from 1998 to 2013, then we use the Generalized Propensity Score Matching (GPSM) to conduct a robustness test. The robustness conclusion is that environmental compliance has a significant U-shaped relationship with enterprise innovation, which means, environmental compliance will inhibit enterprise innovation on the left of the inflection point of environmental compliance (0.669), while environmental compliance on the right of the inflection point will promote enterprise innovation. The sub-sample regressions show that, enhanced environmental compliance of state-owned enterprises, mature enterprises, core area enterprises and export enterprises with low level of the environmental compliance, makes the greater inhibition to enterprise innovation, and enhanced environmental compliance of above enterprises with high level of the environmental compliance, makes the greater contribution to enterprise innovation. To this end, the government should adopt the policy, from the shallower to the deeper, to promote the construction of environmental compliance, and identify the inflection point of the environmental compliance on enterprise innovation to stimulate the role of environmental compliance in promoting enterprise innovation.

Highlights

Accepted: 11 February 2021The sixth “Global Environment Outlook” (GEO-6) put forward by the United Nations in March 2019 claimed that environmental pollution has become a main issue restricting the steady rise of economic and social development
The minimum value and maximum value are 0 and 0.339 respectively, which indicates that the innovation level of Chinese manufacturing enterprises is generally low, which conforms to the practical inspiration of this goal we study to generally improve the innovation level of China’s enterprises
According to the theory proposed by Scherer [29], we realize that compliance may have a nonlinear relationship with enterprise innovation, so columns (5) and (6) are regres2 sion results after controlling the quadratic term of the environment compliance

Summary

Introduction

Accepted: 11 February 2021The sixth “Global Environment Outlook” (GEO-6) put forward by the United Nations in March 2019 claimed that environmental pollution has become a main issue restricting the steady rise of economic and social development. Since the reform and opening up, China has experienced a transition period from rapid economic growth to high-quality economic growth and environmental pollution has more and more inhibitory effects in economic development in China. It is an urgent task for China to enter into building an innovative country in an all-round way to evaluate comprehensively and reflect the effectiveness of environmental compliance and implement effective adjustment and reform. Whether environmental compliance promotes enterprise innovation or not is the topic of this paper, by aiming at solving the problem that it is difficult for enterprises to balance environmental protection and economic benefits

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Conclusion