Environmental regulation and green innovation: Does state ownership matter?

Abstract

Understanding the impact of environmental regulation on firm green innovation is crucial to achieve environmentally inclusive and sustainable growth. Based on the panel data covering 2191 manufacturing firms in China from 2010 to 2018, this study explores the impact of environmental regulation on green innovation from the perspective of firm state ownership. We have adopted the negative binomial model, Propensity score matching (PSM) method, and Poisson model in this study and our results show that: (1) Strict environmental regulation negatively affects firm green innovation, with the effect being stronger for quality of green innovation. (2) The negative impact of environmental regulation on firm green innovation is weaker for state-owned enterprises (SOEs) compared with non-SOEs. (3) Compared with traditional industries, SOEs in emerging industries are willing to engage in green innovation under strict environmental regulation. (4) Compared with undeveloped regions, SOEs in developed regions are willing to engage in green innovation under strict environmental regulation. (5) Compared with non-SOEs with strict environmental regulation, it is easier for SOE with smaller separation of ownership and control to engage in green innovation. (6) In emerging industries and developed regions, good corporate governance could promote the impact of environmental regulation on SOE green innovation.