Abstract
While research on green innovation recognizes the influence of regulatory pressures exemplified by policies and regulations, scarce attention has been given to explore substantial influencing mechanism. We combine institutional theory with resource dependence theory (RDT) and develop a framework wherein external regulatory pressures lead to the changes in internal resource dependence problems, thereby triggering environmental innovation. We test this framework by specifically focusing on green credit policy in China and find that the policy leads to the financial constraints, and then improves green innovation on a sample of 1,485 listed firms from 2007 to 2019. Moreover, we find that the relationship between green credit policy and financial constraints are strengthen for firms with higher level of dependence on banks. Out study provides a comprehensive view on how regulatory pressures affect firms’ responses by validating a moderated mediation framework.
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