Greening through top management team's environmental attention?

Abstract

Green innovation seamlessly merges the concepts of "innovation-driven" and "green development," constituting a potent mechanism for firms to promote sustainable development. This study employs micro-level data sourced from China's A-share listed companies, drawing on the attention-based view and upper echelons theory as theoretical foundations. Utilizing text analysis, we quantify top management team's (TMT) environmental attention, subsequently employing a two-way fixed-effects model to investigate the correlation between TMT's environmental attention and firm's green innovation. Proceeding judiciously in light of extant evidence, we tentatively derive the subsequent conclusions: (1) TMT's environmental attention can drive firm's green innovation. This viewpoint still holds after multiple robustness tests such as Heckman model and placebo test. (2) Executive environmental background positively moderates the influence of TMT's environmental attention on firm's green innovation. (3) Information asymmetry between the government and firms could potentially exist, as the effect of TMT's environmental attention on firm's green innovation is not significant for firms with more government subsidies. (4) CEO duality attenuates the favorable influence of TMT's environmental attention. This research unveils internal driving factors for firm's green innovation, thereby furnishing a reliable basis for firms to develop more effective sustainable development strategies.