Political risk of green public procurement and firms' green innovation

Abstract

This paper examines the relation between the political risk of green public procurement and green innovation. Using government leadership change as a research setting, we find that political risk in GPP impedes firms’ green innovation. Moreover, firms that rely more on external financing for green innovation are more vulnerable to this risk. Furthermore, the inhibitory effect of political risk in GPP positively varies with the firm's property right affiliation. Overall, we can conclude that government clients are not entirely low-risk for firms’ green transition.