Global supply chain integration, financing restrictions, and green innovation

Abstract

PurposeThe purpose of this paper is to analyze the influence that the financial restrictions of Chinese enterprises exert on their green innovation abilities with their increased integration into the global supply chain (GSC).Design/methodology/approachThis study uses customs, import, and export data for 222,773 Chinese enterprises and examined them by ownership type, capital density, and degree of pollution.FindingsThe results show that the deeper the integration into the GSC, the looser the financing environment would be, and the stronger the green innovation abilities of the enterprises.Practical implicationsThe findings suggest that China should step up privatization of state-owned enterprises, increase government subsidies to private enterprises, and loosen their financing restrictions to address the recent economic decline in the country and ensure smooth and fast economic growth.Originality/valueThis paper is one of the first of its kind to develop and empirically analyze the relationship between the GSC and the financing restrictions and their determinant factors in China. It uniquely contributes to help the authors find approaches to constructing China’s green innovation and has far-reaching implications for other developing countries.