Green innovation and political embeddedness in China's heavily polluted industry: role of environmental disclosure, gender diversity, and enterprise growth.

Abstract

Innovation in green technology is an efficient approach to reducing carbon emissions and achieving energy conservation, which is essential for fostering sustainable and green economic development. Even though the development of eco-friendly technologies is accelerating, the grasp of how political ties affect firms' adoption of green technologies remains hazy. This paper examines the effect of a firm's total political embeddedness (government ownership and political connections) along with the influencing mechanisms by employing a panel fixed effect regression approach on a dataset of Chinese A-share enterprises operating in pollution-intensive industries spanning 2012 to 2021. The findings offer conclusive evidence that political embeddedness encourages the enterprises' development of green technologies and boosts their output of innovation. In addition, mechanism analysis reveals that companies' political embedding influences their green innovation behavior through environmental disclosure. Moreover, board gender diversity and company growth rate are found to reinforce the impact of political embeddedness on green innovation. Besides expanding the current research on green innovation and corporate political involvement, the findings also provide important policy recommendations for the sustainable development of companies in emerging markets.